HOW INSTITUTIONAL ENVIRONMENTS AFFECT
ORGANIZATION TRAINING PROGRAM
Song Yang
Assistant Professor
Department of Sociology and Criminal Justice
University of Arkansas
Fayetteville AR 72701
*Direct all correspondences to Song Yang by writing to Department of Sociology and Criminal
Justice, University of Arkansas, Fayetteville, AR 72701, or by email to yangw@cavern.uark.edu
I thank Professor David Knoke for providing and explaining the dataset used in our analyses.
C. Organization Institutionalization
Researchers have long considered organizational institutionalization as an important
determinant of organization job training (Cappelli et al. 1997:127; Knoke and Kalleberg 1994;
Knoke and Janowiec-Kurle 1999:99; Manahan, Meyer, and Scott 1994; Osterman 1995; Scott
and Meyer 1991). In this regard, prevailing institutional conventions such as legal/requirements
rules, professional stipulations, practices among peer organizations, or general social norms
affect decisions regarding organizational training (Manahan, Meyer, and Scott 1994; Scott and
Meyer 1991). Most recently, Felstead and Green (1994) established that these institutional
forces provide a training floor that prevents employers from cutting organization training
programs below a certain threshold. In fact, they found that the training floor effect is
pronounced during economic recession when employers have strong incentives to pull back from
investment in training workers.
However, organizations commonly embrace different internal structures that contain
various capacities to enact and tailor changes in response to outside influences. In this regard,
there has been no consensus among researchers regarding whether organizations can change
rapidly enough to keep pace with environmental changes. On the one hand, researchers
emphasizing structural fluidity argue that organizations are able to make swift changes in
response to external influences through organizational adaptation, learning, strategic moves, and
resource exchanges that necessitate frequent workplace restructuring (Lawrence and Lorsch
1967; Pfeffer and Salancik 1978; Levitt and March 1988).
Conversely, adherents to the organization ecology perspective maintain that
organizational forms are subject to strong structural inertia; changes in organizational structures
and activities are slower than environmental changes (Hannan and Freeman 1989). Empirical
evidence suggested that organizational size, formalization, decision-making, and organizational
accountability for performance are related to organizational fluidity (Frumkin and Galaskiewicz
forthcoming; Haveman 1992; Minkoff 1999). Using data from 1991 National Organizations
Survey, Frumkin and Galaskiewicz (2003) report that among the three types of organizations,
governmental organizations, nonprofit, and for-profit organizations, government organizations
are much more vulnerable to institutional forces than the other organizations. Due to lack of
accountability for performance indicators such as sales and profits, government organizations are
in greater need of legitimacy to indicate their success by conforming to institutional pressures
than were other types of organizations. Haveman (1993) asserts that workplace formalization
created structural rigidity. Standard operating rules reduce personalized relations in
organizations and increase the use of categorization as a decision-making technique, both of
which decrease the extent of search for alternatives (Haveman 1992:24). Analyzing data from
California financial corporations from 1977 to 1986, Haveman (1992) found that large, and
highly formalized organizations are more prone to structural inertia that impede their ability to
change and diversify.
We contend that in addition to organization performance measures, workplace
formalization is an important dimension that differentiates organizations in their
accommodations to institutional scrutiny. With their codified regulations that govern various
aspects in employment relations, highly formalized workplaces contain rigid structures that can
tolerate little adjustment in their work practices in response to external scrutiny. In contrast, less
formalized workplaces embrace more flexible structures that accommodate large-scale changes
as a result of institutional influences. In other words, workplace flexibility determines how
strongly institutionalization process can affect organizational practices. The more flexible the
workplaces -- indicated by workplace formalization -- the stronger the impact of
institutionalization on organization practices.
In sum, this discussion leads us to posit the following:
H4: Organizations receiving strong institutional influences provide more training to their
core workers than do organizations receiving weak institutional scrutiny.
H5: The higher the workplace formalization, the weaker the relationship between
institutionalization and organization job training.