Institutions: Sociology
Reflections on
“Institutionalized Organizations: Formal Structure as Myth and Ceremony.”
“The Iron Cage Revisited: Institutional Isomorphism and Collective
Rationality in Organizational Fields.”
Content
Introduction
“Institutionalized Organizations: Formal Structure as Myth and
Ceremony.”
“The Iron Cage Revisited: Institutional Isomorphism and
Collective Rationality in Organizational Fields.”
Conclusion
Discussion
Introduction
Neoinstitutionalism describes social theory that focuses on
developing a sociological view of institutions: the way they
interact and the way they affect society.
Outside of the traditional views of economics
Why do so many businesses end up having the same
organizational structure?
How do institutions shape the behavior of individual members?
“Institutionalized Organizations: Formal Structure as Myth and Ceremony.”
Organizations incorporate societally-rationalized
procedures to achieve legitimacy *independent of the
practices’ actually efficacy.
Institutionalized products, services, techniques, policies,
and programs function as myths…organizations adopt
them ceremonially
“Institutionalized Organizations: Formal Structure as Myth and Ceremony.”
Rise of formal organization is attributed to:
• Rational organization is seen as an efficient way to
structure work
• Bureaucratic control is perceived to be useful for
dealing with political processes + standardization
The authors make a strong distinction between the
structure of institutions or practices vs. actual day-to-day
activity.
“Institutionalized Organizations: Formal Structure as Myth and Ceremony.”
Norms of rationality exist in institutional structure  a
part of social reality and are deeply ingrained in life
• “Myths” of institutions take on rationalized,
impersonal properties.
• They are institutionalized, beyond individuals  have
legitimacy apart from the outcomes of their
implementations.
Myths of legitimate organization are already codified,
and are drawn upon to create new activities.
“Institutionalized Organizations: Formal Structure as Myth and Ceremony.”
Proposition 1: Formal organizations emerge in domains
*defined by institutional myths…
Proposition 2: Modern society tends to have more
institutionalized domains and more rationalized
institutional structures.
• Formal organizations are more likely to emerge in
modern societies
• Formal organizations in modern societies are more
likely to have rational structures.
“Institutionalized Organizations: Formal Structure as Myth and Ceremony.”
Bureaucracy forms because relational networks become
*complex with the beginning of modernity.
Institutional myths work as rules depicting formal,
rational structure for attaining ends in such a system.
Eventually, organizations become a part of the
institutional environment…
“Institutionalized Organizations: Formal Structure as Myth and Ceremony.”
Where did these rational institutional myths come from?
1) Elaboration of complex relational networks. 2) Degree
of collective organization. 3) Leadership efforts of local
organizations.
“Institutionalized Organizations: Formal Structure as Myth and Ceremony.”
Isomorphism has crucial consequences…
• Organizations incorporate elements which are
legitimate, not necessarily efficient.
• They employ ceremonial evaluation criteria.
• Dependence on externally fixed and legitimate
institutions reduces uncertainty and maintains
stability.
Institutional structure demonstrates an organization’s
adherence to valued purposes and means.
“Institutionalized Organizations: Formal Structure as Myth and Ceremony.”
Long-term organizational *survival increases as state
structures elaborate and as organizations respond to
institutional rules
Arranging organizations along a continuum of technology
and strength of output control…
• Success: rests on the management of relational
networks V.S. depending on isomorphism with
institutional rules.
“Institutionalized Organizations: Formal Structure as Myth and Ceremony.”
“Categorial rules conflict with the logic of efficiency”
Institutional rules tend to be highly generalized,
they may be inappropriate for some situations
Institutional elements can be inconsistent
What are the resolutions?
“Institutionalized Organizations: Formal Structure as Myth and Ceremony.”
Decoupling: the separation of structure from activity 
e.g. encouraging professionalism, making goals
ambiguous
The logic of confidence: internal and external
participants are acting in good faith
“The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in
Organizational Fields.”
“The Iron Cage” was a term initially used by
Weber to describe bureaucratic control of life in
a capitalist society.
Weber argued that bureaucratization is caused
by:
• Competition among firms
• Competition among states
• Increasing need to control staff and citizens
• Middle-class demands for equal protection under the law
“The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in
Organizational Fields.”
DiMaggio and Powel argue that bureaucratization is
caused by:
• Processes that make organizations more similar
• “Structuration of organizational fields”
New organizational fields start out fairly diverse  there
is a push toward homogeneity e.g. textbooks / legal
education
 legitimacy becomes more important than efficiency to
organizations
“The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in
Organizational Fields.”
Initially, organizations are only responsive to some kind
of need  then start responding to other organizations
and the environment
Eventually, larger organizations can dominate & control
their environment!
“The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in
Organizational Fields.”
The term that describes this homogenization:
“isomorphism”
The environment makes organizations isomorphic
Two types of isomorphism: Competitive and Institutional
Organizations compete for: resources and customers +
legitimacy, political power, and social fitness
“The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in
Organizational Fields.”
Coercive isomorphism
Driven by two forces:
1. Pressures from other organizations on which a focal organization
is dependent
2. Pressure to conform to cultural expectations of the society
“The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in
Organizational Fields.”
Mimetic isomorphism: a response to uncertainty  to mimic a
peer that they perceive to be successful
Best response is to mimic a peer that they perceive to be successful
“The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in
Organizational Fields.”
Normative isomorphism as a result of professionalization
1. members of professions receive similar training 
socializes them into similar worldviews
2. members of professions interact through professional
and trade associations  diffuses ideas among them
*The three mechanisms through which institutional ismorphism
is diffused are not necessarily empirically distinguishable.
Conclusion
Institutional isomorphism approach: explain why orgs take on a
certain standard form + emphasizes that such a form is not
necessarily congruent with organizational practices
Note that there are Many levels within organizations and
organizational networks…
Well-established organizations define what the “proper” form is
and are...
Many organizational features cannot be explained only by
efficiency concerns
The articles have explained the character and diversity of these
institutional processes
Discussion 1: DiMaggio and Powell (1983)
What is the significance of DiMaggio and Powell’s
theoretical ideas?
How do you think their questions and ideas relate to
sociology/economic sociology?
Discussion 1: DiMaggio and Powell (1983)
Lay out the principles underlying observed social
phenomena.
Provide different lenses through which to understand
observed social phenomena.
When focus is on how to manage business, we zoom in on
one corporation (focal organization) and view social change
from its perspective: (e.g.) stakeholder analysis &
stakeholder engagement.
Discussion 1: DiMaggio and Powell (1983)
Shifting Gears: From Focal Org. to Org. Field
Firm
Stakeholder
Stakeholder
Firm
Focal
Organization
Stakeholder
•Industry
•Society
•Fortune 500 Firms
Stakeholder
Firm
Discussion 1: DiMaggio and Powell (1983)
When we zoom out from the focal organization, we can see the social structure
in which it is located & broader social changes that affect the structure.
Org. actions are not determined solely by the logic of economic and
technological environment but also by the logic of institutional environment.
Discussion 2: Meyer and Rowan (1977)
How do organizations/institutional practices change? What are the forces
that drive organizations to change? (E.g. Consider the case of China)
Organizations may be affected by internal members and external environment
(vice versa?)
How about the Organizational Culture theory (which is founded on the premise
that over time, organizations will incorporate human-like personalities,
attitudes and values that give them an independent presence)?
Consider the complexity of forces that drive organizations to change (state,
market, activist groups, shareholders, employers, employees, suppliers,
customers…).
Discussion 3: DiMaggio and Powell (1983)
To what degree can consultants and individuals who
work in correlated firms (such as Coke and Pepsi staff)
actually spread information? There are moral, legal, and
practical obstacles.
What are some actual examples of how homogenizing
information spreads (aside from public company
reports)?
Discussion 4: DiMaggio and Powell (1983)
Could there be any exceptions to DiMaggio and Powell’s
(1983) theory? For instance, Google, and other
organizations appear to uphold a distinctive structure
and collection of business processes. Search engines
have been present for more than a decade and design
companies have been around for a century. How do
these organizations continue to exist in these ways?