14 Institutional Analysis SP 2012

Institutional Analysis
March 28, 2012
Instructor: Sarah Whetstone
Readings and Key Concepts
• Paul DiMaggio and Walter Powell - “The
Iron Cage Revisited”
– Bureaucratic rationalization (iron cage)
– Isomorphism – different types
• Mark Granovetter - “Economic
– Under-socialized v. Over-socialized behavior
– Embeddedness in social relations
– Trust and malfeasance
Institutions and Human Behavior…
• Durkheim – institutions are functional, a means to
ensure human behavior serves social ends
• Parsons – institutions are “sets of norms that go
• But this “need” cannot determine how individuals
interact, with some freedom– importance of
interdependent action (p. 142).
Paul DiMaggio
• Born 1951 in the United States
• Works as a Professor at Princeton University since 1992
Walter Powell
• Born 1951 in the United States
• He is a professor of Education, Sociology,
Organizational Behavior, and Communication at
Stanford University since 1999.
“The Iron Cage Revisited” (1983)
Organizations slowly become the same, through a process
of institutional and competitive isomorphism.
Updating Weber…
• Weber argued that an emphasis on efficiency
and rationalized systems– driven by capitalist
markets-- led to increasing bureaucratization-the “iron cage.”
• But– Researchers see something different.
Inefficiency and “non-productive ritual” is
• DiMaggio & Powell: Organizations remain
similar– and continue to become more like each
other– because of different “isomorphic”
“A constraining process that forces one
unit in a population to resemble other
units that face the same set of
environmental conditions” (149).
In your small groups, identify the four types
of isomorphism, and provide an example of
each process.
Types of Isomorphism
that shape institutions/organizations…
Competitive Isomorphism:
 Driven by regular market
Institutional Isomorphism:
 Coercive: Driven by government
regulation, political influence,
search for legitimacy
 Mimetic: Driven by standardized
responses to uncertainty
 Normative: Socialization of
workers– professionalization–
creates pressures to work in
accepted ways
Why do organizations tend to
become so similar?
• Case in point: Decline of local family-owned
restaurant and rise of chains (McDonaldization)
• Why does this occur, according to DiMaggio and
• Competitive isomorphism? Coercive, mimetic, or
Discuss in Small Groups…
Some organizations don’t seem to follow the theory
of isomorphism… Compare coffee shops and
** Identify the features of a chain coffee shop like
Starbucks that fit isomorphism. Does a neighborhood
bar share these features– does the bar fit DiMaggio and
Powell’s theory?
** Why do you think coffee shops tend to be more
isomorphic than bars? Is this always true? Exceptions?
Mark Granovetter
• Born 1943 in the United States, currently
Professor in the School of Humanities and
Sciences at Stanford
• Social network theory and economic sociology
• Economic Embeddedness
– How are actions conditioned
by network contexts?
– How are behavior and
institutions affected by
social relations?
• The oversocialized human
– Humans are deeply embedded in institutions
– They are strongly socially constrained
– Their behavior is follows predictable scripts and
• The undersocialized human
– Humans are egoistic and autonomous
– They are calculating, rational actors
– They have all the information about other people and
processes, act on their own self interest, and are
totally free to act.
• Granovetter’s “middle position” –
• What is it?
• The idea that economic relations between individuals or
firms are embedded in actual social networks and do
not exist in an abstract idealized market.
• Economic behavior is not over-socialized
(Durkheimian tradition)
• or under-socialized (economists, “game theory”),
• but rather, it is constrained by social networks.
• Social relations can generate trust and/or discourage