New Institutional Theory Essay

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Emerging from the sociology of education in the 1970s, new institutional theory (NIT) has become one of the foremost positions within the mainstream of US management studies. It seeks to explain the ways in which institutions are created, sustained, and diffused. Adherents of NIT are keen to draw a distinction between ”new and ”old institutionalism. While old institutionalism emphasized politics and the role of conflict, NIT took legitimacy as its master concept. The old institutionalism focused on the existence of a negotiated order between different interest groups, while in its place NIT sought to understand the way in which the quest for legitimacy is a driving force behind the isomorphism of organizations. NIT is interested in understanding the means through which the socially constructed external environment enters the organization by ”creating the lens through which actors view the world and the very categories of structure, action, and thought (Powell & DiMaggio 1991).

Works by Meyer and Rowan (1977) and DiMaggio and Powell (1983) are generally held up as foundational or seminal statements of NIT. Constituting the two branches of NIT, they remain widely cited to this day. Meyer and Rowan examined why particular phenomena became institutionalized; that is, why certain forms were repeatedly enacted over time while the DiMaggio and Powell branch of NIT seeks to understand why it is that organizations are increasingly coming to resemble each other.

Despite its limitations, NIT remains a popular position and it has the capacity to help understand aspects of the intersubjective relationship between an organization and its field. It can help us understand the adoption of innovations, long-term shifts in organization fields, and variation among nation-states, an issue that is also addressed by the closely related societal effects school. Indeed, with the latter we may say that a separate European New Institutional School, more attuned to the classical sociological concerns of power, has been established. Recent important developments in new institutional theory include looking at practice variation and the sociology of translation.

Bibliography:

  1. DiMaggio, P. J. & Powell, W. W. (1983) The iron cage revisited: institutional isomorphism and collective rationality in organizational fields. American Sociological Review 48: 147-60.
  2. Meyer, J. W. & Rowan, B. (1977) Institutionalized organizations: formal structure as myth and ceremony. American Journal of Sociology 83: 340-63.
  3. Powell, W. W. & DiMaggio, P. J. (eds.) (1991) The New Institutionalism in Organizational Analysis. University of Chicago Press, Chicago, IL.

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