Organization Theory - 35 (Institutional Theory)

In the last blog, we looked at the population ecology model partially. In today's blog we look at another theory - Institutional Theory.

Environment puts demands on organization in 2 ways

1. They make a technical and economic demands that require organizations to produce and exchange their goods and services in a market or a quasi-market.

2. They may make social and cultural demands that requirer organizations to play particular roles in society and to establish and maintain certain outward appearances.

Institutions generally have a repeated actions and shared concept of reality. Sometimes actions are repeated because explicitly rules or laws exist to ensure their repetition (legal and political influences). Sometimes activity patterns are supported by norms, values, and expectations (cultural influences); sometimes by a desire to be or look like another institution (social influences).

In the institutional perspective, the environment is session as providing a more or less shared view of what organizations should look like and how they should behave.

In this approach the manager would need to analyze the particular organization you should consider how the organization is adapting to its institutional context.

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