Institutional Theory

Much of modern institutional theory arose from the work of Berger and Luckman (1967), who argue that social reality is a human construction created through interaction (from Scott p. 117).
The process by which actions are repeated and given similar meaning by self and others is defined as institutionalization" (Scott p. 117). This is also the basis of symbolic interactionist approaches as well, though they tend to focus on micro processes within organizations.

At the macro-level, the concept of bureaucracy is a meta-institution (Scott quoting Berger p. 117). Meyer and Rowan (1977) influentially argued that modern societies have many institutionalized rules which "provide a framework for the creation and elaboration of formal organizations" (Scott p. 117). Much of these rules are rationalized myths that are believed but not testable. They originate and are sustained through public opinion, the educational system, laws, etc.

Thus, many of the environmental forces on organizations are not based on efficiency or effectiveness but on social and cultural pressures to conform to a given structural form.

Institutional Environments

Institutional Explanations for the Emergence of Organizational Forms