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 Explanations for the Emergence
of Organizational Forms