Power and the Environment
But an instituationalist perspective suggest that power is often defined by the environment, not by the organization. The social validity of a particular unit inpacts its power base (e.g., professional groups, etc). For example in universities over time the power had transferred from the administrators and trustees to the faculty. In hospitals the power has transferred from owners and trustees to the physicians, and now on to professional administrators.

Fligstein (1987) found that the background of CEO's changed throughout this century. They were selected from manufacturing departments between 1920-1940, sales departments from 1940-1960, and from finance departments from 1960-1980. He argues these shifts reflect the main issues confronting corporations within the respective time periods (production, distribution, and finance respectively).

Galbraith (1967) argues that organizations have shifted from an entrepreneurial mode with a single dominant person to a more diffuse , larger technostructure. Thompson (1967) adds that the more uncertain the technology and the greater number of sources of uncertainty in the organization's environment, the more bases of power there are within the organization (Scott p. 295) and the larger the dominant coalition.

As the power shifts in organizations, often the goals shift as well to reflect the new power structure. For example, as physicians gained control in hospitals, focus shifted from community welfare to research. Galbraith (1967) notes that as entrepreneurial power structures were replaced by technostructures, goals shifted from profit maximization to sales growth (leading to bigger organizations with more positions and hence more responsibility and compensation). As financial types increasingly become CEO's the organizational goals became more focused on financial measurements.