(Neo-)Institutionalism is a theoretical school which is concerned with the question of which organizational actions and routines become taken for granted. Within the school of Neo-Institutionalism distinctions between the micro and the macro level of this theory are made.

Generally, macroinstitutionalisation is seen as the tendency of organizations to arrange their formal structure not in response to the technical needs of the organizations but in accordance to certain widely accepted rules. This is done in order not to loose the legitimacy towards important stakeholders like banks, clients etc. (Scott, 1987, Scott, 1995, Zucker, 1991, Meyer & Rowan, 1977). Organizations are expected to conform to the institutionalized rules. So firms react to these expectations of good practice rather than looking for the most rational solutions. An example for this notion would be the implementation of computing facilities in organizational settings just because competing firms use computing facilities in similar settings too. "We arrive at the conclusion that formal organization, as it expands in a domain or society, becomes less explicitly rational in its structure. ... Every aspect of rationalized organizational structure comes under exogenous institutional control ..." (Meyer, 1992: 268). The consequence of this tendency is that within an organization the institutionalized routines might be decoupled from the actual practice of the organization. The formal rules signal to the environment that the organization complies with the institutionalized norms of organizing. However, the strict appliance of the rules would lead to inconsitencies. Therefore the organizational members (OM) have the freedom to arrange the tasks in a way which they consider most efficient - thereby violating the official rules (Meyer & Rowan, 1977: 357).

The micro level of the institutionalist theory covers the processes of institutionalization within an organization, i.e. it is concerned with the views and actions of the OM while dealing with certain routines. It states that once certain norms of organizing are institutionalized it is no longer necessary that the OM get to know the value of these modes of action through personal influence of other OM or through internalizing these norms or by the hope of getting a personal advantage (Zucker, 1991). The mere knowledge that the routines are objective organizational actions (i.e. that they represent „the way things are done“) is sufficient for the OM to take these routines for granted. The taking for granted of certain routines dominates the cognitive activities of the OM. This tendency gets even stronger the more distinct the history of an unchanged routine is to be seen.

Literature: Meyer (1992), Meyer & Rowan (1977), Scott (1987), Scott (1995), Zucker (1991)

Entry by: Klaus Beck

November 10, 1997
Direct questions and comments to: Glossary master