Institutional Theory - Explained
What is Institutional Theory?
Written by Jason Gordon
Updated at September 1st, 2023
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What is Institutional Theory?
Institutional theory considers the processes by which structures, including schemes, rules, norms, and routines, become established as authoritative guidelines for social behavior.
Different components of institutional theory explain how these elements are created, diffused, adopted, and adapted over space and time; and how they fall into decline and disuse.
Institutional theory, as applied to business organizations, is an approach to understanding organizations and management practices as the product of social rather than economic pressures.
Adoption and retention of many organizational practices are often more dependent on social pressures for conformity and legitimacy than on technical pressures for economic performance.
Social pressures might include ethics, peer activity, social norms, etc.
