Notes for Institutional Theory

The aim of this essay is to explore the response of organisations when confronting with institutional pressures. The essay is organised as follow. Firstly, some concepts as well as explanation related to institutional theory will be introduced. Then, this essay will define and explain the conception of legitimacy and the connection between legitimacy and institutional process. Thirdly, the strategic responses of organisations to deal with the pressures from institutional process and an example of response in terms of institutional control will be examined. Institutional theory is a concept that emphasizes the existence of some norms, values and beliefs of the society which organisations conform with. And the process of conformity called institutionalisation is reflected in the structures and practices of organisations (Powell & DiMaggio, 1991). According to Oliver (1991), institutional theory emphasizes more specifically on the pressures and constraints from the institutional environment which is one of its two issues addressed (the other one is technical pressures). Institutions here include the state, professions, interest group as well as public opinion (Scott, 1987b). These institutions have interconnected and interdependent relationships with organisations, as the behaviours of organisation are restricted by outside pressures exerted by institutions. In order to survive, organisations have to force themselves to adapt to the environment. So, they have no other choice but to make their behaviours consistent with external norms and rules. After discussing the environment perspective of institutional theory, the next section will regard motives of conformity as the point of departure.
Institutional theory demonstrates that stability and legitimacy is what organisations to attain (Powell & DiMaggio, 1983; Oliver, 1991). In terms of obtaining stability, institutional theory can explain why organisations conform to external rules, norms and beliefs, not because