New institutionalism
Encyclopedia
New institutionalism or neoinstitutionalism is a theory that focuses on developing a sociological
view of institutions--the way they interact and the way they affect society
. It provides a way of viewing institutions outside of the traditional views of economics
by explaining why so many businesses end up having the same organizational structure (isomorphism
) even though they evolved in different ways, and how institutions shape the behavior of individual members.
Sociological or political new institutionalism should not be confused with new institutional economics
.
focused on the ways bureaucracy
and institutions were coming to dominate our society with his notion of the Iron cage
that rampant institutionalization created.
In Britain and the United States, the study of political institutions dominated political science until after the post-war period. This approach, sometimes called 'old' institutionalism, focused on analysing the formal institutions of government and the state in comparative perspective. After the behavioural revolution brought new perspectives to analysing politics such as positivism, rational choice theory and behaviouralism, the focus on institutions was discarded as it was too narrow. The focus moved to analysing the individual rather than the institutions which surrounded him/her.
In the 1980s however, new institutionalism, sometimes called 'neo-institutionalism', has seen a revived focus on the study of institutions as a lens for viewing work in a number of disciplines including economics
, sociology
, international relations
and political science
. John W. Meyer
proposed an early influential formulation (Meyer and Rowan 1977). Authors like Paul DiMaggio
and Walter W. Powell
consciously revisited Weber's iron cage in the early 1980s (DiMaggio and Powell 1983, 1991). The following decade saw an explosion of literature on the topic across disciplines. DiMaggio and Powell's 1991 anthology summarizes work in sociology. In economics, the new institutionalism is most closely associated with Washington University in St. Louis, Missouri, where Douglass North
, who won a Nobel Prize in 1993 for his work in new institutionalism, currently teaches.
). In this environment, the main goal of organizations is to survive. In order to do so, they need to do more than succeed economically, they need to establish legitimacy
within the world of institutions.
Much of the research within New Institutionalism deals with the pervasive influence of institutions on human behavior through rules, norms, and other frameworks. Previous theories held that institutions can influence individuals to act in one of two ways: they can cause individuals within institutions to maximize benefits (regulative institutions, also called Rational Choice Institutionalism), similar to rational choice theory
or to act out of duty
or an awareness of what one is "supposed" to do (normative institutions, also called Historical Institutionalism). An important contribution of new institutionalism was to add a cognitive type influence. This perspective adds that, instead of acting under rules or based on obligation, individuals act because of conceptions. "Compliance occurs in many circumstances because other types of behavior are inconceivable; routines are followed because they are taken for granted as 'the way we do these things'" (Scott 2001, p. 57) - also called Social Institutionalism. Individuals make certain choices or perform certain actions not because they fear punishment
or attempt to conform; neither do they do so because an action is appropriate or the individual feels some sort of social obligation. Instead, the cognitive element of new institutionalism suggests that individuals make certain choices because they can conceive of no alternative.
For an interesting application of the new institutional approach see Terry Karl (1990), which portrays institutions as constraining elite actors' preferences and policy choices during transition. The focus upon economics in this article is misleading; institutions are politics: they are the substance of which politics is constructed and the vehicle through which the practice of politics is transmitted. New institutionalism was born out of a reaction to the behavioural revolution. In viewing institutions more widely as social constructs, and by taking into account the influence that institutions have on individual preferences and actions, new institutionalism has moved away from its institutional (formal legal descriptive historical) roots and become a more explanatory discipline within politics.
More recent work has begun to emphasize multiple, competing logics (Friedland & Alford, 1991; Lounsbury, 2007), focusing on the more heterogeneous sources of diversity within fields (Lounsbury, 2001) and the institutional embeddedness of technical considerations (e.g., Scott et al., 2000; Thornton, 2004). The concept of logic generally refers to broader cultural beliefs and rules that structure cognition and guide decision-making in a field. At the organization level, logics can focus the attention of key decision-makers on a delimited set of issues and solutions (Ocasio, 1997), leading to logic-consistent decisions that reinforce extant organizational identities and strategies (Thornton, 2002). In line with the new institutionalism, social rule system theory
stresses that particular institutions and their organizational instantiations are deeply embedded in cultural, social, and political environments and that particular structures and practices are often reflections of as well as responses to rules, laws, conventions, paradigms built into the wider environment (Powell, 2007).
This approach can be readily contrasted with rational choice institutionalism: rather than a series of calculated actions designed to maximise perceived benefit, any given actor within an institution will feel to some extent constrained and obligated by the norms and rules of the institution.
Normative institutionalism is referred to by Hall and Taylor (1996) as "Sociological institutionalism". It defines institutions much more broadly than political scientist or economist and it includes also the symbol systems, cognitive scripts and moral templates, hence it breaks down the divide between 'institutions' and 'culture'.
A key concept is path dependency
: the historical track of a given institution or polity will result in almost inevitable occurrences. In some institutions, this may be a self-perpetuating cycle: actions of one type beget further actions of this type.
This theory does not hold that institutional paths will forever be inevitable. Critical junctures may allow rapid change at a time of great crisis.
s and discourse
in politics while providing a more dynamic approach to institutional change than the older three new institutionalisms".
(see institutional economics
).
, Thorstein Veblen
, John Commons, and others, and which has been further extrapolated by various philosophers and scholars such as Donald Davidson
, Richard Rorty
, Amartya Sen
, Donald McCloskey, Warren Samuels
, Daniel Bromley
, E. J. Mishan
, Yngve Ramstad, and others. Proponents of the older institutionalism are strongly opposed to new institutionalism, most saliently in the manner in which new institutionalism seeks to explain institutional change as merely another instance of maximization. Instead, old institutionalism seeks to articulate reasons for institutional change in terms of social and political volition.
Sociology
Sociology is the study of society. It is a social science—a term with which it is sometimes synonymous—which uses various methods of empirical investigation and critical analysis to develop a body of knowledge about human social activity...
view of institutions--the way they interact and the way they affect society
Society
A society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations...
. It provides a way of viewing institutions outside of the traditional views of economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
by explaining why so many businesses end up having the same organizational structure (isomorphism
Isomorphism (sociology)
In sociology, an isomorphism is a similarity of the processes or structure of one organization to those of another, be it the result of imitation or independent development under similar constraints...
) even though they evolved in different ways, and how institutions shape the behavior of individual members.
Sociological or political new institutionalism should not be confused with new institutional economics
New institutional economics
New institutional economics is an economic perspective that attempts to extend economics by focusing on the social and legal norms and rules that underlie economic activity.-Overview:...
.
History
Thinkers have long recognized that institutions interact with one another in ways that can be studied and understood. Sociologists in the late 19th century and early 20th century began to systematize this study. Economist and Social theorist Max WeberMax Weber
Karl Emil Maximilian "Max" Weber was a German sociologist and political economist who profoundly influenced social theory, social research, and the discipline of sociology itself...
focused on the ways bureaucracy
Bureaucracy
A bureaucracy is an organization of non-elected officials of a governmental or organization who implement the rules, laws, and functions of their institution, and are occasionally characterized by officialism and red tape.-Weberian bureaucracy:...
and institutions were coming to dominate our society with his notion of the Iron cage
Iron cage
Iron cage, a sociological concept introduced by Max Weber, refers to the increased rationalization inherent in social life, particularly in Western capitalist societies. The "iron cage" thus traps individuals in systems based purely on teleological efficiency, rational calculation and control...
that rampant institutionalization created.
In Britain and the United States, the study of political institutions dominated political science until after the post-war period. This approach, sometimes called 'old' institutionalism, focused on analysing the formal institutions of government and the state in comparative perspective. After the behavioural revolution brought new perspectives to analysing politics such as positivism, rational choice theory and behaviouralism, the focus on institutions was discarded as it was too narrow. The focus moved to analysing the individual rather than the institutions which surrounded him/her.
In the 1980s however, new institutionalism, sometimes called 'neo-institutionalism', has seen a revived focus on the study of institutions as a lens for viewing work in a number of disciplines including economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, sociology
Sociology
Sociology is the study of society. It is a social science—a term with which it is sometimes synonymous—which uses various methods of empirical investigation and critical analysis to develop a body of knowledge about human social activity...
, international relations
International relations
International relations is the study of relationships between countries, including the roles of states, inter-governmental organizations , international nongovernmental organizations , non-governmental organizations and multinational corporations...
and political science
Political science
Political Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...
. John W. Meyer
John W. Meyer
John W. Meyer is a sociologist and professor at Stanford University, located in Palo Alto, California, noted for his contributions to the study of organizations, diffusion, and modern mass education...
proposed an early influential formulation (Meyer and Rowan 1977). Authors like Paul DiMaggio
Paul DiMaggio
Paul Joseph DiMaggio is an American educator, and professor of sociology at Princeton University since 1992.-Career:...
and Walter W. Powell
Walter W. Powell
Walter W. Powell , born 1951, is a contemporary American sociologist. Powell is Professor of Education, Sociology, Organizational Behavior, Management Science and Engineering, and Communication at Stanford University and the Stanford University School of Education since 1999 and is known for his...
consciously revisited Weber's iron cage in the early 1980s (DiMaggio and Powell 1983, 1991). The following decade saw an explosion of literature on the topic across disciplines. DiMaggio and Powell's 1991 anthology summarizes work in sociology. In economics, the new institutionalism is most closely associated with Washington University in St. Louis, Missouri, where Douglass North
Douglass North
Douglass Cecil North is an American economist known for his work in economic history. He is the co-recipient of the 1993 Nobel Memorial Prize in Economic Sciences...
, who won a Nobel Prize in 1993 for his work in new institutionalism, currently teaches.
Introduction to new institutionalism
New institutionalism recognizes that institutions operate in an environment consisting of other institutions, called the institutional environment. Every institution is influenced by the broader environment (or in simpler terms institutional peer pressurePeer pressure
Peer pressure refers to the influence exerted by a peer group in encouraging a person to change his or her attitudes, values, or behavior in order to conform to group norms. Social groups affected include membership groups, when the individual is "formally" a member , or a social clique...
). In this environment, the main goal of organizations is to survive. In order to do so, they need to do more than succeed economically, they need to establish legitimacy
Legitimacy
Legitimacy, from the Latin word legitimare , may refer to:* Legitimacy * Legitimacy of standards* Legitimacy * Legitimate expectation* Legitimate peripheral participation* Legitimate theater* Legitimation...
within the world of institutions.
Much of the research within New Institutionalism deals with the pervasive influence of institutions on human behavior through rules, norms, and other frameworks. Previous theories held that institutions can influence individuals to act in one of two ways: they can cause individuals within institutions to maximize benefits (regulative institutions, also called Rational Choice Institutionalism), similar to rational choice theory
Rational choice theory
Rational choice theory, also known as choice theory or rational action theory, is a framework for understanding and often formally modeling social and economic behavior. It is the main theoretical paradigm in the currently-dominant school of microeconomics...
or to act out of duty
Duty
Duty is a term that conveys a sense of moral commitment to someone or something. The moral commitment is the sort that results in action and it is not a matter of passive feeling or mere recognition...
or an awareness of what one is "supposed" to do (normative institutions, also called Historical Institutionalism). An important contribution of new institutionalism was to add a cognitive type influence. This perspective adds that, instead of acting under rules or based on obligation, individuals act because of conceptions. "Compliance occurs in many circumstances because other types of behavior are inconceivable; routines are followed because they are taken for granted as 'the way we do these things'" (Scott 2001, p. 57) - also called Social Institutionalism. Individuals make certain choices or perform certain actions not because they fear punishment
Punishment
Punishment is the authoritative imposition of something negative or unpleasant on a person or animal in response to behavior deemed wrong by an individual or group....
or attempt to conform; neither do they do so because an action is appropriate or the individual feels some sort of social obligation. Instead, the cognitive element of new institutionalism suggests that individuals make certain choices because they can conceive of no alternative.
For an interesting application of the new institutional approach see Terry Karl (1990), which portrays institutions as constraining elite actors' preferences and policy choices during transition. The focus upon economics in this article is misleading; institutions are politics: they are the substance of which politics is constructed and the vehicle through which the practice of politics is transmitted. New institutionalism was born out of a reaction to the behavioural revolution. In viewing institutions more widely as social constructs, and by taking into account the influence that institutions have on individual preferences and actions, new institutionalism has moved away from its institutional (formal legal descriptive historical) roots and become a more explanatory discipline within politics.
More recent work has begun to emphasize multiple, competing logics (Friedland & Alford, 1991; Lounsbury, 2007), focusing on the more heterogeneous sources of diversity within fields (Lounsbury, 2001) and the institutional embeddedness of technical considerations (e.g., Scott et al., 2000; Thornton, 2004). The concept of logic generally refers to broader cultural beliefs and rules that structure cognition and guide decision-making in a field. At the organization level, logics can focus the attention of key decision-makers on a delimited set of issues and solutions (Ocasio, 1997), leading to logic-consistent decisions that reinforce extant organizational identities and strategies (Thornton, 2002). In line with the new institutionalism, social rule system theory
Social rule system theory
Social rule system theory is an attempt to formally approach different kinds of social rule systems in a unified manner. Social rules systems include institutions such as norms, laws, regulations, taboos, customs, and a variety of related concepts and are important in the social sciences and...
stresses that particular institutions and their organizational instantiations are deeply embedded in cultural, social, and political environments and that particular structures and practices are often reflections of as well as responses to rules, laws, conventions, paradigms built into the wider environment (Powell, 2007).
Sub-fields of the new institutionalism
New institutionalism can take different focuses and can draw its inspiration from different disciplines. Here are some types of new institutional study:Normative institutionalism
Normative institutionalism is sometimes seen as the "original" new institutionalism; much of the introduction of this article relates to a normative view of institutionalism. A sociological interpretation of institutions, normative institutionalism holds that a "logic of appropriateness" guides the behaviour of actors within an institution. The norms and formal rules of institutions will shape the actions of those acting within them.This approach can be readily contrasted with rational choice institutionalism: rather than a series of calculated actions designed to maximise perceived benefit, any given actor within an institution will feel to some extent constrained and obligated by the norms and rules of the institution.
Normative institutionalism is referred to by Hall and Taylor (1996) as "Sociological institutionalism". It defines institutions much more broadly than political scientist or economist and it includes also the symbol systems, cognitive scripts and moral templates, hence it breaks down the divide between 'institutions' and 'culture'.
Rational choice institutionalism
Rational choice institutionalism draws heavily from rational choice theory, but is not identical to it. Proponents of this theory argue that political actors' rational choices are constrained ("bounded rationality"). But, individuals realise their goals can be best achieved through institutions. In other words, institutions are systems of rules and inducements to behaviour in which individuals attempt to maximise their own utilities.Historical institutionalism
As the name suggests, this version of institutionalism states that "history matters." Paths chosen or designed early on in the existence of an institution tend to be followed throughout the institution's development. Institutions will have an inherent agenda based on the pattern of development, both informal (the way things are generally done) and formal (laws, rulesets and institutional interaction.)A key concept is path dependency
Path dependence
Path dependence explains how the set of decisions one faces for any given circumstance is limited by the decisions one has made in the past, even though past circumstances may no longer be relevant....
: the historical track of a given institution or polity will result in almost inevitable occurrences. In some institutions, this may be a self-perpetuating cycle: actions of one type beget further actions of this type.
This theory does not hold that institutional paths will forever be inevitable. Critical junctures may allow rapid change at a time of great crisis.
Constructivist institutionalism
Recently, a number of authors have used the term "constructivist institutionalism" or "discursive institutionalism" to describe an approach which "lends insight into the role of ideaIdea
In the most narrow sense, an idea is just whatever is before the mind when one thinks. Very often, ideas are construed as representational images; i.e. images of some object. In other contexts, ideas are taken to be concepts, although abstract concepts do not necessarily appear as images...
s and discourse
Discourse
Discourse generally refers to "written or spoken communication". The following are three more specific definitions:...
in politics while providing a more dynamic approach to institutional change than the older three new institutionalisms".
Feminist institutionalism
Feminist institutionalism is a new institutionalist approach that looks at "how gender norms operate within institutions and how institutional processes construct and maintain gender power dynamics".Sociological institutionalism
Sociological institutionalism is a form of new institutionalism that concerns ‘the way in which institutions create meaning for individuals, providing important theoretical building blocks for normative institutionalism within political science’.Interdisciplinary relevance
This way of understanding individual choice is also relevant to economics. New institutionalists in economics recognize that institutions have at least as much influence on the economy as individual's choices(see institutional economics
Institutional economics
Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behaviour. Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the one side and the "ceremonial" sphere of society on the...
).
Critiques of new institutionalism
New Institutionalism is often contrasted with "old" or "classical" institutionalism, the latter of which was first articulated in the writings of John DeweyJohn Dewey
John Dewey was an American philosopher, psychologist and educational reformer whose ideas have been influential in education and social reform. Dewey was an important early developer of the philosophy of pragmatism and one of the founders of functional psychology...
, Thorstein Veblen
Thorstein Veblen
Thorstein Bunde Veblen, born Torsten Bunde Veblen was an American economist and sociologist, and a leader of the so-called institutional economics movement...
, John Commons, and others, and which has been further extrapolated by various philosophers and scholars such as Donald Davidson
Donald Davidson (philosopher)
Donald Herbert Davidson was an American philosopher born in Springfield, Massachusetts, who served as Slusser Professor of Philosophy at the University of California, Berkeley from 1981 to 2003 after having also held teaching appointments at Stanford University, Rockefeller University, Princeton...
, Richard Rorty
Richard Rorty
Richard McKay Rorty was an American philosopher. He had a long and diverse academic career, including positions as Stuart Professor of Philosophy at Princeton, Kenan Professor of Humanities at the University of Virginia, and Professor of Comparative Literature at Stanford University...
, Amartya Sen
Amartya Sen
Amartya Sen, CH is an Indian economist who was awarded the 1998 Nobel Prize in Economic Sciences for his contributions to welfare economics and social choice theory, and for his interest in the problems of society's poorest members...
, Donald McCloskey, Warren Samuels
Warren Samuels
Warren Joseph Samuels was an American economist and historian of economic thought. He received a BBA from University of Miami, Miami, FL and obtained his Ph.D. from University of Wisconsin–Madison...
, Daniel Bromley
Daniel Bromley
Daniel w. Bromley is an economist, the Anderson-Bascom Professor of applied economics at the University of Wisconsin–Madison. His research fields include the institutional foundations of the economy property rights; the economics of natural resources and the environment; and economic development...
, E. J. Mishan
E. J. Mishan
Ezra J. Mishan is an English economist best known for his work criticising economic growth. Between 1956 and 1977 he worked at the London School of Economics where he became Professor of Economics. In 1965, while at the LSE, he wrote his seminal work The Costs of Economic Growth, but was unable to...
, Yngve Ramstad, and others. Proponents of the older institutionalism are strongly opposed to new institutionalism, most saliently in the manner in which new institutionalism seeks to explain institutional change as merely another instance of maximization. Instead, old institutionalism seeks to articulate reasons for institutional change in terms of social and political volition.
Further reading
- Berger, Peter L. and Luckmann. 1966. The Social Construction of RealityThe Social Construction of RealityThe Social Construction of Reality is a book about the sociology of knowledge written by Peter L. Berger and Thomas Luckmann and published in 1966....
. New York: Doubleday. - Chappell, Louise (2006) 'Comparing Political Institutions: Revealing the Gendered “Logic of Appropriateness”, Politics & Gender / Volume 2 / Issue 02, pp 223 –235
- DiMaggio, Paul J. and Walter W. Powell. 1983. "The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields." American Sociological Review 48:147-160.
- DiMaggio, Paul J. and Walter W. Powell. 1991. "Introduction." Pp. 1–38 in The New Institutionalism in Organizational Analysis, edited by Walter W. Powell and Paul J. DiMaggio. Chicago: University of Chicago Press.
- Friedland, Roger and Robert R. Alford. 1991. "Bringing Society Back In: Symbols, Practices, and Institutional Contradictions." Pp. 232–263 in The New Institutionalism in Organizational Analysis, edited by Walter W. Powell and Paul J. DiMaggio. Chicago: University of Chicago Press.
- Jepperson, Ronald L. 1991. "Institutions, Institutional Effects, and Institutionalism." Pp. 143–163 in The New Institutionalism in Organizational Analysis, edited by W. W. Powell, DiMaggio. Chicago: University of Chicago Press.
- Michael LounsburyMichael LounsburyMichael Lounsbury is an American organizational theorist, Associate Dean of Research, Thornton A. Graham Chair and Professor of strategic management, organizations and sociology at the University of Alberta, and expert in innovation and institutions....
(2001). "Institutional Sources of Practice Variation: Staffing College and University Recycling Programs." In: Administrative Science Quarterly.Vol 46. pp. 29–56. - Michael LounsburyMichael LounsburyMichael Lounsbury is an American organizational theorist, Associate Dean of Research, Thornton A. Graham Chair and Professor of strategic management, organizations and sociology at the University of Alberta, and expert in innovation and institutions....
(2007). "A Tale of Two Cities: Competing Logics and Practice Variation in the Professionalizing of Mutual Funds." In: Academy of Management Journal. Vol 50. pp. 289–307. - Meyer, Heinz-Dieter and Brian Rowan, 2006. The New Institutionalism in Education. Albany, NY: SUNY Press.
- Meyer, J. and Rowan, B. (1991) ‘Institutionalized Organizations: Formal Structure as Myth and Ceremony’ in W. Powell and P. DiMaggio (eds) ‘’The New Institutionalism in Organizational Analysis’’, Chicago, Illinois: University of Chicago Press
- Meyer, John. W., and Brian Rowan. 1977. "Institutionalized Organizations: Formal Structure as Myth and Ceremony." American Journal of Sociology, 83(2), 340.
- Nicita A. and M. Vatiero (2007), “The Contract and the Market: Towards a Broader Notion of Transaction?”. Studi e Note di Economia, 1:7-22.http://www.mps.it/NR/rdonlyres/B6F3EB33-518F-4310-8137-D2EC9B7C77F2/34110/722NICITAVATIERO.pdf
- Ocasio W. 1997. "Towards an Attention-Based View of the Firm." Strategic Management Journal, 18:187-206.
- Parto, Saeed. 2003. "Economic Activity and Institutions," Others 0303001, Economics Working Paper Archive at WUSTL.
- Powell, W.W. 2007 " The New Institutionalism". In The International Encyclopedia of Organization Studies The International Encyclopedia of Organization Studies. Thousand Oaks, Ca.: Sage Publishers
- Scott, Richard W. 2001. Institutions and Organizations, 2nd ed. Thousand Oaks: Sage Publications.
- Scott, W.R., Ruef, M., Mendel, P. & Caronna, C. 2000. Institutional Change and Healthcare Organizations: From Professional Dominance to Managed Care. Chicago: University of Chicago Press.
- Thornton, P.H. 2002. "The Rise of the Corporation in a Craft Industry: Conflict and Conformity in Institutional Logics." Academy of Management Journal, 45: 81-101.
- Thornton, P.H. 2004. Markets from Culture: Institutional Logics and Organizational Decisions in Higher Education Publishing. Stanford, CA: Stanford University Press.