Institutional Theory

Conceptual Overview

The aim of institutional theory is to explain the stability and persistence of social (inter)action in specific socially constructed contexts (ranging from the world system to the intraorganizational realm). Besides regularities emerging from the encounter of competitive processes with the bounded rationality of individuals, it is the presence of institutions, salient in the specific action context, that largely explains stability in (inter)action patterns among socially constructed actors (ranging from individuals to organizations, communities, or states). Institutions exist in the standardized behaviors of individuals and in the isomorphic displays of organizations and of nation states. They are settled habits of thought and of action, imperfect and pragmatic solutions used to work out past problems and to reconcile past conflicts.

Institutions, shaped by a set of cultural and historical forces, are considered as multifaceted, relatively self-activating social reproductive processes, made up of symbolic elements. According to Philip Selznick, to institutionalize is to infuse with value beyond the technical requirements of the task at hand. Institutions emerge when some symbolic element has attained a state of legitimacy; i.e., social acceptability and credibility. Legitimacy derives from the connections of social elements, such as goals, structures, artifacts, or actors' identities, to values, meanings, or rules that are wider and of a higher order than the action context under consideration.

Cognitive-cultural elements of institutions are taken-for-granted components of social reality grounded either in the stability of interpretation and of cognitive frames or in specific systems of cultural beliefs considered as constitutive rules. Constitutive rules define the very nature of social reality and of the actors legitimated to act in it. They are taken for granted because they emerge in a process, which Peter L. Berger and Thomas Luckmann defined as the suc-cession of externalization, objectification, and internalization. Externalization is the production in social interaction of symbolic structures whose meaning comes to be shared by the participants. Objectification is the process by which, through the cultural transmission of such meaning to individuals other than their creators, this production comes to confront individuals as a facticity outside of themselves, as something out there, as a reality experienced in common with others. Internalization is the process by which the objectivated world is retrojected into consciousness in the course of socialization.

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