The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields Author(S): Paul J

The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields Author(s): Paul J. DiMaggio and Walter W. Powell Source: American Sociological Review, Vol. 48, No. 2 (Apr., 1983), pp. 147-160 Published by: American Sociological Association Stable URL: http://www.jstor.org/stable/2095101 Accessed: 17/09/2009 16:46

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http://www.jstor.org THE IRON CAGE REVISITED: INSTITUTIONAL ISOMORPHISM AND COLLECTIVE RATIONALITY IN ORGANIZATIONAL FIELDS*

PAUL J. DIMAGGIO WALTER W. POWELL Yale University

What makes organizations so similar? We contend that the engine of rationalization and bureaucratization has moved from the competitive marketplace to the state and the professions. Once a set of organizations emerges as a field, a paradox arises: rational actors make their organizations increasingly similar as they try to change them. We describe three isomorphic processes-coercive, mimetic, and normative-leading to this outcome. We then specify hypotheses about the impact of resource centralization and dependency, goal ambiguity and technical uncertainty, and professionalization and structuration on isomorphic change. Finally, we suggest implications for theories of organizations and social change.

In The Protestant Ethic and the Spirit of capitalistfirms in the marketplace;competition Capitalism, Max Weber warned that the ra- amongstates, increasingrulers' need to control tionalist spirit ushered in by asceticism had their staff and citizenry; and bourgeois de- achieved a momentum of its own and that, mands for equal protection under the law. Of under capitalism, the rationalistorder had be- these three, the most importantwas the com- come an ironcage in which humanitywas, save petitive marketplace. "Today," Weber for the possibility of propheticrevival, impris- (1968:974)wrote: oned "perhaps until the last ton of fossilized coal is burnt" (Weber, 1952:181-82). In his it is primarilythe capitalistmarket economy essay on bureaucracy,Weber returnedto this which demands that the official business of theme, contending that bureaucracy, the ra- administrationbe dischargedprecisely, un- tional spirit'sorganizational manifestation, was ambiguously, continuously, and with as so efficient and powerfula meansof controlling much speed as possible. Normally, the very men and women that, once established, the large, modern capitalist enterprises are momentumof bureaucratizationwas irreversi- themselves unequalledmodels of strict bu- ble (Weber, 1968). reaucraticorganization. The imagery of the iron cage has haunted We argue that the causes of bureaucratiza- students of society as the tempo of bureau- tion and rationalizationhave changed. The bu- cratizationhas quickened. But while bureau- reaucratizationof the corporationand the state cracy has spread continuously in the eighty have been achieved. Organizationsare still be- years since Weber wrote, we suggest that the coming more homogeneous, and bureaucracy engine of organizational rationalization has remains the common organizational form. shifted. For Weber, bureaucratizationresulted Today, however, structuralchange in organi- from three related causes: competitionamong zations seems less and less driven by competition or by the need for efficiency. Instead, we will contend, bureaucratization and other forms of organizationalchange occur as the *Direct all correspondence to: Paul J. DiMaggio result of processes that make organizations and Walter W. Powell, School of Organization and more similarwithout necessarily makingthem Management, Yale University, Box IA, New Haven, CT 06520. more efficient. Bureaucratizationand other A preliminary version of this paper was presented forms of homogenization emerge, we argue, by Powell at the American Sociological Association out of the structuration(Giddens, 1979)of or- meetings in Toronto, August 1981. We have bene- ganizational fields. This process, in turn, is fited considerably from careful readings of earlier effected largely by the state and the profes- drafts by Dan Chambliss, Randall Collins, Lewis sions, which have become the great ration- Coser, Rebecca Friedkin, Connie Gersick, Albert alizers of the second half of the twentiethcen- Hunter, Rosabeth Moss Kanter, Charles E. tury. For reasons that we will explain, highly Lindblom, John Meyer, David Morgan, Susan con- Olzak, Charles Perrow, Richard A. Peterson, Arthur structuredorganizational fields provide a Stinchcombe, Blair Wheaton, and two anonymous text in which individualefforts to deal ration- ASR reviewers. The authors' names are listed in ally with uncertaintyand constraintoften lead, alphabetical order for convenience. This was a fully in-the aggregate,to homogeneity in structure, collaborative effort. culture, and output.

American Sociological Review 1983, Vol. 48 (April: 147-160) 147 148 AMERICAN SOCIOLOGICAL REVIEW

ORGANIZATIONALTHEORY AND prehends the importance of both connected- ORGANIZATIONALDIVERSITY ness (see Laumann et al., 1978) and structural equivalence (White et al., 1976).1 Muchof modernorganizational theory posits a The structure of an organizational field can- diverse and differentiated world of organi- not be determined a priori but must be defined zations and seeks to explain variationamong on the basis of empirical investigation. Fields organizationsin structure and behavior (e.g., only exist to the extent that they are institu- Woodward, 1965; Child and Kieser, 1981). tionally defined. The process of institutional Hannanand Freemanbegin a majortheoretical definition, or "structuration," consists of four paper(1977) with the question, "Whyare there parts: an increase in the extent of interaction so many kinds of organizations?"Even our in- among organizations in the field; the vestigatory technologies (for example, those emergence of sharply defined interorgani- based on least-squarestechniques) are geared zational structures of domination and patterns towardsexplaining variation rather than its ab- of coalition; an increase in the information load sence. with which organizations in a field must con- We ask, instead, why there is such startling tend; and the development of a mutual aware- homogeneityof organizationalforms and prac- ness among participants in a set of organi- tices; and we seek to explain homogeneity,not zations that they are involved in a common variation.In the initialstages of theirlife cycle, enterprise (DiMaggio, 1982). organizationalfields display considerable di- Once disparate organizations in the same versity in approachand form. Once a field be- line of business are structured into an actual comes well established, however, there is an field (as we shall argue, by competition, the inexorable push towards homogenization. state, or the professions), powerful forces Coser, Kadushin,and Powell (1982)describe emerge that lead them to become more similar the evolution of American college textbook to one another. Organizations may change publishingfrom a period of initial diversity to their goals or develop new practices, and new the currenthegemony of only two models, the organizations enter the field. But, in the long largebureaucratic generalist and the small spe- run, organizational actors making rational de- cialist. Rothman(1980) describes the winnow- cisions construct around themselves an envi- ing of several competing models of legal edu- ronment that constrains their ability to change cation into two dominant approaches. Starr further in later years. Early adopters of organi- (1980)provides evidence of mimicryin the de- zational innovations are commonly driven by a velopment of the hospital field; Tyack (1974) desire to improve performance. But new prac- and Katz (1975)show a similarprocess in pub- tices can become, in Selznick's words lic schools; Barnouw (1966-68) describes the (1957:17), "infused with value beyond the tech- development of dominant forms in the radio nical requirements of the task at hand." As an industry; and DiMaggio (1981) depicts the innovation spreads, a threshold is reached be- emergence of dominantorganizational models yond which adoption provides legitimacy for the provision of high culture in the late rather than improves performance (Meyer and nineteenthcentury. Rowan, 1977). Strategies that are rational for What we see in each of these cases is the individual organizations may not be rational if emergence and structuration of an organi- adopted by large numbers. Yet the very fact zational field as a result of the activities of a that they are normatively sanctioned increases diverse set of organizations;and, second, the the likelihood of their adoption. Thus organi- homogenizationof these organizations,and of zations may try to change constantly; but, after new entrants as well, once the field is established. I By connectedness we mean the existence of By organizationalfield,-we mean those orga- transactionstying organizationsto one another:such nizations that, in the aggregate, constitute a transactions might include formal contractual re- recognized area of institutional life: key lationships, participationof personnel in common suppliers, resource and product consumers, enterprisessuch as professionalassociations, labor regulatory agencies, and other organizations unions, or boards of directors, or informal that produce similarservices or products. The organizational-levelties like personnelflows. A set virtue of this unit of analysis is that it directs of organizationsthat are strongly connected to one our attentionnot simply to competingfirms, as anotherand only weakly connected to other organi- does the populationapproach of Hannan and zations constitutes a clique. By structuralequiva- lence we refer to similarityof position in a network Freeman (1977), or to networks of organi- structure: for example, two organizations are zations that actuallyinteract, as does the inter- structurallyequivalent if they have ties of the same organizationalnetwork approachof Laumann kind to the same set of other organizations,even if et al. (1978), but to the totality of relevant they themselves are not connected: here the key actors. In doing this, the field idea com- structureis the role or block. INSTITUTIONAL ISOMORPHISM 149 a certain point in the structurationof an orga- gests that older, larger organizationsreach a nizationalfield, the aggregateeffect of individ- point where they can dominate their envi- ual change is to lessen the extent of diversity ronments rather than adjust to them. within the field.2 Organizationsin a structured The concept that best captures the process field, to paraphrase Schelling (1978:14), re- of homogenization is isomorphism. In Haw- spond to an environmentthat consists of other ley's (1968)description, isomorphism is a con- organizationsresponding to theirenvironment, straining process that forces one unit in a which consists of organizationsresponding to populationto resembleother units that face the an environmentof organizations'responses. same set of environmentalconditions. At the Zucker and Tolbert's (1981) work on the population level, such an approach suggests adoption of civil-service reform in the United that organizationalcharacteristics are modified States illustrates this process. Early adoption in the direction of increasing comparability of civil-service reforms was related to internal with environmental characteristics; the governmentalneeds, and stronglypredicted by number of organizationsin a population is a such city characteristicsas the size of immi- function of environmentalcarrying capacity; grant population,political reform movements, and the diversity of organizationalforms is socioeconomic composition, and city size. isomorphic to environmentaldiversity. Han- Later adoption, however, is not predicted by nan and Freeman(1977) have significantlyex- city characteristics, but is related to institu- tended Hawley's ideas. They argue that tional definitions of the legitimate structural isomorphism can result because nonoptimal form for municipal administration. Marshall forms are selected out of a populationof orga- Meyer's (1981) study of the bureaucratization nizations or because organizationaldecision of urban fiscal agencies has yielded similar makerslearn appropriateresponses and adjust findings: strong relationships between city their behavior accordingly. Hannan and characteristicsand organizationalattributes at Freeman's focus is almost solely on the first the turn of the century, null relationships in process: selection.5 recent years. Carroll and Delacroix's (1982) Following Meyer (1979) and Fennell (1980), findings on the birth and death rates of news- we maintain that there are two types of papers support the view that selection acts isomorphism: competitive and institutional. with great force only in the early years of an Hannan and Freeman's classic paper (1977), industry's existence.4 Freeman (1982:14)sug- and much of their recent work, deals with competitive isomorphism, assuming a system

2 By organizational change, we refer to change in formal structure, organizational culture, and goals, tive organizational fields. An expanding or a stable, program, or mission. Organizational change varies in protected market can also mitigate the forces of its responsiveness to technical conditions. In this selection. paper we are most interested in processes that affect 5In contrast to Hannan and Freeman, we empha- organizations in a given field: in most cases these size adaptation, but we are not suggesting that man- organizations employ similar technical bases; thus agers' actions are necessarily strategic in a long- we do not attempt to partial out the relative im- range sense. Indeed, two of the three forms of portance of technically functional versus other forms isomorphism described below-mimetic and of organizational change. While we shall cite many normative-involve managerial behaviors at the examples of organizational change as we go along, level of taken-for-granted assumptions rather than our purpose here is to identify a widespread class of consciously strategic choices. In general, we ques- organizational processes relevant to a broad range of tion the utility of arguments about the motivations of substantive problems, rather than to identify deter- actors that suggest a polarity between the rational ministically the. causes of specific organizational ar- and the nonrational. Goal-oriented behavior may be rangements. reflexive or prerational in the sense that it reflects 3 Knoke (1982), in a careful event-history analysis deeply embedded predispositions, scripts, schema, of the spread of municipal reform, refutes the con- or classifications; and behavior oriented to a goal ventional explanations of culture clash or hierarchal may be reinforced without contributing to the ac- diffusion and finds but modest support for modern- complishment of that goal. While isomorphic change ization theory. His major finding is that regional dif- may often be mediated by the desires of managers to ferences in municipal reform adoption arise not from increase the effectiveness of their organizations, we social compositional differences, "but from some are more concerned with the menu of possible op- type of imitation or contagion effects as represented tions that managers consider than with their motives by the level of neighboring regional cities previously for choosing particular alternatives. In other words, adopting reform government" (p. 1337). we freely concede that actors' understandings of 4 A wide range of factors-interorganizational their own behaviors are interpretable in rational commitments, elite sponsorship, and government terms. The theory of isomorphism addresses not the support in form of open-ended contracts, subsidy, psychological states of actors but the structural de- tariff barriers and import quotas, or favorable tax terminants of the range of choices that actors per- laws-reduce selection pressures even in competi- ceive as rational or prudent. 150 AMERICAN SOCIOLOGICALREVIEW rationality that emphasizes market competi- sion, or as invitations to join in collusion. In tion, niche change, and fitness measures. Such some circumstances,organizational change is a a view, we suggest, is most relevant for those direct response to governmentmandate: man- fields in which free and open competition ufacturers adopt new pollution control exists. It explains parts of the process of bu- technologies to conform to environmentalreg- reaucratizationthat Weberobserved, and may ulations; nonprofits maintain accounts, and apply to early adoption of innovation, but it hire accountants, in order to meet tax law re- does not present a fully adequatepicture of the quirements; and organizations employ modern world of organizations. For this pur- affirmative-actionofficers to fend off allega- pose it must be supplementedby an institutions of discrimination. Schools mainstream tional view of isomorphismof the sort intro- special students and hire special education duced by Kanter (1972:152-54) in her discus- teachers, cultivate PIAs and administrators sion of the forces pressing communes toward who get along with them, and promulgatecur- accommodationwith the outside world. As Al- ricula that conform with state standards drich (1979:265)has argued,"the majorfactors (Meyer et al., 1981). The fact that these that organizationsmust take into account are changes may be largely ceremonial does not other organizations." Organizationscompete mean that they are inconsequential. As Ritti not just for resources and customers, but for and Goldner(1979) have argued, staff become politicalpower and institutionallegitimacy, for involved in advocacy for their functions that social as well as economic fitness.6 The con- can alter power relations within organizations cept of institutional isomorphism is a useful over the long run. tool for understandingthe politics and cere- The existence of a common legal environ- mony that pervade much modern organi- ment affects many aspects of an organization's zational life. behaviorand structure.Weber pointed out the profound impact of a complex, rationalized system of contractlaw that requiresthe neces- Three Mechanisms of Institutional sary organizational controls to honor legal Isomorphic Change commitments. Other legal and technical re- We identify three mechanismsthrough which quirementsof the state-the vicissitudes of the institutional isomorphic change occurs, each budget cycle, the ubiquity of certain fiscal with its own antecedents: 1) coercive years, annual reports, and financial reporting isomorphism that stems from political influ- requirementsthat ensure eligibilityfor the re- ence and the problemof legitimacy;2) mimetic ceipt of federal contractsor funds-also shape isomorphism resulting from standard re- organizations in similar ways. Pfeffer and sponses to uncertainty; and 3) normative Salancik (1978:188-224) have discussed how isomorphism,associated with professionaliza- organizationsfaced with unmanageableinter- tion. This typology is an analyticone: the types dependence seek to use the greater power of are not always empiricallydistinct. For exam- the larger social system and its governmentto ple, externalactors may inducean organization eliminate difficulties or provide for needs. to conform to its peers by requiringit to per- They observe that politicallyconstructed envi- form a particulartask and specifying the pro- ronments have two characteristic features: fession responsible for its performance. Or political decisionmakersoften do not experi- mimetic change may reflect environmentally ence directly the consequences of their ac- constructed uncertainties.7 Yet, while the tions; and politicaldecisions are appliedacross three types intermingle in empirical setting, the board to entire classes of organizations, they tend to derive from different conditions thus making such decisions less adaptive and and may lead to differentoutcomes. less flexible. Coercive isomorphism. Coercive iso- Meyer and Rowan (1977) have argued per- morphism results from both formal and in- suasively that as rationalizedstates and other formal pressures exerted on organizationsby large rationalorganizations expand their domi- other organizationsupon which they are de- nance over more arenas of social life, organi- pendent and by cultural expectations in the zationalstructures increasingly come to reflect society within which organizations function. rules institutionalizedand legitimatedby and Such pressuresmay be felt as force, as persua- within the state (also see Meyer and Hannan, 1979). As a result, organizationsare increasingly homogeneous within given domains and 6 Carroll and Delacroix (1982) clearly recognize around rituals of con- this and include political and institutionallegitimacy increasingly organized as a majorresource. Aldrich(1979) has argued that formityto wider institutions.At the same time, the populationperspective must attend to historical organizations are decreasingly structurally trendsand changes in legal and politicalinstitutions. determinedby the constraintsposed by techni- 7 This point was suggested by John Meyer. cal activities, and decreasingly held together INSTITUTIONAL ISOMORPHISM 151 by outputcontrols. Under such circumstances, advantages of mimetic behavior in the econ- organizations employ ritualized controls of omy of human action are considerable; when credentialsand group solidarity. an organizationfaces a problem with ambigu- Direct impositionof standardoperating pro- ous causes or unclear solutions, problemistic cedures and legitimated rules and structures search may yield a viable solution with little also occurs outside the governmentalarena. expense (Cyert and March, 1963). Michael Sedlak (1981) has documented the Modeling, as we use the term, is a response ways that United Charitiesin the 1930saltered to uncertainty.The modeled organizationmay and homogenizedthe structures,methods, and be unaware of the modeling or may have no philosophiesof the social service agencies that desire to be copied; it merely serves as a con- dependedupon them for support. As conglom- venient source of practices that the borrowing erate corporationsincrease in size and scope, organizationmay use. Models may be diffused standard performancecriteria are not neces- unintentionally, indirectly through employee sarily imposed on subsidiaries, but it is com- transfer or turnover, or explicitly by organi- mon for subsidiaries to be subject to stan- zations such as consulting firms or industry dardized reportingmechanisms (Coser et al., trade associations. Even innovationcan be ac- 1982). Subsidiaries must adopt accounting counted for by organizationalmodeling. As practices, performanceevaluations, and bud- Alchian (1950) has observed: getary plans that are compatible with the While there certainly are those who con- policies of the parentcorporation. A variety of sciously innovate, there are those who, in service infrastructures, often provided by their imperfect attempts to imitate others, monopolistic firms-for example, telecom- unconsciously innovate by unwittingly ac- munications and transportation-exert com- quiringsome unexpectedor unsoughtunique mon pressures over the organizationsthat use attributes which under the prevailing cir- of central state, them. Thus, the expansion the cumstances prove partly responsiblefor the the centralizationof capital, and the coordina- success. Others, in turn, will attemptto copy tion of philanthropyall supportthe homogeni- the uniqueness,and the innovation-imitation zation of organizationalmodels throughdirect process continues. authorityrelationships. We have so far referred only to the direct One of the most dramaticinstances of mod- and explicit impositionof organizationalmodeling was the effort of Japan's modernizersin els on dependent organizations. Coercive the late nineteenthcentury to model new gov- isomorphism, however, may be more subtle ernmentalinitiatives on apparentlysuccessful and less explicit than these examples suggest. western -prototypes. Thus, the imperial gov- Milofsky (1981) has described the ways in ernment sent its officers to study the courts, which neighborhood organizatioins in urban Army, and police in France, the Navy and communities,many of which are committedto postal system in Great Britain, and banking participatorydemocracy, are driven to devel- and art education in the United States (see oping organizationalhierarchies in order to Westney, forthcoming). American corpo- gain support from more hierarchicallyorga- rations are now returningthe compliment by nized donor organizations.Similarly, Swidler implementing(their perceptions of) Japanese (1979)describes the tensions createdin the free models to cope with thorny productivityand schools she studied by the need to have a personnel problems in their own firms. The "principal"to negotiate with the district sup- rapid proliferation of quality circles and erintendentand to representthe school to out- quality-of-work-lifeissues in American firms side agencies. In general, the need to lodge is, at least in part, an attempt to model responsibilityand managerialauthority at least Japanese and European successes. These de- ceremoniallyin a formallydefined role in order velopments also have a ritual aspect; com- to interact with hierarchicalorganizations is a panies adopt these "innovations"to enhance constant obstacle to the maintenance of their legitimacy, to demonstrate they are at egalitarianor collectivist organizationalforms least trying to improve working conditions. (Kanter, 1972; Rothschild-Whitt,1979). More generally, the wider the population of Mimetic processes. Not all institutional personnel employed by, or customers served isomorphism,however, derives from coercive by, an organization,the strongerthe pressure authority.Uncertainty is also a powerfulforce felt by the organization to provide the pro- that encourages imitation. When organi- grams and services offered by other organizational technologies are poorly understood zations. Thus, either a skilled labor force or a (Marchand Olsen, 1976), when goals are am- broad customer base may encourage mimetic biguous, or when the environment creates isomorphism. symbolic uncertainty, organizations may Much homogeneity in organizational model themselves on other organizations.The structuresstems from the fact that despite con- 152 AMERICAN SOCIOLOGICAL REVIEW siderablesearch for diversity there is relatively base and legitimation for their occupational little variationto be selected from. New orga- autonomy. As Larson points out, the profes- nizations are modeled upon old ones through- sional project is rarelyachieved with complete out the economy, and managersactively seek success. Professionals must compromise with models upon which to build (Kimberly, 1980). nonprofessionalclients, bosses, or regulators. Thus, in the arts one can find textbookson how The majorrecent growth in the professionshas to organizea communityarts council or how to been among organizationalprofessionals, par- start a symphony women's guild. Large orga- ticularlymanagers and specializedstaff of large nizations choose from a relatively small set of organizations. The increased professionaliza- major consulting firms, which, like Johnny tion of workers whose futures are inextricably Appleseeds, spread a few organizationalmod- boundup with the fortunesof the organizations els throughoutthe land. Such models are pow- that employ them has renderedobsolescent (if erful because structuralchanges are observa- not obsolete) the dichotomy between organi- ble, whereaschanges in policy and strategyare zational commitment and professional alle- less easily noticed. With the advice of a major giance that characterized traditional profes- consulting firm, a large metropolitan public sionals in earlier organizations (Hall, 1968). television station switched from a functional Professions are subject to the same coercive design to a multidivisionalstructure. The sta- and mimetic pressures as are organizations. tions' executives were skeptical that the new Moreover,while variouskinds of professionals structurewas more efficient; in fact, some ser- within an organizationmay differfrom one an- vices were now duplicated across divisions. other, they exhibit much similarity to their But they were convinced that the new design professional counterparts in other organi- would carry a powerful message to the for- zations. In addition, in many cases, profes- profit firms with whom the station regularly sional power is as much assigned by the state dealt. These firms, whether in the role of cor- as it is created by the activities of the profes- porate underwritersor as potential partnersin sions. joint ventures, would view the reorganization Two aspects of professionalizationare im- as a sign that "the sleepy nonprofitstation was portant sources of isomorphism. One is the becoming more business-minded" (Powell, restingof formaleducation and of legitimation forthcoming).The history of managementre- in a cognitive base producedby universityspe- form in American government agencies, cialists; the second is the growth and elabora- which are noted for their goal ambiguity, is tion of professionalnetworks that span organi- almost a textbook case of isomorphic model- zations and across which new models diffuse ing, from the PPPBof the McNamaraera to the rapidly. Universities and professional training zero-basedbudgeting of the Carteradministra- institutions are importantcenters for the de- tion. velopment of organizational norms among Organizations tend to model themselves professional managersand their staff. Profes- after similar organizations in their field that sional and trace associations are anothervehi- they perceive to be more legitimate or suc- cle for the definitionand promulgationof nor- cessful. The ubiquity of certain kinds of mative rules about organizationaland profes- structural arrangementscan more likely be sional behavior. Such mechanisms create a credited to the universality of mimetic pro- pool of almost interchangeableindividuals who cesses than to any concrete evidence that the occupy similarpositions across a range of or- adopted models enhance efficiency. John ganizationsand possess a similarityof orienta- Meyer (1981)contends that it is easy to predict tion and disposition that may override varia- the organizationof a newly emergingnation's tions in traditionand control that mightother- administration without knowing anything wise shape organizationalbehavior (Perrow, about the nation itself, since "peripheralna- 1974). tions are far more isomorphic-in administra- One importantmechanism for encouraging tive form and economic pattern-than any normativeisomorphism is the filteringof per- theory of the world system of economic di- sonnel. Within many organizationalfields fil- vision of labor would lead one to expect." tering occurs throughthe hiringof individuals Normative pressures. A third source of from firms within the same industry; through isomorphicorganizational change is normative the recruitmentof fast-track staff from a nar- and stems primarilyfrom professionalization. row range of training institutions; through FollowingLarson (1977) and Collins (1979),we common promotionpractices, such as always interpret professionalizationas the collective hiring top executives from financial or legal struggleof membersof an occupationto define departments;and from skill-level requirements the conditions and methods of their work, to for particularjobs. Many professional career control "the production of producers" (Lar- tracks are so closely guarded,both at the entry son, 1977:49-52), and to establish a cognitive level and throughout the career progression, INSTITUTIONAL ISOMORPHISM 153 that individuals who make it to the top are macy and visibilityand lead competingfirms to virtually indistinguishable.March and March copy aspects of their structure or operating (1977) found that individualswho attained the procedures in hope of obtaining similar re- position of school superintendentin Wisconsin wards. Professional and trade associations were so alike in backgroundand orientationas provideother arenas in which center organiza- to make further career advancement random tions are recognized and their personnelgiven and unpredictable.Hirsch and Whisler (1982) positions of substantive or ceremonial influ- find a similarabsence of variationamong For- ence. Managersin highly visible organizations tune 500 boardmembers. In addition,individu- may in turn have their stature reinforced by als in an organizationalfield undergo antici- representationon the boards of other organi- patory socialization to common expectations zations, participation in industry-wide or about their personal behavior, appropriate inter-industry councils, and consultation by style of dress, organizational vocabularies agencies of government(Useem, 1979). In the (Cicourel, 1970; Williamson, 1975) and stan- nonprofitsector, where legal barriersto collu- dard methods of speaking,joking, or address- sion do not exist, structurationmay proceed ing others (Ouchi, 1980). Particularlyin indus- even more rapidly. Thus executive producers tries with a service or financial orientation or artistic directors of leading theatres head (Collins, 1979, argues that the importanceof trade or professional association committees, credentialsis strongest in these areas), the fil- sit on governmentand foundationgrant-award tering of personnel approaches what Kanter panels, or consult as government- or (1977) refers to as the "homosexualreproduc- foundation-financedmanagement advisors to tion of management."To the extent managers smaller theatres, or sit on smaller organi- and key staff are drawnfrom the same univer- zations' boards, even as their stature is rein- sities and filtered on a common set of attri- forced and enlargedby the grantstheir theatres butes, they will tend to view problemsin a simi- receive from government, corporate, and lar fashion, see the same policies, procedures foundationfunding sources (DiMaggio, 1982). and structuresas normativelysanctioned and Such central organizations serve as both legitimated, and approach decisions in much active and passive models; their policies and the same way. structures will be copied throughout their Entrants to professional career tracks who fields. Their centrality is reinforced as up- somehow escape the filtering process-for wardly mobile managersand staff seek to se- example, Jewish naval officers, woman cure positions in these central organizationsin stockbrokers, or Black insurance order to further their own careers. Aspiring executives-are likely to be subjected to per- managersmay undergo anticipatorysocializa- vasive on-the-job socialization. To the extent tion into the norms and mores of the organi- that organizationsin a field differ and primary zations they hope to join. Career paths may socialization occurs on the job, socialization also involve movementfrom entry positions in could reinforce, not erode, differences among the center organizations to middle- organizations. But when organizations in a management positions in peripheral organi- field are similarand occupationalsocialization zations. Personnel flows within an orgarni- is carried out in trade association workshops, zational field are further encouraged by in-serviceeducational programs, consultant ar- structural homogenization, for example the rangements, employer--professional school existence of common career titles and paths networks,and in the pages of trade magazines, (such as assistant, associate, and full profes- socializationacts as an isomorphicforce. sor) with meaningsthat are commonly under- The professionalization of management stood. tends to proceed in tandem with the structura- It is importantto note that each of the in- tion of organizationalfields. The exchange of stitutional isomorphic processes can be ex- information among professionals helps con- pected to proceed in the absence of evidence tributeto a commonly recognizedhierarchy of that they increase internal organizationaleffi- status, of center and periphery,that becomes a ciency. To the extent that organizationaleffec- matrix for information flows and personnel tiveness is enhanced, the reason will often be movement across organizations. This status that organizations are rewarded for being ordering occurs through both formal and in- similar to other organizationsin their fields. formal means. The designationof a few large This similarity can make it easier for organi- firmsin an industryas key bargainingagents in zations to transactwith other organizations,to union-management negotiations may make attract career-minded staff, to be acknowl- these central firms pivotal in other respects as edged as legitimate and reputable, and to fit well. Governmentrecognition of key firms or into administrativecategories that define eligi- organizations through the grant or contract bility for public and private grants and con- process may give these organizations legiti- tracts. None of this, however, insures that 154 AMERICAN SOCIOLOGICAL REVIEW conformistorganizations do what they do more variabilityin the extent to and rate at which efficiently than do their more deviant peers. organizationsin a field change to become more Pressuresfor competitive efficiency are also like theirpeers. Some organizationsrespond to mitigatedin manyfields because the numberof externalpressures quickly; others change only organizationsis limited and there are strong after a long period of resistance. The first two fiscal and legal barriersto entry and exit. Lee hypotheses derive from our discussionof coer- (1971:51) maintains this is why hospital ad- cive isomorphismand constraint. ministratorsare less concerned with the effi- Hypothesis A-1: The greater the dependence cient use of resources and more concerned of an organization on another organization, with status competitionand parity in prestige. the more similar it will become to that organi- Fennell (1980) notes that hospitals are a poor zation in structure, climate, and behavioral market system because patients lack the focus. Following Thompson(1957) and Pfeffer needed knowledge of potential exchange and Salancik (1978), this proposition recog- partnersand prices. She arguesthat physicians nizes the greaterability of organizationsto re- and hospital administratorsare the actual con- sist the demands of organizations on whom sumers. Competitionamong hospitals is based they are not dependent. A position of depen- on "attractingphysicians, who, in turn, bring dence leads to isomorphic change. Coercive their patients to the hospital." Fennell (p. 505) pressuresare built into exchange relationships. concludes that: As Williamson(1979) has shown, exchanges are characterized by transaction-specificin- Hospitals operate according to a norm of vestments in both knowledge and equipment. social legitimationthat frequently conflicts Once an organization chooses a specific with marketconsiderations of efficiency and supplier or distributorfor particularparts or system rationality.Apparently, hospitals can services, the supplier or distributordevelops increase their range of services not because expertise in the performanceof the task as well there is an actualneed for a particularservice as idiosyncraticknowledge about the exchange or facility within the patient population,but relationship.The organizationcomes to rely on because they will be defined as fit only if the supplier or distributor and such they can offer everything other hospitals in transaction-specific investments give the the area offer. supplieror distributorconsiderable advantages in any with results a more subsequent competition other These suggest generalpattern. or distributors. fields that include a suppliers Organizational large pro- Hypothesis A-2: fessionally trained labor force will be driven The greater the centraliza- primarily by status competition. Organi- tion of organization A's resource supply, the greater the extent to which zational prestige and resources are key ele- organization A will ments in attractingprofessionals. This change isomorphically to resemble the organi- process on encourages homogenization as organizations zations which it depends for resources. As that can the same Thompson(1967) notes, organizationsthat de- seek to ensure they provide pend on the benefits and services as their competitors. same sources for funding,personnel, and legitimacywill be more subject to the whims of resource suppliers than will organi- PREDICTORSOF ISOMORPHICCHANGE zations that can play one source of supportoff against another. In cases where alternative It follows from our discussion of the mech- sources are either not readily available or re- anismby which isomorphicchange occurs that quire effort to locate, the strongerparty to the we should be able to predict empiricallywhich transaction can coerce the weaker party to organizationalfields will be most homogeneous adopt its practices in order to accommodate in structure, process, and behavior. While an the strongerparty's needs (see Powell, 1983). empiricaltest of such predictionsis beyond the The thirdand fourthhypotheses derive from scope of this paper, the ultimate value of our our discussion of mimetic isomorphism,mod- perspectivewill lie in its predictiveutility. The eling, and uncertainty. hypotheses discussed below are not meant to Hypothesis A-3: The more uncertain the re- exhaust the universe of predictors,but merely lationship between means and ends the greater to suggest several hypotheses that may be pur- the extent to which an organization will model sued using data on the characteristicsof orga- itself after organizations it perceives to be suc- nizations in a field, either cross-sectionallyor, cessful. The mimeticthought process involved preferably,over time. The hypotheses are im- in the search for models is characteristicof plicitly governed by ceteris paribus assump- change in organizations in which key tions, particularlywith regardto size, technol- technologies are only poorly understood ogy, and centralizationof external resources. (Marchand Cohen, 1974). Here our prediction A. Organizational-level predictors. There is diverges somewhat from Meyer and Rowan INSTITUTIONAL ISOMORPHISM 155 (1977)who argue, as we do, that organizations the collective organizationof the environment which lack well-defined technologies will im- (Meyer and Rowan, 1977). port institutionalized rules and practices. B. Field-level predictors. The following six Meyer and Rowan posit a loose coupling be- hypotheses describe the expected effects of tween legitimatedexternal practices and inter- several characteristicsof organizationalfields nal organizational behavior. From an on the extent of isomorphismin a particular ecologist's point of view, loosely coupled or- field. Since the effect of institutional ganizationsare more likely to vary internally. isomorphismis homogenization,the best indi- In contrast, we expect substantive internal cator of isomorphic change is a decrease in changes in tandemwith more ceremonialprac- variation and diversity, which could be mea- tices, thuggreater homogeneity and less varia- sured by lower standard deviations of the tion and change. Internal consistency of this values of selected indicatorsin a set of organi- sort is an important means of interorgani- zations. The key indicators would vary with zationalcoordination. It also increases organi- the nature of the field and the interests of the zational stability. investigator. In all cases, however, field-level Hypothesis A-4: The more ambiguous the measures are expected to affect organizations goals of an organization, the greater the extent in a field regardless of each organization's to which the organization will model itself after scores on related organizational-level mea- organizations that it perceives to be suc- sures. cessful. There are two reasons for this. First, Hypothesis B-1: The greater the extent to organizations with ambiguous or disputed which an organizational field is dependent goals are likely to be highly dependent upon upon a single (or several similar) source of appearancesfor legitimacy.Such organizations support for vital resources, the higher the level may find it to their advantageto meet the ex- of isomorphism. The centralization of re- pectations of important constituencies about sources within a field both directly causes how they should be designed and run. In con- homogenizationby placingorganizations under trast to our view, ecologists would argue that similarpressures from resource suppliers,and organizations that copy other organizations interacts with uncertaintyand goal ambiguity usually have no competitive advantage. We to increase their impact. This hypothesis is contend that, in most situations, reliance on congruent with the ecologists' argumentthat established, legitimated procedures enhances the number of organizationalforms is deter- organizationallegitimacy and survival charac- mined by the distributionof resources in the teristics. A second reason for modeling be- environmentand the terms on which resources havior is found in situations where conflict are available. over organizationalgoals is repressed in the Hypothesis B-2: The greater the extent to interest of harmony; thus participantsfind it which the organizations in afield transact with easier to mimic other organizations than to agencies of the state, the greater the extent of make decisions on the basis of systematic isomorphism in the field as a whole. This fol- analyses of goals since such analyses would lows not just from the previous hypothesis, but prove painful or disruptive. from two elements of state/private-sector The fifth and sixth hypotheses are based on transactions:their rule-boundednessand for- our discussionof normativeprocesses found in mal rationality, and the emphasis of govern- professionalorganizations. ment actors on institutionalrules. Moreover, Hypothesis A-5: The greater the reliance on the federal government routinely designates academic credentials in choosing managerial industry standards for an entire field which and staff personnel, the greater the extent to requireadoption by all competingfirms. John which an organization will become like other Meyer (1979) argues convincinglythat the as- organizations in its field. Applicants with aca- pects of an organizationwhich are affected by demic credentials have already undergone a state transactionsdiffer to the extent that state socialization process in university programs, participationis unitary or fragmentedamong and are thus more likely than others to have several public agencies. internalizedreigning norms and dominantor- The thirdand fourthhypotheses follow from ganizationalmodels. our discussion of isomorphicchange resulting Hypothesis A-5: The greater the participa- from uncertaintyand modeling. tion of organizational managers in trade and Hypothesis B-3: The fewer the number of professional associations, the more likely the visible alternative organizational models in a organization will be, or will become, like field, the faster the rate of isomorphism in that other organizations in its field. This hypothesis field. The predictions of this hypothesis are is parallel to the institutional view that the less specific than those of others and require more elaboratethe relationalnetworks among furtherrefinement; but our argumentis that for organizationsand their members, the greater any relevant dimensionof organizationalstrat- 156 AMERICAN SOCIOLOGICAL REVIEW

egies or structures in an organizational field on some dimensions, yet extremely homoge- there will be a threshold level, or a tipping neous on others. While we suspect, in general, point, beyond which adoption of the domi- that the rate at which the standard deviations nant form will proceed with increasing speed of structural or behavioral indicators approach (Granovetter, 1978; Boorman and Leavitt, zero will vary with the nature of an organi- 1979). zational field's technology and environment, Hypothesis B-4: The greater the extent to we will not develop these ideas here. The point which technologies are uncertain or goals are of this section is to suggest that the theoretical ambiguous within afield, the greater the rate discussion is susceptible to empirical test, and of isomorphic change. Somewhat counterin- to lay out a few testable propositions that may tuitively, abrupt increases in uncertainty and guide future analyses. ambiguity should, after brief periods of ideologically motivated experimentation, lead IMPLICATIONS FOR SOCIAL THEORY to rapid isomorphic change. As in the case of A-4, ambiguity and uncertainty may be a func- A comparison of macrosocial theories of function of environmental definition, and, in any tionalist or Marxist orientation with theoretical case, interact both with centralization of re- and empirical work in the study of organi- sources (A-i, A-2, B-I, B-2) and with profes- zations yields a paradoxical conclusion. sionalization and structuration (A-5, A-6, B-5, Societies (or elites), so it seems, are smart, B-6). Moreover, in fields characterized by a while organizations are dumb. Societies com- high degree of uncertainty, new entrants, prise institutions that mesh together comforta- which could serve as sources of innovation and bly in the interests of efficiency (Clark, 1962), variation, will seek to overcome the liability of the dominant value system (Parsons, 1951), or, newness by imitating established practices in the Marxist version, capitalists (Domhoff, within the field. 1967; Althusser, 1969). Organizations, by con- The two final hypotheses in this section fol- trast, are either anarchies (Cohen et al., 1972), low from our discussion of professional filter- federations of loosely coupled parts (Weick, ing, socialization, and structuration. 1976), or autonomy-seeking agents (Gouldner, Hypothesis B-5: The greater the extent of 1954) laboring under such formidable con- professionalization in a field, the greater the straints as bounded rationality (March and amount of institutional isomorphic change. Simon, 1958), uncertain or contested goals Professionalization may be measured by the (Sills, 1957), and unclear technologies (March universality of credential requirements, the and Cohen, 1974). robustness of graduate training programs, or Despite the findings of organizational re- the vitality of professional and trade associ- search, the image of society as consisting of ations. tightly and rationally coupled institutions per- Hypothesis B-6: The greater the extent of sists throughout much of modern social theory. structuration of a field, the greater the degree Rational administration pushes out non- of isomorphics. Fields that have stable and bureaucratic forms, schools assume the broadly acknowledged centers, peripheries, structure of the workplace, hospital and uni- and status orders will be more homogeneous versity administrations come to resemble the both because the diffusion structure for new management of for-profit firms, and the mod- models and norms is more routine and because ernization of the world economy proceeds un- the level of interaction among organizations in abated. Weberians point to the continuing the field is higher. While structuration may not homogenization of organizational structures as lend itself to easy measurement, it might be the formal rationality of bureaucracy extends tapped crudely with the use of such familiar to the limits of contemporary organizational measures as concentration ratios, reputational life. Functionalists describe the rational adap- interview studies, or data on network charac- tation of the structure of firms, schools, and teristics. states to the values and needs of modern soci- This rather schematic exposition of a dozen ety (Chandler, 1977; Parsons, 1977). Marxists hypotheses relating the extent of isomorphism attribute changes in such organizations as to selected attributes of organizations and of welfare agencies (Pivan and Cloward, 1971) organizational fields does not constitute a and schools (Bowles and Gintis, 1976) to the complete agenda for empirical assessment of logic of the accumulation process. our perspective. We have not discussed the We find it difficult to square the extant lit- expected nonlinearities and ceiling effects in erature on organizations with these macroso- the relationships that we have posited. Nor cial views. How can it be that the confused and have we addressed the issue of the indicators contentious bumblers that populate the pages that one must use to measure homogeneity. of organizational case studies and theories Organizations in a field may be highly diverse combine to construct the elaborate and well- INSTITUTIONAL ISOMORPHISM 157 proportioned social edifice that macrotheorists nization seek to use it for ends that restrict the describe? return to masters." The conventional answer to this paradox has We reject neither the natural-selection nor been that some version of natural selection oc- the elite-control arguments out of hand. Elites curs in which selection mechanisms operate to do exercise considerable influence over mod- weed out those organizational forms that are ern life and aberrant or inefficient organi- less fit. Such arguments, as we have con- zations sometimes do expire. But we contend tended, are difficult to mesh with organi- that neither of these processes is sufficient to zational realities. Less efficient organizational explain the extent to which organizations have forms do persist. In some contexts efficiency become structurally more similar. We argue or productivity cannot even be measured. In that a theory of institutional isomorphism may government agencies or in faltering corpo- help explain the observations that organi- rations selection may occur on political rather zations are becoming more homogeneous, and than economic grounds. In other contexts, for that elites often get their way, while at the example the Metropolitan Opera or the Bohe- same time enabling us to understand the irra- mian Grove, supporters are far more con- tionality, the frustration of power, and the lack cerned with noneconomic values like aesthetic of innovation that are so commonplace in or- quality or social status than with efficiency per ganizational life. What is more, our approach is se. Even in the for-profit sector, where com- more consonant with the ethnographic and petitive arguments would promise to bear the theoretical literature on how organizations greatest fruit, Nelson and Winter's work work than are either functionalist or elite (Winter, 1964, 1975; Nelson and Winter, 1982) theories of organizational change. demonstrates that the invisible hand operates A focus on institutional isomorphism can with, at best, a light touch. also add a much needed perspective on the A second approach to the paradox that we political struggle for organizational power and have identified comes from Marxists and survival that is missing from much of popula- theorists who assert that key elites guide and tion ecology. The institutionalization approach control the social system through their com- associated with John Meyer and his students mand of crucial positions in major organi- posits the importance of myths and ceremony zations (e.g., the financial institutions that but does not ask how these models arise and dominate monopoly capitalism). In this view, whose interests they initially serve. Explicit while organizational actors ordinarily proceed attention to the genesis of legitimated models undisturbed through mazes of standard and to the definition and elaboration of organi- operating procedures, at key turning points zational fields should answer this question. capitalist elites get their way by intervening in Examination of the diffusion of similar organi- decisions that set the course of an institution zational strategies and structures should be a for years to come (Katz, 1975). productive means for assessing the influence of While evidence suggests that this is, in fact, elite interests. A consideration of isomorphic sometimes the case-Barnouw's account of the processes also leads us to a bifocal view of early days of broadcasting or Weinstein's power and its application in modern politics. (1968) work on the Progressives are good To the extent that organizational change is examples-other historians have been less unplanned and goes on largely behind the successful in their search for class-conscious backs of groups that wish to influence it, our elites. In such cases as the development of the attention should be directed to two forms of New Deal programs (Hawley, 1966) or the ex- power. The first, as March and Simon (1958) pansion of the Vietnamese conflcit (Halperin, and Simon (1957) pointed out years ago, is the 1974), the capitalist class appears to have been power to set premises, to define the norms and muddled and disunited. standards which shape and channel behavior. Moreover, without constant monitoring, in- The second is the point of critical intervention dividuals pursuing parochial organizational or (Domhoff, 1979) at which elites can define ap- subunit interests can quickly undo the work propriate models of organizational structure that even the most prescient elites have ac- and policy which then go unquestioned for complished. Perrow (1976:21) has noted that years to come (see Katz, 1975). Such a view is despite superior resources and sanctioning consonant with some of the best recent work power, organizational elites are often unable to on power (see Lukes, 1974); research on the maximize their preferences because "the com- structuration of organizational fields and on plexity of modern organizations makes control isomorphic processes may help give it more difficult." Moreover, organizations have in- empirical flesh. creasingly become the vehicle for numerous Finally, a more developed theory of organi- "gratifications, necessities, and preferences so zational isomorphism may have important im- that many groups within and without the orga- plications for social policy in those fields in 158 AMERICAN SOCIOLOGICAL REVIEW which the state works throughprivate organi- Chandler,Alfred D. zations. To the extent that pluralismis a guid- 1977 The Visible Hand:The ManagerialRevolu- ing value in public policy deliberations, we tion in American Business. Cambridge: need to discover new forms of intersectoral HarvardUniversity Press. coordinationthat will encouragediversification Child, John and Alfred Kieser 1981 "Developmentof organizationsover time." rather than hastening homogenization. An Pp. 28-64 in Paul C. Nystrom and William understandingof the manner in which fields H. Starbuck (eds.), Handbookof Organi- become more homogeneous would prevent zational Design. New York: Oxford Uni- policy makersand analysts from confusingthe versity Press. disappearanceof an organizationalform with Cicourel, Aaron its substantive failure. Current efforts to en- 1970 "The acquisitionof social structure:toward courage diversity tend to be conducted in an a developmental sociology of language." organizational vacuum. Policy makers con- Pp. 136-68 in Jack D. Douglas (ed.), cerned with pluralismshould consider the im- Understanding Everyday Life. Chicago: Aldine. pact of their programson the structureof orga- Clark, Burton R. nizationalfields as a whole, and not simply on 1962 Educatingthe Expert Society. San Fran- the programsof individualorganizations. cisco: Chandler. We believe there is much to be gained by Cohen, Michael D., James G. 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