In this introductory, self-paced course, you will learn multiple theories of organizational behavior and apply them to actual cases of organizational change. Organizations are groups whose members coordinate their behaviors in order to accomplish a shared goal. They can be found nearly everywhere in today’s society: universities, start-ups, classrooms, hospitals, non-profits, government bureaus, corporations, restaurants, grocery stores, and professional associations are some of many examples of organizations. Organizations are as varied and complex as they are ubiquitous: they differ in size and internal structure; they can entail a multiplicity of goals and tasks (some of which are planned and others unplanned!); they are made up of individuals whose goals and motivations may differ from those of the group; and they must interact with other organizations and deal with environmental constraints in order to be successful. This complexity frequently results in a myriad of problems for organizational participants and the organization’s survival. In this course, we will use organizational theories to systematically analyze how an organization operates and can best be managed. Organizational theories highlight certain features of an organization’s structure and environment, as well as its processes of negotiation, production, and change. Each provides a lens for interpreting novel organizational situations and developing a sense for how individual and group behaviors are organized. Theories are valuable for the analyst and manager because most organizational problems are unique to the circumstances and cannot be solved by simple rules of thumb. Armed with a toolset of organizational theories, you will be able to systematically identify important features of an organization and the events transforming it; choose a theoretical framework most applicable to the observed mode of organizing; and use that theory to determine which actions will best redirect the organization in desired directions. In sum, the course has three goals: to become familiar with a series of real-world organizational phenomena; to learn different theoretical perspectives that can elucidate these phenomena; and to apply these different ways of “seeing” and managing organizations to cases. In such a fashion, the course is designed to actively bridge theory and practice, exposing students to a variety of conceptual tools and ways to negotiate novel situations.
Lecture 22 - Theory and Application - Part 1
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Organizational Analysis
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From the lesson
Module 9 - Institutional Theory
In this module, we will continue our discussion of organizations as open-systems whose survival depends on their relation with the environment. In particular, we will discuss one of the prevailing organizational theories stemming from sociology, called “neoinstitutional theory.” In oversimplified terms, one can think of neoinstitutional theory as arguing that an organization’s survival de- pends on its fit with the cultural environment. That is, a firm’s success depends on whether it adopts structures that are deemed rational and legitimate in the external environment; that the firm mirrors environmental beliefs about what a legitimate organization of that type should look like. Neoinstitutional theory has always been one of the harder theories for students to fully grasp, so we have organized the chapter to be a little repetitive. We will discuss many of the core concepts twice and relate them in different ways so you get a better sense for what this theory conveys.
Meet the Instructors
Daniel A. McFarlandProfessor
Education, Sociology, and Organizational Behavior
This next lecture concerns the core features
of the theory of neoinstitutionlism.
To this point, I've given you a general sense of neoinstitutional theory and
how it compares to previous theories in the course.
At this point, we can now kind of begin to delve more deeply
into the core concepts of neoinstitutional theory.
In this weeks readings, I assigned readings that were primarily
secondary sources, and they afford an overview of neoinstitutional theory.
In this lecture, however, I'm going to draw on a couple of additional primary
sources that you can find in the section for additional reading materials.
In particular, I want to discuss the basic ideas presented
in the 1977 piece by Meyer and Rowan.
Institutionalized Organizations: Formal Structure as Myth and Ceremony.
And I want to discuss the 1983 piece by Dimaggio and
Powell called The Iron Cage Revisited.
And as we go along, I'm going to draw out examples on schools as an application.
And the reason for this is because both Meyer and Rowan's 1978 paper
that I did assign and Mary Metz's 1989 paper about real schools.
Both do a terrific job of providing concrete examples of how neoinstitutional
theory is being applied to real organizations out there in the world.
The seminal article in neoinstitutional theory is Meyer and Rowan's 1977 paper.
And in that paper, the general argument is that independent of the drive for
efficiency, organizations ceremonially incorporate institutions
into their formal structure that are believed to be rational.
And by doing this, organizations gain legitimacy and
secure social resources from the environment.
So, the institutions they incorporate are things like regulations and
procedures, classifications, rules and practices.
And note that I said that these institutions
are incorporated because they are believed to be rational though.
The adopted practices and formal structures are called rational myths, or
legitimated institutions that we adopt on the assumption that they're rational.
But we don't investigate whether they really improve efficiency or not.
They're taken for granted as actually accomplishing that.
So these institutions are built into society as typifications and
ritual classifications.
For example, we believe educational institutions are more legitimate when they
have buildings, classrooms with chairs, lectures, student-teacher roles and
interactions, mathematics and other subject matter, credentials and so forth.
These roles, classifications and rules
are ceremonially applied much like we enact a script and play.
Like we play our parts and give off appearances in, say, a marriage ceremony.
The ceremonial adoption of appearances is done on the basis of belief.
They are myths, because we believe they're legitimate forms we use and
we take them for granted as natural.
And we view them as rational myths because we think they help the organization
function better without actually investigating their relation to efficacy.
So in order to survive in modern society,
organizations must be regarded as legitimate, and
this legitimacy is accomplished by maintaining ceremonial conformity.
Organizations look their part in an ongoing script or play for
that type of organization, hence their formal structures are organized to
reflect the rational myths located in the external environment.
And this conformity leads organizational fields to have organizations
that look more or less alike, more than they do different.
The key point here is that organizations adopt institutional rules as
rationalized myths.
And let me explain what that means a little more carefully.
They are rationalized because they are impersonal prescriptions identified
in a rule-like way as the appropriate means to pursue various goals, okay?
They are myths because we adopt them on faith or in a taken for granted way.
We believe they are rational constructs, but we seldom look deeply at whether they
are efficient or if other constructs would work better.
We are all limited problem solvers is the assumption here and
we adopt rationalizing myths.
We use a shorthand logic that's encoded in the environment.
The efficiency and efficacy of standard operating procedures in organisational
structures is kind of presumed on the basis of their wide adoption or
the endorsements by professionals like a Stanford academic.
As such, the sources of legitimation vary from public opinion, ideologies,
regulatory structures, certification and accreditation bodies,
professional norms and credentials and even government requirements.
All of these become rationalizing agents that we put our faith in.
That they've established these institutional
forms in the environment as legitimate.
So, where do rationalized myths come from then?
What are their origins?
So, rationalized myths arise in a context of dense complex networks.
They arise in a context of modernization.
And they arise in an effort to make
rational decisions were there's all this ambiguity and uncertainty.
Rational myths and
their reliance on rationalizing agents are a shorthand means to deciding things.
They also diffuse through networks in their paths because the practices
are believed to rationally effective.
We all experience it, we see them.
Rationalized myths are also used because leaders with any organization
want their firm to have legitimacy in the wider environment.
So on the one hand, resource dependence theory saw this as
arising from the creation of resource demand,
so managers built greater external dependence on their organization.
On the other hand, neoinstitutional theory,
it also seeks to create demand in an environment.
And by mirroring institutional rationalized myths that are in society,
by looking like the real deal or
as an exemplar, they garner attention and resources.
So it's a different kind of effort and one geared toward cultural fit.
Now the notion of rationalized myth can extend to organizational products.
Take car advertising as an example.
When creating the idea of what a good car is,
advertisers project appearances of the firm and
its product as if they exhibit externally legitimate rational myths.
For example, consider Jaguar.
It's a nice looking car, love one.
But what makes you think it's legitimate?
Is it the car's performance?
Sure, perhaps.
So a neoinstitutional kind of ad would trumpet various awards
regardless of what they were for.
So maybe it was an award for safety or speed, but regardless,
they would trumpet them, right?
These awards are rationalizing agents, so saying you got any award is great.
And a good example of this could be seen with movie reviews and newspapers.
And many of you probably recall looking up a movie listing in the paper, and
you see all these reviews slapped onto the face of the movie, right?
And in many cases, the critics giving the new movie good reviews are unknown, so
they give the movie the appearance of legitimacy when it's
likely a pretty bad movie.
Like Transformers being called a great movie of our age.
But back to the car.
Note the references into the institutional environment
can be even more decoupled from the actual content and performance of the car.
Why not just show an ad of a car moving along, and there in the back seat,
beautiful back seat, is Sting, right?
Wouldn't I want what Sting, the exemplary Englishman, wouldn't I want what he likes?
So lots of advertising does things like this.
Their ads have more to do with appealing to a rational myth or a shared
public opinion or sentiment than the actual product itself or its performance.
And if they do mention performance, it's via awards and
rationalizing agents, not details of performance.
Now, of course, you can find out such information if you go to the websites and
find the specs of each car or whatever.
But we still frequently consider the products by their impression of fit with
some section of the institutional environment or
some kind of shared opinion or belief held out there.
In many regards, Mary Metz's article on Real School gives you a really clear
example of rationalized myths using the case of educational organizations.
In her paper, she describes how educational organizations
symbolically code their structures to resemble beliefs about real school
that are held in the institutional environment.
She thinks this is why American high schools all look the same on the surface
in spite of really being different internally.
They look the same and
plod along in spite of having differences in content and output.
Huge inequities across schools
in spite of them having these structure similarities across them.
Now, Metz describes symbolic coding as arising when organizations adopt a common
script.
And the script is like that of a play.
And educational organizations play the part of a real school in that play.
So these organizations engage in rituals or ceremonial performances,
by looking their part in the play when interacting with the environment.
And this is where real schools have buildings, classrooms, desks and chairs.
They have age graded student roles, undifferentiated teacher roles,
department chairs, principals, and various other staff.
They have differentiated core subjects, whose scope and sequence are recognizable
to colleges and employers, and across each of these schools.
They have familiar technologies, like lessons, many of the same tasks,
whether they're lecture, recitation, seat work.
They use textbooks, computers and blackboards.
They have coded time into school days, school weeks, quarters,
semesters and school years, right, different notions of time.
And they use many of the same symbols of ranking and completion like grades,
test scores, and credentials.
Many of which are used as ritual classifications in other external
organizations that rely on them, that's how they secure resources and legitimacy.
So all of these features are typifications that we recognize and
expect a school to have.
We take them for granted and we place confidence in them as being normal and
rational without much inspection of their efficacy.
So in short, educational organizations put on a play, or
the appearance of real school in spite of some kids failing in reality.
And the script serves symbolic purposes more than technical ones.
Now, the same can be said of universities and their development.
Over the last 100 years or
more, universities are growing increasingly common in societies and
their forms are isomorphic, such that a new university will quickly adopt courses,
subject matters, departments, credentialed employees, and so on.
They'll have many ceremonial features of the leading universities.
So they adopt these rationalized myths of what a good university should be.
And university structures have grown increasingly complex over time as they try
to appeal to different segments of the institutional environment,
to seem legitimate to those different segments.
So consider what new universities look like.
Like Qatar university, do they adopt dramatic shifts in
ceremonial features, or do they mirror what exemplary universities look like?
So how are rationalized myths sustained if they aren't efficient or optimal?
It's a good question.
The formal structure of many organizations is adopted like a sacred ritual.
I mean, rituals are like marriage rights.
People adopt a range of appearances, they go through a series of scripted actions so
they resemble these roles of husband and wife.
And they transform into such an embodiment through that ritual, right?
We begin to believe them as such.
They've transitioned the role.
And when we say an organization reflects ritual classifications,
we mean it displays appearances so as to embody a ratified
organizational identity that we consider legitimate in the environment.
To maintain the ritual and the plausibility of legitimacy,
the organization presumes a chain of confidences and
adopts an assortment of face-saving efforts to preserve this kind of myth.
Here are a few face-saving efforts used to preserve these myths.
The first is avoidance.
It's maximized when units are segmented, so interaction across them is minimized.
In this manner, one unit can't see into another and
question their contents or their performance.
The second is discretion.
Discretion is maximized when inspection is minimized and
participants are cloaked in professional credentialed authority.
By placing trust in teachers, we give them discretion, and
we let their profession act as rationalizing agents.
Last is assumption of integrity.
Organizations often assume ritual performances and
appearances have integrity.
And this sentiment allows them to overlook problems, and
to label those problems as anomalies.
So we have all these kind of face-saving efforts that sustain logics of confidence.
Whether we avoid things, give them discretion, or presuppose or
presume integrity of them, that allows the rationalized myth to
be sustained in the face of possibly not being an optimal or efficient solution.
In education,
there exists a sequence of confidences that are never fully inspected.
The state has confidence in the district, the district has
confidence in the school, the school has confidence in the teacher, and the teacher
deserves confidence due to their degree and the program's accreditation.
And the accrediting agency doesn't inspect the teaching and
skill of the graduate, but has confidence in the college administrators, faculty and
the courses offered, right?
So these people in turn have confidence in the teachers training them,
to label certain courses as history, or math, or algebra, or
organizational analysis, without really carefully inspecting them.
So it's this larger system of all these interdependent confidences
that sustain a lot of these rationalized myths or
notions of what is the legitimate form of schooling to adopt.
The institutional theory also argues that the sequence of confidences
is greatly sustained by a structural adaptation that they call loose coupling.
And organizations may all come to look alike in terms of their formal ceremonial
aspects, but that doesn't really mean that their actual internal practice and
activity are the same.
So many organizations actually decouple their formal structure and
appearances from the technical activities and outcomes within them.
So the question that follows is, why?
Why does that happen?
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