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Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at https://about.jstor.org/terms American Sociological Association is collaborating with JSTOR to digitize, preserve and extend access to American Sociological Review This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms 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 Capitalism, Max Weber warned that the ra- tionalist spirit ushered in by asceticism had achieved a momentum of its own and that, under capitalism, the rationalist order had be- come an iron cage in which humanity was, save for the possibility of prophetic revival, impris- oned "perhaps until the last ton of fossilized coal is burnt" (Weber, 1952:181-82yf , Q K L s essay on bureaucracy, Weber returned to this theme, contending that bureaucracy, the ra- tional spirit's organizational manifestation, was so efficient and powerful a means of controlling men and women that, once established, the momentum of bureaucratization was irreversi- ble (Weber, 1968yf . The imagery of the iron cage has haunted students of society as the tempo of bureau- cratization has quickened. But while bureau- cracy has spread continuously in the eighty years since Weber wrote, we suggest that the engine of organizational rationalization has shifted. For Weber, bureaucratization resulted from three related causes: competition among capitalist firms in the marketplace; competition among states, increasing rulers' need to control their staff and citizenry; and bourgeois de- mands for equal protection under the law. Of these three, the most important was the com- petitive marketplace. "Today," Weber (1968:974yf Z U R W H : it is primarily the capitalist market economy which demands that the official business of administration be discharged precisely, un- ambiguously, continuously, and with as much speed as possible. Normally, the very large, modern capitalist enterprises are themselves unequalled models of strict bu- reaucratic organization. We argue that the causes of bureaucratiza- tion and rationalization have changed. The bu- reaucratization of the corporation and the state have been achieved. Organizations are still be- coming more homogeneous, and bureaucracy remains the common organizational form. Today, however, structural change in organi- zations seems less and less driven by competi- tion or by the need for efficiency. Instead, we will contend, bureaucratization and other forms of organizational change occur as the result of processes that make organizations more similar without necessarily making them more efficient. Bureaucratization and other forms of homogenization emerge, we argue, out of the structuration (Giddens, 1979yf R I R U - ganizational fields. This process, in turn, is effected largely by the state and the profes- sions, which have become the great ration- alizers of the second half of the twentieth cen- tury. For reasons that we will explain, highly structured organizational fields provide a con- text in which individual efforts to deal ration- ally with uncertainty and constraint often lead, in-the aggregate, to homogeneity in structure, culture, and output. *Direct all correspondence to: Paul J. DiMaggio and Walter W. Powell, School of Organization and Management, Yale University, Box IA, New Haven, CT 06520. A preliminary version of this paper was presented by Powell at the American Sociological Association meetings in Toronto, August 1981. We have bene- fited considerably from careful readings of earlier drafts by Dan Chambliss, Randall Collins, Lewis Coser, Rebecca Friedkin, Connie Gersick, Albert Hunter, Rosabeth Moss Kanter, Charles E. Lindblom, John Meyer, David Morgan, Susan Olzak, Charles Perrow, Richard A. Peterson, Arthur Stinchcombe, Blair Wheaton, and two anonymous ASR reviewers. The authors' names are listed in alphabetical order for convenience. This was a fully collaborative effort. American Sociological Review 1983, Vol. 48 (April: 147-160yf 7 This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms 148 AMERICAN SOCIOLOGICAL REVIEW ORGANIZATIONAL THEORY AND ORGANIZATIONAL DIVERSITY Much of modern organizational theory posits a diverse and differentiated world of organi- zations and seeks to explain variation among organizations in structure and behavior (e.g., Woodward, 1965; Child and Kieser, 1981yf . Hannan and Freeman begin a major theoretical paper (1977yf Z L W K W K H T X H V W L R Q : K \ D U H W K H U e so many kinds of organizations?" Even our in- vestigatory technologies (for example, those based on least-squares techniquesyf D U H J H D U H d towards explaining variation rather than its ab- sence. We ask, instead, why there is such startling homogeneity of organizational forms and prac- tices; and we seek to explain homogeneity, not variation. In the initial stages of their life cycle, organizational fields display considerable di- versity in approach and form. Once a field be- comes well established, however, there is an inexorable push towards homogenization. Coser, Kadushin, and Powell (1982yf G H V F U L E e the evolution of American college textbook publishing from a period of initial diversity to the current hegemony of only two models, the large bureaucratic generalist and the small spe- cialist. Rothman (1980yf G H V F U L E H V W K H Z L Q Q R Z - ing of several competing models of legal edu- cation into two dominant approaches. Starr (1980yf S U R Y L G H V H Y L G H Q F H R I P L P L F U \ L Q W K H G H - velopment of the hospital field; Tyack (1974yf and Katz (1975yf V K R Z D V L P L O D U S U R F H V V L Q S X E - lic schools; Barnouw (1966-68yf G H V F U L E H V W K e development of dominant forms in the radio industry; and DiMaggio (1981yf G H S L F W V W K e emergence of dominant organizational models for the provision of high culture in the late nineteenth century. What we see in each of these cases is the emergence and structuration of an organi- zational field as a result of the activities of a diverse set of organizations; and, second, the homogenization of these organizations, and of new entrants as well, once the field is estab- lished. By organizational field,-we mean those orga- nizations that, in the aggregate, constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products. The virtue of this unit of analysis is that it directs our attention not simply to competing firms, as does the population approach of Hannan and Freeman (1977yf R U W R Q H W Z R U N V R I R U J D Q L - zations that actually interact, as does the inter- organizational network approach of Laumann et al. (1978yf E X W W R W K H W R W D O L W \ R I U H O H Y D Q t actors. In doing this, the field idea com- prehends the importance of both connected- ness (see Laumann et al., 1978yf D Q G V W U X F W X U D l equivalence (White et al., 1976yf 1 The structure of an organizational field can- not be determined a priori but must be defined on the basis of empirical investigation. Fields only exist to the extent that they are institu- tionally defined. The process of institutional definition, or "structuration," consists of four parts: an increase in the extent of interaction among organizations in the field; the emergence of sharply defined interorgani- zational structures of domination and patterns of coalition; an increase in the information load with which organizations in a field must con- tend; and the development of a mutual aware- ness among participants in a set of organi- zations that they are involved in a common enterprise (DiMaggio, 1982yf . Once disparate organizations in the same line of business are structured into an actual field (as we shall argue, by competition, the state, or the professionsyf S R Z H U I X O I R U F H s emerge that lead them to become more similar to one another. Organizations may change their goals or develop new practices, and new organizations enter the field. But, in the long run, organizational actors making rational de- cisions construct around themselves an envi- ronment that constrains their ability to change further in later years. Early adopters of organi- zational innovations are commonly driven by a desire to improve performance. But new prac- tices can become, in Selznick's words (1957:17yf L Q I X V H G Z L W K Y D O X H E H \ R Q G W K H W H F K - nical requirements of the task at hand." As an innovation spreads, a threshold is reached be- yond which adoption provides legitimacy rather than improves performance (Meyer and Rowan, 1977yf 6 W U D W H J L H V W K D W D U H U D W L R Q D O I R r individual organizations may not be rational if adopted by large numbers. Yet the very fact that they are normatively sanctioned increases the likelihood of their adoption. Thus organi- zations may try to change constantly; but, after I By connectedness we mean the existence of transactions tying organizations to one another: such transactions might include formal contractual re- lationships, participation of personnel in common enterprises such as professional associations, labor unions, or boards of directors, or informal organizational-level ties like personnel flows. A set of organizations that are strongly connected to one another and only weakly connected to other organi- zations constitutes a clique. By structural equiva- lence we refer to similarity of position in a network structure: for example, two organizations are structurally equivalent if they have ties of the same kind to the same set of other organizations, even if they themselves are not connected: here the key structure is the role or block. This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms INSTITUTIONAL ISOMORPHISM 149 a certain point in the structuration of an orga- nizational field, the aggregate effect of individ- ual change is to lessen the extent of diversity within the field.2 Organizations in a structured field, to paraphrase Schelling (1978:14yf U H - spond to an environment that consists of other organizations responding to their environment, which consists of organizations responding to an environment of organizations' responses. Zucker and Tolbert's (1981yf Z R U N R Q W K e adoption of civil-service reform in the United States illustrates this process. Early adoption of civil-service reforms was related to internal governmental needs, and strongly predicted by such city characteristics as the size of immi- grant population, political reform movements, socioeconomic composition, and city size. Later adoption, however, is not predicted by city characteristics, but is related to institu- tional definitions of the legitimate structural form for municipal administration. Marshall Meyer's (1981yf V W X G \ R I W K H E X U H D X F U D W L ] D W L R n of urban fiscal agencies has yielded similar findings: strong relationships between city characteristics and organizational attributes at the turn of the century, null relationships in recent years. Carroll and Delacroix's (1982yf findings on the birth and death rates of news- papers support the view that selection acts with great force only in the early years of an industry's existence.4 Freeman (1982:14yf V X J - gests that older, larger organizations reach a point where they can dominate their envi- ronments rather than adjust to them. The concept that best captures the process of homogenization is isomorphism. In Haw- ley's (1968yf G H V F U L S W L R Q L V R P R U S K L V P L V D F R Q - straining process that forces one unit in a population to resemble other units that face the same set of environmental conditions. At the population level, such an approach suggests that organizational characteristics are modified in the direction of increasing comparability with environmental characteristics; the number of organizations in a population is a function of environmental carrying capacity; and the diversity of organizational forms is isomorphic to environmental diversity. Han- nan and Freeman (1977yf K D Y H V L J Q L I L F D Q W O \ H [ - tended Hawley's ideas. They argue that isomorphism can result because nonoptimal forms are selected out of a population of orga- nizations or because organizational decision makers learn appropriate responses and adjust their behavior accordingly. Hannan and Freeman's focus is almost solely on the first process: selection.5 Following Meyer (1979yf D Q G ) H Q Q H O O \f, we maintain that there are two types of isomorphism: competitive and institutional. Hannan and Freeman's classic paper (1977yf , 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, program, or mission. Organizational change varies in its responsiveness to technical conditions. In this paper we are most interested in processes that affect organizations in a given field: in most cases these organizations employ similar technical bases; thus we do not attempt to partial out the relative im- portance of technically functional versus other forms of organizational change. While we shall cite many examples of organizational change as we go along, our purpose here is to identify a widespread class of organizational processes relevant to a broad range of substantive problems, rather than to identify deter- ministically the. causes of specific organizational ar- rangements. 3 Knoke (1982yf L Q D F D U H I X O H Y H Q W K L V W R U \ D Q D O \ V L s of the spread of municipal reform, refutes the con- ventional explanations of culture clash or hierarchal diffusion and finds but modest support for modern- ization theory. His major finding is that regional dif- ferences in municipal reform adoption arise not from social compositional differences, "but from some type of imitation or contagion effects as represented by the level of neighboring regional cities previously adopting reform government" (p. 1337yf . 4 A wide range of factors-interorganizational commitments, elite sponsorship, and government support in form of open-ended contracts, subsidy, tariff barriers and import quotas, or favorable tax laws-reduce selection pressures even in competi- tive organizational fields. An expanding or a stable, protected market can also mitigate the forces of selection. 5In contrast to Hannan and Freeman, we empha- size adaptation, but we are not suggesting that man- agers' actions are necessarily strategic in a long- range sense. Indeed, two of the three forms of isomorphism described below-mimetic and normative-involve managerial behaviors at the level of taken-for-granted assumptions rather than consciously strategic choices. In general, we ques- tion the utility of arguments about the motivations of actors that suggest a polarity between the rational and the nonrational. Goal-oriented behavior may be reflexive or prerational in the sense that it reflects deeply embedded predispositions, scripts, schema, or classifications; and behavior oriented to a goal may be reinforced without contributing to the ac- complishment of that goal. While isomorphic change may often be mediated by the desires of managers to increase the effectiveness of their organizations, we are more concerned with the menu of possible op- tions that managers consider than with their motives for choosing particular alternatives. In other words, we freely concede that actors' understandings of their own behaviors are interpretable in rational terms. The theory of isomorphism addresses not the psychological states of actors but the structural de- terminants of the range of choices that actors per- ceive as rational or prudent. This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms 150 AMERICAN SOCIOLOGICAL REVIEW rationality that emphasizes market competi- tion, niche change, and fitness measures. Such a view, we suggest, is most relevant for those fields in which free and open competition exists. It explains parts of the process of bu- reaucratization that Weber observed, and may apply to early adoption of innovation, but it does not present a fully adequate picture of the modern world of organizations. For this pur- pose it must be supplemented by an institu- tional view of isomorphism of the sort intro- duced by Kanter (1972:152-54yf L Q K H U G L V F X V - sion of the forces pressing communes toward accommodation with the outside world. As Al- drich (1979:265yf K D V D U J X H G W K H P D M R U I D F W R U s that organizations must take into account are other organizations." Organizations compete not just for resources and customers, but for political power and institutional legitimacy, for social as well as economic fitness.6 The con- cept of institutional isomorphism is a useful tool for understanding the politics and cere- mony that pervade much modern organi- zational life. Three Mechanisms of Institutional Isomorphic Change We identify three mechanisms through which institutional isomorphic change occurs, each with its own antecedents: 1yf F R H U F L Y e isomorphism that stems from political influ- ence and the problem of legitimacy; 2yf P L P H W L c isomorphism resulting from standard re- sponses to uncertainty; and 3yf Q R U P D W L Y e isomorphism, associated with professionaliza- tion. This typology is an analytic one: the types are not always empirically distinct. For exam- ple, external actors may induce an organization to conform to its peers by requiring it to per- form a particular task and specifying the pro- fession responsible for its performance. Or mimetic change may reflect environmentally constructed uncertainties.7 Yet, while the three types intermingle in empirical setting, they tend to derive from different conditions and may lead to different outcomes. Coercive isomorphism. Coercive iso- morphism results from both formal and in- formal pressures exerted on organizations by other organizations upon which they are de- pendent and by cultural expectations in the society within which organizations function. Such pressures may be felt as force, as persua- sion, or as invitations to join in collusion. In some circumstances, organizational change is a direct response to government mandate: man- ufacturers adopt new pollution control technologies to conform to environmental reg- ulations; nonprofits maintain accounts, and hire accountants, in order to meet tax law re- quirements; and organizations employ affirmative-action officers to fend off allega- tions of discrimination. Schools mainstream special students and hire special education teachers, cultivate PIAs and administrators who get along with them, and promulgate cur- ricula that conform with state standards (Meyer et al., 1981yf 7 K H I D F W W K D W W K H V e changes may be largely ceremonial does not mean that they are inconsequential. As Ritti and Goldner (1979yf K D Y H D U J X H G V W D I I E H F R P e involved in advocacy for their functions that can alter power relations within organizations over the long run. The existence of a common legal environ- ment affects many aspects of an organization's behavior and structure. Weber pointed out the profound impact of a complex, rationalized system of contract law that requires the neces- sary organizational controls to honor legal commitments. Other legal and technical re- quirements of the state-the vicissitudes of the budget cycle, the ubiquity of certain fiscal years, annual reports, and financial reporting requirements that ensure eligibility for the re- ceipt of federal contracts or funds-also shape organizations in similar ways. Pfeffer and Salancik (1978:188-224yf K D Y H G L V F X V V H G K R w organizations faced with unmanageable inter- dependence seek to use the greater power of the larger social system and its government to eliminate difficulties or provide for needs. They observe that politically constructed envi- ronments have two characteristic features: political decisionmakers often do not experi- ence directly the consequences of their ac- tions; and political decisions are applied across the board to entire classes of organizations, thus making such decisions less adaptive and less flexible. Meyer and Rowan (1977yf K D Y H D U J X H G S H U - suasively that as rationalized states and other large rational organizations expand their domi- nance over more arenas of social life, organi- zational structures increasingly come to reflect rules institutionalized and legitimated by and within the state (also see Meyer and Hannan, 1979yf $ V D U H V X O W R U J D Q L ] D W L R Q V D U H L Q F U H D V - ingly homogeneous within given domains and increasingly organized around rituals of con- formity to wider institutions. At the same time, organizations are decreasingly structurally determined by the constraints posed by techni- cal activities, and decreasingly held together 6 Carroll and Delacroix (1982yf F O H D U O \ U H F R J Q L ] e this and include political and institutional legitimacy as a major resource. Aldrich (1979yf K D V D U J X H G W K D t the population perspective must attend to historical trends and changes in legal and political institutions. 7 This point was suggested by John Meyer. This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms INSTITUTIONAL ISOMORPHISM 151 by output controls. Under such circumstances, organizations employ ritualized controls of credentials and group solidarity. Direct imposition of standard operating pro- cedures and legitimated rules and structures also occurs outside the governmental arena. Michael Sedlak (1981yf K D V G R F X P H Q W H G W K e ways that United Charities in the 1930s altered and homogenized the structures, methods, and philosophies of the social service agencies that depended upon them for support. As conglom- erate corporations increase in size and scope, standard performance criteria are not neces- sarily imposed on subsidiaries, but it is com- mon for subsidiaries to be subject to stan- dardized reporting mechanisms (Coser et al., 1982yf 6 X E V L G L D U L H V P X V W D G R S W D F F R X Q W L Q g practices, performance evaluations, and bud- getary plans that are compatible with the policies of the parent corporation. A variety of service infrastructures, often provided by monopolistic firms-for example, telecom- munications and transportation-exert com- mon pressures over the organizations that use them. Thus, the expansion of the central state, the centralization of capital, and the coordina- tion of philanthropy all support the homogeni- zation of organizational models through direct authority relationships. We have so far referred only to the direct and explicit imposition of organizational mod- els on dependent organizations. Coercive isomorphism, however, may be more subtle and less explicit than these examples suggest. Milofsky (1981yf K D V G H V F U L E H G W K H Z D \ V L n which neighborhood organizatioins in urban communities, many of which are committed to participatory democracy, are driven to devel- oping organizational hierarchies in order to gain support from more hierarchically orga- nized donor organizations. Similarly, Swidler (1979yf G H V F U L E H V W K H W H Q V L R Q V F U H D W H G L Q W K H I U H e schools she studied by the need to have a "principal" to negotiate with the district sup- erintendent and to represent the school to out- side agencies. In general, the need to lodge responsibility and managerial authority at least ceremonially in a formally defined role in order to interact with hierarchical organizations is a constant obstacle to the maintenance of egalitarian or collectivist organizational forms (Kanter, 1972; Rothschild-Whitt, 1979yf . Mimetic processes. Not all institutional isomorphism, however, derives from coercive authority. Uncertainty is also a powerful force that encourages imitation. When organi- zational technologies are poorly understood (March and Olsen, 1976yf Z K H Q J R D O V D U H D P - biguous, or when the environment creates symbolic uncertainty, organizations may model themselves on other organizations. The advantages of mimetic behavior in the econ- omy of human action are considerable; when an organization faces a problem with ambigu- ous causes or unclear solutions, problemistic search may yield a viable solution with little expense (Cyert and March, 1963yf . Modeling, as we use the term, is a response to uncertainty. The modeled organization may be unaware of the modeling or may have no desire to be copied; it merely serves as a con- venient source of practices that the borrowing organization may use. Models may be diffused unintentionally, indirectly through employee transfer or turnover, or explicitly by organi- zations such as consulting firms or industry trade associations. Even innovation can be ac- counted for by organizational modeling. As Alchian (1950yf K D V R E V H U Y H G : While there certainly are those who con- sciously innovate, there are those who, in their imperfect attempts to imitate others, unconsciously innovate by unwittingly ac- quiring some unexpected or unsought unique attributes which under the prevailing cir- cumstances prove partly responsible for the success. Others, in turn, will attempt to copy the uniqueness, and the innovation-imitation process continues. One of the most dramatic instances of mod- eling was the effort of Japan's modernizers in the late nineteenth century to model new gov- ernmental initiatives on apparently successful western -prototypes. Thus, the imperial gov- ernment sent its officers to study the courts, Army, and police in France, the Navy and postal system in Great Britain, and banking and art education in the United States (see Westney, forthcomingyf $ P H U L F D Q F R U S R - rations are now returning the compliment by implementing (their perceptions ofyf - D S D Q H V e models to cope with thorny productivity and personnel problems in their own firms. The rapid proliferation of quality circles and quality-of-work-life issues in American firms is, at least in part, an attempt to model Japanese and European successes. These de- velopments also have a ritual aspect; com- panies adopt these "innovations" to enhance their legitimacy, to demonstrate they are at least trying to improve working conditions. More generally, the wider the population of personnel employed by, or customers served by, an organization, the stronger the pressure felt by the organization to provide the pro- grams and services offered by other organi- zations. Thus, either a skilled labor force or a broad customer base may encourage mimetic isomorphism. Much homogeneity in organizational structures stems from the fact that despite con- This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms 152 AMERICAN SOCIOLOGICAL REVIEW siderable search for diversity there is relatively little variation to be selected from. New orga- nizations are modeled upon old ones through- out the economy, and managers actively seek models upon which to build (Kimberly, 1980yf . Thus, in the arts one can find textbooks on how to organize a community arts council or how to start a symphony women's guild. Large orga- nizations choose from a relatively small set of major consulting firms, which, like Johnny Appleseeds, spread a few organizational mod- els throughout the land. Such models are pow- erful because structural changes are observa- ble, whereas changes in policy and strategy are less easily noticed. With the advice of a major consulting firm, a large metropolitan public television station switched from a functional design to a multidivisional structure. The sta- tions' executives were skeptical that the new structure was more efficient; in fact, some ser- vices were now duplicated across divisions. But they were convinced that the new design would carry a powerful message to the for- profit firms with whom the station regularly dealt. These firms, whether in the role of cor- porate underwriters or as potential partners in joint ventures, would view the reorganization as a sign that "the sleepy nonprofit station was becoming more business-minded" (Powell, forthcomingyf 7 K H K L V W R U \ R I P D Q D J H P H Q W U H - form in American government agencies, which are noted for their goal ambiguity, is almost a textbook case of isomorphic model- ing, from the PPPB of the McNamara era to the zero-based budgeting of the Carter administra- tion. Organizations tend to model themselves after similar organizations in their field that they perceive to be more legitimate or suc- cessful. The ubiquity of certain kinds of structural arrangements can more likely be credited to the universality of mimetic pro- cesses than to any concrete evidence that the adopted models enhance efficiency. John Meyer (1981yf F R Q W H Q G V W K D W L W L V H D V \ W R S U H G L F t the organization of a newly emerging nation's administration without knowing anything about the nation itself, since "peripheral na- tions are far more isomorphic-in administra- tive form and economic pattern-than any theory of the world system of economic di- vision of labor would lead one to expect." Normative pressures. A third source of isomorphic organizational change is normative and stems primarily from professionalization. Following Larson (1977yf D Q G & R O O L Q V \f, we interpret professionalization as the collective struggle of members of an occupation to define the conditions and methods of their work, to control "the production of producers" (Lar- son, 1977:49-52yf D Q G W R H V W D E O L V K D F R J Q L W L Y e base and legitimation for their occupational autonomy. As Larson points out, the profes- sional project is rarely achieved with complete success. Professionals must compromise with nonprofessional clients, bosses, or regulators. The major recent growth in the professions has been among organizational professionals, par- ticularly managers and specialized staff of large organizations. The increased professionaliza- tion of workers whose futures are inextricably bound up with the fortunes of the organizations that employ them has rendered obsolescent (if not obsoleteyf W K H G L F K R W R P \ E H W Z H H Q R U J D Q L - zational commitment and professional alle- giance that characterized traditional profes- sionals in earlier organizations (Hall, 1968yf . Professions are subject to the same coercive and mimetic pressures as are organizations. Moreover, while various kinds of professionals within an organization may differ from one an- other, they exhibit much similarity to their professional counterparts in other organi- zations. In addition, in many cases, profes- sional power is as much assigned by the state as it is created by the activities of the profes- sions. Two aspects of professionalization are im- portant sources of isomorphism. One is the resting of formal education and of legitimation in a cognitive base produced by university spe- cialists; the second is the growth and elabora- tion of professional networks that span organi- zations and across which new models diffuse rapidly. Universities and professional training institutions are important centers for the de- velopment of organizational norms among professional managers and their staff. Profes- sional and trace associations are another vehi- cle for the definition and promulgation of nor- mative rules about organizational and profes- sional behavior. Such mechanisms create a pool of almost interchangeable individuals who occupy similar positions across a range of or- ganizations and possess a similarity of orienta- tion and disposition that may override varia- tions in tradition and control that might other- wise shape organizational behavior (Perrow, 1974yf . One important mechanism for encouraging normative isomorphism is the filtering of per- sonnel. Within many organizational fields fil- tering occurs through the hiring of individuals from firms within the same industry; through the recruitment of fast-track staff from a nar- row range of training institutions; through common promotion practices, such as always hiring top executives from financial or legal departments; and from skill-level requirements for particular jobs. Many professional career tracks are so closely guarded, both at the entry level and throughout the career progression, This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms INSTITUTIONAL ISOMORPHISM 153 that individuals who make it to the top are virtually indistinguishable. March and March (1977yf I R X Q G W K D W L Q G L Y L G X D O V Z K R D W W D L Q H G W K e position of school superintendent in Wisconsin were so alike in background and orientation as to make further career advancement random and unpredictable. Hirsch and Whisler (1982yf find a similar absence of variation among For- tune 500 board members. In addition, individu- als in an organizational field undergo antici- patory socialization to common expectations about their personal behavior, appropriate style of dress, organizational vocabularies (Cicourel, 1970; Williamson, 1975yf D Q G V W D Q - dard methods of speaking, joking, or address- ing others (Ouchi, 1980yf 3 D U W L F X O D U O \ L Q L Q G X V - tries with a service or financial orientation (Collins, 1979, argues that the importance of credentials is strongest in these areasyf W K H I L O - tering of personnel approaches what Kanter (1977yf U H I H U V W R D V W K H K R P R V H [ X D O U H S U R G X F - tion of management." To the extent managers and key staff are drawn from the same univer- sities and filtered on a common set of attri- butes, they will tend to view problems in a simi- lar fashion, see the same policies, procedures and structures as normatively sanctioned and legitimated, and approach decisions in much the same way. Entrants to professional career tracks who somehow escape the filtering process-for example, Jewish naval officers, woman stockbrokers, or Black insurance executives-are likely to be subjected to per- vasive on-the-job socialization. To the extent that organizations in a field differ and primary socialization occurs on the job, socialization could reinforce, not erode, differences among organizations. But when organizations in a field are similar and occupational socialization is carried out in trade association workshops, in-service educational programs, consultant ar- rangements, employer--professional school networks, and in the pages of trade magazines, socialization acts as an isomorphic force. The professionalization of management tends to proceed in tandem with the structura- tion of organizational fields. The exchange of information among professionals helps con- tribute to a commonly recognized hierarchy of status, of center and periphery, that becomes a matrix for information flows and personnel movement across organizations. This status ordering occurs through both formal and in- formal means. The designation of a few large firms in an industry as key bargaining agents in union-management negotiations may make these central firms pivotal in other respects as well. Government recognition of key firms or organizations through the grant or contract process may give these organizations legiti- macy and visibility and lead competing firms to copy aspects of their structure or operating procedures in hope of obtaining similar re- wards. Professional and trade associations provide other arenas in which center organiza- tions are recognized and their personnel given positions of substantive or ceremonial influ- ence. Managers in highly visible organizations may in turn have their stature reinforced by representation on the boards of other organi- zations, participation in industry-wide or inter-industry councils, and consultation by agencies of government (Useem, 1979yf , Q W K e nonprofit sector, where legal barriers to collu- sion do not exist, structuration may proceed even more rapidly. Thus executive producers or artistic directors of leading theatres head trade or professional association committees, sit on government and foundation grant-award panels, or consult as government- or foundation-financed management advisors to smaller theatres, or sit on smaller organi- zations' boards, even as their stature is rein- forced and enlarged by the grants their theatres receive from government, corporate, and foundation funding sources (DiMaggio, 1982yf . Such central organizations serve as both active and passive models; their policies and structures will be copied throughout their fields. Their centrality is reinforced as up- wardly mobile managers and staff seek to se- cure positions in these central organizations in order to further their own careers. Aspiring managers may undergo anticipatory socializa- tion into the norms and mores of the organi- zations they hope to join. Career paths may also involve movement from entry positions in the center organizations to middle- management positions in peripheral organi- zations. Personnel flows within an orgarni- zational field are further encouraged by structural homogenization, for example the existence of common career titles and paths (such as assistant, associate, and full profes- soryf Z L W K P H D Q L Q J V W K D W D U H F R P P R Q O \ X Q G H U - stood. It is important to note that each of the in- stitutional isomorphic processes can be ex- pected to proceed in the absence of evidence that they increase internal organizational effi- ciency. To the extent that organizational effec- tiveness is enhanced, the reason will often be that organizations are rewarded for being similar to other organizations in their fields. This similarity can make it easier for organi- zations to transact with other organizations, to attract career-minded staff, to be acknowl- edged as legitimate and reputable, and to fit into administrative categories that define eligi- bility for public and private grants and con- tracts. None of this, however, insures that This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms 154 AMERICAN SOCIOLOGICAL REVIEW conformist organizations do what they do more efficiently than do their more deviant peers. Pressures for competitive efficiency are also mitigated in many fields because the number of organizations is limited and there are strong fiscal and legal barriers to entry and exit. Lee (1971:51yf P D L Q W D L Q V W K L V L V Z K \ K R V S L W D O D G - ministrators are less concerned with the effi- cient use of resources and more concerned with status competition and parity in prestige. Fennell (1980yf Q R W H V W K D W K R V S L W D O V D U H D S R R r market system because patients lack the needed knowledge of potential exchange partners and prices. She argues that physicians and hospital administrators are the actual con- sumers. Competition among hospitals is based on "attracting physicians, who, in turn, bring their patients to the hospital." Fennell (p. 505yf concludes that: Hospitals operate according to a norm of social legitimation that frequently conflicts with market considerations of efficiency and system rationality. Apparently, hospitals can increase their range of services not because there is an actual need for a particular service or facility within the patient population, but because they will be defined as fit only if they can offer everything other hospitals in the area offer. These results suggest a more general pattern. Organizational fields that include a large pro- fessionally trained labor force will be driven primarily by status competition. Organi- zational prestige and resources are key ele- ments in attracting professionals. This process encourages homogenization as organizations seek to ensure that they can provide the same benefits and services as their competitors. PREDICTORS OF ISOMORPHIC CHANGE It follows from our discussion of the mech- anism by which isomorphic change occurs that we should be able to predict empirically which organizational fields will be most homogeneous in structure, process, and behavior. While an empirical test of such predictions is beyond the scope of this paper, the ultimate value of our perspective will lie in its predictive utility. The hypotheses discussed below are not meant to exhaust the universe of predictors, but merely to suggest several hypotheses that may be pur- sued using data on the characteristics of orga- nizations in a field, either cross-sectionally or, preferably, over time. The hypotheses are im- plicitly governed by ceteris paribus assump- tions, particularly with regard to size, technol- ogy, and centralization of external resources. A. Organizational-level predictors. There is variability in the extent to and rate at which organizations in a field change to become more like their peers. Some organizations respond to external pressures quickly; others change only after a long period of resistance. The first two hypotheses derive from our discussion of coer- cive isomorphism and constraint. Hypothesis A-1: The greater the dependence of an organization on another organization, the more similar it will become to that organi- zation in structure, climate, and behavioral focus. Following Thompson (1957yf D Q G 3 I H I I H r and Salancik (1978yf W K L V S U R S R V L W L R Q U H F R J - nizes the greater ability of organizations to re- sist the demands of organizations on whom they are not dependent. A position of depen- dence leads to isomorphic change. Coercive pressures are built into exchange relationships. As Williamson (1979yf K D V V K R Z Q H [ F K D Q J H s are characterized by transaction-specific in- vestments in both knowledge and equipment. Once an organization chooses a specific supplier or distributor for particular parts or services, the supplier or distributor develops expertise in the performance of the task as well as idiosyncratic knowledge about the exchange relationship. The organization comes to rely on the supplier or distributor and such transaction-specific investments give the supplier or distributor considerable advantages in any subsequent competition with other suppliers or distributors. Hypothesis A-2: The greater the centraliza- tion of organization A's resource supply, the greater the extent to which organization A will change isomorphically to resemble the organi- zations on which it depends for resources. As Thompson (1967yf Q R W H V R U J D Q L ] D W L R Q V W K D W G H - pend on the same sources for funding, person- nel, and legitimacy will be more subject to the whims of resource suppliers than will organi- zations that can play one source of support off against another. In cases where alternative sources are either not readily available or re- quire effort to locate, the stronger party to the transaction can coerce the weaker party to adopt its practices in order to accommodate the stronger party's needs (see Powell, 1983yf . The third and fourth hypotheses derive from our discussion of mimetic isomorphism, mod- eling, and uncertainty. Hypothesis A-3: The more uncertain the re- lationship between means and ends the greater the extent to which an organization will model itself after organizations it perceives to be suc- cessful. The mimetic thought process involved in the search for models is characteristic of change in organizations in which key technologies are only poorly understood (March and Cohen, 1974yf + H U H R X U S U H G L F W L R n diverges somewhat from Meyer and Rowan This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms INSTITUTIONAL ISOMORPHISM 155 (1977yf Z K R D U J X H D V Z H G R W K D W R U J D Q L ] D W L R Q s which lack well-defined technologies will im- port institutionalized rules and practices. Meyer and Rowan posit a loose coupling be- tween legitimated external practices and inter- nal organizational behavior. From an ecologist's point of view, loosely coupled or- ganizations are more likely to vary internally. In contrast, we expect substantive internal changes in tandem with more ceremonial prac- tices, thug greater homogeneity and less varia- tion and change. Internal consistency of this sort is an important means of interorgani- zational coordination. It also increases organi- zational stability. Hypothesis A-4: The more ambiguous the goals of an organization, the greater the extent to which the organization will model itself after organizations that it perceives to be suc- cessful. There are two reasons for this. First, organizations with ambiguous or disputed goals are likely to be highly dependent upon appearances for legitimacy. Such organizations may find it to their advantage to meet the ex- pectations of important constituencies about how they should be designed and run. In con- trast to our view, ecologists would argue that organizations that copy other organizations usually have no competitive advantage. We contend that, in most situations, reliance on established, legitimated procedures enhances organizational legitimacy and survival charac- teristics. A second reason for modeling be- havior is found in situations where conflict over organizational goals is repressed in the interest of harmony; thus participants find it easier to mimic other organizations than to make decisions on the basis of systematic analyses of goals since such analyses would prove painful or disruptive. The fifth and sixth hypotheses are based on our discussion of normative processes found in professional organizations. Hypothesis A-5: The greater the reliance on academic credentials in choosing managerial and staff personnel, the greater the extent to which an organization will become like other organizations in its field. Applicants with aca- demic credentials have already undergone a socialization process in university programs, and are thus more likely than others to have internalized reigning norms and dominant or- ganizational models. Hypothesis A-5: The greater the participa- tion of organizational managers in trade and professional associations, the more likely the organization will be, or will become, like other organizations in its field. This hypothesis is parallel to the institutional view that the more elaborate the relational networks among organizations and their members, the greater the collective organization of the environment (Meyer and Rowan, 1977yf . B. Field-level predictors. The following six hypotheses describe the expected effects of several characteristics of organizational fields on the extent of isomorphism in a particular field. Since the effect of institutional isomorphism is homogenization, the best indi- cator of isomorphic change is a decrease in variation and diversity, which could be mea- sured by lower standard deviations of the values of selected indicators in a set of organi- zations. The key indicators would vary with the nature of the field and the interests of the investigator. In all cases, however, field-level measures are expected to affect organizations in a field regardless of each organization's scores on related organizational-level mea- sures. Hypothesis B-1: The greater the extent to which an organizational field is dependent upon a single (or several similaryf V R X U F H R f support for vital resources, the higher the level of isomorphism. The centralization of re- sources within a field both directly causes homogenization by placing organizations under similar pressures from resource suppliers, and interacts with uncertainty and goal ambiguity to increase their impact. This hypothesis is congruent with the ecologists' argument that the number of organizational forms is deter- mined by the distribution of resources in the environment and the terms on which resources are available. Hypothesis B-2: The greater the extent to which the organizations in afield transact with agencies of the state, the greater the extent of isomorphism in the field as a whole. This fol- lows not just from the previous hypothesis, but from two elements of state/private-sector transactions: their rule-boundedness and for- mal rationality, and the emphasis of govern- ment actors on institutional rules. Moreover, the federal government routinely designates industry standards for an entire field which require adoption by all competing firms. John Meyer (1979yf D U J X H V F R Q Y L Q F L Q J O \ W K D W W K H D V - pects of an organization which are affected by state transactions differ to the extent that state participation is unitary or fragmented among several public agencies. The third and fourth hypotheses follow from our discussion of isomorphic change resulting from uncertainty and modeling. Hypothesis B-3: The fewer the number of visible alternative organizational models in a field, the faster the rate of isomorphism in that field. The predictions of this hypothesis are less specific than those of others and require further refinement; but our argument is that for any relevant dimension of organizational strat- This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms 156 AMERICAN SOCIOLOGICAL REVIEW egies or structures in an organizational field there will be a threshold level, or a tipping point, beyond which adoption of the domi- nant form will proceed with increasing speed (Granovetter, 1978; Boorman and Leavitt, 1979yf . Hypothesis B-4: The greater the extent to which technologies are uncertain or goals are ambiguous within afield, the greater the rate of isomorphic change. Somewhat counterin- tuitively, abrupt increases in uncertainty and ambiguity should, after brief periods of ideologically motivated experimentation, lead to rapid isomorphic change. As in the case of A-4, ambiguity and uncertainty may be a func- tion of environmental definition, and, in any case, interact both with centralization of re- sources (A-i, A-2, B-I, B-2yf D Q G Z L W K S U R I H V - sionalization and structuration (A-5, A-6, B-5, B-6yf 0 R U H R Y H U L Q I L H O G V F K D U D F W H U L ] H G E \ a high degree of uncertainty, new entrants, which could serve as sources of innovation and variation, will seek to overcome the liability of newness by imitating established practices within the field. The two final hypotheses in this section fol- low from our discussion of professional filter- ing, socialization, and structuration. Hypothesis B-5: The greater the extent of professionalization in a field, the greater the amount of institutional isomorphic change. Professionalization may be measured by the universality of credential requirements, the robustness of graduate training programs, or the vitality of professional and trade associ- ations. Hypothesis B-6: The greater the extent of structuration of a field, the greater the degree of isomorphics. Fields that have stable and broadly acknowledged centers, peripheries, and status orders will be more homogeneous both because the diffusion structure for new models and norms is more routine and because the level of interaction among organizations in the field is higher. While structuration may not lend itself to easy measurement, it might be tapped crudely with the use of such familiar measures as concentration ratios, reputational interview studies, or data on network charac- teristics. This rather schematic exposition of a dozen hypotheses relating the extent of isomorphism to selected attributes of organizations and of organizational fields does not constitute a complete agenda for empirical assessment of our perspective. We have not discussed the expected nonlinearities and ceiling effects in the relationships that we have posited. Nor have we addressed the issue of the indicators that one must use to measure homogeneity. Organizations in a field may be highly diverse on some dimensions, yet extremely homoge- neous on others. While we suspect, in general, that the rate at which the standard deviations of structural or behavioral indicators approach zero will vary with the nature of an organi- zational field's technology and environment, we will not develop these ideas here. The point of this section is to suggest that the theoretical discussion is susceptible to empirical test, and to lay out a few testable propositions that may guide future analyses. IMPLICATIONS FOR SOCIAL THEORY A comparison of macrosocial theories of func- tionalist or Marxist orientation with theoretical and empirical work in the study of organi- zations yields a paradoxical conclusion. Societies (or elitesyf V R L W V H H P V D U H V P D U W , while organizations are dumb. Societies com- prise institutions that mesh together comforta- bly in the interests of efficiency (Clark, 1962yf , the dominant value system (Parsons, 1951yf R U , in the Marxist version, capitalists (Domhoff, 1967; Althusser, 1969yf 2 U J D Q L ] D W L R Q V E \ F R Q - trast, are either anarchies (Cohen et al., 1972yf , federations of loosely coupled parts (Weick, 1976yf R U D X W R Q R P \ V H H N L Q J D J H Q W V * R X O G Q H U , 1954yf O D E R U L Q J X Q G H U V X F K I R U P L G D E O H F R Q - straints as bounded rationality (March and Simon, 1958yf X Q F H U W D L Q R U F R Q W H V W H G J R D O s (Sills, 1957yf D Q G X Q F O H D U W H F K Q R O R J L H V 0 D U F h and Cohen, 1974yf . Despite the findings of organizational re- search, the image of society as consisting of tightly and rationally coupled institutions per- sists throughout much of modern social theory. Rational administration pushes out non- bureaucratic forms, schools assume the structure of the workplace, hospital and uni- versity administrations come to resemble the management of for-profit firms, and the mod- ernization of the world economy proceeds un- abated. Weberians point to the continuing homogenization of organizational structures as the formal rationality of bureaucracy extends to the limits of contemporary organizational life. Functionalists describe the rational adap- tation of the structure of firms, schools, and states to the values and needs of modern soci- ety (Chandler, 1977; Parsons, 1977yf 0 D U [ L V W s attribute changes in such organizations as welfare agencies (Pivan and Cloward, 1971yf and schools (Bowles and Gintis, 1976yf W R W K e logic of the accumulation process. We find it difficult to square the extant lit- erature on organizations with these macroso- cial views. How can it be that the confused and contentious bumblers that populate the pages of organizational case studies and theories combine to construct the elaborate and well- This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms INSTITUTIONAL ISOMORPHISM 157 proportioned social edifice that macrotheorists describe? The conventional answer to this paradox has been that some version of natural selection oc- curs in which selection mechanisms operate to weed out those organizational forms that are less fit. Such arguments, as we have con- tended, are difficult to mesh with organi- zational realities. Less efficient organizational forms do persist. In some contexts efficiency or productivity cannot even be measured. In government agencies or in faltering corpo- rations selection may occur on political rather than economic grounds. In other contexts, for example the Metropolitan Opera or the Bohe- mian Grove, supporters are far more con- cerned with noneconomic values like aesthetic quality or social status than with efficiency per se. Even in the for-profit sector, where com- petitive arguments would promise to bear the greatest fruit, Nelson and Winter's work (Winter, 1964, 1975; Nelson and Winter, 1982yf demonstrates that the invisible hand operates with, at best, a light touch. A second approach to the paradox that we have identified comes from Marxists and theorists who assert that key elites guide and control the social system through their com- mand of crucial positions in major organi- zations (e.g., the financial institutions that dominate monopoly capitalismyf , Q W K L V Y L H Z , while organizational actors ordinarily proceed undisturbed through mazes of standard operating procedures, at key turning points capitalist elites get their way by intervening in decisions that set the course of an institution for years to come (Katz, 1975yf . While evidence suggests that this is, in fact, sometimes the case-Barnouw's account of the early days of broadcasting or Weinstein's (1968yf Z R U N R Q W K H 3 U R J U H V V L Y H V D U H J R R d examples-other historians have been less successful in their search for class-conscious elites. In such cases as the development of the New Deal programs (Hawley, 1966yf R U W K H H [ - pansion of the Vietnamese conflcit (Halperin, 1974yf W K H F D S L W D O L V W F O D V V D S S H D U V W R K D Y H E H H n muddled and disunited. Moreover, without constant monitoring, in- dividuals pursuing parochial organizational or subunit interests can quickly undo the work that even the most prescient elites have ac- complished. Perrow (1976:21yf K D V Q R W H G W K D t despite superior resources and sanctioning power, organizational elites are often unable to maximize their preferences because "the com- plexity of modern organizations makes control difficult." Moreover, organizations have in- creasingly become the vehicle for numerous "gratifications, necessities, and preferences so that many groups within and without the orga- nization seek to use it for ends that restrict the return to masters." We reject neither the natural-selection nor the elite-control arguments out of hand. Elites do exercise considerable influence over mod- ern life and aberrant or inefficient organi- zations sometimes do expire. But we contend that neither of these processes is sufficient to explain the extent to which organizations have become structurally more similar. We argue that a theory of institutional isomorphism may help explain the observations that organi- zations are becoming more homogeneous, and that elites often get their way, while at the same time enabling us to understand the irra- tionality, the frustration of power, and the lack of innovation that are so commonplace in or- ganizational life. What is more, our approach is more consonant with the ethnographic and theoretical literature on how organizations work than are either functionalist or elite theories of organizational change. A focus on institutional isomorphism can also add a much needed perspective on the political struggle for organizational power and survival that is missing from much of popula- tion ecology. The institutionalization approach associated with John Meyer and his students posits the importance of myths and ceremony but does not ask how these models arise and whose interests they initially serve. Explicit attention to the genesis of legitimated models and to the definition and elaboration of organi- zational fields should answer this question. Examination of the diffusion of similar organi- zational strategies and structures should be a productive means for assessing the influence of elite interests. A consideration of isomorphic processes also leads us to a bifocal view of power and its application in modern politics. To the extent that organizational change is unplanned and goes on largely behind the backs of groups that wish to influence it, our attention should be directed to two forms of power. The first, as March and Simon (1958yf and Simon (1957yf S R L Q W H G R X W \ H D U V D J R L V W K e power to set premises, to define the norms and standards which shape and channel behavior. The second is the point of critical intervention (Domhoff, 1979yf D W Z K L F K H O L W H V F D Q G H I L Q H D S - propriate models of organizational structure and policy which then go unquestioned for years to come (see Katz, 1975yf 6 X F K D Y L H Z L s consonant with some of the best recent work on power (see Lukes, 1974yf U H V H D U F K R Q W K e structuration of organizational fields and on isomorphic processes may help give it more empirical flesh. Finally, a more developed theory of organi- zational isomorphism may have important im- plications for social policy in those fields in This content downloaded from 128.6.45.205 on Thu, 26 Aug 2021 00:21:13 UTC All use subject to https://about.jstor.org/terms 158 AMERICAN SOCIOLOGICAL REVIEW which the state works through private organi- zations. To the extent that pluralism is a guid- ing value in public policy deliberations, we need to discover new forms of intersectoral coordination that will encourage diversification rather than hastening homogenization. An understanding of the manner in which fields become more homogeneous would prevent policy makers and analysts from confusing the disappearance of an organizational form with its substantive failure. Current efforts to en- courage diversity tend to be conducted in an organizational vacuum. Policy makers con- cerned with pluralism should consider the im- pact of their programs on the structure of orga- nizational fields as a whole, and not simply on the programs of individual organizations. We believe there is much to be gained by attending to similarity as well as to variation among organizations and, in particular, to change in the degree of homogeneity or varia- tion over time. Our approach seeks to study incremental change as well as selection. We take seriously the observations of organi- zational theorists about the role of change, am- biguity, and constraint and point to the impli- cations of these organizational characteristics for the social structure as a whole. The foci and motive forces of bureaucratization (and, more broadly, homogenization in generalyf K D Y H D s we argued, changed since Weber's time. But the importance of understanding the trends to which he called attention has never been more immediate. 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