Institutional pressures and isomorphic change: an empirical test - includes appendix

Organization Studies, Mid-Winter, 1994 by Trevor Slack, Bob Hinings

Trevor Slack Department of Physical Education and Sports Studies, University of Alberta, Edmonton, Canda

Bob Hinings Department of Organizational Analysis, University of Alberta, Edmonton, Canada

Introduction

In explaining changes which take place in the formal structure of an organization, considerable emphasis has been placed on the environment in which the organization exists. Within much of this literature is the notion that organizations change to become isomorphic with their environment. Isomorphism refers to 'the constraining process that forces one unit in a population to resemble other units that face the same set of environmental conditions' (DiMaggio and Powell 1983: 149). For contingency theorists such as Lawrence and Lorsch (1967), isomorphism occurs because increased environmental differentiation has to be matched by similar patterns of differentiation within the organization. Thompson (1967) and Woodward (1965) have made similar arguments about the need to match technology or the task environment of an organization with its internal structure. More recently, population ecologists and institutional theorists have extended ideas about the process of isomorphism. For population ecologists (Hannan and Freeman 1977), isomorphism occurs because competitive pressures select out non-optimal forms of organization. Thus, those which remain are isomorphic with each other and with the demands of their environment.

Institutional theorists such as Meyer and Rowan (1977), DiMaggio and Powell (1983) and Zucker (1987) suggest that organizations are influenced by normative pressures which are placed on them. These pressures often emanate from sources such as the state and other regulatory bodies. Conformity to these pressures results in organizations changing their structural arrangements to become isomorphic with institutionally prescribed expectations. DiMaggio and Powell (1983) identify three mechanisms through which this type of change takes place. Coercive isomorphism is the result of formal and informal pressures exerted by organizations on other organizations which may be dependent on them. It may also result from cultural expectations within the societal context in which an organization exists. Mimetic isomorphism occurs when organizations faced with uncertainty model themselves on other organizations which they perceive as successful. Normative isomorphism results primarily from professionalization.

DiMaggio and Powell (1983) maintain that there are two types of isomorphic change that come about for different reasons. Competitive isomorphism is the type of change proposed by population ecologists in which optimal forms of organization are selected out of a population. They suggest that this view assumes 'a system rationality that emphasizes market competition, niche changes and fitness measures' (1983: 149-150). It is a view most relevant for organizations which operate in a relatively free and open competitive market. For organizations which do not operate under such conditions, but compete for 'political power and institutional legitimacy' as well as for 'social and economic fitness', the idea of institutional isomorphism is more relevant.

Isomorphism and Change

Despite the implicit notion of change within the concept of isomorphism, existing studies have been primarily concerned with establishing congruence between the environment and the structural arrangements of organizations. As such, they have been cross-sectional in nature and have not specifically examined the dynamics of the process by which isomorphic change takes place. Nelson (1989), for example, carried out a cross-sectional study to examine the extent to which protestant churches that exhibit a particular organizational form were isomorphic with their environmental conditions. Ethridge (1983) claimed support for isomorphism by showing that state travel offices operating in differentiated and unstable travel markets were larger and more structurally differentiated and Oliver (1988), in a study to compare competing perspectives on the determinants of isomorphism, used cross-sectional data on inter-organizational relations and the structural arrangements of voluntary social-service organizations.

Studies such as these, while extending our understanding of isomorphism, do not consider the dynamic nature of organizational environments and thus the process by which isomorphism occurs. There are, in fact, very few institutional studies which centre on the dynamics of isomorphism through longitudinal research. One study that did take a longitudinal approach was that of Tolbert and Zucker (1983). They examined the general nature of institutionalization by showing how a particular set of organizational arrangements became distributed across a population of local government organizations over a relatively short space of time. However, this important study did not focus on the process by which institutionalization occurred; its aim was to demonstrate the principle. Similarly, Meyer et al. (1988) carried out a longitudinal study which provided indications of isomorphic change. With data on the organizational system of U.S. public education between 1940 and 1980, they showed increases in the level of homogeneity in aspects of state educational systems such as the number of students per school and the number of superintendents per district. Thus, we are suggesting that the concept of isomorphism requires that longitudinal studies be undertaken in order to examine the dynamic nature of isomorphic change. Indeed, the whole conceptual framework of institutional theory implicitly places a strong emphasis on change but this has not been matched by the necessary empirical work. Such work would act as a stronger test of the theory.