New Institutionalism - Introduction To New Institutionalism

Introduction To New Institutionalism

New institutionalism recognizes that institutions operate in an environment consisting of other institutions, called the institutional environment. Every institution is influenced by the broader environment (or in simpler terms institutional peer pressure). In this environment, the main goal of organizations is to survive. In order to do so, they need to do more than succeed economically, they need to establish legitimacy within the world of institutions.

Much of the research within New Institutionalism deals with the pervasive influence of institutions on human behavior through rules, norms, and other frameworks. Previous theories held that institutions can influence individuals to act in one of two ways: they can cause individuals within institutions to maximize benefits (regulative institutions, also called Rational Choice Institutionalism), similar to rational choice theory or to act out of duty or an awareness of what one is "supposed" to do (normative institutions, also called Historical Institutionalism). An important contribution of new institutionalism was to add a cognitive type influence. This perspective adds that, instead of acting under rules or based on obligation, individuals act because of conceptions. "Compliance occurs in many circumstances because other types of behavior are inconceivable; routines are followed because they are taken for granted as 'the way we do these things'" (Scott 2001, p. 57) - also called Social Institutionalism. Individuals make certain choices or perform certain actions not because they fear punishment or attempt to conform; neither do they do so because an action is appropriate or the individual feels some sort of social obligation. Instead, the cognitive element of new institutionalism suggests that individuals make certain choices because they can conceive of no alternative.

For an interesting application of the new institutional approach see Terry Karl (1990), which portrays institutions as constraining elite actors' preferences and policy choices during transition. The focus upon economics in this article is misleading; institutions are politics: they are the substance of which politics is constructed and the vehicle through which the practice of politics is transmitted. New institutionalism was born out of a reaction to the behavioural revolution. In viewing institutions more widely as social constructs, and by taking into account the influence that institutions have on individual preferences and actions, new institutionalism has moved away from its institutional (formal legal descriptive historical) roots and become a more explanatory discipline within politics.

More recent work has begun to emphasize multiple, competing logics (Friedland & Alford, 1991; Lounsbury, 2007), focusing on the more heterogeneous sources of diversity within fields (Lounsbury, 2001) and the institutional embeddedness of technical considerations (e.g., Scott et al., 2000; Thornton, 2004). The concept of logic generally refers to broader cultural beliefs and rules that structure cognition and guide decision-making in a field. At the organization level, logics can focus the attention of key decision-makers on a delimited set of issues and solutions (Ocasio, 1997), leading to logic-consistent decisions that reinforce extant organizational identities and strategies (Thornton, 2002). In line with the new institutionalism, social rule system theory stresses that particular institutions and their organizational instantiations are deeply embedded in cultural, social, and political environments and that particular structures and practices are often reflections of as well as responses to rules, laws, conventions, paradigms built into the wider environment (Powell, 2007).