MANA 341 Lecture Notes - Lecture 16: Institutional Theory, Uptodate
25 Jan 2017
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Document Summary
The institutional view argues that organizations need legitimacy from their stakeholders. Companies perform well when they are perceived by the larger environment to have a legitimate right to exist. Thus, the institutional perspective describes how organizations survive and succeed through congruence between an organization and the expectations from its environment. The institutional environment is composed of norms and values from stakeholders (customers, investors, association, boards, government, and collaborating organizations. ) The institutional view believes that organizations adopt structures and processes to please outsiders and these activities come to take on rule-like status in organizations. The institutional environment reflects what the greater society views as correct ways of organizing and behaving. Legitimacy is defined as the general perspective that an organization"s actions are desirable, proper and appropriate within the environment"s system of norms, values, and beliefs. Institutional theory thus is concerned with the set of intangible norms and values that she behaviour, as opposed to the tangible elements of technology and structure.
