Let's take the example of schools since it's heavily elaborated in the readings and in the theoretical texts on the institutional theory. So for schools, decoupling occurs for a few reasons. The first is that decoupling protects the formal structure from uncertainties of the technical core, it's buffering, right? There's much uncertainty in how, say, a curriculum is delivered, received, and so on, and measuring its kind of effect is difficult. All too often if inspect it, it creates doubts about the legitimacy of any form of instruction and we lack clear working alternatives. Second, decoupling enables the organization to adapt to inconsistent and conflicting institutionalized rules in the environment, so flexibility. The plurality of environmental pressures can put conflicted demands on the organization. By differentiation and isolation, the firm can forego coordination and avoid incompatibilities and inconsistencies. So for example, segmenting special education apart, or the use of tracking, the formation of different departments, and so on. All of these are means of making an educational organization appear rational, but also of segmenting contents inspection. And think of what accreditation efforts entail, they mostly just count surface features of how many departments and categories. Third, decoupling enables participants to avoid inspection, and this avoidance is a display of trust and confidence. As such, decoupling contributes to the logic of confidence and increases the commitment of internal participants. Responsibility is kind of pushed onto the teachers and to teacher professionalism. And then finally, a great deal of the value in education has little to do with the efficiency of instructional activities. It's not so much about learning per expended dollar, as much as value residing in the ceremonial enactments of schooling that are regarded relatively equivocal. So buildings, teachers, books, topics, accreditation, classrooms, desks and so on. Those are kind of equivocal values. So by decoupling formal structures and categories from the core practices and activities, uncertainty about the effectiveness of ritual categories is kind of reduced. Schools can kind of go on and do well without inspection. But why does this loose coupling arise in the US education system in particular, and what other systems might this occur in? The reason in the US system, it's argued this occurs is because it's decentralized and it kind of co-occurs with decoupling. The US system is decentralized and it relies on resources from the local population like school boards, counties, mayors. In contrast to other countries like yours, out there might have centralized structures with examinations and clear inspection systems that ensure conformity to the activity. By contrast to the United States, exams are privatized and not universal. A national system would define almost all the kids from some communities as successful or as failures. And there's this danger for a system that depends on legitimating itself and obtaining resources from local populations. If it does that, it would kill itself. So local control deprofessionalizes administrators, but professionalizes the teachers. And American schools have this kind of system where there's weak administrators who struggled to control any kind of educational reform. So in sum, the institutional theory argues that organizations succeed in the environment by engaging in symbolic coding or the adoption of rationalized myths about structures that rely on the logic of confidence. And then they decouple their formal structure from the actual internal activities and their performance. And this affords them greater flexibility and buffers the technical core and internal workings of instruction from the likely conflicted concerns of the external environment, the plurality of concerns in external environment. Decoupling the logic of confidence enables the managers and employees of these organizations to do their work without inspection, and with some degree of certainty and security that they wouldn't have otherwise. Why adopt the formal rules and structures when observation or inspection are not all that relevant? Is the adherence to rationalized myths helpful in some way? So organizations need legitimacy, is the kind of argument a neo-institutionalist would have. They need that legitimacy in order to secure resources and to survive. So independent of material needs, organizations need to look like a real organization and at least appear to behave like a real organization. The creation and adherence to prevailing rationalized myths provides them with all kinds of resources. So again, let's look at the case of schools to flush this out. So they have credentials, classifications, and categories of schooling that constitute a language that facilitates exchange across organizations and with the environment. Funds are frequently allocated in a categorical fashion. So if you have vocational education, special education, college tracks, having them in place makes the transfer or the labeling of individuals and transfer of them across these institutions feasible, hiring feasible. The system of ritual classifications can also be exploited in order to kind of gain prestige. I mean, you can hire prestigious faculty. You can incorporate innovative programs that say or do MOOCs at your own institutions, and this might increase the status of your own university. And finally, organizations can rely on ritual classification to provide internal order and identities. It kind of helps you organize internally and gives people something to work into. So in many ways this is kind of a managerial prescription. If you attend to all of this above and conform to the institutional environment, you're going to reap rewards from it. By incorporating externally defined teachers, curricula, and students into a formal structure, schools stay legitimate and get the necessary funds and participants so they can operate. So in short, the rewards for adherence are the increased ability to mobilize social resources for organizational purposes. So any time you create a new charter school or a private school, it's miraculous how similar it looks to every other school. It's not that innovative and distinctive. And it's the same with a lot of startup companies and businesses that try to imitate other firms and corporations out there. That are deemed to have these kind of legitimate ritualized features that make it feasible that they can inter-relate with other firms and other segments of the environment. And to have kind of legitimate facets that are deemed value and rational compatibility. The second theory paper I want to discuss is that of Dimaggio and Powell's Iron Cage Revisited. What's great about this article is that it shows how neo-institutional theory relates to both resource dependence theory and population ecology, and that will be the final theory we'll cover next week in week ten. In addition, this article describes a variety of bridging tactics that lead organizations to resemble one another in their form. So Dimaggio and Powell's big question in this article is why do so many organizations look the same? Within an organizational field, why do they imitate each other? Why do they appear similar, as opposed to why not different? And why is there progression from a diverse set of organizational forms to a homogenous set? So Dimaggio and Powell focus on organizational fields and how organizations within them grow isomorphic. Kind of like our example application of how schools have come to look so similar or how universities have. So, let's first define the concept of an organizational field since it really describes the bin in which the process of organizational homogenization arises. So organizational fields are composed of organizations that in the aggregate, constitute a recognized area of institutional life. So, for example, you have key suppliers, resources, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products. Now here's an example of what might be regarded to be an institutional field for something like the domain of technology. Now it's not complete of course, but it gives you some sense of the variety of organizations that they're composed, and it might mutually recognize each other. So how does a field like this kind of form? Powell and DiMaggio kind of give you the process of field and the definition in four parts. There's an increase first, an interaction among these members, right? And then there's greater interoganizational patterns of hierarchy and coalitions among them, and then eventually there's an increase in information load about the activity to contend with. And then finally, the development of mutual awareness occurs among those members. So for Wei Pao, for example, a lot of his research concerns the emergence of the biotechnology industry and how that field emerged among banks, venture capitalists, and universities, R&D firms, as well as biotechnology companies. So this field was all of these different groups or organizations that had heightened interaction into organizational networks that formed in certain forms. You have this kind of information load about biotechnology that occurs, and then this mutual awareness of themselves as some kind of industry or domain. So through that process and addition, a lot of the firms come to look like each other. They start to resemble one another. They start to adopt similar patterns and encode their symbolic structures. So that's the kind of argument that a neo-institutionalist has for a wider field or domain. So next, within a field like this, how does organizational homogenization arise? So the process is one where one unit of a population comes to resemble others. And neo-institutional theorists call this isomorphism. I've already talked about it a little bit, but I want to kind of elaborate it further now. In usual parlance, isomorphism can be expressed in a variety of ways, and visually you can think of it as mirroring, or when a building assumes the same form or appearance of another, they adopt the same facade and external kind of patterning. But it can also have more of a mathematical or even geometric expression. And notice here 1, 2, 3, 4 have the same pattern of association as 5, 6, 7, 8. The same for a through d, as for g through j. They're structurally equivalent sets of nodes and they're substitutable, right? So geometrically we can talk about isomorphism. For neo-institutional theory, these appearances can decouple from function. So perhaps this last image may help even more. It's of an orchid whose flower mimics a bee. And by showing appearances of one sort, it attracts resources, so pollen. Now none of these are perfect similes or metaphors by any means, but hopefully, they give you some better sense of what it means to be isomorphic or to engage in isomorphism. DiMaggio and Powell described multiple processes by which isomorphism arises, and the first process is one they call competitive isomorphism. And in these instances, certain forms of organizing don't survive because they're suboptimal, and because decision makers learn appropriate responses and adapt their organizations so they can survive. Dimaggio and Powell suggest this occurs in fields where open competition exists. And this is actually a reference to population ecology or a theory we're going to read much more about next week. So I'm going to punt, as they say, or take a time-out on that one and wait until next week. The second form of isomorphism is institutional, and this is really the core process of neo-institutional theory. Here, organizations don't just compete for resources and customers, but for political power and institutional legitimacy. The concept of institutional isomorphism is useful for understanding the politics and ceremony that purveyed modern organizational life. So it's much more than this kind of natural selection and fit in competition. It's this much more sociological process of social and political and cultural kinds of issues of fit and alignment and legitimacy. Powell and DiMaggio describe three forms of institutional isomorphism, and I want to relate each here in a little more detail. The first is a coercive form of institutional isomorphism, and it most closely resembles those observed in dependence relations as discussed in resource dependence theory. Here, a dependent firm is subject to political influence. And this course of influence results from both informal and formal pressures exerted by other organizations upon which a focal organization's dependent, and by societal and cultural expectations within which the organization functions. So the firm is coerced to conform, and this leads them to follow and adopt organizational forms of the organizations that they're dependent on. So that's the kind of coercive isomorphism that they first talk about. The second form is mimetic isomorphism. And mimetic institutional isomorphism is different from the course of form. Mimetic isomorphism is a standard response to uncertainty and ambiguity. So whenever ambiguity arises, organizations begin to model themselves on other exemplary organizations or those that they think are particularly legitimate and successful. So the mimetic process here is one driven by the focal organization and their effort to secure resources. So many universities do like Stanford does. Not from the certainty about efficiency, but because in a context of ambiguity and uncertainty, they can rise through the ranks by looking more like a leading institution or this innovative one, say. Normative forms are different yet again, and they're different from both coercive and mimetic. Here, isomorphism is associated with professionalism. And professionalism is defined as the collective struggle of members of an occupation to define the conditions and methods of their work, to control the production of producers, and to establish a cognitive base and legitimation for their occupational autonomy. So rather than direct coercion or imitation, the firms in these instances try to fit in and mirror professional norms from which they draw legitimacy. And two aspects are really key here, I think. The emphasis on formal educational credentials, and the development of professional networks via kind of associations, right? And these create pools of individuals who are relatively the same and substitutable across these institutions. So in this way, professionalization enables normative forms of isomorphism, and renders firms relatively similar in terms of who they hire, or what tools they use, and so on. So that's the kind of notion of normative isomorphism. So to sum up, the theoretical features of neo-institutionalism are buffering strategies on the one hand. And the theory argues that firms buffer themselves from the environment by symbolic coding of their formal structure. So a new university will adopt many of the same subject matters and departments that established universities have. In that manner, their formal structure fits ceremonial classifications, right? And these constructs are supported by a logic of confidence that extends throughout society. The labels are assumed to be rational because rationalizing agents support them. There's a confidence in elite universities and their accreditation, per se. Further buffering of the core activities in firms is accomplished by the process of loose coupling. And here, the formal structures and codings of the firm are distinct and unrelated to the actual activity. By segmenting them apart, the firm exudes rational competence and cultural fit. But it doesn't allow them to be inspected in relation to the actual activity, okay? So this decoupling enables the firm to run on trust and not have to confront the potentially unsolvable issues of what works best and why, okay? Firms also bridge, right, in the environment. But here, it's mostly done through networks. And DiMaggio and Powell argue that these networks of association lead to isomorphism via various routes. And the first entailed political pressure, as we learned about in resource dependence theory. The second entailed mimetic behavior, where firms look to exemplars and peer firms, and imitate what they seem to do that works well, or is legitimate, or trendy. And last, firms respond to pressures of professional networks, like professional norms and standards, on how to assess and consider their firm's performance. So all of these bridging efforts render the firm more institutionalized and legitimate in the cultural environment in which they are found. And this in turn draws in social resources and continues the firm
