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Intuitional theory suggests organizations over time adopt similar if not the same organizational strategies, becoming isomorphic. Organizational isomorphism according to Deephouse (1996) is the resemblance of an organization to other organizations. More succinctly, organizational isomorphism involves strategies that are mimicked such as acquisitions, diversification, and other financial strategies or organizational strategies (Deephouse, 1996). In appearance, it seems as though organizations position themselves so that they are not far behind the leader in terms of innovation and market shares. McDonalds and Burger King are a prime example of isomorphism that explains the general idea of institutional theory. Burger King replicates McDonald’s geographical strategy and operational strategies. After McDonald’s do market research, Burger King simply follows the current. These are the benefits of imitating other firms. Which is to say being number two is not necessarily a bad strategic position. DiMaggio (1983) informs organizations compete for customers and resources. The forerunner often works out the kinks and identifies issues that the runner up can avoid. The ultimate strategy of the come from behind leader for some organizations is to discover what the competition does well and do it better.
This notion is not to suggest that organizations are slaves to each other; that what one company does the other is forced to mimic. Suddaby (2010) recognizes some of the research state contingency theory is represented in institutional theory, pointing to the opinion institutions are subject to their environment and adjust accordingly. Suddaby (2010) also recognizes DiMaggio (1998) who argues emphatically against the idea that organizations are prisoners to their institutional environment, and simply adjust on a whim, on the contrary, organizations reflect their institutional environment and are institutional entrepreneurs. What is inferred is that organizations are constantly reinventing processes to improve themselves, which ultimately helps the competition improve. As such, institutions are improving industries and driving instead of following. This interesting dichotomy is what makes explaining institutional theory difficult as pinpointing what institutionalism is can be approached by interpreting what institutionalization is not. Intuitional theory embodies the idea that institutionalism is a specific organizational practice while it also represents the organization as a whole.
Institutional Theory is a continuation and extension of the intellectual revolution that began in the 1960s, which introduced the concept of open systems in the study of organizations.Institutional theories of organizations provide a complex view of orga-nizations. In these theories, organizations are influenced by normative pressures, sometimes arising from external sources such as the state, other times arising from within the organization itself. Under some conditions, these pressures lead the organization to be guided by legitimated elements, from standard operating procedures to professional certification and state requirement, which often have the effect of directing attention away from task performance (Dacin, Goodstein, & Scott, 2002). In time, institutional theory came to recognize the significant organizational effects that are associated with the increase of cultural and social forces: the institutional environment (Dacin, et al., 2002). In fact, as institutional theory has grown, some branches have moved closer to behavioral theory. Organizations came to be seen as being more than productive systems; they were now seen as cultural and social systems (De Pra, da Cunha, Lima, Carstens, 2017). Institutional theorists assert that the institutional environment can strongly influence the development of formal structures in an organization, often more so than market pressures. Dimaggio and Powell (1983) were key to the growth of Institutional Theory, which has come to encompass a large variety of phenomena within the field of organizational studies. Institutional theory is a theoretical framework for analyzing social and in particular, particularly organizational phenomena (Dacin, et al., 2002). In sum, Institutional theory seeks to explain organizational communication in terms of shared pre-existing rules, beliefs, and norms in the external environment of organizations. Complying with institutionalized prescriptions has benefits such as a means for gaining legitimacy, a decrease in uncertainty, and an increase in intelligibility of organizations actions and activities (Dacin, et al., 2002).
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