Institutionalized Organizations: Formal Structure as Myth and Ceremony on JSTOR

Organizational structures are created and made more elaborate with the rise of institutionalized myths, and, in highly institutionalized contexts, organizational action must support these myths. But an organization must also attend to practical activity. The two requirements are at odds. A stable solution is to maintain the organization in a loosel... See more

Proposition 3. Organizations that incorporate societally legitimated rationalized elements in their formal structures maximize their legitimacy and increase their resources and survival capabilities

Proposition 5. The more an organization's structure is derived from institutionalized myths, the more it maintains elaborate displays of confidence, satisfaction, and good faith, internally and externally.

Core argument: This paper argues that the formal structures of many organizations in postindustrial society (Bell 1973) dramatically reflect the myths of their institutional environments instead of the demands of their work activities. Societal / institutional complexity has added to the core activities needed to perform a productive act of labour.... See more

Proposition 1. As rationalized institutional rules arise in given domains of work activity, formal organizations form and expand by incorporating these rules as structural elements.

Proposition 6. Institutionalized organizations seek to minimize inspection and evaluation by both internal managers and external constituents.

The rise of professionalized economics makes it useful for organizations to incorporate groups of economists and econometric analyses. Though no one may read, understand or believe them, econometric analyses help legitimate the organization's plans in the eyes of investors, customers (as with Defense Department contractors), and internal participan... See more

Proposition 4. Because attempts to control and coordinate activities in institutionalized organizations lead to conflicts and loss of legitimacy, elements of structure are decoupled from activities and from each other.

Where the production organisation has strong output controls and depends on managing relational networks, the institutionalised organisation has ambiguous outputs and depends on confidence and stability it achieve by following the rules of its environment—conforming both to the opinions of external constituents as well as the demands on internal st... See more