Institutional Theory Perspectives

This chapter examines institutional theory, with the concept utilized to explain how businesses respond to pressure and crisis. Institutional theory assumes that the social context has an important impact on human behavior, while at the same time downplaying the role of strategic responses often found in the management literature. Institutional theory also emphasizes conformance that refers to meeting and potentially exceeding societal and other informal norms and obligations. The chapter develops to evaluate traditional strategic responses to pressure and the characteristics and parameters of people institutions, before considering institutional deterioration causing decay and institutional plasticity enabling change.