New institutionalism is a social theory that focuses on developing a sociological view of institutions, the way they interact and the effects of institutions on society. It is significant in that it provides a way of viewing institutions outside of the traditional views of economics, explaining, for example, why so many businesses end up having the same organizational structure (isomorphism) even though they evolved in very different ways, or how institutions shape the behavior of individual members. Social interactions of people and their consequences are the subject of sociology studies. ... An institution is a group, tenet, maxim, or organization created by a group of humans. ... ... Economics (from the Greek οίκος [oikos], family, household, estate, and νομος [nomos], custom, law, hence household management and management of the state) is a social science that studies the production, distribution, trade and consumption of goods and services. ...

Sociological or politological new institutionalism should not be confused with new institutional economics. New institutional economics is a school of heterodox economics, which builds on old institutional economics arguments about the embeddedness of economic activity in social and legal institutions, using Ronald Coases fundamental insight about the critical role that transaction costs play in determining economic structures and peroformance. ...

History

In some ways, institutionalism and the analysis of the way institutions affect our society are as old as the Greek Philosophers. Thinkers for thousands of years have recognized that insititutions interact with one another in ways that can be studied and understood. Sociologists in the late 19th Century and early 20th Century began to systematize this study. Economist and Social theorist Max Weber focused on the ways bureaucracy and institutions were coming to dominate our society with his notion of the iron cage that rampant institutionalization created. Classical (or early) Greek philosophy focused on the role of reason and inquiry. ... Alternative meaning: Nineteenth Century (periodical) (18th century — 19th century — 20th century — more centuries) As a means of recording the passage of time, the 19th century was that century which lasted from 1801-1900 in the sense of the Gregorian calendar. ... (19th century - 20th century - 21st century - more centuries) Decades: 1900s 1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s As a means of recording the passage of time, the 20th century was that century which lasted from 1901–2000 in the sense of the Gregorian calendar (1900–1999 in the... Maximilian Weber (April 21, 1864 – June 14, 1920) was a German political economist and sociologist who is considered one of the founders of the modern, antipositivistic study of sociology and public administration. ... Bureaucracy is a concept in sociology and political science. ... Maximilian Weber (April 21, 1864 – June 14, 1920) was a German political economist and sociologist who is considered one of the founders of the modern, antipositivistic study of sociology and public administration. ... Institutionalization is a term used to describe both the treatment of, and damage caused to, vulnerable human beings by the oppressive or corrupt application of inflexible systems of social, medical, or legal controls by publicly owned or not-for-profit organisations originally created for beneficial purposes and intents. ...

In the 1980s new institutionalism, sometimes called 'neo-institutionalism' has seen a revival of the focus on the study of institutions as a lens for viewing work in a number of disciplines including economics, international relations and political science. Authors like Paul Dimaggio and Walter Powell consciously revisited Weber's iron cage (DiMaggio and Powell, 1991) in the early 1990s. The following decade saw an explosion of literature on the topic across disciplines. Now, new institutionalism is most closely associated with Washington University in St. Louis, where Douglass North, who won a Nobel Prize in 1993 for his work with NI, currently teaches. The 1980s decade refers to the years from 1980 to 1989, inclusive. ... Economics (from the Greek οίκος [oikos], family, household, estate, and νομος [nomos], custom, law, hence household management and management of the state) is a social science that studies the production, distribution, trade and consumption of goods and services. ... International Relations (IR), a branch of political science, is the study of foreign affairs of and relations among states within the international system, including the roles of states, inter-governmental organizations (IGOs), non-governmental organizations (NGOs), and multinational corporations (MNCs). ... Political science is a social science discipline that deals with the theory and practice of politics and the description and analysis of political systems and political behavior. ... The 1990s decade refers to the years from 1990 to 1999, inclusive. ... Douglass Cecil North (born November 5, 1920) is co-recipient of the 1993 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. ...

Introduction to New Institutionalism

New Institutionalism recognizes that institutions operate in an environment consisting of other institutions, called the institutional environment. Every institution is influenced by the broader environment through institutional isomorphism (or in simpler terms institutional peer pressure). In this environment, the main goal of organizations is to survive. In order to do so, they need to do more than succeed economically, they need to establish legitimacy within the world of institutions. Peer pressure comprises a set of group dynamics whereby a group in which one feels comfortable may override personal habits, individual moral inhibitions or idiosyncratic desires to impose a group norm of attitudes and/or behaviors. ...

Much of the research within New Institutionalism deals with the pervasive influence of institutions on human behavior through rules, norms, and other frameworks. Previous theories held that institutions can influence individuals to act in one of two ways: they can cause individuals within institutions to maximize benefits (regulative institutions), similar to rational choice theory or to act out of duty or an awareness of what one is "supposed" to do (normative institutions). An important contribution of New Institutionalism was to add a cognitive type influence This perspective adds that, instead of acting under rules or based on obligation, individuals act because of conceptions. "Compliance occurs in many circumstances because other types of behavior are inconceivable; routines are followed because they are taken for granted as 'the way we do these things'" (Scott 2001, p. 57). Individuals make certain choices or perform certain actions not because they fear punishment or attempting to conform, and not because an action is appropriate or the individual feels some sort of social obligation. Instead, the cognitive element of new institutionalism suggests that individuals make certain choices because they can conceive of no other alternative. Rational choice theory is a way of looking at deliberations between a number of potential courses of action, in which rationality of one form or another is used either to decide which course of action would be the best to take, or to predict which course of action actually will... // Ethics Duty is a term loosely applied to any action (or course of action) which is regarded as morally incumbent, apart from personal likes and dislikes or any external compulsion. ... Cognitive The scientific study of how people obtain, retrieve, store and manipulate information. ... sexual abuse is the practice of imposing something unpleasant on a wrongdoer as a response to something unwanted that the wrongdoer has done. ...

For an interesting application of the new institutional approach see Terry Karl (1990), which portrays institutions as constraining elite actors' preferences and policy choices during transition. The focus upon economics in this article is misleading; institutions are politics: they are the substance of which politics is constructed and the vehicle through which the practice of politics is transmitted. New Institutionalism was born out of a reaction to the behavioural revolution. In viewing institutions more widely, i.e. as social constructs also and taking into account the influence that institutions have on individual preferences and actions New Institutionalism has moved away from its institutional (formal legal descriptive historical) roots and become a more explanaratory discipline within politics.

Interdisciplinary relevance

This way of understanding individual choice is also relevant to economics. New institionalists in economics recognize that institutions have at least as much influence on the economy as individual's choices. (see institutional economics) Institutional economics is a school of heterodox economics, with a focus going beyond economics usual concentration on markets to the exclusion of all else. ...

References

Berger, Peter L. and Luckmann. 1966. The Social Construction of Reality. New York: Doubleday.

DiMaggio, Paul J. and Walter W. Powell. 1991. "Introduction." Pp. 1-38 in The New Institutionalism in Organizational Analysis, edited by Walter W. Powell and Paul J. DiMaggio. Chicago: University of Chicago Press.

Friedland, Roger and Robert R. Alford. 1991. "Bringing Society Back In: Symbols, Practices, and Institutional Contradictions." Pp. 232-263 in The New Institutionalism in Organizational Analysis, edited by Walter W. Powell and Paul J. DiMaggio. Chicago: University of Chicago Press.

Jepperson, Ronald L. 1991. "Institutions, Institutional Effects, and Institutionalism." Pp. 143-163 in The New Institutionalism in Organizational Analysis, edited by W. W. Powell, DiMaggio. Chicago: University of Chicago Press.

Parto, Saeed. 2003. "Economic Activity and Institutions," Others 0303001, Economics Working Paper Archive at WUSTL.

Scott, Richard W. 2001. Institutions and Organizations, 2nd ed. Thousand Oaks: Sage Publications.

See also

• historical institutionalism