DiMaggio 1983 - The Iron Cage Revisited - Institutional Isomorphism and Collective Rationality in Organizational Fields

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DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American sociological review, 147-160.

Summary

Increasing cultural importance placed on rationality has lead to a universal quest for efficiency, which has resulted, almost entirely, in organizational bureaucracy. While early-stage organizations can appear very different, large, more established organizations all appear to be similarly structured, relying on a bureaucracy. Organizations exist within a certain ecosystem (an organizational field) that consists of their suppliers, consumers, competitors, and regulators. Organizations act rationally, and since competing organizations are normally responding to the same environment, it follows that they might make the same decisions (i.e., innovation spreads and becomes a norm). The authors argue that this tendency towards similarity (called isomorphism) happens through three processes: coercive isomorphism, mimetic isomorphism, and normative isomorphism.

Coercive isomorphism refers to the forces acting on organizations, either politically or culturally. A company might need to clean up their CO2 output because of a government mandate or social pressure from the community. The larger an organization is, the more it influences society, and the more the government seeks to control it. When organizations face uncertainty, there is a tendency to “do what everyone else does,” a process called mimetic isomorphism (mimetic as in mimicry). American factories going to Japanese factories to learn how they operate is a mimetic process. Normative isomorphism is a result of professionalization, which is a process through which members of a field attempt “to define the conditions and methods of their work” in an effort to establish legitimacy and a “cognitive base.” A startup tech company’s CEO who switches from t-shirts to button-down shirts when meeting with investors is an example of normative isomorphism.

Application

These isomorphic processes can be used to explain many organizational attributes: lack of diversity amongst personnel, homogeneity of corporate structure, innovation adoption, etc. These processes can happen on individual levels as well as organizational.