Institutional Theory and Nonprofits

Synonyms

Organizational theory pertaining to institutions

Definition

Perspectives about how organizations develop cultures, systems of patterned behaviors, and recurring processes.

Introduction

The economic theory of the nonprofit sector states that the sector’s existence is attributable to market failure, pluralism, and needs for modernization, trust, and solidarity. Nonprofit organizations are structured in accordance with democratic, collective/feminist, hierarchical, and elitist approaches. As individual nonprofit organizations become larger and more complex, they become institutions. Social scientists apply the term “institutions” to organizations that have developed a well-defined structure and a culturefounded on rules, folkways, mores, and customs. The culture influences the behavior of the organization’s members, making it consistent. Institutions in a field of activity converge toward similar structures and cultures. Deviations from this pressure for convergence, when they...