Presenting Structural Innovation in an Institutional Environment: Hospitals' Use of Impression Management
Arndt, Margarete, Bigelow, Barbara, Administrative Science Quarterly
This research examines how the first organizations to abandon an institutionalized, taken-for-granted structure and adopt a radically different form presented the innovation to important stakeholders. A content analysis of hospitals' annual reports reveals that organizations that differed on other dimensions uniformly made preventive use of defensive impression management in announcing the change to a diversified corporate structure. The organizations invoked coercive and mimetic pressures to account for and justify the new structure, and they associated the innovation with legitimated organizational activities. The findings make two contributions that link the "old" institutionalism and neoinstitutionalism: they point to organizational agency in the preventive use of the very institutional forces that create isomorphism and suggest the presence of institutional forces even during the early stages of innovation. [*]
It is well established that organizations derive their legitimacy in large part from having structures that are seen as appropriate. Meyer and Rowan (1977: 343) described formal organizational structures as "manifestations of powerful institutional rules which function as highly rationalized myths that are binding on particular organizations" and as reflections of widespread understandings of what is "considered proper, adequate, rational, and necessary" (p. 345). Legitimacy is closely tied to structure, as it is to any institutionalized practice. Organizations that incorporate legitimating structural elements are themselves legitimated, while those that do not, risk their legitimacy. But organizations sometimes change their structure radically, and it is not well understood how innovating organizations, faced with the threat their deviance poses to the organization's legitimacy, present a structural change to their stakeholders.
Structure, as it is used in this paper, refers to the "blueprint for activities which includes, first of all, the table of organization: a listing of offices, departments, positions, and programs" (Meyer and Rowan, 1977: 341-342). Organizations' structures come to resemble each other in an "inexorable push toward homogenization" (DiMaggio and Powell, 1983: 148) as institutional processes exert their effect through mechanisms such as the imposition of organizational structure by coercive power, inducements created by funding sources, and the acquisition of organizational structure through mimetic or normative mechanisms (Scott, 1991). The titles used to describe different positions, or the departments and divisions that categorize functions, are often indistinguishable among organizations in a field. Even across fields, the use of titles and divisions, though they may have different labels, reflect highly rationalized myths about functional specialization and hierarchy. It is virtually unthinkable for an organ ization to be without functional divisions or hierarchy, because they are taken-for-granted elements of structure, whether the organization is a hospital, an oil company, a homeless shelter, or a conglomerate.
In institutional environments, in particular, organizations are rewarded for structural isomorphism (Scott, 1987: 126). A change in structure may alter how an entity relates to its environment, and if social values do not change to accommodate the new relational pattern, the entity's legitimacy is threatened (Parsons, 1982). The mechanisms that account for isomorphism, however, also create change (Fligstein, 1991). For example, through mandate or the manipulation of rules, the state or other entities upon whom organizations depend can require organizations to change their structure in exchange for continued support. Similarly, when organizational fields are in a state of flux, change may occur because "the actions of others in the organizational field can either legitimate current actions or else constitute reasons for change" (Fligstein, 1991: 313), as in the spread of the multidivisional form (Fligstein, 1985) or the rise of incorporation (Zucker, 1983). …