Exploring the Limits of the New Institutional Ism the Causes and Consequences of Illegitimate...

8/6/2019 Exploring the Limits of the New Institutional Ism the Causes and Consequences of Illegitimate Organizational Change

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Exploring the Limits of the New Institutionalism: The Causes and Consequences of IllegitimateOrganizational ChangeAuthor(s): Matthew S. Kraatz and Edward J. ZajacSource: American Sociological Review, Vol. 61, No. 5 (Oct., 1996), pp. 812-836Published by: American Sociological AssociationStable URL: http://www.jstor.org/stable/2096455 .

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EXPLORING THE LIMITS OF THE NEW INSTITUTIONALISM:THE CAUSES AND CONSEQUENCES OF ILLEGITIMATEORGANIZATIONALCHANGE*MatthewS. Kraatz EdwardJ. ZajacUniversity of Illinois NorthwesternUniversity

While the "new institutionalism" has emerged as a dominant theory of orga-nization-environment relations, very little research has examined its possiblelimits. Under what circumstances might the neoinstitutional predictions re-garding organizational inertia, institutional isomorphism, the legitimacy im-perative, and otherfundamental beliefs be overshadowed by more traditionalsociological theories accentuating organizational adaptation, variation, andthe role of specific global and local technical environmental demands? Weanalyze longitudinal data from 1971 to 1986 for 631 private liberal arts col-leges facing strong institutional and increasingly strong technical environ-ments. Ourfindings reveal surprisingly little support for neoinstitutional pre-dictions: (1) Many liberal arts colleges changed in ways contrary to institu-tional demands by professionalizing or vocationalizing their curricula; (2)global and local technical environmental conditions, such as changes in con-sumers'preferences and local economic and demographic differences, werestrong predictors of the changes observed; (3) schools became less, ratherthan more, homogeneous over time; (4) schools generally did not mimic theirmost prestigious counterparts; (5) the illegitimate changes had no negative(and often had positive) performance consequences for enrollment and sur-vival. Our results suggest that current research on organization-environmentrelations may underestimate the power of traditional adaptation-based ex-planations in organizational sociology.

rganizational sociologists have longsought a greater understandingof or-ganization-environment relations. A note-worthy recent trendin this literaturehas beenthe relative deemphasis of traditional adap-tation theories (Pfeffer and Salancik 1978;Selznick 1948; Thompson 1967) andthe riseof alternative theories. Prominent amongthese alternativetheories is the "newinstitu-

tionalism" (DiMaggio and Powell 1991),also labeled by Perrow (1986) as the "newinstitutional school," which has emerged asa widely recognized, widely cited perspec-tive with considerable impact on organiza-tion theory (Davis andPowell 1992).Neoinstitutional explanations of organiza-tion-environment relations draw their powerand distinctiveness largely from an explicitrejection of traditional adaptation theories,and from an emphasis on institutionalratherthan technical environments.1This rejectionis typified by DiMaggio and Powell's (1991)

* Direct correspondence to Edward J. Zajac,J. L. Kellogg School of Management,Northwest-ern University, Evanston, IL 60208-2001 ([email protected])or Matthew S. Kraatz, DepartmentofBusiness Administration, University of Illinois,Champaign, IL 61820 ([email protected]). Both authors contributedequally to thepaper. Comments and suggestions from GeraldDavis, Roberto Fernandez, John Freeman, MarkGranovetter,John Meyer, MarkMizruchi, TrondPetersen, Arthur Stinchcombe, and the ASR Edi-tor helped shape this paper.

I Technical environmentsapproximateThomp-son's (1967) definition of task environments,which include customers, suppliers, competitors,and regulatorygroups. Institutionalenvironmentsare much broader; they encompass overarchingsocial forces such as norms, standards, and ex-pectations held by relevant stakeholders and com-mon to all inhabitants of the organizational field.

812 American Sociological Review, 1996, Vol. 61 (October:812-836)


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NEW INSTITUTIONALISM AND ILLEGITIMATE ORGANIZATIONAL CHANGE 813contention that neoinstitutional theorists insociology "find adaptive storytelling lesspersuasive" and "reject functional explana-tions" (pp. 10-11). Tolbert and Zucker(1983: 22) describe a majordebate in orga-nization theory in terms of the contrast be-tween a technical perspectivethat"views or-ganizations as rational actors, albeit in acomplex environment" (Thompson 1967)and an institutional perspective that "viewsorganizations as captives of the institutionalenvironmentin which they exist." Similarly,Orru,Biggart, and Hamilton(1991) note thatthe majordistinctive featureof "the new in-stitutionalism" is that it "departs from ...technically oriented approaches[to the studyof organizationenvironments] by turningourattention to institutional environments," andthat "it is a theoretical perspective that fo-cuses on organizationalconformity with so-cial rules and rituals"(p. 361).DiMaggio and Powell (1983), drawingonthe earlierwork of Meyerand Rowan(1977),have developed the most strongly stated andmost influentialstatementon neoinstitutionaltheory; they suggest explicitly that Weber's(1968) emphasis on the competitive market-place as the major environmentalforce driv-ing organizational change is no longer valid.Instead,they view institutionalenvironmentsdemandingconformity as dominant;as a re-sult, organizationsincreasinglybecome pris-oners in a new "iron cage" of institutionalisomorphism (DiMaggio and Powell 1983).More recently, DiMaggio and Powell (1991)claimed again that (1) the new institutional-ism is concerned with "persistence" ratherthan "change,"(2) "the legitimacy impera-tive" acts as a source of "inertia,"and (3)"not only does neoinstitutionalism empha-size the homogeneity of organizations; t alsotends to stress the stability of institutionalcomponents"(pp. 13-14).Very little large-scale, longitudinal re-search, however, has directly examined suchpredictions regardingorganizationalinertia,the tendency towardisomorphism,the legiti-macy imperative, the relative influence oftechnical versus institutional environmentalforces, and other fundamentalbeliefs of thenew institutionalism.This may explaininpartwhy Davis and Powell (1992:359) argued hat"cautionflags are warranted"n interpreting"work under the institutional banner."Such

concerns suggest that it may be quite valu-able to explore the limits of the new institu-tionalism. For example, when might the newinstitutionalism's emphasis on inertia, persis-tence, and isomorphismin highly institution-alized organizational fields be challengedmeaningfully by more traditional sociologi-cal theories emphasizing organizational ad-aptation and diversity? We address these is-sues, first, by identifying key propositions inthe neoinstitutional literature regarding thelikelihood and direction of organizationalchange, as well as its antecedents and conse-quences. Then we examine the degree towhich the patterns, predictors, and conse-quences of organizational change over timeare consistent with the new institutionalism.To providea suitableempiricalcontext forexamining both neoinstitutional and moretraditional adaptation perspectives on orga-nization-environment relations, we use ex-tensive longitudinaldata from a large sampleof nonprofit educational organizations (pri-vate liberal arts colleges) facing strong insti-tutional pressures for conformity, as well asincreasingly strong technical pressures forinstitutionally illegitimate organizationalchange.Because "education s the sector thathas undoubtedly received the greatest scru-tiny by institutionalists" (Davis and Powell1992:357) and is often cited as an exampleof a highly institutionalized organizationalfield, examining educational organizationsover time also seems particularly appropri-ate for exploring the possible limits of thenew institutionalism.THE NEOINSTITUTIONALPERSPECTIVEReviews of the new institutionalismtypicallybegin with the warningthat there is no suchthing as "institutionaltheory."For example,while neoinstitutionalists typically have em-phasized how their perspective differs fromadaptation theories (Pfeffer and Salancik1978; Thompson 1967), DiMaggio andPowell (1991, chap. 1) also emphasize dis-tinctions between the new institutionalismand "old" institutional theory (Selznick1948). In fact, DiMaggio and Powell (1991)have acknowledged thatperhapsit is "easierto gain agreement about what [neoinstitu-tionalism] is not than what it is" (p. 1).


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814 AMERICAN SOCIOLOGICAL REVIEWTherefore,in defining the core of the new in-stitutionalism (and how to test its predic-tions), we identify anddiscuss specific influ-ential, representative pieces of neoinstitu-tional research.The most explicitly defined, most stronglystated, most influential theoreticalstatementof the new institutionalism is found in Di-Maggio and Powell (1983), and is summa-rized, clarified, and extended in DiMaggioand Powell (1991). Explicit and testable hy-potheses can be derived from this version ofneoinstitutionalism (Scott 1991). Conse-quently any attempt to discuss and test thecentral themes of neoinstitutional theoryshould begin by identifying the fundamentalpropositions of this perspective.Drawing on the earlier work of Meyer andRowan (1977), DiMaggio andPowell (1983)develop the notion thatorganizations exist infields of other organizations that influencetheir behavior. When these organizationalfields become "structurated" i.e., well-de-fined and mature), they exertpowerful influ-ences on the behavior of the organizationswithin them. As fields undergo increasingstructuration, he organizations,of necessity,become increasingly homogeneous. The col-lective rationality of organizations, alongwith their collective striving for legitimacyand social fitness, leads them to adopt uni-form, institutionalized structures and prac-tices that conform to the mandate of the in-stitutional environment. This view stands incontrast to an adaptationperspective, whichregards organizations as typically alteringtheir structures and practices so as to main-tain coalignment with changing general andlocal (andprimarilytechnical) environments(Thompson 1967). Also note the contrastmade explicitly in DiMaggio and Powell(1991:13) between the new institutionalismand the "old," more traditional institutionaltheory, which views organizations as con-tinually adapting and changing (Selznick1948). The new institutionalism regardsor-ganizational change as highly constrained;once an organizational field has been estab-lished, whatever change does occur will betoward greater conformity (DiMaggio andPowell 1983; Meyer and Rowan 1977; Scott1987). This trend towardconformityis a cen-tral element of the neoinstitutionalperspec-tive (Scott 1991).

Because institutional arrangements pre-clude the choice of certaincourses of action,the result is organizational nertia.DiMaggioand Powell (1983) state, for example, that"organizational actors ... construct aroundthemselves an environment that constrainstheir ability to change furtherin later years"(p. 148). The persistence, stability, and iner-tia thatresult from the legitimacy imperativeimposed by institutionalenvironmental con-straints suggest the following fundamentalneoinstitutionalproposition:Proposition 1: In a highly institutionalizedorganizational field, organizations are

not likely to change in ways contrarytothe demands of the institutionalenviron-ment.A related neoinstitutional proposition isthat organizations in mature, well-definedorganizational fields become less likely tochange in response to conditions in the tech-nical environment.This idea contrastssharp-ly with adaptationperspectives on organiza-tion-environmentrelations, in which organi-

zations are viewed as seeking primarily toadjust to technical environmentaldemands,such as changes in consumers' preferences,competitive conditions, and other character-istics of the task environment (Pfeffer andSalancik 1978; Thompson 1967). In otherwords, neoinstitutionalists view changingtechnical environmentalfactors as relativelyunimportant sources of organizationalchange in a matureorganizationalfield. Thisis not to say that the new institutionalismviews technical environments as having noinfluence on organizationalchange; as Scott(1991) observes, the difference is one of em-phasis.Proposition 2: In a highly institutionalizedorganizational field, changing technicalenvironmentalconditions exert little in-fluence on organizationalchange.

Furthermore,from a neoinstitutional per-spective, whateverorganizationalchange oc-curs in such settings is viewed as a continua-tion of the homogenizing process, impelledby institutionalratherthan technical forces.DiMaggio andPowell (1983) arguethat thiscontinuing push toward somorphismmay bedue to a numberof institutionalprocesses.AsScott (1991) states, however, "all are pre-


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NEW INSTITUTIONALISM AND ILLEGITIMATE ORGANIZATIONAL CHANGE 815dicted to have the same effect-increasedstructural isomorphism" (p. 171); thereforeScott refers to the predictionof homogeneityas DiMaggio and Powell's (DATE) "masterhypothesis."We express this idea in proposi-tional terms:Proposition 3: In a highly institutionalizedorganizational field, organizationalchange that does occur results in the in-creasing homogeneity of organizations.

Mimesis is one of the processes underly-ing DiMaggio and Powell's (1983) predic-tion of increased institutional isomorphism.This process is seen as likely to occur in anorganizational field that has no clear perfor-mance criteria and no understandingof thetechnologies employed. Organizationsoper-ating in fields with these characteristicscan-not objectively prove fitness to outsidersand lack proven methods to improve theirown functioning. Thus such organizationsare likely to mimic the most "legitimateandsuccessful" organizations in their field todemonstrate fitness by their similarity tothose organizations. DiMaggio and Powell(1983) suggest that mature organizationalfields, with their "stable and broadly ac-knowledged centers, peripheries, and statusorders ... will be more homogeneous..."(p. 156). In other words, isomorphism re-sults when organizations mimic high-statusorganizations.Proposition 4: In a highly institutionalizedorganizational field, organizational

change is explainedby organizations' n-creasing resemblance to the most presti-gious organizationsin their field.Homogeneity is also caused by the greaterinfluence of the overarching nstitutionalen-vironment relative to local environmentalconditions. DiMaggio andPowell (1983) andScott (1987) view institutionalization as aprocess that occurs at the sectoral or fieldlevel; thus it renders local environmental

variation ess important han a traditional ad-aptation perspective for explaining changesin organizationalpractices (as discussed ear-lier). DiMaggio and Powell (1991) make thispoint explicit in their more recent work, ar-guing that "institutionalizationtends to re-duce variety,operating across organizationsto override diversity in local environments"

(p. 14). Thus, from an neoinstitutional per-spective, differing local environmental con-tingencies should not be significant predic-tors of organizational change.Proposition 5: In a highly institutionalizedorganizational field, organizationalchange is not predicted by diversity inlocal environmentalconditions.

Also, performance implications are ex-plicit in the neoinstitutional school. Organi-zations adhering to rather than deviatingfrom the conformity required by institu-tional pressures are seen as increasing theirability to obtain needed resources and sur-vive. Ecologists also have embraced thisview. The "legitimacy" obtained from con-formity is "imperative"precisely because ofits presumed effect on organizational perfor-mance. This argument is made explicitly inother widely cited neoinstitutional works(D'Aunno, Sutton, and Price 1991; Meyerand Rowan 1977; Scott 1987). Meyer andRowan (1977:34), for example, state that"organizationsfail when they deviate fromthe prescriptions of institutionalizingmyths,"and that "organizationswhich inno-vate in important structural ways bear con-siderable costs in legitimacy."Proposition 6: In a highly institutionalizedorganizational field, organizations thatchange in institutionally illegitimateways typically suffer harmful perfor-mance consequences.

Although most neoinstitutionalistsrely onthe fundamental enets of the new institution-alism stated above, some emphasize the dif-fusion process surroundinginstitutionaliza-tion-that is, the emergence of new organi-zationalpracticesand the subsequentconver-gence or institutionalization of such prac-tices. The most prominent example of thisline of research is Tolbert and Zucker's(1983) study of the diffusion of civil servicereform among American cities. They offerthe general proposition that the primacy oftechnical versus institutional environmentalforces may change over time: "[O]nce his-torical continuity has established their im-portance . . . changes in formal structure areadoptedbecause of their societal legitimacy,regardlessof theirvalue for the internalfunc-tioning of the organization" (Tolbert and


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816 AMERICAN SOCIOLOGICAL REVIEWZucker 1983:26). These authors find thattechnical environmentalfactorspredictearly,but not late, adoption of organizational inno-vations. This issue has been examined aswell in a numberof other empiricalcontexts(Baron, Dobbin, and Jennings 1986; Burnsand Wholey 1993). This research generatesthe following:Proposition 7: Technical environmentalfac-tors are strong predictorsof adoption forearlier adopters of organizational inno-vations, but not for later adopters.

EMPIRICAL CONTEXT ANDHYPOTHESESIn an ideal empirical context for testing hy-potheses related to the propositions devel-oped above, institutionaland technical envi-ronmentswould be equally strongor equallyweak. Scott (1987) offers a 2 x 2 matrixus-ing these dimensions, with organizationssuch as hospitals, banks, and utilities in the"strong institutional/strong technical envi-ronment" cell. Scott (1987) places educa-tional organizations in the "strong institu-tional/weak technical"cell; this may explainwhy much of the neoinstitutional literaturehas emerged from observations of educa-tional organizations(Covaleski and Dirsmith1988; Meyer and Rowan 1977).Thus, although our choice of empiricalcontext may bias our results towardsupport-ing neoinstitutional predictions, we havechosen to use a set of nonprofiteducationalorganizations for our analyses, namely pri-vate liberal artscolleges. Neoinstitutionalistsview nonprofit educational organizations asjudged more strongly by the appropriatenessof their form than by their outputs and be-lieve that their survival requiresconformityto the demands of the institutional environ-ment (Davis and Powell 1992). Liberal artscolleges can be categorized in this way; inaddition, they possess several features thatmake them particularlywell-suited for test-ing predictions from institutional theory.First, liberal artscolleges operatein a highlystructurated organizational field. They re-semble each other closely, insofaras they areall nonprofit, private, independent schoolsproviding predominantlyundergraduate,ib-eral arts education. In addition, the average

liberal arts college has been engaged in thesepractices for almost a century. Finally, thetraditional undergraduate iberal arts educa-tion provided by these colleges historicallyhas been valued very highly in the UnitedStates (Breneman 1990); this fact suggeststhat strong institutional pressures operatewithin this mature, well-defined organiza-tional field. Thus, nonprofit liberal arts col-leges are classic examples of organizationsin a highly institutionalized organizationalfield that are likely to exhibit the inertia, sta-bility, persistence, and conformity predictedby neoinstitutional theorists.

Changes in the technical environments ofthese organizations,however, also make thiscontext appropriate or exploring the possiblelimits of the new institutionalism.Liberal artscolleges have faced powerful market-basedpressures for change since the early 1970s.According to educational researchers thetechnical environments faced by these col-leges have been alteredby several significanttrends, including: (1) a majorshift in poten-tial students' life goals away from more hu-manistic purposes and toward more personaleconomic objectives (Astin, Green,andKorn1987), (2) increasing emphasison specializedskills in the labor market (Cameron 1984),and (3) an expected and realized dramaticdecline in the population of traditional col-lege-age students (Stadtman1980).From an adaptation perspective (Thomp-son 1967), changes in life goals reflectchanges in consumers'preferencesthat couldhave strongly negative implications for lib-eral artscolleges. Students with increasinglyeconomic anddecreasingly humanisticgoalswould seem likely to be less interestedin thegeneral liberal arts education that these col-leges historically have provided. Similarly,an increasedemphasis in the labormarket onspecialized skills creates an additionalprob-lem by limiting employment opportunitiesfor liberal arts graduateswho lack technicalor professional skills (Stinchcombe 1983).The expected demographic decline exacer-bates these problems by further eroding analready diminishing studentbase. Thus, withthe shrinkageof the traditional studentbase,an adaptation perspective suggests that lib-eral arts colleges would seek to make majororganizational changes to more fully satisfytheir traditionalconsumers' desires or to at-


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NEW INSTITUTIONALISM AND ILLEGITIMATE ORGANIZATIONAL CHANGE 817tract new consumers. More directly, the ad-aptationperspective suggests that the neces-sary changes are likely to involve the pro-fessionalization/vocationalization of the lib-eral arts college curriculum-that is, the ad-dition of more professional, morecareer-ori-ented programsof study.This situationis particularly nterestingfortesting predictions aboutthe new institution-alism because this potential organizationalchange is perhaps the most illegitimatechange that a liberal arts college could con-sider, short of leaving the higher educationsector altogether. If one unifying historicalnormativebelief or value is held by the vari-ous constituents of nonprofit,privateliberalarts colleges (e.g., administrators, faculty,alumni, and philanthropic organizations), itis that liberal arts colleges are not intendedto be schools for professional, career-ori-ented training.In fact, Hannan and Freeman(1984:149) use exactly this type of change asa hypothetical example of a "core"organiza-tional change that is highly unlikely to occurbecause of the resistance that it would belikely to engender.For at least three reasons, a change towardprofessionalization or vocationalization canbe consideredillegitimate for liberalartscol-leges. Such a change is: (1) fundamentallyinconsistent with deeply institutionalizednorms and values in this field, (2) widelyviewed as a threat to the perpetuation ofthese norms and values, and (3) vehementlydenounced by significant actors in the insti-tutional environmentsof these colleges. Al-though the definition of illegitimate changemay not require the presence of all three ofthese factors, we show below that all threewere present in the context of our study.At the most foundational level, the adop-tion of professional programs is an illegiti-mate change simply because the practice ofprofessional education fundamentally con-flicts with the widely-and explicitly-es-poused collective mission of these organiza-tions, which is to provide liberal education.Liberal education, by its very nature, isaimed at imparting general knowledge andgeneral capabilities.Thus it inevitablystandsin opposition to professional studies, whichare intended to teach specific, marketableskills (Breneman 1990; Crimmel 1993; Ness1975; Pope 1990). The conflict between lib-

eral educationand professional educationex-ists at the most deeply rooted, ideologicallevel; indeed, the inconsistency betweenthese types of education is so fundamentalthat liberal education is sometimes definedas that type of higher education which doesnot consist of "professional, vocational ortechnical studies" (Crimmel 1993:59; alsosee Cohen 1964).While the prima facie inconsistency be-tween professional and liberal educationdemonstrates the illegitimacy of adoptingprofessional programs for liberal arts col-leges, additional indicators can be found indiscussions in the community of liberal artscolleges during period under study. French(1979), for example, captured the prevailingsentiment that "[liberal arts colleges] mustprotectthe purityof liberal andgeneral stud-ies from the barbariansnow at the gate whowould buryus with careerism, technologicalspecialization, and the cult of vocationalpreparation" p. 470). Such a comment sug-gests that the professionalization of liberalarts colleges was viewed as a significantthreat to the collective values of these orga-nizations.Authorswriting during this periodcharacterized professional education as "atime bomb" (McGrath 1975:24) and as an"instrumentof execution" that had placedliberal education "under siege" and threat-ened to "garrote" t (Stephenson 1974:386).The pressuresfor professionalization, it wasargued, were motivated by a "cult of rel-evance"(Adams 1975:341); andaccordingtosome, these pressuresthreatened o "bastard-ize the disciplines" (Adams 1975:340) and todeprive liberal arts colleges of their "spiritandsoul, feeling andpurpose,worthanddig-nity" (Bratton 1976:527).In 1975 even the presidentof the Associa-tion of American Colleges (AAC), the na-tional association of liberal arts colleges towhich more than 90 percent of the collegesin this sample belong, referred to pressuresfor professionalizationas "centrifugalforceswhich threaten to split us off from the cen-tral core of our educational mission" (Ness1975:72). It is also significant that the AACannual conference at which Ness made thisspeech was organized around the theme"Consumerism,Student Needs, and Institu-tional Integrity." Indeed, throughout the1970s the potential loss of integrity due to


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818 AMERICAN SOCIOLOGICAL REVIEWprofessionalization was an omnipresenttheme in the pages of the AAC journal,Lib-eral Education.In fact, most of the dialoguecited here was obtained from this journal.One representativepassage summarizesboththe threat posed by professionalization andthe implications:

It would be a mistake, in my opinion, for smallprivate colleges to seek more students by of-fering new programs in technical fields....Responding thoughtlessly to public demandsand budgetary pressures could easily rob lib-eral arts colleges of their very souls. If thatshould happen then what would their survivalbe worth? Given the choice between commer-cialization and integrity, I believe that smallliberal arts colleges should unhesitatinglychoose the latter, even if this means runningthe risk of extinction. (Isetti 1974:546)Finally, the illegitimacy of this innovationis reflected in the judgments passed by sig-nificant institutional actors during our studyperiod. The adoption of professional pro-grams would transform the college into an"educational service station" (Isetti 1974:

541), a "desecratedtemple" (Crimmel 1993:9), and/or an "academic theme park"(Crimmel 1993:13). Colleges consideringthe adoption of such programswere charac-terized as motivated by "the love of money"(Isetti 1974:543), depicted as engaging in"timorouspandering to the market"(Crim-mel 1993:120), and accused of "rankcom-mercialism" (Isetti 1974:541). Profession-alization of the curriculum would "activelysubvert the announced aims of the [liberalarts] college" (Crimmel 1993:31). Pope(1990) summarized the feelings of many inthe field of liberal arts colleges, stating that"for nearly 200 years, the best minds...have said that the only practicalcollege edu-cation is a liberal one," but that liberal artscolleges now risked sending the same mes-sage as do "vocationally oriented and mor-ally neutered public institutions . . .: jobtrainingis more important" p. 28).

It is hard to imagine a more illegitimatechange for a liberal arts college than pro-fessionalizing its curriculum.Rarely is a po-tential organizational change decried by in-stitutional actors in such strong moral, al-most religious, terms. Indeed, such a changeappears to be not only illegitimate, but he-retical (recall that potential adopters were

warned of "desecrating the temple," fallingvictim to "cult of relevance"andthe "cult ofvocationalpreparation,"and failing to "pro-tect the purity"of "thespiritandsoul"of lib-eral artsfrom the "barbarians t the gate").Thus the situation of privatenonprofitlib-eral arts colleges facing strong institutionaland technical environmental pressures isuniquelyappropriateor testing what the newinstitutionalism would (and certainly wouldnot) predict. Neoinstitutionalism suggeststhatin such a highly institutionalizedsetting,changes in the technical environmentare notlikely to have a significant effect on the col-leges. Organizationalchange will be mini-mal, according to this perspective; whateverchange might occur would lead to the in-creasing isomorphism of organizations. In alegitimacy-enhancingchange, for example, acollege would increasingly resemble thehigher-statusand more prestigious elite lib-eral arts colleges. Mission-altering changes,such as professionalizing liberal arts cur-ricula,would be extremelyunlikely given thestrong historical institutional pressures fac-ing liberal arts colleges and the illegitimacyof such a change. Finally, any organizationsthat chose to make such illegitimate changeswould be likely to suffer performance de-clines due to ignoringthe demandsof the in-stitutional environment.In contrast, a traditional adaptation per-spective suggests that technical environmen-tal pressures(stemmingfromchanges in con-sumers' preferences, specialized labor mar-ket demands, andthe diminishing numberofcollege-age students) will impel many non-profit liberal artscolleges to professionalizetheir curricula. Those colleges that face ad-ditional pressures from the local technicalenvironment will be particularly likely tochange. Finally, those that choose not tochange in this technically appropriatebut in-stitutionallyillegitimate manner are likely toexperience performance declines. We cannow examine whether (under these circum-stances) the observed actions of the collegesstudied, the significant predictors of thoseactions and the subsequent implications forperformanceare consistent with the new in-stitutionalism.In this discussion we suggest the follow-ing hypotheses, each corresponding to theneoinstitutional propositions developed


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NEW INSTITUTIONALISM AND ILLEGITIMATE ORGANIZATIONAL CHANGE 819above. Given the strong institutional pres-sures for stability andconformity facing lib-eral artscolleges:HI: Colleges will not be likely to change inillegitimate ways, such as moving to-ward professionalizing or vocational-izing the curriculum.H2: Changes in the colleges' technical envi-ronments will exert little influence onthe organizationalchanges they make.H3: Organizationalchanges made by the col-leges will result in the increasinghomo-geneity among these organizations.H4: Organizationalchanges made by the col-leges will be explained by colleges' in-creasing resemblance to the most presti-gious colleges.H5: Organizationalchange will not be pre-dicted by diversity in colleges' local en-vironmentalconditions.H6: Those colleges that make illegitimatechanges will be more likely, on average,

to experience organizationaldecline andorganizational death.In addition:H7: Technical environmental factors willpredict which liberal arts colleges wereearly adoptersof professionalprograms,but will not predict which colleges werelate adoptersof such programs.

METHODDataData for this study come primarilyfrom theHigher Education General InformationSur-vey (HEGIS) conducted annually by the Na-tional Center for Education Statistics. Weobtained additional data from the Compara-tive Guide to AmericanColleges and Univer-sities (Cass and Birnbaum 1971) and fromthe 1980 U.S. Census. Our final data set in-cludes annualinformationon programoffer-ings, degrees granted, and performance ofthe 631 colleges included in the study foreach year from 1971 to 1986. The study in-cludes all private, independent liberal artscolleges in the United States as of 1970, asclassified by the Carnegie Commission

(1970). Liberal arts colleges are readily dis-tinguished from otherhighereducationorga-nizations, which fall into one of the otherfour categories in the Carnegie Commissionclassification:researchuniversities,doctoral-granting universities, comprehensive col-leges anduniversities, andtwo-year colleges.The colleges in our study representthe com-plete population of Americanliberalartscol-leges during this period. We obtained con-sumer preference data from Astin et al.'s(1987) authoritative annual survey of200,000 Americanfreshmen,which has beenconductedannuallysince 1966.

For the theoretically motivated reasonsmentionedearlier, our study periodbegins in1971: The major technical environmentalchanges, although continuous, began toemerge more strongly in the early 1970s, asdocumentedby highereducationresearchers.Continuous yearly observations of these or-ganizations over the period from 1971 to1986 allows full considerationof both lead-ing and lagging organizationalresponses, aswell as an ample time frame for assessingperformance mplications.Change and Performance VariablesOrganizational change. Organizationalchange is the primary dependent variable inthe study and is also the independent vari-able of interest in Hypothesis 6. We mea-sured it as the first-timeaddition,to a liberalarts college's curriculum,of any one of fiveprofessional programs:business administra-tion, health, communications, public affairs,andcomputerscience.As noted above, the addition of such pro-grams (in fact, often entire academic depart-ments) has been used by Hannan and Free-man (1984:149) as an example of a "core"change for these organizations, in part be-cause it represents a movement away fromthe traditional goals and missions of thesecolleges.2 Such a changereflects changes notonly in admissions policies, resource alloca-

2 Programsmay encompass a numberof differ-ent courses of study; for example, business is aprogram, although it may include a number ofmajors.We view a programas having been addedwhen a college grantsa degree in that areafor thefirst time.


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820 AMERICAN SOCIOLOGICAL REVIEWtions, and other significant aspects of policy,but also changing cultures and a fundamen-tal change in the established, legitimate mis-sion of the organizationsstudied. Thereforein this study we examine the type of illegiti-mate core organizationalchange of interestto institutional (and ecological) theorists(Scott 1987).Organizational performance. We em-ployed two measures of organizationalper-formance to test Hypothesis 6. The first isenrollmentdecline. The enrollment of a lib-eral arts college is a highly relevantperfor-mance variable for the organizations in thisstudy and a widely accepted measure of or-ganizational health (or sickness) among col-leges. Educational researchers have estab-lished that declining enrollment is a majorindicator of organizational decline (Cheit1971; Gilmartin 1981), and ultimately is astrong predictorof organizationaldeath. Be-cause the variable of interest is organiza-tional decline and because it is not obviousthat liberal arts colleges continually anduniformly pursue enrollment growth, themeasure used is a dichotomous (yes/no)variable that captures whether a college'sFTE (full-time equivalent) student enroll-ment has decreased. (As noted in the "re-sults" section, we also examine whether theresults might be sensitive to alternativespecifications, such as 2 percent and 5 per-cent decline thresholds.)A second and related performancemeasurewe used is organizational death. Survival isas much an overarchinggoal for colleges asfor other organizations. This variable is oftheoretical interest in neoinstitutional andotherorganization-environment erspectives,and it is particularly relevant for nonprofitorganizationssuch as those studied here. Weexamine the effects of adding programs onmortalityover subsequentone- andtwo-yearperiods. (As stated in the "results"section,we also examine whether the results mightbe sensitive to alternativespecifications-forexample three years later and beyond.) Tosummarize, organizational "sickness" anddeath represent two universal measures oforganizational performance consistent withboth neoinstitutional (Meyer and Rowan1977; Zucker 1987) and traditionaladapta-tion (Thompson 1967) theories of organiza-tion.

Technical VariablesConsumer preferences. To address whetherorganizationalchange appears to follow con-sumers' preferences (Hypothesis 2), we ob-tained dataon the stated life goals of collegefreshmenfrom Astin's annual U.S. survey ofentering students (Astin et al. 1987). Severalquestions regarding goals were particularlyappropriate or this study. For example, wecollected data over time on responses toquestions measuring the students' goals to"be very well off financially" or to "developa meaningful philosophy of life." An in-creased trend towardemployment andfinan-cial goals suggests consumers' preferenceforprofessional (as opposed to liberal arts) de-grees. Similarly, a decreasing concern aboutdeveloping a meaningful philosophy of lifesuggests a decreasing preference for degreesin traditional iberalartsprograms.By exam-ining whether trends in these aggregatedpreferencesover time correlatewell with theaggregated changes of liberal arts collegestoward professional programs, we couldlearn whether technical environmentalchanges, such as changes in consumers'pref-erence, are significant predictors of organi-zation change in highly institutionalizedfields.Anothervariable that serves as a proxy forconsumers' preferences, but at the organiza-tional level, is a time-varying variable cap-turing the proportion of a college's enroll-ment composed of part-time students. Suchstudents are more likely than full-time stu-dents to prefer career-orientedprograms ofstudy.Thus, by examiningwhetherorganiza-tions with a higher proportion of part-timestudents are more likely to change, we ob-tain an additionaltest showing whethercon-sumers'preferencesaresignificantpredictorsof organizationchange in highly institution-alized fields.Local environment. We also used a num-berof measuresto assess differences in localenvironmentalconditions. Several measurescapturedenvironmentaldifferences attribut-able to geographicarea.Duringthe period ofstudy, economic growth varied considerablyacrossstates. Thus schools in more economi-cally advantagedstates may be less suscep-tible to the overall changes in environmentalconditionsdescribedearlier.Accordingly,we


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NEW INSTITUTIONALISM AND ILLEGITIMATE ORGANIZATIONAL CHANGE 821include a local environmental variable tocapture economic variation:per capita per-sonal income of the state in which the col-lege is located. A second variableoften dis-cussed by educationalresearchers s whethera college is in a rural (versus urban/subur-ban) setting. During the period of study, ru-ral areas in the United States were shrinking(in population and in economic terms) rela-tive to urban/suburbanareas. From a tradi-tional adaptation perspective, colleges insuch areas therefore would be consideredmore sensitive to changing technical environ-ments (and thus more likely to change). Wecoded colleges as rural (a dichotomous yes/no variable) if they were located outside anySMSA (standard metropolitan statisticalarea). Following the same logic, we includeda census variable capturingthe local schoolenrollment (primary and secondary) in acollege's county.Other local environmental variables arealso likely to affect the availablepool of po-tential students. The next measure is theschool's dependence on students who comefrom within the state. Schools with a histori-cally largerproportion of in-state students,because of their relative inability to attractstudents from the national population, arelikely to be more sensitive to the changingmarket conditions, and thus more likely tochange. We measuredthis time-varyingvari-able yearly as the number of in-state FTEstudentsdivided by the total numberof FTEstudents. A second measure is religious af-filiation (a dichotomous yes/no variable).Areligiously affiliated college is somewhatmore restricted in its pool of potential stu-dents, and thus is likely to be more sensitiveto technical pressures for change. From aneoinstitutional perspective, however, onemight expect these organizationsface strongpressuresnot to change.A final measure that captures local varia-tion in a college's susceptibility to changingtechnical environmentsis the ratio of tuitionrevenue to total revenue(Paulsen 1990). Thistime-varyingmeasurecapturesthe degree towhich an organization relies on the "cus-tomer" element in its technical environment(Thompson 1967), as opposed to other con-stituencies such as alumni, foundations, andchurches. From a traditionaladaptationper-spective, the higher this ratio, the more sen-

sitive one would expect colleges to be tochanging consumers' preferences, and thusthe more likely they are to change.Institutional VariablesHomogeneity. The extent of homogeneitywithin the field over time is the outcome ofinterest in Hypothesis 3. We operationalizedhomogeneity for a given year as the disper-sion around the mean number of profes-sional programsoffered in thatyear. We cre-ated the dispersionmeasure for each year by(1) computing the mean number of profes-sional programs offered in each year, (2)computing the mean deviation from thismean in each year, and (3) taking the abso-lute value of this mean deviation. Trends inthis dispersion measure were then consid-ered over time in testing Hypothesis 3. Thisapproach is consistent with DiMaggio andPowell's (1983:156) discussion regardingmeasuring homogeneity over time in termsof "standarddeviations" of structural ndica-tors.

Status. To test Hypothesis 4, (whether or-ganizational change is explained as an iso-morphic process whereby liberal arts col-leges increasingly resemble the most presti-gious organizationsin their field), one mustselect a group of high-status organizations.Fortunatelyan existing industry-specific in-dicator of organizational prestige is wellsuited to this purpose. We identify as mostprestigious those 62 organizations whichfilled the top three spots on Cass and Birn-baum's (1971) six-point selectivity index.The Cass and Birnbaum scale is a recog-nized measure of an institution's "quality,"and is compiled by acknowledged experts inthe industry.Because legitimacy is bestow-ed on an organization by others (Singh,Tucker, and Meinhard 1991), this indicatorof reputational/statusdifference is a particu-larly appropriate measure for the presentstudy.

Early versus late period. This variable isof interest in testing Hypothesis 7. WhereasTolbert and Zucker (1983) divided theirsample into four period-specific subgroups,we bisected our sample into early and latesubgroups (closer to those in otherearly/lateadoption studies, such as Burns andWholey1993). Ourmeasure is defined as a dichoto-


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822 AMERICAN SOCIOLOGICAL REVIEWmous (early/late) variable that captures theperiod before 1980 versus after 1980, andcreates two periods of equal length. (Asnoted in the "results"section, we also exam-ine whether the findings might be sensitiveto alternativespecifications.) We interact thisvariable with the technical variables de-scribedearlier to assess whetherthe relation-ship between the technical variables and theaddition of professional programs is differ-ent in early versus late periods. This ap-proach is more precise than analyzing twosubgroups separatelyand then attemptingtoexamine the comparative strengthof specificcoefficients and overall fit across subgroupequations (TolbertandZucker 1983).Control VariablesGiven the extensive literature relating sizeand age (Hannan and Freeman 1984) andfi-nancial well-being (Cyert and March 1963)to the likelihood of organizational change,we controlled for organizational age, size(FTE enrollment), andfinancial health (en-dowment per FTE) in all equations predict-ing program change (adding professionalprograms). In the pooled models predictingthe addition of professional programswe in-cluded measures of the prior numberof pro-grams alreadyoffered and whether a collegehad added a program in the prior period. Inthis way we controlled for the nonindepen-dence of observations across years (Allison1984). For the models predictingthe additionof a specific program, also to control fornonindependence, we added dummy vari-ables for whether the organization adoptedother professional programs in the same pe-riod. In addition, we controlled for the num-ber of organizations in the population thatpreviously had adopted a particular profes-sional program, given some evidence thatadopter density may be a significant predic-tor of organizational change (Haveman1993). We also included an ecological mea-sure of competition, namely local density(the number of other colleges in a college'scounty). The performancemodels included,as control variables, all of the variables weused to model change. Finally, the perfor-mance equations predicting enrollment de-cline controlled for enrollmentdecline in theprevious period.

AnalysesWe examined Hypotheses 1 through 4 usingdescriptive statistics and t- tests. Hypotheses5 through 7 requiredmore complex time-se-ries methods. We employed discrete-timeevent-history methodology to examine thecauses and the survival and enrollment con-sequences of adding professional programs(Allison 1984; Yamaguchi 1991). This formof analysis entails simple logit analysis ofpooled time-series datawherein multiple or-ganizationsareobserved at multiple, equallyspaced intervals. This allows us to estimatethe hazardof an event (professional programaddition, enrollment decline, and organiza-tional death) occurring in any one of t dis-crete time periods as a function of covariatesthat are allowed, but not required, to varyover time.The discrete-time model has the followinggeneral form:

log[P(t)/(1 - P(t)] = a + bjx1+ b2x2(t),where log(P(t)I(1-P(t)) represents the logodds of the event occurring for a particularorganizationat any time t, a represents thebaseline hazard of the event occurring, b,represents the change in the log odds foreach one-unit increase in a time-invariantcovariatexl, and b2 representsthe change inthe log odds for each one-unit increase in atime varyingcovariatex2(t).The discrete-time model, unlike the con-tinuous-time model, does not require exactinformationon the timing of events and thusis well suited to handling ties on the depen-dent variable. Accordingly it is appropriatewhen measurement s based on discrete timescoveringfairly large intervals(such as years)andwhen the event of interest sometimes oc-curs for a substantial number of organiza-tions at the same time, as in this study (Peter-sen 1991; Yamaguchi 1991). In virtually allcases the discrete-time model produces re-sults that closely approximate those pro-duced by continuous-time models (Allison1984).We employed the simplest form of modelin the analyses of adding a specific profes-sional programand of organizationaldeath(both of which are nonrepeatable events).Estimating the hazard of adding any of thefive professionalprogramsand of enrollment


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NEW INSTITUTIONALISM AND ILLEGITIMATE ORGANIZATIONAL CHANGE 8233.0

2.5E-

n

a-2.0

1971 1972 1973 197 19517 9717 9918 9118 93189518

.0

a-~~~~~~~~~~~Yac 1.0 Ma Nb o P Porm Ofrd 1 9

Source: stintal.98:7~s.

Figue: o 971 hean umber ofrfsinlprograms OffereSd, .8971or 1986, h enws26 SD

=1.57). The t-value for the difference between the means is 29.57 (p < .001, N = 566)decline, both of which are repeatableevents,requireda more complex analyticstrategy; nthese cases we applied appropriatecontrolsfor nonindependence of observations (vari-ables for "numberof professional programsoffered"and"added n last period").We con-ducted these two sets of analyses (adding aspecific professionalprogramandaddinganyprofessional program) to provide evidenceon overall change and on the specific com-ponents of that overall change. We discussthis issue again in the "results"section.RESULTSHypothesis 1 states that liberal arts colleges,as a highly institutionalized organizationalfield with strong pressures for stability andconformity, would be unlikely to change inways inconsistent with prevailing institu-tional constraints, such as professionalizingor vocationalizingthe curriculum.The aggre-gate evidence does not supportthis hypoth-esis, however: 447 of the 566 liberalarts col-leges that survived the 16-year period ofstudy changed the number of professionalprograms they offered. Figure 1 shows that

the mean number of professional programsoffered by these colleges was .98 in 1971 buthad climbed to 2.67 by 1986 (t = 29.57; p


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824 AMERICAN SOCIOLOGICAL REVIEW80-

03 Be FinanciallyWell-Off * DevelopMeaningful ifePhilosophy700

60

,p 50

WU40(00.6-w30

201020 + 3-+

1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986Year

Figure 2. Trends in Students Preferences and Life Goals, 1971 to 1986

professionalization of the curricula n liberalarts colleges. In addition, students'desire todevelop a meaningful philosophy of life ap-pearsto be correlatedstronglyandnegativelywith the time trend showing the increasedprofessionalizationof the liberal artscollegecurriculum. These results are inconsistentwith Hypothesis 2; they suggest thateven inthis highly institutionalized field, technicalenvironmentalforces (here,consumers'pref-erences) play a substantialrole in affectingorganizationalchange.Hypothesis 3 states that, given the stronginstitutionalpressuresfacing liberal arts col-leges, whateverorganizationalchange occurswill tend to increase homogeneity.Figure 3,however, shows no evidence of the homog-enization predicted by the neoinstitutionalperspective.In fact, Figure 3, which capturesthechangesin thedispersion around he meannumber of professional programs that theschools offered in each year, shows clearlythat the dispersion of professional programsoffered by liberal arts colleges has been in-creasing, rather than decreasing, over time.Figure 3 shows that this increaseddispersionfrom 1971 to 1986 is also statisticallysignifi-cant: When the mean absolute deviations for1971 are compared with those for 1986, theaverage organization is .64 away from the

meannumberof programsofferedin 1971, asopposed to 1.33 away fromthe mean numberof programs offered in 1986 (t = 17.74; p


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NEW INSTITUTIONALISM AND ILLEGITIMATE ORGANIZATIONAL CHANGE 8251.4

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more strongly so than the more prestigiouscolleges. Rather thanobserving colleges thatincreasingly resemble the more prestigiousliberal arts colleges over time, we find atrend toward greater dissimilarity betweenthe higher-andthe lower-statuscolleges. Thedifference in the magnitudeof change towardprofessionalization in these two groups ofcolleges from 1971 to 1986 is the critical sta-tistic (t = 6.92; p < .001). To summarizethen, the growing overall heterogeneity anda growing gap between higher-status andlower-status organizations suggest respec-tively the rejection of the neoinstitutionalHypothesis 3 and Hypothesis 4.The discrete-time event-history analysesreportedin Table 1 allow for a more directinferential test of Hypothesis 2 (whethertechnical forces affect change in a highly in-stitutionalized field) and Hypothesis 5,which refers to the differences in local envi-ronmental conditions. The most relevant re-sults are displayed in the first column ofTable 1, because they addressthe hypothesesmost directly.The first column addressestheaddition of any of the five possible profes-sional programs,while each of the otherfivecolumns provides additional information on

the addition of a specific program; thus weprovide evidence on overall change and itsspecific components. For example, the firstcolumn in Table 1 ("Any Professional Pro-gram") shows that the percentage of part-time students (a proxy for students' prefer-ence for career and professionally orientedprograms) was a significant predictor of add-ing professional programs: Schools with agreater proportionof part-time students in agiven period were more likely to subse-quently addprograms.This finding is incon-sistent with the neoinstitutional deemphasisof technical environments in highly institu-tionalized fields (Hypothesis 2), but quiteconsistent with a traditionaladaptation per-spective, which emphasizes factors such asconsumers'preferences.The statisticalsignificance of the measuresof local variation shown in the first columnin Table I does not support the neoinstitu-tional prediction regardingthe insignificantrole of differences in local environmentalconditions (Hypothesis 5). For example, as acollege's dependenceon in-state students in-creases, so does its likelihood of adding aprofessional program. Although this findingis inconsistent with Hypothesis 5, which ar-


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826 AMERICAN SOCIOLOGICAL REVIEW3.0

El Most restigious2.5 U Other(0OnD2.000

000 1.5

100 N

.5

0 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986Year

Figure 4. Mean Number of Professional Programs Offered; Most Prestigious Colleges versus OtherColleges, 1971 to 1986Note: For prestigious colleges, the mean numberof programsadded between 1971 and 1986 was .68(S.D. = 1.15);for othercolleges, the meannumberaddedwas 1.80 (S.D. = 1.32) The t-value for the differ-

ence betweenthe means was 6.92 (p < .001;N(prestigious)= 60, N(other)= 506).

gues that local situational variables will beoverriddenby macro-institutionalfactors, itis consistent with a traditional adaptationperspective:Faced with a relative inabilitytoattractstudents from the nationalpopulation,a school is more sensitive to changing tech-nical environmental conditions (and thus ismore likely to adapt). Similarly,schools witha religious affiliation were also significantlymore likely to add a professional program,in keeping with a traditional adaptationar-gument that such restrictions on the pool ofpotential students will make such schoolsmore sensitive to the technical environmen-tal pressures for change.Furthermore,schools that rely more heav--ily on tuition as a source of revenue weremore likely to add programs. Again, thisfinding is inconsistent with an institutionaldeemphasis on local environmental condi-tions (Hypothesis 5), and more consistentwith the adaptation perspective (Thompson1967), whereby an organizationdepends onthe "customer"element in its technical envi-ronment. Finally, two of the three regionalvariables capturing local environmentaldif-

ferences are also statistically significant, asa traditional adaptation perspective wouldsuggest (only the rural variable was not sig-nificant). Schools in more financially disad-vantagedstates-that is those with lower percapita income, were more likely to change,as were colleges with lower local school en-rollments. Taken together, these results arequite inconsistent with the notion of the newinstitutionalismthat, in a highly institution-alized field, organizational change will notbe sensitive to local environmental differ-ences (Hypothesis 5).Tables2 and 3 display a test of Hypothesis6, which refers to the performance implica-tions of institutionally illegitimate organiza-tional change. Table 2 shows the effect ofsuch a legitimacy-reducing change (i.e.,professionalization)on enrollmentdecline, awidely accepted measure of poor organiza-tional health among colleges (Collier andPatrick 1978). The results are inconsistentwith the institutionally based Hypothesis 6:Specifically, they show no harmful perfor-mance effects of illegitimate organizationalchange. In fact, Model 1 in Table 2 shows


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NEW INSTITUTIONALISM AND ILLEGITIMATE ORGANIZATIONAL CHANGE 827Table 1. Discrete-Time Event-History Analysis Showing Antecedents of Adding Professional Pro-

grams: American Liberal Arts Colleges, 1971 to 1986AnyIndependent Professional Communi- Public Health Computer

Variable Program Business cations Affairs Fields SciencePercent part- .174... .397+++ .093 .331... .374+++ .196++time students (.046) (.118) (.086) (.097) (.107) (.079)Tuition revenue/ .555+ 2.429+++ .245 1.082+ 1.251+ -.232total revenue (.315) (.800) (.652) (.642) (.711) (.604)Percent in-state .314++ 1.118... .498++ .132 .156 .384++students (.084) (.247) (.181) (.154) (.189) (.147)Religious .241++ -.104 .518++ .297+ .569+7 .310+affiliation (.089) (.252) (.184) (.178) (.214) (.150)Rural -.032 -.164 -.211 .510+ .252 .057

(.138) (.354) (.270) (.304) (.326) (.253)Local school -.052+ -.136+ -.034 -.202... -.103+ -.136++enrollment (.026) (.080) (.051) (.053) (.063) (.042)Per capita income -.822-4++ -.427-3.++ -.646-5 -.206-3+++ -.161-3+ .356-4in state (.343-4) (.118-3) (.649-4) (.666-4) (.816-4) (.596-4)Age -.960-3 _ 475-2 -.623-3 -.283-2 -.299-3 _ 359-2

(.1 10-2) (.303-2) (.219-2) (.218-2) (.284-2) (.195-2)Sizea .384*** .459** .536*** .431 ** .528*** 1.133***(.072) (.176) (.144) (.143) (.167) (.133)Endowment/ -.026 -.093* -.771-3 -.056 -.065 .036

FTE enrollment (.018) (.041) (.037) (.036) (.042) (.037)Local density -.018 -.059 -.035 .034 .041 .138-2(.022) (.061) (.051) (.047) (.052) (.038)Number adopters _.405-2 _.319-2 _.254-2 _*453-2** _.137-2 .011 ***in population (.269-2) (.329-2) (.161-2) (.162-2) (.449-2) (.771-3)Added business - .768* .129-2 .777 -1.324concurrently (.367) (.480) (.431) (1.021)Added communi- - 1.565*** - .239 .513 .335cations concurrently (.479) (.352) (.397) (.317)Added public affairs - .981 .310 .507 .640*

concurrently (.590) (.345) (.393) (.317)Added health fields .883 .479 .326 .249concurrently (.515) (.387) (.396) (.475)Added computer - .138 .671* .721 * .007science concurrently (.999) (.324) (.329) (.478)Prior number -.220***of programs (.034)Added program -.097in last period (.112)Constant -2.533 -3.708 -8.358*** -2.209 -4.841** -12.154***

(1.397) (2.282) (1.304) (1.181) (1.721) (1.169)Organization-years 6,745 1,486 3,863 3,440 2,937 5,320Chi-square 110.36*** 126.47*** 63.94*** 92.64*** 73.20* 332.63***

Note: Negative superscripts indicate the number of places the decimal point should be shifted to the left(e.g., .129-2 = .129 x 10-2 = .00129). Numbers in parentheses are standard errors.a Variable has been log-transformed.+p < .05 ++p< .01 +++p< .001 (one-tailed tests)* < .05 **p< .01 ***p< .001 (two-tailed tests)


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828 AMERICAN SOCIOLOGICAL REVIEWTable 2. Discrete-Time Event-History AnalysisShowing Effects of Adding Professional

Programs on Hazard of Enrollment De-cline: American Liberal Arts Colleges,1971 to 1986

Independent Variable Model 1 Model 2Added any professional -.286+++program (.080)Added business -.410+(.209)Added communications -.182(.149)Added public affairs -.269+(.150)Added health fields -.019(.183)Added computer science -.361++(.146)Percent part-time students -.020 -.022(.034) (.034)Tuition revenue/total -.645** -.664**revenue (.227) (.227)Percent in-state students -.118* -.123 *(.057) (.057)Religious affiliation -.076 -.073

(.063) (.063)Rural .179 .201(.104) (.101)Local school enrollment -.037* -.037*(.018) (.019)Per capita income in state .330-4 -.353-4(.261-4) (.26 1-4)Age .170-2* .166-2*

(.826-3) (.824 -3)Sizea -.116** -.117**

(.045) (.044)Endowment/ FTE -.019 -.019enrollment (.014) (.014)Local density .879-2 .826-2(.016) (.054)Number adopters in .014*** .015***population (.002) (.002)Constant -5.347*** -5.472**(1.092) (1.103)Organization-years 5,619 5,619Chi-square 115.72*** 120.20***

Note: Negative superscripts indicate the numberof places the decimal point should be shifted to theleft (e.g., .129-2 = .129 x 10-2 = .00129). Numbersin parentheses are standard errors.a Indicates that variable has been log-transformed.+p < .05 ++p< .01 ...p < .001 (one-tailed tests)p < .05 **p< .01 *** < .001 (two-tailed tests)

that adding any professional programs had asignificant negative effect on enrollment de-cline in the subsequentperiod.4 Model 2 inTable 2 shows that this overall result alsoholds for 3 of the 5 individual professionalprogramsexamined.InTable 3 we examine the performanceef-fects of adding professional programs usingorganizational death, another, more severediscrete performanceindicator. Both Model1 and Model 3, which estimate the effect ofadding any of the professional programs (af-ter one and two years, respectively), show re-sults thatagainareinconsistent with Hypoth-esis 6: The risk of organizational death doesnot increase after making an illegitimate or-ganization change.5 Models 1 and 3 do notappearto show an actual decrease in the riskof organizational death. However, Models 2and 4, which decompose the overall resultsby considering separately the effect of add-ing specific professional programs, merit ad-ditional discussion. In four of five instanceswith a one-year lag (Model 2) and in one offive instances with a two-year lag (Model 4),the absence of any organizationaldeaths fol-lows the addition of a specific professionalprogram addition preventedestimation of ahazard rate for thatparticularchange (this isnotedinTable 3 by ####). Inotherwords, the #signs in Models 2 and4 indicate that none ofthe organizationsthat added these particularprograms ailed in the subsequentperiod(oneyear in Model 2 and two years in Model 4)and thus that it was impossible to estimate

I We found very similar results at alternativespecifications of decline (e.g., 2-percent and 5-percentdecline thresholds). Also, it is not defini-tionally true that adding programs will enable acollege to avoid enrollment decline. To use ananalogy, if General Motors offers more modelsfor sale, this does not imply that they will sellmore cars.5 We also find no increased risk of mortalitywhen estimating the effect of professional pro-gramaddition on organizationalmortalityin later

years (t + 3 to t + 10). In addition, the general re-sult is not a function of the absence of events:Models 1 and 3 of Table 4 indicate a nontrivialnumberof organizationdeaths (28 and 26 respec-tively) during this period. Recent higher educa-tion research suggests that the number of deathshas been smaller than expected, in part becauseof the adaptive changes made by liberal arts col-leges (St. John 1991).


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NEW INSTITUTIONALISM AND ILLEGITIMATE ORGANIZATIONAL CHANGE 829Table 3. Discrete-Time Event-History Analysis Showing Effect of Adding Professional Programs on

Risk of Organizational Death: American Liberal Arts Colleges, 1971 to 19861 Year Later 2 Years Later

Independent Variable Model 1 Model 2 Model 3 Model 4Added any professional program -.968 .557(1.031) (.510)Added businessAdded communications .414(1.033)Added public affairs .388 .104(1.033) (1.104)Added health fields - 1.427+(.767)Added computer science - .397(1.048)Percent part-time students .119 .100 .171 .124(.238) (.203) (.201) (.188)Tuition revenue/total revenue .902 .308 -.009 -.477(1.392) (1.225) (1.247) (1.203)Percent in-state students' -.193 -.273 -.211 -.186(.367) (.325) (.335) (.324)Religious affiliation -.879 -.723 -1.105+ -.977+(.460) (.420) (.410) (.399)Rural .501 1.202+ .735 1.178+(.628) (.608) (.567) (.572)Local school enrollment .016 .126 .131 .142(.143) (.019) (.131) (.124)Per capita income in state -.261-3 -.143-3 -.263-3* -.132-3

(.199-3) (.178-3) (.175-3) (.173-3)Age -.008 -.009 -.007 -.009(.007) (.007) (.006) (.006)Sizea -1.073... -1.200... -1.129... -1.177...(.261) (.197) (.250) (.228)Endowment/FTE enrollment -.090 -.093 -.116+ -.135+(.075) (.064) (.064) (.060)Local density .007 -.053 -.041 -.062(.110) (.103) (.098) (.096)Number adopters in population .015 .005 -.005 -.005(.015) (.014) (.013) (.013)Constant -1.492 2.509 8.383 7.534(7.957) (6.979) (6.644) (6.531)Organization-years 6,759 6,834 6,736 6,805Chi-square 32.81 49.99*** 46.83*** 63.53***

Note: Negative superscripts indicate the number of places the decimal point should be shifted to the left(e.g., .129-2 = .129 x 10-2 = .00129). Numbers in parentheses are standard errors.aVariable has been log-transformed.

####Coefficient could not be estimated.+p < .05 ++p< .01 +++p< .001 (one-tailed tests)*p < .05 ** < .01 ***p< .001 (two-tailed tests)


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830 AMERICAN SOCIOLOGICAL REVIEWTable 4. Discrete-Time Event-History Analysis

Showing Antecedents of Adding Profes-sional Programs in Earlier and LaterPeriods: American Liberal Arts Col-leges, 1971 to 1986Independent Variable Coefficient (S. E.)

Percent part-time students -.094 (.087)x later periodPercent revenue from tuition -1.193+ (.584)x later periodPercent in-state students .098 (.167)x later periodReligious affiliation -.189 (.169)

x later periodRural x later period -.191 (.249)Local school enrollment -.57 -2 (.043)x later periodPer capita income in state .620-4 (.684-4)x later periodLater period -.106 (.848)Percent part-time students .222*** (.062)Tuition revenue/total revenue 1.021** (.389)Percent in-state students .273** (.112)Religious affiliation .322** (.120)Rural .051 (.186)Local school enrollment -.047 (.033)Per capita income in state -.1 1 1-3 (.473-4)Age -.968-3 (.111-2)Sizea .391*** (.073)Endowment/FTE enrollment -.027 (.018)Local density -.018 (.023)Number adopters in population -.361-2 (.401 -2)Prior number of programs -.213*** (.034)Added program in last period -.112 (.113)Constant -2.744(1.998)Organization-years 6,745Chi-square 1 8.86***

Note: Negative superscripts indicate the numberof places the decimal point should be shifted to theleft (e.g., .129-2 = .129 x 10-2 = .00129). Numbersin parentheses are standard errors.aIndicates that variable has been log-transformed.+p < .05 1+p< .01 ++p < .001 (one-tailed tests)*p< .05 ** < .01 *** < .001 (two-tailed tests)

these coefficients. The exceedingly low mor-talityratefollowing the addition of these pro-fessional programs suggests that suchchangesin fact often enhancedsurvival.Thusthe analyses for both performanceoutcomesindicate no support for the neoinstitutionalHypothesis 6, which proposes that adoptingillegitimate changes threatensorganizationalhealth and survival. On the contrary,the re-sults suggest that even institutionallyillegiti-mate changes-when consistent with techni-cal environmentaldemands-can enhance or-ganizationalperformance.In Table 4 we address whether technicalenvironmental factors predict the adoptionof professional programsfor earlier,but notlater, adopters of such programs (Hypoth-esis 7). Using interaction terms to capturepossible differences in the relationship be-tween our seven technical variables and pro-gram adoption in the early and the late pe-riod, Table 4 shows very little support forHypothesis 7; only one of the seven interac-tion terms emerges as significant.6 In addi-tion, a chi-squaretest for increase in fit sug-gests that adding the seven interactiontermsdoes not significantly improve the fit of themodel. Thus we found little supportfor thenotion that the relationship of technicalvariables to program adoption differs be-tween the early and the late period.DISCUSSIONWe have examined several fundamentalpro-positions from the new institutionalismper-spective. We formulated and tested corre-sponding hypotheses using data on U.S. lib-eral arts colleges, a mature, well-defined,highly structuratedorganizational field thatfaces very strong institutionalpressures andincreasingly strong technical pressures. Ourintent was to explore the possible limits ofthe new institutionalism by examining the

6 Given possible multicollinearityamong theseinteraction terms, we also estimated separatemodels for each term, but found no additionalevidence supportingearly versus late differences.In addition,we estimatedthese interaction effectsusing a continuous measure of time rather thanthe early/late indicator variable, and obtainedsimilar results. Again this finding suggests thatthe effect of technical variables on adoption didnot vary significantly as a function of time.


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NEW INSTITUTIONALISM AND ILLEGITIMATE ORGANIZATIONAL CHANGE 831robustnessof its applicability in this setting.Powell (1991), in a discussion of "expandingthe scope of institutionalanalysis,"suggestedthat to create "a robust institutionalism"there is a need for "large-scale, longitudinalstudies that explore the staying power of in-stitutional arrangements" (p. 201). In ourlarge-scale longitudinal study we found thatinstitutional arrangements may not alwayshave the staying power that previously wasassumed. The most prominent,most surpris-ing conclusion is that across seven differenttests of hypotheses, the neoinstitutionalper-spective consistently was unable to accountfor the observed organizationalbehavior andperformancein this empiricalcontext.First, technical environmentsappearedtoimpel a great many educational organiza-tions to make significant, legitimacy-de-creasing changes in their fundamental struc-ture and policy. In addition, the organiza-tional changes observed could not be ex-plained as resulting from processes of insti-tutional isomorphism. Ratherthanbecomingmore homogeneous over time, we observeda significant increase in heterogeneity. Fur-thermore, most colleges did not imitate thehighest-status colleges of their field, butrather became increasingly dissimilar tothese colleges, thus contributingto the sig-nificant decrease in the homogeneity of thefield. Also, contraryto neoinstitutional con-tention but in keeping with a traditionaladaption perspective, local technical envi-ronmental factors significantly predictedthemajor changes that the colleges undertook.Finally, and again contrary to neoinstitu-tional predictions, the institutionally illegiti-mate (but technically adaptive) changes weobserved had no negative implications-andoften had positive implications-for organi-zational survival and health.These results are somewhat striking for atleast three reasons. First, even though eachof the seven hypotheses is conceptually dis-tinct andwas tested separately, he results aresurprisinglyuniformin their lack of supportfor neoinstitutionalpredictions.Thus our re-sults and their implications do not hinge onany single assumption, hypothesis, opera-tionalization, or method of analysis.Second, although neoinstitutional theoristshave long used educational and other non-profit organizations as classic examples of

organizationsfacing strong institutional pres-sures, our results do not support this view, atleast in the case of nonprofit liberal arts col-leges. Even though the education sector hasbeen scrutinized by many neoinstitutionalists(Davis and Powell 1992), this scrutiny gen-erally has not involved large-scale longitudi-nal quantitative studies; nor has it been di-rected at identifying situations involvingboth strong institutionaland strong technicalpressures.Evidence for the constraint of in-stitutional forces may seem clear when tech-nical environmental forces are minimal, butthis point would not represent a strong testof the institutionalperspective; nor could itbe considered a basis for the rejecting moretraditionaladaptation-based heories in orga-nizational sociology.Third, the addition of professional pro-grams cannot be interpreted as evidence ofsymbolic changes in which adoption is de-coupled from actual implementation (Meyerand Rowan 1977; Westphal and Zajac 1994).The professionalization of the curriculum ofliberal arts colleges documented here re-sulted in massive changes in resource alloca-tion and shifts in the composition of thekinds of degrees granted.Our data show thatby 1986, 38 percentof all degrees granted byliberal arts colleges were professional de-grees, comparedto 11percentin 1971. In ad-dition, this core change was difficult andcontroversial for these organizationsbecauseof its institutional illegitimacy and its impli-cations for allocation of internal resources.Therefore the addition of professional pro-grams shown here could hardlybe describedas mythical or ritualistic actions undertakenlightly to appease institutional forces. In-deed, as discussed earlier,such core changeswere (and largely still are) antithetical to theestablished institutional order confrontingliberal arts colleges (Crimmel 1993); theycertainly were not motivated by a "legiti-macy imperative." Quite the contrary,thesechanges were largely illegitimate in terms ofliberal artscolleges' traditional missions.Note also how our results compare andcontrast with Brint and Karabel's (1991)qualitative study of community colleges. Al-though we share theirconcern about the newinstitutionalism'sneglect of issues relatingtoorganizational change (which they call "gapsin the new institutionaltheory" [p. 343]), our


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832 AMERICAN SOCIOLOGICAL REVIEWempiricalcontext is quite different.BrintandKarabeldescribed how powerful institutionalactors and organizational leaders mobilizedsupport for educational changes that werenot influenced by technical environmentalforces. We analyzedhow, why, and with whatconsequences organizationsfacing strongin-stitutional and technical environmentschanged in institutionally illegitimate buttechnically desirable ways. Our study sug-gests that maintaining or establishing legiti-macy should be viewed as only one of sev-eral possible paths towardorganizationalvi-ability, and that alignment with global andlocal technical environments(even at the riskof institutionalillegitimacy) representsan al-ternative path that provides an escape fromthe "ironcage" of a stronginstitutional envi-ronment.We also considered whether our surpris-ingly nonsupportive results for neoinstitu-tional predictions might somehow be sensi-tive to the definition of an organizationalfield. For example, are our more prestigiousand less prestigious liberal arts colleges inthe same organizational field? Theoreticallythe presence of status differences, such asthose observable in our sample of organiza-tions, is quite consistent with the notion of asingle, mature, institutionalized organiza-tional field. In fact, as stated earlier, Di-Maggio andPowell (1983) claim thatmatureorganizational fields typically have "stableandbroadlyacknowledgedcenters,peripher-ies, and statusorders"andtherefore thatthey"will be more homogeneous" (p. 156). Be-cause of the considerable similarities in so-cial identity shared by all schools in thissample, it is also hard to arguethat these or-ganizations were not in the same organiza-tional field. (Indeed, our focus on nonprofit,private liberal artscolleges, rather hanon alltypes of higher education organizations,re-flects a conservative definition of an organi-zational field.)7 Nonetheless we examinedthis issue empirically by dividing our sampleinto more prestigious and less prestigioussubsamples and performing our analyses

separatelyfor each. For bothsubsamples, wefound evidence of (1) a clear increase in themean number of professional programsovertime and (2) a clear increase in standardde-viations over time. This result provides fur-ther evidence of the increasing changes andheterogeneity,ratherthan inertia and homo-geneity.8The final hypothesis relating to institu-tional diffusion (Hypothesis 7) does not faremuch better than the six preceding hypoth-eses. As noted earlier, technical variableswere generally significant predictors of theadoption of professional programs,and thisrelationshipgenerally did not differ signifi-cantly for early and late periods. This find-ing is not consistent with TolbertandZucker(1983) or with subsequent studies thatshowed differences between early and lateadoption patterns. Several issues merit dis-cussion, however, before we interpret thisempiricalresult further.First, we purposely chose a mature,well-defined, highly institutionalized organiza-tional field for our study. In contrast, theTolbert/Zucker model stresses how, in anewly orming organizationalfield, technicalenvironmentalforces will be overshadowedover time by institutionalforces, which willlead organizationstowardisomorphism. It isless explicit as to when or why a diffusionprocess will begin or end in an alreadyhighly institutionalized field. In fact, Fried-land and Alford (1991:244) have suggestedthat neoinstitutionalists "do not have thetheoreticaltools" to address such issues, andpropose an interpretative nstitutionalism toaddress this shortcoming.In contrast,our ap-proach and findings suggest that simply re-discoveringthe role of technicalenvironmen-tal factors can lead to a more appropriatemodel of the diffusion of organizational in-novations(Oliver 1992).Second, it is not clear what one can con-clude from an institutionalanalysis of earlyversus late adoption and diffusion of organi-zationalpracticeswhen the diffusion leads togreaterheterogeneityof organizations,ratherthan greaterhomogeneity. In prior analysesit was presumedthat change in the later pe-

8 Figure2 showed hateliteschoolsalsochang-ed overtime;the ratesimplywas not at as highas fornonelite chools.

7 Organizational fields sometimes are definedmuchmore broadly- for example, by Fligstein's(1991) use of two-digit SIC codes. Such an ap-proach, although appropriate for that research,would be much too imprecise for this study.


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NEW INSTITUTIONALISM AND ILLEG

Exploring the Limits of the New Institutional Ism the Causes and Consequences of Illegitimate...

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