Exploring the Limits of the New Institutionalism: The Causes and Consequences of Illegitimate Organizational Change

While the "new institutionalism" has emerged as a dominant theory of organization-environment relations, very little research has examined its possible limits. Under what circumstances might the neoinstitutional predictions regarding organizational inertia, institutional isomorphism, the legitimacy imperative, and other fundamental beliefs be overshadowed by more traditional sociological theories accentuating organizational adaptation, variation, and the role of specific global and local technical environmental demands? We analyze longitudinal data from 1971 to 1986 for 631 private liberal arts colleges facing strong institutional and increasingly strong technical environments. Our findings reveal surprisingly little support for neoinstitutional predictions: (1) Many liberal arts colleges changed in ways contrary to institutional demands by professionalizing or vocationalizing their curricula; (2) global and local technical environmental conditions, such as changes in consumers' preferences and local economic and demographic differences, were strong predictors of the changes observed; (3) schools became less, rather than more, homogeneous over time; (4) schools generally did not mimic their most prestigious counterparts; (5) the illegitimate changes had no negative (and often had positive) performance consequences for enrollment and survival. Our results suggest that current research on organization-environment relations may underestimate the power of traditional adaptation-based explanations in organizational sociology.