Where does institution collide?

The humanly devised constraints that structure political, economic, and social interaction: the formal rules, informal norms, and their enforcement that make up the rules of the game in a society. Douglass North set out this account in Institutions, Institutional Change and Economic Performance (1990), where an institution is a constraint, not a body. He draws a sharp line between institutions, the rules, and organizations, the players who act within them. The referent is a rule set that reduces uncertainty and shapes incentives, and North's claim is that these constraints, not the organizations themselves, explain long-run economic performance. An institution in this meaning is not a building and not a firm; it is the constraint under which firms and people transact.[1]

Unit

A society's formal and informal constraints on interaction

Recovery means

Not applicable

Measured by

Studied through economic history and comparative institutional analysis, tracing how formal rules, informal norms, and enforcement shape transaction costs and growth

Institutions as taken-for-granted, rationalized rules and beliefs that organizations adopt to secure legitimacy rather than efficiency. In Meyer and Rowan's 1977 account, formal structures reflect institutionalized rationalized myths in the wider environment; organizations incorporate them ceremonially to appear proper, sometimes decoupling them from the actual work. DiMaggio and Powell (1983) extended this to explain why organizations in a field come to resemble one another: coercive, mimetic, and normative pressures drive institutional isomorphism. The referent is a legitimated practice or belief carried in an organizational field, and what an institution does here is confer legitimacy, not lower transaction costs. This is close to North's world in name only: his institution is a constraint that shapes incentives, while this one is a taken-for-granted meaning that shapes what counts as proper.[2][3]

Unit

A legitimated, taken-for-granted practice or belief in an organizational field

Recovery means

Not applicable

Measured by

Studied through field-level comparison, tracing the spread of practices and the structural similarity (isomorphism) of organizations under legitimacy pressure

A place of residence and work where a large number of like-situated people, cut off from the wider society for an appreciable time, together lead an enclosed, formally administered round of life. Erving Goffman coined the term in Asylums (1961), listing prisons, mental hospitals, monasteries, barracks, and boarding schools as examples; what unites them is that the ordinary barriers between sleep, play, and work break down, and a single authority runs all of it. The referent is a specific kind of establishment defined by its encompassing control over inmates, and the object of interest is what such a setting does to the self. It shares the word with the everyday establishment meaning but adds a strict criterion, and it shares nothing with North's rules or the sociologists' rationalized myths.[4]

Unit

An enclosed establishment that administers the whole life of its inmates

Recovery means

Not applicable

Measured by

Studied ethnographically, through close observation of enclosed settings and the effect of their regimes on inmates' sense of self