New Institutionalism

Background

Early twentieth-century "old institutionalism" in political science and economics concentrated on describing constitutions and government bodies. Behavioralism and rational choice theory then turned attention to individual behavior and pushed institutions into the background. March and Olsen (1984, 1989) criticized this, arguing that institutions are not merely aggregates of individual preferences but provide a "logic of appropriateness" defining what behavior is fitting, and they popularized the label "new institutionalism." Hall and Taylor (1996) sorted the movement into three strands, which share the view that institutions constrain actors' options and even shape their preferences and identities.

The three strands

Rational choice institutionalism treats institutions as rules of the game that reduce transaction costs and solve cooperation problems. Douglass North (1990) defined institutions as "the rules of the game in a society," and Oliver Williamson (1985) explained firms and contract forms through transaction costs. Historical institutionalism focuses on path dependence and critical junctures through which past institutions constrain later policy choices (Thelen and Steinmo, 1992); Hall and Soskice's (2001) "varieties of capitalism" compared liberal and coordinated market economies. Sociological institutionalism holds that organizations adopt forms taken for granted in society to gain legitimacy rather than efficiency. Meyer and Rowan (1977) described formal structures adopted as "myth and ceremony," and DiMaggio and Powell (1983), revisiting Weber's "iron cage," explained how coercive, mimetic and normative isomorphism make organizations in a field resemble one another. Scott (1995) laid out the regulative, normative and cultural-cognitive pillars of institutions.

Institutional change and critiques

New institutionalism was criticized for explaining stability well but change poorly. Streeck and Thelen (2005) identified gradual modes of change that need no major shock, including layering new rules onto old ones, conversion of institutions to new functions, and drift as environments change. Vivien Schmidt (2008) proposed "discursive institutionalism" as a fourth strand in which ideas and discourse drive change. Critics also note that the three strands define institutions differently, making a unified theory difficult, and that they underplay agency, prompting work on "institutional entrepreneurs" and the institutional work actors perform. These debates connect to the long-running controversy over structure and agency.

FAQ

What counts as an "institution" in new institutionalism?

Not only formal laws and rules but also customs, norms and taken-for-granted cognitive frames. Emphasis varies: rational choice institutionalism stresses rules, sociological institutionalism culture and cognition.

What is institutional isomorphism?

The tendency of organizations in the same field to adopt increasingly similar structures because of legal coercion, imitation of successful organizations and the spread of professional norms.

Sources reviewed: 2026-10-26

References

1. Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2), 340–363.
2. DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160.
3. March, J. G., & Olsen, J. P. (1984). The new institutionalism: Organizational factors in political life. American Political Science Review, 78(3), 734–749.
4. March, J. G., & Olsen, J. P. (1989). Rediscovering Institutions. New York: Free Press.
5. North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.
6. Williamson, O. E. (1985). The Economic Institutions of Capitalism. New York: Free Press.
7. Powell, W. W., & DiMaggio, P. J. (Eds.). (1991). The New Institutionalism in Organizational Analysis. Chicago: University of Chicago Press.
8. Thelen, K., & Steinmo, S. (1992). Historical institutionalism in comparative politics. In S. Steinmo, K. Thelen & F. Longstreth (Eds.), Structuring Politics (pp. 1–32). Cambridge: Cambridge University Press.
9. Hall, P. A., & Taylor, R. C. R. (1996). Political science and the three new institutionalisms. Political Studies, 44(5), 936–957.
10. Scott, W. R. (1995). Institutions and Organizations. Thousand Oaks, CA: Sage.
11. Hall, P. A., & Soskice, D. (Eds.). (2001). Varieties of Capitalism. Oxford: Oxford University Press.
12. Schmidt, V. A. (2008). Discursive institutionalism: The explanatory power of ideas and discourse. Annual Review of Political Science, 11, 303–326.
13. Streeck, W., & Thelen, K. (Eds.). (2005). Beyond Continuity: Institutional Change in Advanced Political Economies. Oxford: Oxford University Press.