INSTITUTIONALISM

Lesson 4

Introduction

Lesson 4 presents topics regarding the Institutionalism as one of the theories under
positivism. It discusses the definition, historical background, key concepts, contributors,
strengths and weaknesses of the theory.

Objectives

At the end of this lesson, you should be able to:

1. Identify and explain the concepts of the Institutionalism theory;

2. Enumerate the contributors to the theory and explain these contributions; and

3. Explain the strengths and weaknesses of this theory.

Topic Outline:

1. Institutionalism

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 Try this!

Identification

Instructions: Read each term carefully and provide the definition for each. Write your answer on
the provided line.

1. Institution - _________________________________________

2. Formal Institution - _________________________________________

3. Informal Institution - _________________________________________

4. New Institutionalism - _________________________________________

5. Old Institutionalism - _________________________________________

6. Historical Institutionalism - _________________________________________

Think ahead!

Instruction: Read and answer the following questions.

1. What is the difference between formal and informal institutions?

2. How does institutions control human behavior? Explain and give examples.

3. How does institutionalism view society? Explain.

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 Read and Ponder

Institutionalism

Institutionalism is an approach, in social science, that emphasizes the role of institutions

(both formal and informal) and is frequently characterized by the attention it gives to history
(Barkanov, 2013).

It is a theory that sees institutions built by humans as restrictions that structure political,
economic, and social interactions and refers to the interaction of different institutions of society
and how their dynamics, rules and norms determine the behavior and actions of people (Jose &
Ong, 2016).

Old Institutionalism focuses on how formal institutions control human behavior while
New Institutionalism recognizes the importance of both formal and informal institutions in
shaping the behavior of society (Jose & Ong, 2016).

Micro Institutionalism refers to the processes of institutionalization within the

organization while Macro Institutionalism refers to the tendency of organizations to arrange
their formal structure not in response to the technical needs of the organization but in accordance
to widely accepted rules (Jose & Ong, 2016).

Classifications of New Institutionalism

1. Rational-Choice Institutionalism

It examines how human behavior is shaped by institutions by the creation of expectations

on the possible consequences of certain options. This type is rooted in the type of microanalysis
as suggested by rational choice theory (Jose & Ong, 2016).

2. Historical Institutionalism

This type emphasizes how timing, sequences and path dependence (it happens when the
decisions presented to people are dependent on decisions or experiences made in the past) affect
institutions and shape social, political, economic behavior and change. It states that many
outcomes are possible, small events and flukes can have larger consequences, actions are hard to
reverse once they take place and outcomes may be inefficient. It also focuses on history to
understand why specific events happen (Wikipedia , 2021).

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3. Sociological Institutionalism

It defines institutions more broadly to include informal and formal customs and rules and
focuses on how values and identities shape individual’s perceptions of their concerns.

Historical Background

Institutionalism appeared in America during the late 19 th and early 20th centuries.
Thorsten Veblen was one of the leading figures of this approach described the neoclassical
approach as too focused on individual and believed that institutional and socio-cultural
context influenced individuals (Jose & Ong, 2016).

Institutionalism found its way to Anthropology when Karl Polyani, in his work during the
middle of the 20th century, argued that economic interactions are historically dependent and can
only be understood in terms of their social context (Jose & Ong, 2016).

During the middle 20th century, this approach also made an appearance in political
science through Carl J. Friedrich. He stated that constitutionalism was exemplified by both the
concern for individual liberty and institutional agreements so that the concentration of power
may be avoided (Jose & Ong, 2016)

Chester Irving Barnard made possible the introduction of this approach in sociology. He
argued that an organization is an intricate system of collaboration and stressed the need to
comprehend individual behavior that created it.

This approach was replaced by other social science theories that emphasized on social
structures and individual behavior after World War 2. In the 80s, studies in social structures
paved way for a resurgence of interest in institutions that led to the birth of New Institutionalism.
This was started by James March and Johan Olsen who reacted to behaviourism and the
increasing influence of rational choice theory. They stated that institutions themselves are
important and as an indispensable variable in political results and as epitome of standards and
power relations. Institutions ascribe meaning to such relations and provide the context within
which relation occur (Jose & Ong, 2016).

Concepts in Institutionalism

1. Institutions

Samuel P. Huntington stated that institutions are stable, valued and recurring patterns of
behavior. It could also refer to mechanisms that govern behavior of a set of individuals within a
given community. It is also identified with a social purpose, transcending individuals and
intentions by mediating the rules that govern living behavior (Wikipedia, 2020).

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 Geoffrey M. Hodgson said that it is misleading to state that institution is a form of
behavior. He argued that institutions are integrated systems of rules that structure social
interactions (Wikipedia, 2020).

According to Douglas North, institutions are referred to as the rules of the game. These
are humanly devised constraints that affect human interaction, which were made by people to
enable them to control their environment for the purpose of bringing certainty in an uncertain
world and is a method of minimizing transaction costs or the costs of relations between people
(Jose & Ong, 2016). Examples are the government and the church or religion.

2. Formal Institutions

These are institutions that are created with the intent of governing human behavior and
are legally introduced and enforced by the state (Libretexts, 2021). Examples of this kind of
institutions are the following: government, religion, educational institutions, etc.

3. Informal Institutions

These refer to rules governing behavior outside the official channel/formal institutions
and may have constitutive and regulative effects on human behavior. The term constitutive refer
to aspects of culture that affect economic behavior while regulative effects refer to the ways in
which values and beliefs of a society are manifested through social norms and behaviors that
regulate/control how a person acts/behaves. Example of this type of institution is courtship and
marriage, which varies from one society to another (Jose & Ong, 2016).

Formal and informal institutions, according to Geoffrey Hodgson, controls and enables
human behavior. Rules imposed imply constraints but they also enable choices and actions that
would not exist without said rules. Example, language rules enable people to communicate (Jose
& Ong, 2016).

Strengths and Weaknesses

The strength of rational choice institutionalism is its emphasis on the role of deliberate
interaction in determining results. It also explains the origin of institutions, the functions they
perform, the benefits they provide, and why certain institutions continue to exist by claiming that
their existence continue based on the benefits that they deliver. Its weakness is the claim that
rationality is the basic factor of human choice in all activities (Jose & Ong, 2016).

Sociological institutionalism’s strength is its broader definition of institutions that

involves formal and informal rules, norms and conventions. It claims that both formal and
informal institutions are made up of actors which in turn shape the way they view the world. Its
weakness is its focus on macro-level analysis which ignores the actors involved in the process
and the result begins to look like action without agents (Jose & Ong, 2016).

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 The strength of historical institutionalism is its broader definition of institutions, which
is similar to the strength of sociological institutionalism and its focus on the effects of
institutions over time. It also explains how a particular set of institutions can influence the
behavior of actors who created them. Its weakness is on its inability to offer a refined
comprehension of how institutions affect human behavior (Jose & Ong, 2016).

See if you can do this!

Activity 1 – Quiz

1. What are the key concepts of institutionalism? Explain each concept briefly and provide an
example for each.

2. How do the classifications of new institutionalism differ?

Activity 2 – Powerpoint Presentation

Instructions: Create a powerpoint presentation about the Institutionalism. Your presentation must
not be more than 20 slides and not less than 15 slides.

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