What is institutional isomorphism?

When institutions are said to be isomorphic, it means that they are similar in practice and procedure. This can occur due to one organization imitating another or developing independently but under similar circumstances. The word "isomorphic" comes from the Greek "iso," meaning "equal," and "morphosis" meaning "to form." The prevailing theory of institutional isomorphism maintains that any organization, regardless of how unique it sets out to be, will eventually operate in much the same way as other organizations of its kind. Institutional isomorphism has three sub-categories:Normative isomorphism occurs when organizations must conform to professional standards in order to continue as a competitive force in their network, such as licensing or employee standards. Mimetic isomorphism occurs when the organization elects to mimic another, namely one that is leading in a market. This is typically done when the best independent course of action seems unclear. Coercive isomorphism occurs when the organization is shaped by the public and professional opinion of the world around it and must adhere to the social standards of the society in which it operates.

Insitutional isomorphism is a description of an often-predicted phenomena whereby global institutions tend towards homogenization of structure, goals, and function. These predictions are borne out when, for instance, a new nation enters the global stage and quickly adopts diplomatic, economic, and political systems that are replicative of those already existing on the global stage. This can occur because of coercive cultural or diplomatic pressures from other groups on the global stage, out of a belief that existing structures have developed because they genuinely work, or out of a desire to be seen as legitimate within established systems. These three pressures work together, for better or worse, to produce a generally standardized global approach to economics, schooling, legal systems, and many other institutional forms.

Institutional isomorphism occurs when two organizations are similar to each other. Paul DiMaggio and Walter Powell developed the concept of institutional isomorphism. In the paper “The iron cage revisited institutional isomorphism and collective rationality in organizational fields,” they discuss what makes organizations similar. They find that the main drivers are rationalization and bureaucratization. These forces lead to organizations acting in a similar manner because of standardized processes and the desire to maximize their outcomes, typically profitability for businesses. However, institutional isomorphism is more likely to occur in mature industries, and it comes about as organizations seek legitimacy in these industries, which means they may not actually be maximizing efficiency. They also discuss the reasons institutional isomorphism can occur. These reasons are classified into three types of isomorphism: coercive, mimetic, and normative.
Coercive isomorphism occurs when outside forces shape organizations into a similar form. These types of forces include cultural norms or societal regulations. To adhere to these requirements, the organizations become similar, since there is often only one way to meet these requirements.
Mimetic isomorphism occurs when there is significant uncertainty about the best path forward in a given area, so organizations mimic each other or the market leader. This type of isomorphism makes organizations similar as they pick up traits of other organizations that they believe are beneficial. The goal of this mimicry is to make sure that the organization picking up the “beneficial trait” does not fall behind. This type of mimicry, however, can be risky because it can occur without a full understanding of why the “beneficial trait” leads to positive outcomes in another organization, or traits that are even negative instead of beneficial can be selected. However, because this type of mimicry superficially reduces uncertainty, it is still often done by organizations.
Normative isomorphism occurs when professional standards shape organizations. This can be due to licensing requirements or education for a given profession or larger professional organizations that develop standards for an industry. This leads to a labor pool for multiple organizations that has standardized ideas about the way to do things. This, in turn, leads to uniformity of the organizations, since they are all hiring from the same labor pool.
http://faculty.babson.edu/krollag/org_site/org_theory/Scott_articles/dimag_powel.html