Is formal structure a corporate lie?

In this article, I would like to reflect on reading a few articles related to the institutional theory, how they relate to my experience and my research.

First, there is a paper by Meyer and Rowan (1977) looking at formal structure as myth and ceremony. The known examples that come to mind include greenwashing, agile practice adoption, and hiring for diversity and inclusion. Being a startup entrepreneur, what strikes me is the mission and vision used by startups as a myth to motivate employees, get customer support, and raise investment. ‘Making the world a better place’ became such a cliche that even TV sitcoms like Silicon Valley are making fun of it. 

What is especially interesting to me is whether ‘impact washing’ has indeed sinister motivations of the managers behind them or whether it breaks down for some other reason. It is easy to believe that young entrepreneurs indeed have inspirational ambitions when they start a company but succumb to dangers and temptations as their companies grow bigger. An illustrative that comes to mind is Google that adopted the slogan ‘Don’t be evil’ in their early days but had to put it down later on under the pressures of public scrutiny of the ethics of their practices. One explanation for this could be an institutional isomorphism (DiMaggio and Powell, 1983), another explanation is competitive pressures and competitive isomorphism (Hannan and Freeman, 1977). Further research would be helpful to shed light on these questions.

I was also trying to reflect on how this paper (Meyer and Rowan, 1977) could connect to my research. I am currently looking into the theory and practice around so-called ‘self-managing organizations’. A Self-Managing Organization (SMO) was defined quite recently in the paper by Lee and Edmondson (2017) as a model of organization that has (1) a radically decentralized authority (2) across the whole organization, which (3) is accomplished through a formal system. In its essence, SMO theory is about the organization and going beyond the hierarchy.

What made me wonder is whether self-management will follow the fate of agile methodology. Namely, that first it starts as a niche concept, then innovators adopt it, and then laggards adopt it ceremonially but not in practice. Even right now we can already see the beginnings of this in modern IT consulting firms. One of the challenges of the research of self-managing organizations is the fact that the field is very young and there is no clear definition or agreed standards. What happens as the result is that a variety of organizations call themselves self-managing even if the hierarchy inside is very rigid and there are very few processes supporting self-management. This is probably going to do the focus of my PhD work, at least in the beginning, as in my opinion, we need to define the processes that define self-managing organizations and then see if those indeed create certain existing configurations in the market (Meyer et al., 1993). 

Talking about entrepreneurship, I also found the research by Granqvist and Gustafsson (2016) very insightful. What was fascinating was seeing the parallels between founding a university and founding a startup in terms of the temporal institutional work. The authors (Granqvist and Gustafsson, 2016) described how when trying to enact change actors are constructing urgency, entraining, and enacting momentum. Namely, the actors are outlining the windows of opportunity and that those are going to close soon, making the change connected to other temporal and transient factors as to create a ‘now or never’ feeling, and finally putting on a bit of a show and celebrating every small win as to engineer momentum and show everyone around that the enterprise is already successful. 

The parallel with startups is striking and I am judging it from my own experience of building a marketplace in Finland (Syrotkin, 2017). Startups are said to live or die primarily based on their timing, whether the market is ready for the innovation or they are too early. Startups also live on the momentum which is colloquially called the ‘startup hype’. Remembering my own startup experience, despite some grim statistics saying that 95-99% of startups fail, there is a huge pressure to say that everything is going great whenever someone asks. This is probably one reason for the recent emergence of so-called decorators (in comparison to traditional startup accelerators) that are focusing on the mental health and personal development of startup founders. A part of this phenomenon could be explained by the temporal institutional theory perspective (Granqvist and Gustafsson, 2016) and part could be driven by institutional isomorphism (DiMaggio and Powell, 1983).


DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American sociological review, 147-160.

Granqvist, N., & Gustafsson, R. (2016). Temporal institutional work. Academy of Management Journal, 59(3), 1009-1035.

Hannan, M. T., & Freeman, J. (1977). The population ecology of organizations. American journal of sociology, 82(5), 929-964.

Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American journal of sociology, 83(2), 340-363.

Meyer, A. D., Tsui, A. S., & Hinings, C. R. (1993). Configurational approaches to organizational analysis. Academy of Management journal, 36(6), 1175-1195.

Lee, M. Y., & Edmondson, A. C. (2017). Self-managing organizations: Exploring the limits of less-hierarchical organizing. Research in organizational behavior, 37, 35-58.

Syrotkin, D. (2017). Development of a marketplace startup in Finland.

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