Question

What is an example of an industry in which institutional theory seems to explain the behavior of firms?

Answer 1

One of the example could be individual organization decision for Business Process Outsourcing (BPO) engagement model in financial services or telecommunication industries. It is sometime called as “back office” function inclusive of finance and accounting, procurement, human resource, etc. Thus, institutional theory generally centers around the extent to which organizations copy one another’s strategies. Now in BPO’s case the institutional theory applies when an organization takes certain decision (Organizational behavior) based on certain values , norms , beliefs, etc. and this could subject to the pressure from the taken from granted practices in the institutional environment.

Another example could be fast-food restaurants where one organization introduces innovative idea and then copied by the others to follow the bandwagon.