New Institutional Theory

New Institutional Theory explores how organizations and individuals are influenced by established norms, rules, and cultural practices within their environments. It suggests that institutions—like laws, traditions, and social expectations—shape behavior by creating shared standards that are often followed even without actual regulation. This theory emphasizes that organizations don’t operate solely based on efficiency or profit, but also to gain legitimacy and support from their surroundings. In essence, it highlights the power of societal norms and frameworks in guiding decision-making and organizational practices.