Most recently, with the advent of neoinstitutionalism, a number of theorists have emphasized the importance of cognitive belief systems - organizations are assessed in terms of their consistency or congruence with cultural models or rules specifying appropriate structures or procedures. Following the lead of Berger and Luckmann (1967), who emphasized the extent to which institutionalized patterns provide a basis for predictability and order, Meyer and Rowan (1977) were among the first to call attention to the ways in which organizations seek legitimacy and support by incorporating structures and procedures that match widely accepted cultural models embodying common beliefs and knowledge systems. These and related contributions represent considerable diversity but also reflect a common underlying conception, which has been formulated by Suchman (1995: 574) as follows: "Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs and definitions."
The normative component, stressed by Weber's discussion of administrative systems, places emphasis on "normative rules that introduce a prescriptive, evaluative, and obligatory dimension into social life"
Cognitive elements are the rules that specify what types of actors are allowed to exist, what structural features they exhibit, what procedures they can follow, and what meanings are associated with these actions. Hence, cognitive elements are more basic to the operation of social systems and provide frameworks on which normative and regulative systems are constructed. The new institutionalism has emphasized the importance of these cognitive facets of institutions (see Meyer and Rowan, 1977; Zucker, 1977; DiMaggio and Powell, 1991). The prevalence or density of a form or practice is often employed as an indicator of cognitive legitimacy (Fligstein, 1985; Westphal and Zajac, 1994).(1)
Whether an organization is legitimate, or more or less so, is determined by those observers of the organization who assess its conformity to a specific standard or model. All stakeholders participate in this process, evaluating one or another aspect of the organization with varying degrees of knowledge and with varying degrees of influence on the overall level of legitimacy. As Suchman (1995: 574) noted, legitimacy is a "generalized perception" representing the "reactions of observers to the organization as they see it; thus, legitimacy is possessed objectively, yet created subjectively."
Legitimation processes operating on organizations may be considered on several levels: (1) entire organizational populations, (2) individual organizations, or (3) subunits and specialized aspects of organizations. Ecological as well as many institutional approaches focus attention on the legitimation of organizational populations, collections of organizations exhibiting a given structure or form
Institutional theory has focused on the movement towards, and maintenance of, isomorphic institutional environments.
DiMaggio and Powell (1983) discussed isomorphism based on the assumption that organizations become increasingly similar through institutional forces. Their primary focus is on the movement towards, and the maintenance of, institutional norms through coercive, mimetic, and normative processes.
Key to the discussion is the effect of isomorphism on organizational performance. We suggest that isomorphism results in similar organizational performance or outcomes.
