Institutional Pressures and Organizational Capacity: The Case of Outcome Measurement

A central claim of new institutional theory is that organizations in a field come to exhibit shared characteristics over time. Recent literature emphasizes variation across field members, but has yet to concur on why differences occur. This study tests institutional explanations for the uneven implementation of one organizational practice—outcome measurement, an evaluative technique used to assess the impact of an organization’s programs. We analyze data from a new survey investigating the practices of nonprofit organizations (N = 379) and argue for the inclusion of the concept of organizational capacity to account for the uneven implementation of outcome measurement. As predicted by new institutional theory, organizations are more likely to adopt outcome measurement if key actors promulgate its use. However, the implementation of outcome measurement is best explained by the addition of the concept of organizational capacity alongside variables drawn from new institutionalism. Nonprofits with adequate organizational capacity, operationalized—following Weber’s concept of bureaucracy—as the presence of written rules and members with specialized knowledge, are better able to respond to isomorphic pressures to implement a new organizational practice. Our findings expand scholarship that examines the intersection of institutional dynamics and organizational traits in accounting for patterns of implementation of practices across an organizational field.