Institutionalization is a process. It is something that happens to an organization over time, reflecting the organization’s own distinctive history, the people who have been in it, the groups it embodies and the vested interests they have created, and the way it has adapted to its environment.

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Running an organisation... generates problems, which have no necessary (and often an opposed) relationship to the professed or "original" goals of the organization. The day-to-day behaviour of the group becomes centered around specific problems and proximate goals, which have primarily an internal relevance. Then, since these activities come to consume an increasing proportion of the time and thoughts of participants, they are-from the point of view of actual behaviour – substituted for the professed goal.

There seems to be little doubt that the factor of sheer size is a very important element in concrete bureaucratic structures. However, because of the patterns exhibited in the behavior of agents in small organized groups and because of the implications for greater generality, the formulation used here does not make the factor of size crucial for the existence of bureaucratic behavior patterns.

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To institutionalize is to infuse with value beyond the technical requirements of the task at hand. The prizing of social machinery beyond its technical role is largely a reflection of the unique way in which it fulfills personal or group needs. Whenever individuals become attached to an organization or a way of doing things as persons rather than as technicians, the result is a prizing of the device for its own sake. From the standpoint of the committed person, the organization is changed from an expendable tool into a valued source of personal satisfaction.

Whereas some consequences of our actions occur as planned, others are unanticipated; social actions are not context-free but are constrained, and their outcomes are shaped by the setting in which they occur. Especially significant are the constraints on action that arise from commitments enforced by institutionalization. Because organizations are social systems, goals and procedures tend to achieve an established, value impregnated status. We say that they become institutionalized.

The relations outlined on an organization chart provide a framework within which fuller and more spontaneous human behavior takes place. The formal system may draw upon that behavior for added strength; it will in its turn be subordinated to personal and group egotism.