Introducing international development management
Introducing international development management

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Introducing international development management

4.2 Understanding institutions and institutional development

Institutions frame our lives. From birth through to death, in the most private and the most public aspects of our lives, in our personal and professional histories, we are shaped by – and we in turn shape – institutions. They give structure and meaning to our lives. They make shared experience, and shared action, possible. In short, we live our lives through institutions.

We can express this in more formal, academic terms. Brett talks of institutions in these terms:

Institutions are sets of ‘rules that structure social interactions in particular ways’, based on knowledge ‘shared by members of the relevant community or society’ (Knight, 1992, p. 2). Compliance to those rules is enforced through known incentives or sanctions. In other words, institutions are the norms, rules, habits, customs and routines (both formal and written, or, more often, informal and internalised) which govern society at large. They influence the function, structure and behaviour of organisations – ‘groups of individuals bound by some purpose’ who come together to achieve joint objectives (North, 1990, p. 4) – as actors in society. Institutions, by producing stable, shared and commonly understood patterns of behaviour are crucial to solving the problems of collective action amongst individuals.

(Brett, 2000, p. 18)

Brett's definition of institutions raises a number of questions. Amongst the most significant of these questions are:

1. What does it mean to describe institutions as ‘sets of rules’?

One way of getting at the meaning is to think of the expression, ‘as a rule’. It's a term that indicates the way in which life is expected to be conducted in particular contexts. Thus, for example, in contemporary liberal democratic societies, ‘as a rule’:

  • children between particular ages go to school (the institution of education or schooling);

  • we elect our leaders (the institution of democracy);

  • people with insufficient income receive benefits in cash or kind (the institution of welfare);

  • wealth is distributed unequally (the institution of inequality);

  • we have a choice as to how and from whom we obtain goods and services (the institution of the market).

As Brett indicates, the ‘rules’ are not necessarily written down. Some will be, but in all these cases – and in any others – written rules will be complemented with unwritten ones, and those unwritten rules can be the ones that act most powerfully on us as ‘incentives or sanctions’. And, of course, different people will interpret the rules in different ways – and some will break them or work outside them.

2. What is the difference between ‘institutions’ and ‘organisations’?

Again, Brett begins to suggest an answer. He describes organisations as ‘actors in society’. Organisations, then, get things done or, to follow the metaphor, they act, they perform. Institutions provide the framework in which the performance occurs. Thus, for example:

  • schools teach children, within the framework of the institution of education;

  • political parties seek votes, within the framework of the institution of democracy;

  • public and voluntary agencies provide benefits, within the framework of the institution of welfare;

  • companies give different financial rewards to different employees, within the framework of the institution of inequality;

  • supermarkets and other shops compete to provide goods, within the framework of the institution of the market.

And, of course, some organisations will perform better than others. And, as with people, some will act outside the institutional framework – and will sometimes break the rules.

3. Is the difference clear cut?

As you will probably already appreciate, there is a considerable overlap between institutions and organisations. Organisations can become institutions (can be ‘institutionalised’) as they become established and recognised as standing for something more than themselves; they come to embody and express important social norms and values. This can perhaps be seen most obviously in a global context, with organisations such as the World Bank or the United Nations. But it is no less true at a local level where, for example, a school can come to be recognised as having a significance far beyond its own gates, or a shop come to be seen as a place not just where buying and selling take place but also where key neighbourhood concerns are identified and expressed.

4. Does everybody agree on the meaning of ‘institutions’?

The answer here is twofold. First, there is some broad agreement that ‘institution’ has a dual meaning, as already indicated: as ‘sets of rules’, or complexes of ‘norms, rules, habits, customs and routines’ in Brett's more elaborate formula; and as organisations when they are established. Second, the term is used in different, though often overlapping, ways in the literature and by development practitioners.

Activity 9

Identify and make a few notes on some of the institutions that have ‘framed’ your life. Make these notes before you read the discussion below, and then compare your notes with that discussion.



While there is a long list to choose from, you may possibly have thought of the family, schooling, faith community, university, the state, law, democracy (or some other political system), money, or the market. Whatever you have chosen, though, it is likely that you will have chosen them because – using different means to enforce the compliance that Brett speaks of – they have enabled you to understand the world you live in and your place in that world. They will have governed your relations with other people in particular contexts and in society at large, and given you a sense of who you are.

Activity 10

Now extend the previous activity. Identify and make notes on some of the institutions that frame development. Think about both the organisational aspects and the rules (or norms, values and customs) aspects. Draw on your own experience; remember that whether you are professionally involved in development or not, you will be caught up in development of some kind.


Development, too, is framed by a variety of institutions. You might have thought of some of the large institutions, such as the World Bank and the United Nations, which are major players on the world stage. You might have thought of micro-finance, of workers' associations, of NGOs, of development ‘partnerships’, of free trade, of civil society. You might have thought of smaller, more local institutions where you live and/or work. The institutions that contribute to the improvement of health services in the UK are different from the institutions that contribute to the reduction of poverty in the Indian sub-continent, which in turn are different from the institutions designed to create liberal capitalism in Eastern Europe, or those set up to address problems related to HIV/AIDS in Southern Africa, and so on. It is worth noting, though, that such is the sway of ‘globalisation’ that similarities can be identified between institutional development in very different contexts: so, for example, one finds similar institutions of partnership, social enterprise, participation, governance and so on, being developed for urban regeneration in the UK as for rural development in Uganda.

As you thought about the activity, you might have noted that institutions last. Brett uses the term ‘stable’, others say that institutions ‘persist over time’ (Uphoff, 1986, p. 9). That is the nature of institutions: they are around for a long time – it is one of their defining qualities. Yet – certainly in a unit on institutional development – we have also to appreciate that institutions are not ‘for ever’. Even in the cases of institutions which seem to go on for ever – the family and religions are perhaps the most significant examples – the form of the institution, the relationships involved, the norms and values embedded differ so markedly that they constitute different institutions at different times and in different places. Certainly there is continuity. No less certainly there is change.

Sometimes, as suggested by the terms just used – ‘designed’, ‘set up’, etc. – change comes about as a result of deliberate action: the change is intended. Perhaps more often the change is less the outcome of intervention, but emerges – in a way no one exactly intended – out of the complex of social interactions that make up history.

This distinction between the more and less intentional processes is important for our understanding of institutional development and its value for development management. So take, for example, the emergence of liberation movements in the colonised world, of the movement for women's emancipation, of the anti-globalisation campaign, of the movement to secure human rights in the face of massive abuse. All have been created through the purposive, value-oriented action of individuals and groups, often in the face of great personal danger. Equally, all have arisen in the context of broader social and economic processes – most obviously to do with changes in labour markets – which certainly have not been intended to bring about these specific developments.

We can label this distinction between more or less intentional processes succinctly as the distinction between ‘institutional development as intervention’ (where the focus is on intentional activity) and ‘institutional development as history’ (where the focus is on the context that determines the scope and potential for interventions). And we can note that, in both cases, we are talking about changes in Brett's ‘rules that structure social interactions’.


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