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We offer an institutional explanation for the contemporary expansion of formal organization-in numbers, internal complexity, social domains, and national contexts. Much expansion lies in areas far beyond the traditional foci on technical production or political power, such as protecting the environment, promoting marginalized groups, or behaving with transparency. We argue that expansion is supported by widespread cultural rationalization in a stateless and liberal global society, characterized by scientism, rights and empowerment discourses, and an explosion of education. These cultural changes are transmitted through legal, accounting, and professionalization principles, driving the creation of new organizations and the elaboration of existing ones. The resulting organizations are constructed to be proper social actors as much as functionally effective entities. They are painted as autonomous and integrated but depend heavily on external definitions to sustain this depiction. So expansion creates organizations that are, whatever their actual effectiveness, structurally nonrational. We advance institutional theories of social organization in three main ways. First, we give an account of the expansive rise of "organization" rooted in rapid worldwide cultural rationalization. Second, we explain the construction of contemporary organizations as purposive actors, rather than passive bureaucracies. Third, we show how the expanded actorhood of the contemporary organization, and the associated interpenetration with the environment, dialectically generate structures far removed from instrumental rationality.

An important transformation is reshaping once-distinct social structures, such as charitable and religious groups, family firms, and government agencies, into more analogous units called organizations. We use the ideas of sociological institutionalism to build a cultural explanation for the blurring between traditional sectors. In contrast to mainstream theories of power or functionality, we argue that it is increasingly difficult to distinguish between these historically separate entities because of global cultural shifts characterized by a growing emphasis on science, which renders the world subject to systematic principles, and the expansion of individual rights, responsibilities, and capacities. Focusing mainly on nonprofits, our approach explains two important features of contemporary blurring that are overlooked in current explanations: that the practices associated with becoming more like business or government in the nonprofit sector spread beyond known instrumental utility and the demands of funders or clients, and that sector blurring is not simply a transfer of new practices into the

Organizations are increasingly subject to rating and ranking by third-party evaluators. Research in this area tends to emphasize the direct effects of ratings systems that occur when ratings give key audiences, such as consumers or investors, more information about a rated firm. Yet, ratings systems may also indirectly influence organizations when the collective presence of more rated peers alters the broader institutional and competitive milieu. Rated firms may be more responsive to ratings systems when surrounded by more rated peers, and ratings may generate diffuse or spillover effects even among unrated firms. We test these arguments by analyzing how rated and unrated firms change their pollution behavior when more firms in their peer group are rated on environmental performance. Results indicate that the presence of more rated peers is often associated with emissions reductions. This relationship varies, however, by whether a firm was rated, whether the rating was positive or negative (if rated), and, often, features of the competitive and regulatory environment.