Institutions are defined as collective constraints that structure human interaction, including formal constraints like laws and regulations, and informal constraints like social norms. Organizations are groups of individuals united to achieve common goals, and can include political, economic, social, and educational bodies. The key differences between institutions and organizations are that institutions have broader concepts and are decentralized, while organizations have more narrow concepts and specialized roles. Institutions also focus on delivering values and knowledge to society, rather than profit or services like organizations.

1. Institutions and Organizations
Prepared by:
Bindu, H. A
M.Sc.(Agri.)

2. • Institution:
An institution is defined as the collective action
in control, liberation and expansion of individual action.
The institutions are humanly devised constraints that
structure human interaction. There are 2 types of
constraints and are as follows:
• Formal Constraints:
These are rules, regulation, laws, constitution
and so on.
• Informal Constraints:
These are norms, conventions, codes of
conduct etc.

3. Organization:
Group of individuals bound by some common
purpose to achieve the objectives is called organization.
It includes political bodies (political parties, election
commission), economic bodies (firm, industry, trade
union), social bodies (temple, church, club) and
educational bodies (schools, colleges, universities).
Or
An organization is used to mean a group of
people, engaged in chasing the predetermined goals or
set of goals.

4. • It is a social system that ascertains all formal relations
between the activities and the members.
• An organization is owned and controlled by a person
or a group, who are the members of the organization
itself.
• The head of the organization is chosen by the
members of the organization.
• An organization incorporates specialization and
coordination of activities, wherein roles,
responsibilities and authority are assigned to the
members.
• It includes both profit and non-profit undertaking.

5. Difference between Organization and
Institution
Basis for
comparison
Organization Institution
Definition
An organization is an
assemblage of people who unite
to undertake a common goal,
led by a person or a group.
An institution is described
as a form of organization,
which is set up for an
educational, religious, social
or professional cause.
Meaning
1. School
2. Market
3. Railways
4. Court
1. Education
2. Trade
3. Transport
4. Law
Concept Narrow concept Broader concept
Administration Centralized or decentralized. Decentralized.
Governed by Rules, regulations and policies. Customs and values

6. Enforcement
Rules, regulations and
policies are enforced.
Values are accepted and
honoured by individuals.
Nature
Organizational duties
are dyadic in nature
(boss-worker)
Institutional values are
triadic in nature
(established and enforced
by a third party)
Purpose
Purpose is to earn
money or provide
service to the
members.
It is to deliver knowledge
to the people.
Control
An organization is to
be controlled.
An institution is self-
sustaining.
Existence It is physical. It is subtle.
Referred to
as
Players of the game. Rules of the game.
Examples
Charities, companies,
businesses etc.
Marriage, democracy and
churches
Over the period an organization matures in to an institution.