Neo-institutionalism helps explain why we see organizations engage in practices that don’t serve the bottom line. Ultimately, legitimacy trumps efficacy. Suppose that you’re a manager who reads the academic literature, sees that the heavy-handed self-criticism styles of sexual-harassment or racial-diversity training are somewhere between useless and counterproductive, and proposes canceling next year’s training. Legal is going to complain that this will look bad if you face a wrongful-dismissal suit anytime soon. And some of your biggest contracts require that co-located employees from your firm have to be certified as having received the training. Many employees will complain that they expect the firm to express their values, which includes holding seminars featuring “privilege walks” to reaffirm the firm’s commitment to ending white supremacy and other forms of domination. These stakeholders will point to the fact that all your leading rivals in the industry hold such seminars; it is a “best practice.” So you go on propitiating the gods, even knowing full well that they don’t exist, because everyone around you believes in the spirits and even more so in the rituals that honor them and would consider neglect of such piety a sign of illegitimate leadership.
This is the essence of the social construction of reality: objective facts can matter less than intersubjective consensus. Since other people’s perceptions are an objective fact, you had best conform to their expectations—no matter how radical or irrational they might be.