Difference between Organization and Institution

Core difference

The main difference between Organization and Institution is that Organization is a group of people who come together with a common goal and work to achieve that goal, while Institution is an organization that is dedicated to public service.

organization vs. Institution

Organization refers to an organized group of people brought together to accomplish a particular purpose. The institution is a type of formal organization or a pattern of practices and behavior of society. Organization is a narrow term and institution is a broad term. Organization refers to a physical entity, while institution refers to both abstract and concrete entities. Rules and regulations govern the organization. On the contrary, the institution is governed by customs and values. Examples of organizations include the Army, businesses, charities, schools, etc. and examples of institutions include Church, marriage, family, Parliament, etc.

Comparison chart

Organization Institution
An organization is a group of people who come together to undertake a common goal, led by a person or a group in this regard. An institution described as a form of organization, which is established for an educational, religious, social, or professional cause.
To earn money or provide service to members, etc. Deliver knowledge to people.
Centralized or decentralized decentralized
It has a life cycle. It is long lasting.
governing factor
rules and regulations customs and values

What is Organization?

The organization works together in a coordinated manner to achieve the objectives. The organization allowed people to specialize and increase efficiency. There are two types of organizations.

  • Formal organization: In every company, certain rules and procedures establish working relationships between employees. These skills make the business run smoothly. In addition, they introduce a systematic flow of interactions between employees. The formal organization clearly describes the relationships between the employees. Therefore, it becomes easier to accumulate responsibilities. In the formal organization, the duties of each member clearly defined, there is no ambiguity or confusion in individual roles at all. Also, there is no duplication of effort which eliminates any waste. In a formal organization, there is a clear definition of rules and procedures. This means that behaviors and relationships between members are predictable.
  • Informal organization: The informal organization arises from the formal organization. This is because when people contact each other frequently, we cannot push them into a rigid and completely formal structure. Rather, they bond over common interests and form groups, based on friendship and social interactions. The informal organization is fluid and there are no written or predefined rules for it. It is a complex network of social relationships between members that arise spontaneously. In addition, management cannot force or control it. Informal organization, getting real feedback and feedback is not easy. Therefore, in an informal organization, various limitations of the formal organization are hidden.
What is the Institution?

An institution is a social structure in which people cooperate and which influences people’s behavior and the way they live. An institution has a purpose. Institutions are permanent, meaning they don’t end when a person leaves. An institution has rules and can enforce the rules of human behavior.

Types of Institution

  • Crescive Institutions: Those that take shape in the culture are known as Crescive institutions. Property, marriage, religion are growing institutions.
  • Enacted Institutions: These contain commercial and credit institutions that are related to profit and economics and therefore consciously established.
  • Basic Institutions: These are only those that are considered important for maintaining social order in society. Family Institutions, Political Institutions, Educational Institutions, Divine or Religious Institutions, etc.
  • Subsidiary institutions: These institutions are a bit complicated in the sense that they are not necessarily so much for maintaining social order. Like the entertainment activities and the clubs, they belong to these Institutions.
  • Operating Institutions: Those whose function is to organize patterns necessary to achieve any objective. Ex Institution of Industrialism.
  • Relative Institutions: Those that are not part of the regulatory institution themselves, but help to control custom and other forms of behavior.

Functions of the institutions

  • They explain the actions and work of the individual.
  • They give the means to control society and the people who constitute it.
  • Each individual is assigned a role according to which they can achieve and regulate their status.
  • Create balance or harmony and unity among members of society.
Key differences
  1. An organization is a systematic or consistent collection of people, working together to achieve a desired end, under a common identity. On the contrary, an institution is an establishment, one that is dedicated to promoting a specific cause that can be educational, professional, social, etc.
  2. An organization is controlled by rules, regulations and policies, while customs and values ​​are the regulating factors of an institution.
  3. The structure of an organization can be centralized where power is in the hands of the highest authority, or decentralized where power is scattered. At the other extreme, an institution has a decentralized structure, in which power extends to various levels of management.
  4. The main purpose of an organization is to make money or provide services to members. On the contrary, the main objective of an institution is to impart education or knowledge to the users.
  5. An organization has a defined life cycle, that is, it has birth, growth, maturity and decline. On the other hand, an institution is enduring in the sense that it has the ability to constantly grow, surpassing capacity and adapting to extreme conditions, to take a step into the future.


The main objective of an organization is to maintain the internal order of the organization along with the effectiveness in achieving the desired ends. Despite that, when it comes to the institution, it goes beyond the goals of the organization.

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