Economists, of course, had their own explanation for why the firms in a given industry ultimately came to look like one another. Their account was that competitive pressures to claim market share and increase profits forced every firm to find the efficient organizational and operational means for producing the particular good and service. They were all forced out to what economists called the production possibility frontier, and there they settled with the one best method for producing the product or services that defined the industry. That answer was good in theory, but it could not explain in practice why it seemed that many commercial enterprises seemed to be operating well inside the production possibility frontier – in a realm where they could improve their performance on many or even all dimensions of performance without necessarily having to increase costs. (Garvin, 1988) Every time established industries faced a competitive challenge (which was rarer that we thought because the challenge had to be at the industry level rather than the firm level), it turned out that the established firms could find better ways of producing the products and services they had on offer. That fact made the hypothesis that established commercial firms pursued legitimacy within an industry rather than performance seem plausible.

######## Why the Status Quo and Institutional Mimesis are Particularly Powerful in the Public Sector

If the drive for legitimacy was decisive in shaping the conduct and performance of commercial firms in a given industry -- even when they had very good measures of their financial performance, and even when there were powerful competitive pressures on them to keep improving those financial measures of performance -- then how much more powerful would these forces be in the public or voluntary sector where the measures of performance (at both individual client and social levels) were less well developed, and the pressures forcing them to hit performance targets much weaker? The answer to that rhetorical question is a scary one: it seems quite possible that many firms in social or public sector production systems would be driven much more by concerns about legitimacy than real, demonstrated performance with respect to the values held by their “customers”, or to those held by the third parties who were often providing the funds to achieve desired social results above the aim of satisfying the desires of their customers. Think also about the dangers in such a world of defining some particular activities as “best practices”. This designation might be fine if we really knew them to be best practices (at both individual and social levels). But even if that were true, such designations might stop all further inquiry, and encourage the homogenization (standardization!) of activities and outputs in the social sector, and prevent both adaptation to different client populations, and the search for better, more robust methods that could work better across all clients, customers, and local social preferences. If we were not sure that these methods worked but only guessed that they did, then the designation of best practices might lock an entire social production system into mediocre performance for many years. The plausible claim that the managers of producing firms in all sectors, but particularly those in the public and nonprofit sector might seek to pursue legitimacy rather than real performance has enormous significance for the likely impact of the government managed, central research and development system on generating improvements in the national educational system. The reason is that such a system would be unsurpassed in terms of its ability to establish what practices in the educational