THE INFLUENCE OF INSTITUTIONAL AND TASK ENVIRONMENT RELATIONSHIPS ON ORGANIZATIONAL PERFORMANCE: THE CANADIAN CONSTRUCTION INDUSTRY* CHRISTINE OLIVER York University, Toronto ABSTRACT This study compared the in¯uence of organizations' relationships to the institu- tional versus task environment on organizational performance in the Canadian construction industry. This industry is characterized by both intense institutional regulation and strong market competition. Regulatory stringency and resource stringency were proposed as key determinants of the relative importance of insti- tutional versus task environment relations in predicting organizational pro®tabil- ity and productivity. Results favoured the contribution of task environment relations to organizational success in support of an economic or strategic perspec- tive on organizations. However, under highly stringent conditions, institutional relations were shown to be associated signi®cantly with performance, suggesting that future research needs to consider both institutional and task environment eects on organizational performance and success. INTRODUCTION An institutional perspective on organizational environments (DiMaggio and Powell, 1983; Scott, 1995; Zucker, 1987) represents a signi®cant departure from traditional task environment conceptions that focus on the role of markets, resources and competition in determining organizational processes and outcomes (Lawrence and Lorsch, 1967; Pfeer and Salancik, 1978; Williamson, 1975, 1985). Institutional theory calls particular attention to the state and professional associations in an organization's institutional environment and their potentially profound in¯uence in shaping an organization's legitimacy and performance (Meyer and Rowan, 1977; Scott, 1987; Zucker, 1987). In contrast, economic and strategic approaches have focused primarily on exchange relations with key players in the organization's task or technical environment and on the organiza- tional need to acquire and control scarce resources, in the context of intense competition for these resources, in order to ensure organizational success and survival (Pfeer and Salancik, 1978). The distinction between institutional and task environment relationships re¯ects fundamental dierences between institutional and economic or strategic Journal of Management Studies 34:1 January 1997 0022-2380 # Blackwell Publishers Ltd 1997. Published by Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UK and 238 Main Street, Cambridge, MA 02142, USA. Address for reprints: Christine Oliver, Schulich School of Business, York University, 4700 Keele Street, Toronto, Ontario, Canada M3J 1P3.