Difference Between Organization and Institution


Main 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 towards achieving that goal, whereas Institution is an organization that dedicated to public service.

Organization vs. Institution

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


Comparison Chart

An organization is a group of people that unite to undertake a common goal, led by a person or a group thereon.An institution described as a form of organization, which is set up for an educational, religious, social or professional cause.
To earn money, or give service to the members etc.To deliver knowledge to the people.
Centralized or DecentralizedDecentralized
It has a life cycle.It is long lasting.
Governing factor
Rules and RegulationsCustoms and Values

What is Organization?

The organization is working together in a coordinated way to achieve goals. The organization allowed individuals to specialize and increase efficiency. There are two types of organizations.

  • Formal Organization: In every enterprise, certain rules and procedures establish work relationships among the employees. These aptitudes the smooth functioning of the enterprise. Additional, they introduce a systematic flow of interactions among the employees. The formal organization clearly outlines the relationships among employees. Hence, it becomes easier to rack responsibilities. In the formal organization, the duties of each member clearly defined, there is no ambiguity or confusion in individual roles whatsoever. Besides, there is no duplication of efforts which eliminates any wastage. In a formal organization, there is a clear definition of rules and procedures. This means that behaviors and relationships among the members are predictable.
  • Informal Organization: Informal organization arises out of the formal organization. This is because when people frequently contact each other we cannot push them into a stiff and completely formal structure. Rather, they bond over common interests and form groups, based upon friendship and social interactions. The informal organization is fluid and there are no written or predefined rules for it. It is a complex web of social relationships among members who are born spontaneously. Further, it cannot be forced or controlled by the management. Informal organization, getting true feedback and reactions is not easy. Hence, in an informal organization, various limitations of the formal organization are covered up.

What is Institution?

An institution is a social structure in which people cooperate and which influences the behavior of people and the way they live. An institution has a purpose. Institutions are permanent, which means that they do not end when one person is gone. An institution has rules and can enforce rules of human behavior.

Types of Institution

  • Crescive Institutions: That take form in the culture are known as crescive institutions. Property, marriage, religion are all crescive institutions.
  • Enacted Institutions: These contain business and credit Institutions that are related to profits and economy and hence consciously established.
  • Basic Institutions: These are just those that are seen as important to maintain social order in society. The Family institutions, Political Institutions, Educational Institutions, Divine or Religious Institutions etc.
  • Subsidiary Institutions: These Institutions are a bit complicated in the way that they aren’t necessarily so much to maintain social order. Like entertaining activities and clubs come under these Institutions.
  • Operative Institutions: Those whose function is to organize patterns which are necessary to attain any objective. E.g. institution of Industrialism.
  • Relative Institutions: Those who aren’t a part of the regulative institution themselves but help in controlling the custom and other forms of behavior.

Functions of Institutions

  • They explain the actions and work of the individual.
  • They give the means to control society and people who constitute it.
  • Every individual is given a role depending on which he can achieve and regulate his status.
  • Create balance or harmony and unity among the members of society.

Key Differences

  1. An organization is a systematic or consistent collection of people, who work together for achieving the desired end, under a common identity. Conversely, an institution is an establishment, that 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 lies in the hands of the supreme authority, or decentralized where the power disseminated. On the other end, an institution has a decentralized structure, wherein power spread to various levels of management.
  4. The main objective of an organization is to earn money or provide services to the members. On the contrary, the main objective of an institution is to impart education or knowledge to the users.
  5. An organization has a definite life cycle, i.e. they have birth, growth, maturity, and decay. On the other hand, an institution is enduring in the sense that they have the capacity of constantly growing, overcoming ability and adapting itself to extreme conditions, to take a step towards the future.


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