An institution is an action pattern, a social complex of interrelated habits. Members of an institution occupy habitual positions in relation to other members. The conduct of each individual moves in repetitious patterns governed, by that individual's positional relationships in the institution and by the total action pattern of the institution. These positions are defined in the organizational structure of the institution; they evolve, grow, reach an established routine as the institution becomes a stabilized pattern of social action.

An institution may have a formally integrated structure and may be in continuous activity—like a given church; or it may be a contingent pattern of action invoked only on the occurrence of specific events—as marriage or portions of the law. Administration involves both types of institution, but the most frequently observed and commonly studied is the formal structural organization.

The administration as a whole (of the Federal Government, for example), or of any well defined unit of it (as a department or independent agency), may be looked upon as an institution. In general, the form is hierarchical, necessitated by the division of labor involved, the requirements of supervision and coördination, the necessity for authority and direction. As a going concern, the administrative unit has daily, monthly, yearly patterns of action. The effectiveness with which the unit achieves its objectives depends upon the appropriateness of its organization to the functions required of it, the perfection with which its various elements are integrated into a smooth-running going concern.