This chapter advances the theoretical construct of institutional innovation, which is defined as novel, useful, and legitimate change that disrupts, to varying degrees, the cognitive, normative, or regulative mainstays of an organizational field. Institutional innovation, like all innovation, is both novel and useful, but it differs in that it is also legitimate, credible and appropriate. Legitimacy is hinged to four characteristics such that institutional innovation is theorized to be (1) normative or value laden, (2) progressing in bursts of change over time, (3) socially constructed and culturally embedded, and (4) associated with logics that shape practices. A framework is developed that outlines the definition, composition, and processual nature of institutional innovation, as well as its generative potency. Finally, implications for theory, practice, and future research are offered.