Institutional differentiation has been one of the central concerns of sociology since the days of Auguste Comte. However, the overarching tendency among institutionalists such as Durkheim or Spencer has been to treat the process of differentiation from a macro, "outside in" perspective. Missing from this analysis is how institutional differentiation occurs from the "inside out, "or through the efforts and struggles of individual and corporate actors. Despite the recent efforts of the "new institutionalism" to fill in this gap, a closer (...) look at the literature will uncover the fact that (1) it has tended to conflate macro-level institutions and meso-level organizations and (2) this has led to a taken for granted approach to institutional dynamics. This article seeks to develop a general theory of institutional autonomy; autonomy is a function of the degree to which specialized corporate units are structurally and symbolically independent of other corporate units. It is argued herein that the process by which these "institutional entrepreneurs" become independent can explain how institutions become differentiated from the "inside out." Moreover, this article offers five dimensions that can be operationalized, measuring the degree to which institutions are autonomous. (shrink)