Organizations usually consist of multiple internal constituencies and are dependent on numerous external constituencies. Each constituency tries to produce, promote and institutionalize measures of effectiveness that conform to its values and beliefs, and also meet its interests. The measures of effectiveness that are accepted and institutionalized in the organization reflect most closely the values, beliefs and interests of a dominant coalition, which consists of representatives from powerful internal and external constituencies. The study described examined the complex relationship among the values, beliefs and interests and the measures of effectiveness used in hospitals in a province in Canada. It reaffirms the notion that measures of effectiveness are outcomes of a process of negotiation among various internal and external constituencies of an organization, and that the measures reflect the values and beliefs of the dominant coalition and serve its interests. The results indicate the need to integrate the arguments of resource dependence and institutional theories in order to provide a more comprehensive explanation of organizational actions, and suggest that there is a need for more research to examine processes of institutionalization and deinstitutionalization in organizations. Descriptors: measures of effectiveness, beliefs, values, and interests, institutional theory, resource dependence