External pressures, like political, economic and technological factors, as well as competition at labour and education markets have challenged higher education institutions to reconsider their organizational structures and internal management approach to provide better quality education, to attract more potential stakeholders, as well as to sustain their positions at local and global markets. The responsiveness of universities to such pressures and uncertainties is diverse. There are dozens of research identifying current best quality management practices. However, this paper makes an emphasis on the analysis of one of the streams of economic scienceinstitutionalism as an innovative approach to effective internal management in HEIs. Institutionalism is a direction in economic thought that places the main emphasis on the analysis of institutions, which is defined as norms, restrictions and principles of behaviour ("rules of the game") within an organization. In general, institutionalism is so diverse that its study as a whole is almost meaningless because there are different trends in institutionalism itself. Some prefer isomorphic elements of new institutionalism, whereas other stress on processes of differentiation between universities. Nevertheless, despite a growing tendency of an isomorphic strategy of successful universities and effective organizational strategies, there is a lack of research conducted on the application of elements of institutionalism in higher education, as a successful approach to effective internal quality management. The central idea of this paper is to analyze the existing body of literature related to the application of institutionalism in higher education through systematic literature review.