Structural evolution of the National Institutes of Health (NIH) is stu
died with organizational theory. NIH's transition from a functional to
a market divisional structure as the agency's client biomedical resea
rch community underwent segmentation is described using as case exampl
es the formation of two institutes. Strategies followed by professiona
l groups seeking to influence an executive agency are illustrated How
a structure focused on servicing particular medical constituencies may
compromise the study section review of research grant applications on
which NIH credibility rests is examined. NIH response to the more dyn
amic recent environment (AIDS, molecular biology) by recourse to matri
x form is considered. Prospects for survival of the agency's unique ad
ministrative synthesis are evaluated.