In this article, we examine the impact of isomorphic pressures on institutional practices, a field that has not been adequately explored and explained. A critical issue, on which this article focuses, is the process by which isomorphic pressures translate into homogenous institutional practices across organizations. Drawing on the case of extravagant position‐related consumption in local governments in China, we identify the sources of isomorphic pressures, how they come to have an impact, in what ways they are manifested and how they are sustained. We find that institutionalized isomorphic pressures may create informal institutional practices in contradiction to formal legal norms. We further analyze the endogenous dynamics behind the formation of isomorphic pressures, which are deeply embedded in the complex web of Chinese bureaucratic relationships. This article is based on 65 in‐depth interviews with government officials as well as relevant government documents and media accounts. Copyright © 2016 Wiley Periodicals, Inc.