Final answer:
Neo-institutional theory highlights the importance of institutions like NATO in international relations, due to their role in promoting stability and cooperation. Its limitations include underestimating non-institutional factors and over-emphasizing formal structures at the expense of recognizing power dynamics and informal interactions.
Step-by-step explanation:
The strengths of neo-institutional theory primarily involve its perspective on the significance of institutions in shaping the behavior of states and individuals within the global context. This theory underscores how institutions provide a structure for predictable, stable interactions, which can lead to cooperative behaviors even in an anarchic international system. NATO serves as a salient real-world example of how institutions foster collective security. Additionally, the theory explains how the existence and design of institutions are reflections of past practices, contributing to their persistence over time.
However, there are limits to this approach. Neo-institutional theory may sometimes underestimate the influence of non-institutional factors such as cultural, demographic, and economic shifts in international relations. It can also over-emphasize the role of formal structures and rules while underplaying power dynamics and informal practices which often dictate interactions and outcomes. The bureaucratic nature of many institutions might hinder responsiveness and lead to inefficiency, reflected in the challenges faced by NGOs that become preoccupied with funding cycles and administrational responsibilities at the expense of program effectiveness.