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Book ChapterDOI

'Institutionalized Organizations: Formal Structure as Myth and Ceremony', American Journal of Sociology, 83, pp. 340-63.

05 Dec 2016-pp 493-516
About: The article was published on 2016-12-05. It has received 992 citations till now. The article focuses on the topics: Ceremony.
Citations
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12 Aug 2011
TL;DR: A political dependence model is developed that explains how different types of dependency on the government lead firms to issue corporate social responsibility (CSR) reports and how the risk of governmental monitoring affects the extent to which CSR reports are symbolic or substantive.
Abstract: This study focuses on how and why firms strategically respond to government signals on appropriate corporate activity. We integrate institutional theory with research on corporate political strategy to develop a political dependence model that explains (a) how different types of dependency on the government lead firms to issue corporate social responsibility (CSR) reports and (b) how the risk of governmental monitoring affects the extent to which CSR reports are symbolic or substantive. First, we examine how firm characteristics reflecting dependence on the government—including private versus state ownership, executives serving on political councils, political legacy, and financial resources—affect the likelihood of firms issuing CSR reports. Second, we focus on the symbolic nature of CSR reporting and how variance in the risk of government monitoring through channels such as bureaucratic embeddedness and regional government institutional development influences the extent to which CSR communications are symbolically decoupled from substantive CSR activities. Our database includes all CSR reports issued by the approximately 1,600 publicly listed Chinese firms between 2006 and 2009. Our hypotheses are generally supported. The political perspective we develop contributes to organizational theory by showing that (a) government signaling is an important mechanism of political influence, (b) different types of dependency on the government expose firms to different types of legitimacy pressure, and (c) firms face a decoupling risk that makes them more likely to enact substantive CSR actions in situations in which they are likely to be monitored.

584 citations


Cites background from "'Institutionalized Organizations: F..."

  • ...Decoupling is a useful strategy for firms because it “enables organizations to maintain standardized, legitimating, formal structures, while their activities vary in response to practical considerations” (Meyer and Rowan, 1977: 357)....

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  • ...One common response is decoupling (Meyer and Rowan, 1977); that is, symbolically complying with a stakeholder demand without making substantive changes....

    [...]

  • ...One common response is decoupling (Meyer and Rowan 1977)—the symbolic compliance with a stakeholder demand without making substantive changes....

    [...]

  • ...However, research has also found that such legitimacy pressure can result in decoupling processes whereby corporate responses to external demands vary in the extent to which they are symbolic or substantive (Meyer and Rowan, 1977; Okhmatovskiy and David, 2012; Oliver, 1991)....

    [...]

Journal ArticleDOI
TL;DR: In this paper, the authors posit that the value of corporate social responsibility (CSR) initiatives is greater in countries where an absence of market-supporting institutions increases transaction costs and limits access to resources.
Abstract: Drawing on transaction cost theories and the resource-based view of a firm, we posit that the value of corporate social responsibility (CSR) initiatives is greater in countries where an absence of market-supporting institutions increases transaction costs and limits access to resources. Using a large sample of 11,672 firm-year observations representing 2445 unique firms from 53 countries during 2003–2010 and controlling for firm-level unobservable heterogeneity, we find supportive evidence that CSR is more positively related to firm value in countries with weaker market institutions. We also provide evidence on the channels through which CSR initiatives reduce transaction costs. We find that CSR is associated with improved access to financing in countries with weaker equity and credit markets, greater investment and lower default risk in countries with more limited business freedom, and longer trade credit period and higher future sales growth in countries with weaker legal institutions. Our findings provide new insights on non-market mechanisms such as CSR through which firms can compensate for institutional voids.

422 citations


Cites background from "'Institutionalized Organizations: F..."

  • ...Social capital generated by trust and loyalty reduces uncertainty faced by firms as it increases preferential treatment by social actors within the community or government (Oliver, 1991) and deflects adverse attention from constituents that could impair opportunities (Meyer & Rowan, 1977)....

    [...]

Journal ArticleDOI
TL;DR: Greenwash: Greenwash is communication that misleads people into forming overly positive opinions about environmental performance as discussed by the authors. But, greenwash is a form of communication that encourages people to form overly positive beliefs about environmental outcomes.
Abstract: Corporate claims about environmental performance have increased rapidly in recent years, as has the incidence of greenwash, that is, communication that misleads people into forming overly positive ...

399 citations


Cites background from "'Institutionalized Organizations: F..."

  • ...Decoupling Disconnect between the structures and the activities of an organization Meyer and Rowan (1977) Ineffectual Environment, Health and Safety (EHS) departments...

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  • ...Meyer and Rowan’s (1977) foundational work warns that the very fact that conformity to social norms holds advantages for firms may incite misbehavior, and that organizations may manage outside impressions by “decoupling” their internal activities from the structural facade they present to the outside world. In the environmental sphere, decoupling is referred to as a variety of greenwash. Decoupling is commonly used to refer to structural features of an organization, such as the creation of a Sustainability Department, which can be meaningless if the department is understaffed and has little sway within the organization. However, decoupling is also used to refer to promises or policies that are not backed up by corresponding actions, a practice often referred to as “symbolic management” (Westphal & Zajac, 1994). Making and breaking implied environmental promises is clearly deceptive (Bansal & Clelland, 2004; Delmas & Montes-Sancho, 2010; Ramus & Montiel, 2005), and hence a form of greenwash, but it is not the same as selectively disclosing hard evidence. Emerging literature suggests that the familiar decoupling of structure and activity is retreating in the face of information technology, but that a decoupling of means and ends may be emerging in its place (Bromley & Powell, 2012). Wijen (2014) applies this line of reasoning to sustainability, an “opaque” field where causal connections are complex, and argues that if external stakeholders enforce compliance with specific practices they may inadvertently exacerbate means/ ends decoupling if the practices are not sufficient to achieve the desired ends....

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  • ...This work begins from the idea that organizations must conform to the demands of external constituencies in order to avoid censure from stakeholders and to achieve and maintain “legitimacy” (DiMaggio & Powell, 1983; Meyer & Rowan, 1977)....

    [...]

  • ...Meyer and Rowan’s (1977) foundational work warns that the very fact that conformity to social norms holds advantages for firms may incite misbehavior, and that organizations may manage outside impressions by “decoupling” their internal activities from the structural facade they present to the outside world....

    [...]

Journal ArticleDOI
TL;DR: In this paper, a systematic review of the literature on theory building in management around the five key elements of a good story is presented, namely conflict, character, setting, sequence, and plot and arc.

330 citations

Journal ArticleDOI
TL;DR: In this paper, the authors investigated the role of supermarkets in the development of legitimate sustainable practices across the dairy supply chains and found that the dominant logic appeared to be one of cost reduction and profit maximization.

322 citations


Cites background from "'Institutionalized Organizations: F..."

  • ...The strength of Institutional Theory is that it offers explanations of why certain practices are chosenwithout an obvious economic return (Berrone et al., 2010; Meyer and Rowan, 1977; DiMaggio and Powell, 1983)....

    [...]

References
More filters
Journal ArticleDOI
TL;DR: In this paper, the authors posit that the value of corporate social responsibility (CSR) initiatives is greater in countries where an absence of market-supporting institutions increases transaction costs and limits access to resources.
Abstract: Drawing on transaction cost theories and the resource-based view of a firm, we posit that the value of corporate social responsibility (CSR) initiatives is greater in countries where an absence of market-supporting institutions increases transaction costs and limits access to resources. Using a large sample of 11,672 firm-year observations representing 2445 unique firms from 53 countries during 2003–2010 and controlling for firm-level unobservable heterogeneity, we find supportive evidence that CSR is more positively related to firm value in countries with weaker market institutions. We also provide evidence on the channels through which CSR initiatives reduce transaction costs. We find that CSR is associated with improved access to financing in countries with weaker equity and credit markets, greater investment and lower default risk in countries with more limited business freedom, and longer trade credit period and higher future sales growth in countries with weaker legal institutions. Our findings provide new insights on non-market mechanisms such as CSR through which firms can compensate for institutional voids.

422 citations

Journal ArticleDOI
TL;DR: Greenwash: Greenwash is communication that misleads people into forming overly positive opinions about environmental performance as discussed by the authors. But, greenwash is a form of communication that encourages people to form overly positive beliefs about environmental outcomes.
Abstract: Corporate claims about environmental performance have increased rapidly in recent years, as has the incidence of greenwash, that is, communication that misleads people into forming overly positive ...

399 citations

Journal ArticleDOI
TL;DR: In this paper, a systematic review of the literature on theory building in management around the five key elements of a good story is presented, namely conflict, character, setting, sequence, and plot and arc.

330 citations

Journal ArticleDOI
TL;DR: In this paper, the authors investigated the role of supermarkets in the development of legitimate sustainable practices across the dairy supply chains and found that the dominant logic appeared to be one of cost reduction and profit maximization.

322 citations

Journal ArticleDOI
TL;DR: This paper found that state-owned enterprises adapt mode and control decisions differently from private firms to the conditions in host countries, and these differences are larger where pressures for legitimacy on SO firms are stronger.
Abstract: State-owned (SO) enterprises are subject to more complex institutional pressures in host countries than private firms. These institutional pressures arise from a weak legitimacy of “state ownership” in some countries, which arises from a combination of ideological conflicts, perceived threats to national security, and claimed unfair competitive advantage due to support by the home country government. These institutional pressures directed specifically at SO firms induce them to adapt their foreign entry strategies to reduce potential conflicts and to enhance their legitimacy. Testing hypotheses derived from this theoretical argument for subsidiaries of listed Chinese firms, we find that SO firms adapt mode and control decisions differently from private firms to the conditions in host countries, and these differences are larger where pressures for legitimacy on SO firms are stronger. These findings not only extend institutional theory to better explain differential effects on different entrants to an organizational field, but demonstrate how foreign investors of idiosyncratic origins may proactively build legitimacy in host societies.

314 citations