Cross-National Institutional Pressures, Governance Structures and Inclusive Practice Adoption

Abstract

We develop and test a theoretical model to explain organizational adoption of new practices in response to institutional pressures, by variation in national corporate governance structures. Studies have examined the impact of institutional context and national corporate governance structures on the adoption and diffusion of new organizational practices, however have largely overlooked how national corporate governance structures filter institutional pressure before entering the organization. Our approach recognizes that diffusion of practices within countries may be shaped by differences in institutional context and corporate governance structures. Based on this, we argue that political pressures and societal logics enter an organization depending on the relative power of shareholders and employees vis à vis the organization. We test our theory by analyzing the role of national corporate governance structure on the efficacy of favorable political pressures and societal logic on the adoption of inclusive practices in 18 countries from 2002- 2014.We find that political pressures and societal logics increase the adoption of inclusive practices, especially when corporate governance structures posit shareholders in powerful positions to organizations. We find evidence that national corporate governance structures filter institutional pressures entering the organization and could both strengthen and weaken institutional pressures efficacy in provoking organizational change.