"Imitation? Environmental Signals and Similarity of Behavior in Hiring by Japanese Firms, 1974-2011"

Abstract

Organizations often undertake take similar behaviors. The observation of the phenomenon is usually interpreted as a sign of imitation—organizations refer to each other and behave in the similar way. However, similarity of behavior can occur without reference to other's behavior: it can occur when organizations look at the same signals and consequently take similar behavior. Developing theories about environmental signals and socialization in organizational decision-making, we introduce two concepts of primary signal and secondary signal and explicitly distinguish the two different mechanisms generating organizations similar behavior. Then, drawing from recent literature demonstrating the conditional nature of environmental signals, we explore the conditions under which each type of signals will be most relevant. We test our theory using a 38-year panel of annual hiring of graduating students by about 400 large Japanese firms. Our analyses show that organizations often imitate peers, yet at the same ti...