Regional and Place-Based Institutional Drivers of Practice Adoption: The FSC Certificate

Abstract

Scholars who study the adoption of management practices using institutional theory have rarely examined geographically bound institutional pressures. In this paper, we consider the impact of regional institutional pressures on firm adoption decisions and we use a place-based approach to examine firm headquarter (HQ) distance from a country’s capital as a moderator to the above relationship. We, therefore, highlight regional institutional pressures and the differential responsiveness to such pressures by remote and, perhaps, isolated firms within the region, given the place where they are headquartered. Our analysis is based on 291 paper and paperboard manufacturers from five European countries at the NUTS-2 level who were considering adopting the Forest Stewardship Council certificate between 2000-2010. We find confirmation for most of our hypotheses at the regional level. Most importantly, we find that as HQ distance from capital increases, a) regional competitive institutional pressures reverse their impact on adoption decisions, b) regional social institutional pressures become more pronounced and c) regional regulatory institutional pressures also reverse their impact. Our paper contributes to institutional theory by examining fine-grained institutional drivers of geographical adoption decisions, thereby paying attention to heterogeneity (rather than homogeneity) in the mechanisms behind such decisions. It also contributes to the debate of conflicting institutional pressures facing firms by distinguishing the regional from the local levels of analysis. We discuss the theoretical and practical implications of the study in detail and we offer future research avenues for institutional theory, institutional logics and the field of sustainability.