Strategic Conformity or Strategic Differentiation? Mimetic Isomorphism Under Institutional Cues

Abstract

This paper attempts to disentangle the dynamic process when innovators in one field take initiatives, how will the focal firm scan, interpret, and strategically respond to manifold cues from multiple institutional fields. Specifically, the signals and pressures from peers in the same industry or same geographic area. Our study showing that, firms attend to behavioral cues from both peers. Local adopters tend to build up regional ecology and conformation with social infrastructure, while industrial adopters send a competitive signal that forces followers to customize and differentiate themselves. In response, later firms tend to adopt strategic deviation and improve their social performance in reaction to industry competition, instead of simply imitate. In contrast, firms prefer sticking to imitation by taking the advantage of existing social infrastructures developed by local innovators. Furthermore, we also verify that peer effects above would be attenuated with high organizational performance, and low uncertainty. We test our propositions in the context of corporate foundations establishment in China between 2005 and 2015 through event history analysis. We develop a dynamic framework that considers the nature of the position that the focal organization occupies in multiple institutional fields, and provides a new lens for understanding the consequences of embeddedness.