Chapter 5: Mimicry and the Market: Adoption of a New Organizational Form
INTRODUCTION Why are organizations, occupying the same environmental niche or ‘organizational ﬁeld’, similar in structure? Two streams of research have sought to answer this question. Population ecologists (for example, Hannan and Freeman, 1989) suggest that the environment selects ﬁrms with structural elements that provide the highest ﬁtness value. The competitive process to which ﬁrms are exposed winnows out those that lack an adequate structural template (Hannan and Freeman, 1977, 1984). In contrast, institutional scholars have argued that ﬁrms adaptively adopt a certain structure to enhance their legitimacy, thus converging towards a common template in their so-called ‘organizational ﬁeld’ or market (for example, DiMaggio and Powell, 1983; Meyer and Rowan, 1977). The institutional process has been sharply distinguished from the competitive process as shown by earlier institutional studies which sought to explain structural changes and innovation (for example, DiMaggio and Powell, 1983; Meyer and Rowan, 1977). More recently, however, several institutional writers have acknowledged that competitive and institutional processes interact with each other in producing convergence in structure (for example, Powell, 1988, 1991; Scott, 1987; Scott and Meyer, 1991). While conceding the interaction of the two processes in producing institutional changes, those authors did not clarify the nature of the interaction. The present study proposes hypotheses on that interaction by combining tenets of population ecology and institutional theory. We then test those hypotheses with the partner–associate structure adoption in a population of Dutch accounting ﬁrms from 1925 to 1990. When ﬁrms vary in their structural arrangements, their selection environment favors...
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