Understanding strategic responses to institutional pressures

Understanding strategic responses to institutional pressures

Journal of Business Research 58 (2005) 1205 – 1213 Understanding strategic responses to institutional pressures Bruce W. Clemensa,*, Thomas J. Dougla...

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Journal of Business Research 58 (2005) 1205 – 1213

Understanding strategic responses to institutional pressures Bruce W. Clemensa,*, Thomas J. Douglasb,1 a

Management Program, College of Business, James Madison University, Mail Stop Code 0205, Harrisonburg, VA 22807, United States b Management Department, Clemson University, 101 Sirrine Hall, Clemson, SC 29634-1305, United States Received 22 July 2003; accepted 22 April 2004

Abstract Scholars have linked the institutional view with strategic choice to better understand institutional pressures and the associated organizational strategic responses. We empirically evaluate Oliver’s [Acad. Manage. Rev. 6 (1991) 145] framework that addresses these relationships using information from the steel industry and the important issue of radioactive contamination of scrap steel. Our findings, partially replicating three earlier studies, provide general support for her framework. In addition, we identified support for this typology in areas where earlier studies provided inconsistent results. An important finding was that firms that cooperated with others in their industry favored less active firm strategies and were less inclined to engage in the actively resistant strategies of avoidance and defiance. Finally, our findings question the positioning of the manipulation strategy and suggest that using separate lenses for institutions and organizations may be appropriate. The firms in our study considered the strategy of manipulation similar to acquiescence and compromise. D 2004 Elsevier Inc. All rights reserved. Keywords: Strategic responses; Institutional theory; Public policy; Natural environment

1. Introduction In an era of declining state resources, it is exceedingly important to understand the relationship between public policies and firm strategic responses to those policies (Cashore and Vertinsky, 2000). A growing body of literature has begun to use institutional theory (Greve, 1998; McNamara et al., 2003; Oliver, 1991, 1997) to predict bstrategic choiceQ (Goodstein, 1994). Given the growing importance associated with addressing key social issues, such as the protection of the natural environment, and the reduced resources available for governmental regulation, a better understanding of the impact of different institutional alternatives on firm choices will be helpful. Please note that throughout this paper, natural environment and environ* Corresponding author. Tel.: +1 540 568 3026, +1 540 438 0406; fax: +1 540 568 2754. E-mail addresses: [email protected] (B.W. Clemens)8 [email protected] (T.J. Douglas). 1 Tel.: +1 864 656 7418; fax: +1 864 656 2015. 0148-2963/$ - see front matter D 2004 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2004.04.002

ment will be used interchangeably. Business environment will be used to specify the more general business environment. Oliver (1991) wrote a key conceptual article addressing this subject. It presented a theoretical framework for studying the relationship between institutional pressures and firm strategic responses. Subsequent to her seminal article, a number of studies have attempted to test portions of her framework (Etherington and Richardson, 1994; Goodstein, 1994; Ingram and Simons, 1995; Milliken et al., 1998). Each of these studies enhanced and expanded our understanding of the factors facing organizations and the choice of their strategic responses to these institutional pressures. Each of these studies also provided early evidence supporting Oliver’s (1991) framework, but still only represented a limited test. The purpose of our study was to evaluate Oliver’s full model in a single industry, steel. The use of a single industry allowed us to control for common external influences while more precisely defining the relevant institutional antecedents and their relationships to the strategic responses.

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2. Theoretical development Management literature is rich in describing how institutional business environments constrain choice (Baum and Oliver, 1992; Haveman, 1993; Meyer and Rowan, 1977; Tolbert and Zucker, 1983). On the other hand, little coverage has been given to organizations’ strategic choices that are made to deal with factors such as institutional pressures (Milliken et al., 1998). However, as pointed out by Scott (1987), managers are expected to respond to institutional pressures by making rational strategic decisions (Goodstein, 1994). 2.1. Strategic responses Oliver (1991) proposed five categories of strategic responses that organizations could make in response to institutional pressures. She argued that these responses varied with respect to level of resistance to those pressures from passive to active and labeled them acquiescence, compromise, avoidance, defiance, and manipulation. Acquiescence is a passive strategy because, in using it, a firm agrees to institutional pressures. The other four strategies represent increasingly active responses to these institutional pressures. Oliver also presented gradients or tactics within each of these five types. The first three columns of Table 1 reproduce Oliver’s typology. Two of the major studies that have tested Oliver’s framework, Goodstein (1994) and Ingram and Simons (1995), reviewed only four of the five strategic responses, disregarding manipulation. These studies determined that the

organizations in the sample used the four responses and that prescribed institutional pressures influenced selection of strategic responses. The issue addressed in each study was the organization’s responsiveness to work–family issues, which focus on organizations’ responses to the need to balance the demands of work and family for their employees. Etherington and Richardson (1994) applied all five of Oliver’s strategies to university accounting education. They argued that one could view the five strategies along a twodimensional level of activity (active to passive) and pattern of resistance and accommodation (negative to positive). They found that the five strategies loaded onto three factors—passive, active-positive, and active-negative. One key contribution of their study was the combination of the compromise and manipulation strategies into the activepositive category. This regrouping was the result of changing the study lens from Oliver’s focus on the institutional perspective to one that considered the combined views of both institutions and organizations. 2.2. Institutional pressures Oliver’s framework also included a presentation of the factors driving the strategic responses. These factors encapsulated the following questions: bwhy these pressures are being exerted, who is exerting them, what these pressures are, how or by what means they are exerted, and where they occurQ (Oliver, 1991, p. 159). Answering these questions provided a better understanding of an organization’s ability or interest in selecting a particular response. Oliver (1991) suggested the consideration of five institutional factors that

Table 1 Strategic responses to institutional pressures (Oliver, 1991, p. 152) Strategies

Tactics

Examples

Examples for this study—steel firms dealing with impending standards of radioactivity

Acquiescence

Habit Imitate Comply Balance Pacify Bargain Conceal Buffer Escape

Following invisible, taken-for-granted norms Mimicking institutional models Obeying rules and accepting norms Balancing the expectations of multiple constituents Placating and accommodating institutional elements Negotiating with institutional stakeholders Disguising nonconformity Loosening institutional attachments Changing goals, activities, or domains

Defiance

Dismiss Challenge Attack

Ignoring explicit norms and values Contesting rules and requirements Assaulting the sources of institutional pressures

Manipulation

Co-opt Influence Control

Importing influential constituents Shaping values and criteria Dominating institutional constituents and processes

Firms decide to follow the letter and the rule of local, state and federal requirements. They also consider following the international guidelines. Firms negotiate with their regulators to obtain a mutually agreeable solution that meets the intent of the regulation at a reduced cost to the firm. Firms decide that the possibility or the cost of responding to the potential environmental problem is not worth the cost. Therefore, the firms decide not to install necessary monitoring equipment to detect radioactive contamination in their incoming shipments. Firms decide that the regulators do not have the resources or political might to enforce the regulations. Firms deal with requests through attorneys. Eventually, the firms’ attorney may have to battle with the regulators’ attorneys. Firms try to influence the letter of the regulations. They may do this in an open manner directly with the regulators, or even the legislators that drafted the laws that the regulators enforce. One option is for the firms to attempt to influence regulation by asking their shareholders to contact their legislators concerning their interests.

Compromise

Avoidance

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correspond to the above questions. These factors were cause, constituents, content, control, and context. Each of these factors, in varying degrees, was expected to affect an organization’s strategic response selection. 2.3. Relationships between institutional pressures and strategic responses To avoid studying potentially conflicting institutional pressures and business environments, we selected a specific, critical issue associated with a single industry. The metals industry has a significant impact upon the natural environment as the largest contributor to environmental emissions in the United States (EPA, 1995, 2001). It is also important to the U.S. economy—steel contributes 12% of the gross domestic product of all manufacturing in the United States (Bureau of Economic Analysis [BEA], 2003). We further focused on the issue of potential changes to the standards for radioactive metal. The issue of radioactive standards is important to the steel industry due to potential legal liabilities (especially personal liability; ISRI, 1992). In addition, radioactivity is a significant health issue for workers (IAEA, 1993). Finally, the public is becoming more concerned. The importance of this issue is best summed up by James Collins, the president of the Steel Manufacturers Association (SMA), bFor some companies there is a crisis already, for others, it’s still a crisis in the makingQ (Kuster, 1994, p. 31). Our study investigated the relationships between institutional pressures and strategic responses using the cause, constituents, content, control, and context framework. It is important to note that firms can and do choose more than one strategy or tactic in responding to these institutional pressures. For example, part of the government’s potential approach to radioactive contamination was requiring specific types of monitoring equipment. Another component was reporting requirements. An individual firm could elect to acquiesce to the first demand, especially if the firm already had the equipment in place. However, the same firm could attempt to defy the reporting requirement, assuming that the requirement was over burdensome, ineffective, or the government would not have the resources to monitor and enforce this requirement. The institutional factors driving the strategic responses are discussed below. 2.3.1. Cause Oliver (1991) defined cause as purposes behind the institutional pressures for conformity. She argued that firms that feel the most pressure to conform to social or economic norms would be most likely to offer little active resistance. Goodstein (1994) found that larger organizations were more susceptible to these pressures because they were more likely to receive the attention of the public. Thus, larger organizations experienced a higher burden due to their visibility. Ingram and Simons (1995) confirmed these results for the work–family issue.

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As an extension of these concepts, Etherington and Richardson (1994) pointed out that competitive and institutional isomorphism are reflected in either efficiency or legitimacy considerations. In cases where institutional pressures are stronger, organizations will focus more on legitimacy. In these days of declining government resources, regulators are prioritizing their efforts and focusing on the greater and more visible problems associated with the larger firms (EPA, 1999). Better endowed firms will perceive higher levels of social legitimacy as being important to their ongoing success and will be less likely to actively resist based on this disproportionate pressure. This leads to our first hypothesis: Hypothesis 1. The greater the pressures associated with cause, the stronger a firm’s preference for less active strategies. 2.3.2. Constituents Oliver (1991) posited that organizations face a myriad of potentially conflicting forces from a variety of entities, including the state, professions, interest groups, and the general public. She proposed that the higher the degree of external dependence on pressuring constituents, the greater the likelihood of organizational compliance. An effective organization adopts internal procedures and processes to address the pressures inherent in this constituent factor. Adopting internal processes that are based on industrydeveloped standards is reflective of the degree of organizational dependence. Oliver (1991) discussed the process of voluntary diffusion of the institutionally desired practices within an organizational field. She argued that the widespread use of these practices within an industry would likely result in passive compliance, one of the tactics associated with acquiescence. Both Goodstein (1994) and Ingram and Simons (1995) confirmed Oliver’s (1991) hypothesis. Thus, we offer the following hypothesis: Hypothesis 2. The greater the pressures associated with constituents, the stronger a firm’s preference for less active strategies. 2.3.3. Content The requirements associated with institutional pressures are the focus of content. According to Oliver (1991), content represents the extent of the consistency of institutional pressures with organizational goals. If society’s needs can be matched with those of the organization, then both parties can rationally concur on the proper actions. Steel firms are well versed in managing radioactive contamination. Thus, it may be possible to induce firms to comply with institutional pressures by providing incentives that mitigate any possible losses in efficiency (Bansal and Roth, 2000). Oliver (1991) predicted that firms would be inclined to select less active strategies if institutional expectations better matched firm goals. Therefore, providing cost savings or

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cash incentives to firms may result in the alignment of both institutional and organizational goals. The firms become more efficient, while the needs of society are met. Given these concepts, we offer the following hypothesis: Hypothesis 3. The greater the pressures associated with content, the stronger a firm’s preference for less active strategies. 2.3.4. Control Oliver (1991) defined institutional control as bthe means by which pressures are imposed on organizationsQ (p. 168). She argued that the higher the degree to which a regulatory agency used prescriptive approaches, the more likely a firm would choose less active strategies. Bansal and Roth (2000) concurred with this position, stating that legislation strongly encourages firms to comply with regard to regulations focused on sustaining the environment. Tenbrunsel et al. (2000) argued that an organization’s environmental strategy depended upon whether the regulatory pressure focused on bmeans, or precise conformance to a standard, rather than on ends—improving the environmentQ (p. 854). Examples of a bmeansQ focus would be the enactment of specific emission standards that firms must meet. According to Tenbrunsel et al., this approach may preclude firms from working directly with the regulators to find a superior solution to the problem, implying a less active strategy for the firm. They hypothesized that bendsQ-oriented pressures encourage organizations to adopt more efficient environmental improvement, typical of the more active environmental strategies. Higher control pressures would encourage organizations to take less active approaches. In summary, because control pressures are more prescriptive, coercive (Oliver, 1991) and means oriented (Tenbrunsel et al., 2000), they encourage less active strategies, supporting the following hypothesis: Hypothesis 4. The greater the pressures associated with control, the stronger the firm’s preference for less active strategies. 2.3.5. Context Oliver (1991) defined context as the conditions within which institutional pressures are exerted on organizations. She argued that one key element in context is the degree of interconnectedness in the business environment. She theorized that the lower the degree of interconnectedness, the greater the likelihood of active strategies. Organizations are more likely to accede to the institutional environment when the environment is more interconnected. Goodstein (1994) offered that institutional environments are more interconnected when firms participate in professional association activities, such as trade associations. Professional associations are an important mechanism for diffusing institutional norms and expectations.

Hamel et al. (1989) offered that cooperation between regulated organizations would be related to their strategic responses. Stronger cooperation, such as organizational involvement in trade associations, would be associated with individual organizational strategies that were less active. When the regulated community is united, individual firms tend to assume less active strategies and rely on their trade associations to adopt the more active strategies. This leads us to our last hypothesis: Hypothesis 5. The greater the pressures associated with context, the stronger a firm’s preference for less active strategies.

3. Methods 3.1. Sample The majority of this study’s data flow from a survey of the steel industry completed in 1997. We followed the methods developed by Dillman (1978) and refined by Salant and Dillman (1994) to maximize response rate. The survey is available from the lead author. After pilot testing, we sent surveys to members of the two largest trade associations in the steel industry, the SMA and the Institute of Scrap Recycling Industries (ISRI), which had indicated that they would participate. We asked the firms to provide their responses to specific government options for dealing with radioactivity in metal. We mailed final surveys to the environmental managers of 492 members of SMA and ISRI. We received 127 valid, complete responses, a response rate of 26%. Of the respondents, 51% were owners, 17% were operations managers, and 14% were environmental managers. The remaining 18% included technical managers and other representatives. 3.2. Variables and measures Strategic responses. Oliver’s (1991) typology included fifteen tactics and five strategies that organizations use to address institutional pressures. Oliver (1991) associated three tactics with each strategy. We chose to use these tactics to construct the measures for the dependent variables in this study. The questionnaire included a total of 30 items, two representing each of the 15 tactics. Appendix A provides the specific wording of the items. Cronbach alphas for each of the five strategies were as follows: acquiescence (a=.72), compromise (a=.60), avoidance (a=.76), defiance (a=.70), and manipulation (a=.60). These scales should be considered exploratory because this is the first study to use these variables per se to represent Oliver’s (1991) typology. Nunnally (1978) considers this level of reliability acceptable for the early stages of basic research.

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Table 2 Descriptive statistics and correlation coefficients (1) Type (2) Cause (3) Constituents (4) Content (5) Control (6) Context (7) Acquiescence (8) Compromise (9) Avoidance (10) Defiance (11) Manipulation

Mean

S.D.

1

2

3

4

5

6

7

8

9

10

1.90 10.38 5.34 4.24 3.93 5.17 5.19 4.70 1.96 2.24 4.21

.35 1.90 .97 1.14 1.33 1.55 .83 .88 .97 1.25 .96

.42** .15 .13 .17* .09 .10 .04 .13 .02 .01

.01 .09 .08 .32** .01 .12 .20* .15 .15

.29** .06 .18* .41** .29** .12 .13 .22**

.29** .10 .13 .14 .04 .10 .31**

.04 .25** .10 .17* .12 .11

.28** .18* .14 .20* .00

.48** .15 .15 .38**

.12 .06 .56**

.66** .17*

.22**

n=127. * Correlation is significant at the 0.05 level (two-tailed). ** Correlation is significant at the 0.01 level (two-tailed).

Cause. We measured size through the log-normalized average of steel processed by each firm over the 2 years prior to the survey (Singh, 1986). Constituents, content, and control. We developed a list of institutional factors existing in the steel industry. Respondents were asked to report the extent to which their firms were subjected to these pressures, measured on a Likert scale from 1 (low) to 7 (high). Six items in the survey exemplified constituent pressures in the form of industrybased approaches, six were content pressures portrayed as economic incentives, and six were examples of control pressures. Coefficients of reliability (Cronbach alphas) were .83 for constituent pressures, .79 for content, and .79 for control. Context. Experts from the SMA and the ISRI helped develop a scale for the degree of industry cooperation. We pilot tested the scale successfully and measured cooperation through a question that asked respondents to rate the degree to which their firm had worked with other firms on environmental issues. We recorded their responses on a one to seven Likert scale.

Control variable. The study controlled for the type of firm. Members of the SMA (mini-mills) received a boneQ. Members of the ISRI (scrap recyclers) received a btwoQ.

4. Results The descriptive statistics of the variables used in the hypothesis tests are displayed in Table 2. The collinearity diagnostics, including the variance inflation factors, all indicated that multicollinearity was not a problem. Table 3 provides our regression results. 4.1. Tests of hypotheses 4.1.1. Hypothesis 1: more effective cause pressures are related to stronger preferences for less active strategies We found a significant negative relationship between size and manipulation (t=2.16, Pb.01), Oliver’s most active strategy. However, counter to our hypothesis, we also found

Table 3 Regression analyses on strategic responses Hypothesized relationships

Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis

1 2 3 4 5

Variables

Firm Type Cause Constituents Content Control Context R2 Fy

n=127; standardized regression coefficients are shown. * Pb.05, two-tailed test. ** Pb.01, two-tailed test. *** Pb.001, two-tailed test. y Pb.10, two-tailed test.

Passive

Active

Acquiescence

Compromise

Avoidance

Defiance

Manipulation

.15 .12 .48*** .00 .16* .18* .31 9.06***

.03 .17y .25** .13 .02 .17y .14 3.27**

.15 .04 .14 .02 .17y .07 .10 2.15*

.02 .00 .17* .06 .15 .21* .11 2.45*

.12 .22* .16 .25** .03 .07 .14 3.19**

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a significant negative relationship between size and compromise (t = 1.72, Pb.10), a much less active strategy. 4.1.2. Hypothesis 2: more effective constituent pressures are related to stronger preferences for less active strategies We found support for this hypothesis. We found significant positive relationships between industry-based approaches and both acquiescence (t = 6.00, Pb.001) and compromise (t =2.83, Pb.01). In addition, we found a significant negative relationship between industry-based approaches and defiance (t=1.95, Pb.05). 4.1.3. Hypothesis 3: more effective content pressures are related to stronger preferences for less active strategies We found no support for this hypothesis. We found a significant positive relationship between economic incentives and manipulation (t = 2.74, Pb.01), Oliver’s most active strategy. The implications of this finding are discussed below. 4.1.4. Hypothesis 4: more effective control pressures are related to stronger preferences for less active strategies Our analysis supports this hypothesis. We found a significant positive relationship between control and the most passive strategy, acquiescence (t=1.98, Pb.05). In addition, we found a significant negative relationship between control and avoidance (t = 1.81, Pb.10). 4.1.5. Hypothesis 5: more effective context pressures are related to stronger preferences for less active strategies We found support for this hypothesis as well. Our data indicate significant positive relationships between cooperation and both acquiescence (t = 2.21, Pb.05) and compromise (t =1.82, Pb.10). We also found a significant negative relationship between cooperation and defiance (t = 2.16, Pb.05). 4.2. Post hoc analysis of Oliver’s strategies Reviewing the hypotheses tests, we observed that the relationships between the institutional pressures and manipulation are somewhat similar to those between institutional pressures and acquiescence and compromise. This is surprising in that Oliver (1991) considered manipulation to be the most active strategy and the other two, the least active. As a post hoc investigation, we performed an additional factor analysis. Following the methodology used by Etherington and Richardson (1994), we performed a factor analysis using the five original factors and extracted higher level factors that exhibited eigenvalues greater than 1.0. This resulted in two higher level factors. Acquiescence, compromise and manipulation loaded onto one factor that we called bwork within the systemQ. The factor loadings associated with these factors were .780, .855, and .786, respectively, and the Cronbach alpha

was .73. Avoidance and defiance loaded on the second factor that we labeled bfight the systemQ, with the respective loadings of .895 and .904 and a Cronbach alpha of .78. In this day of increased regulatory intensity, firms may consider manipulation little different than finding the best compromise. At least in this data set, manipulation appears to be a less active strategy from the firms’ perspectives. As discussed earlier, Etherington and Richardson (1994) performed a similar factoring. Their efforts resulted in three factors, with a similar combination of avoidance and defiance, a factor containing compromise and manipulate, and an independent factor of acquiescence.

5. Discussion and conclusions The purpose of our study was to evaluate Oliver’s (1991) framework depicting the relationships between institutional pressures and firm strategic responses. Our study focused on one industry to partially replicate and extend the empirical findings of Goodstein (1994), Ingram and Simons (1995), and Etherington and Richardson (1994). Replications are critical for the thorough testing of the theory underlying a model (Hubbard et al., 1998). Our study contributes to the literature in a number of ways. First, our results support much of Oliver’s (1991) conceptual model and are important from a practical standpoint due to the heavy preference of regulation to enforce society’s wishes with respect to issues, like the environment (Bansal and Roth, 2000). Second, two of the previous studies provided mixed results for two of the institutional factors, content and context. In both cases, our study supported the original conceptualization of Oliver (1991) and the findings of Ingram and Simons (1995) and Etherington and Richardson (1994). Third, our study provided additional support to Etherington and Richardson’s (1994) findings that it is important to view the response strategies from multiple foci. While Oliver’s initial typology uses an institutional lens, the perspectives of the organizations are also important and may differ from that of the institutions. We will concentrate most of our attention in this discussion on the incremental findings of our study. 5.1. Incremental findings In two of the previous studies, the institutional factor of cause was represented by the size of the organization. The previous findings supported the arguments that larger organizations tended to use the less active strategies of acquiescence and compromise. Our study could not duplicate these results for the steel industry. In fact, we found the opposite with respect to a lesser preference for the less active strategies. One possible explanation is the importance of radioactivity for the steel industry. It may

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also be that the larger firms in this industry tend to be more proactive due to experience with other important issues. For instance, Schuler (1996) found that the larger steel firms were more active in issues associated with trade protection. This strategic response may support the contention of Milliken et al. (1998) that certain industries may favor a particular response, not favored by other industries. Our findings associated with the institutional factor of content (measured by economic incentives) represent another anomaly. Content represents the degree of goal congruity between the institutions and the firms. We looked at the positive incentives that could be offered to firms to ensure that their economic goals were satisfied if they complied with the relevant pressures. We found that these incentives were positively related to the strategic response of manipulation, but not to the less active strategies as hypothesized. Oliver (1991) argued that manipulation is the most active of the strategies. Our findings are consistent with those of Etherington and Richardson (1994), who found a strong, positive correlation between goal congruence and manipulation. Goodstein (1994) found no support for the hypothesis that firms respond to pressures that result in congruence with their goals, but Ingram and Simons (1995) supported this relationship. Our findings lend additional support to Etherington and Richardson’s (1994) findings, reinforcing Oliver’s (1991) framework from the perspective of the firm and Bansal and Roth’s (2000) depiction of firms’ focusing on the need to be profitable while complying with social pressures. The consistency of our findings with Etherington and Richardson (1994) also suggests the importance of viewing the relationship between institutional pressures and organizational responses through multiple lenses. One of the key conditions supporting the institutional factor of context (measured by cooperation) is the interconnectedness of the firms’ environment (Goodstein, 1994; Oliver, 1991). Our results indicated that the more actively a firm cooperated, the greater would be its preference for less active strategies. These firms also demonstrated less preference for the more active strategy of defiance. This supports the arguments that firms become less active in their individual corporate responses when they are more involved in an effective cooperative venture, such as a trade organization (Hillman and Hitt, 1999). This is a noteworthy finding as a predictor of strategies. Those firms that are more willing to cooperate with each other are more willing to cooperate with the regulatory authorities and adopt less active strategies. Those firms that are less willing to work with each other are more prone to defy regulatory interventions. 5.2. Manipulation strategic response As discussed above, our findings raise some interesting questions about the manipulation strategy as conceptual-

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ized by Oliver (1991). She theorized that manipulation was the most active strategy in that it was an attempt to change either the content of the pressures or the institutional sources themselves. From the institution’s perspective, this may be true. However, from the firm’s perspective, this strategy may represent an attempt to participate in the institutional process in a productive manner. Our findings with respect to this variable may provide some initial insights. The relationships between the factors of cause and content and the strategy of manipulation are similar to the ones identified between these factors and the least active strategies in Oliver’s typology. In none of the relationships studied does manipulation perform similarly to the actively resistant strategies of avoidance and defiance. Etherington and Richardson (1994) found similar findings for accounting education. In our post hoc factor analysis, manipulation loaded with acquiescence and compromise to form a single factor while avoidance and defiance loaded on the other factor. It appears that the perspective used to evaluate strategic responses is important. While Oliver’s (1991) typology uses the perspective of institutions, our organizational respondents evaluating these strategies take the perspective of the organization itself. Thus, from the perspective of the organization, manipulation is an active-positive response as defined by (Etherington and Richardson, 1994) and a bwork within the systemQ response in our study. Hart’s (1995) conceptual depiction of competitive advantage based on a firm’s relationship with the environment describes a strong dependency between the firm and government regulators that he expects to result in long-term collaboration. He describes how firms must participate in the establishment of new standards, rules and laws if they are to prosper. Jennings and Zandbergen (1995) also discuss the possibility of institutions working with organizations on a conciliatory and consultative basis, including bbargainingQ and bnegotiatingQ with these firms. While Oliver (1991) depicts manipulation as selfserving attempts by organizations to challenge institutional policy, it may be that this level of interaction results in revisions to institutional pressures that represent a better alternative for all stakeholders (Starik and Rands, 1995). Thus, further conceptual and empirical work is necessary to evaluate the position of the manipulation strategy in Oliver’s (1991) framework and the importance of the observer’s perspective, that is, whose lens is being using. 5.3. Limitations First, the sample focuses on a single issue in a single industry. However, because the study represents a partial replication of previous work, it adds to our knowledge with respect to the concepts included in Oliver’s (1991) framework. Second, this is the first study to operationalize

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Oliver’s (1991) five strategic responses by constructing items using her associated list of tactics. The scales produced demonstrated acceptable exploratory reliabilities, but need considerable refinement based on additional research.

6. Conclusion We trust that this and future studies on the relationship between institutional pressures and a firm’s strategic

responses will aid researchers, managers, and policymakers in the ongoing debate on the environment and help advance the cause of effective and efficient management of these issues. Managers and policymakers, with a better understanding of how institutional factors relate to organizational strategic responses, may be able to minimize the costs of producing acceptable behavior in support of society’s needs. In addition, the results emphasize the importance of viewing key concepts from multiple lenses to better understand the underlying relationships.

Appendix A. Strategies and Tactics—Oliver (1991) Strategy

Tactic

Items (we asked respondents to rate the effectiveness of the following tactics from 1 to 7)

Acquiescence

Habit

Follow the approach most commonly used in the past by our organization. Speak with others in our firm and adopt the most effective approach used in the past. Speak with other successful associates in our firm and adopt a similar position. Follow the approach used by successful managers in other steel firms. Communicate with the relevant regulators to determine the best way to comply with the spirit and intent of the requirements. Make a conscious evaluation of the specific regulatory requirements and choose to comply with them. Negotiate openly with the regulators to obtain a mutually agreeable solution. Obtain a consensus between the regulators and our owners and customers. Negotiate with the regulatory organizations to obtain an advantageous solution. Bargain with the regulators to obtain a favorable position for our owner(s) and customers. Partially conform with the required procedures that are the most important to the regulators. Determine the most important elements for the regulators and agree to comply. Appear to comply but intentionally avoid certain aspects of the requirements. Conceal certain aspects of our strategy from the regulators. Reduce the sensitivity of our detectors to avoid identifying incoming radioactive contamination. Avoid participating in trade association activities that deal with radioactive scrap metal. Consider moving our operations out of state to avoid oversight. Consider moving the operations overseas to minimize the potential for oversight. Ignore the requirements and continue doing business as usual. Dismiss the requirements and attempt to avoid any discussion with the regulators. Attempt to sue the regulatory agency for the overly burdensome requirement. Challenge the requirements in court. Challenge the requirements in the media. Mount a campaign with our suppliers and customers to attack the regulatory authority. Attempt to form an alliance with the regulators. Attempt to include a member of the regulators on an advisory board to oversee operations. Attempt to influence public perceptions on the need for cost effective requirements to avoid radioactive contamination. Organize our suppliers and customers to attempt to influence the requirements. Meet with elected legislatures to attempt to control the regulators. Attempt to deal with federal regulators to control the state or local government.

Imitate Comply

Compromise

Balance Bargain

Pacify

Avoidance

Conceal Buffer

Escape Defiance

Dismiss Confront Attack

Manipulation

Co-opt

Influence

Control

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