Practice Implementation within a Multidivisional Firm: The Role of Institutional Pressures and Value Consistency

Abstract

This paper proposes a model to predict when the sub-units of a multidivisional firm implement a practice adopted by the firm more or less extensively, focusing on the intra-organizational environment. Drawing on institutional arguments, I propose that a sub-unit’s extent of practice implementation is a combined result of coercive pressures from its headquarters, imitation of its peer units, and its own perception of the practice’s legitimacy. More specifically, I argue that a sub-unit will implement new practices related to Corporate Social Responsibility (CSR) more fully (1) when the corporate mandate from the headquarters is more pressing, (2) when its peer sub-units have implemented similar actions and (3) when the practice is perceived as consistent with the sub-unit’s own values. Regression results further suggest that peers and headquarters influence a sub-unit’s extent of implementation of a practice only when the sub-unit perceives it as highly consistent with its own values—a finding that points to the importance of values for practice legitimacy and the need to rethink practice implementation within complex organizations.

Keywords: Institutional Theory, International Management, Practice Implementation, Values, Corporate Social Responsibility