Title

Delayed adoption of rules: A relational theory of firm exposure and state cooptation

Publication Type

Journal Article

Publication Date

10-2016

Abstract

Thestate creates and changes rules that coerce firms, but firms can delay or decouple responses to rule changes in order to managethe cost of demands. Theoryof compliance to thestate has not yet considered the degree to which the firm candelay adoption because of low exposure to rules and state linksthat allow cooptation, butboth of these relations between state power and firm ability to counteract itcan affect the adoption decision. This makes the response to state rule changes a more strategic outcome than the theoryof coercive isomorphism implies. We develop a relational theory of delayed firmcompliance to a state rule change that considers firm exposure due todiscrepancy from the rule, and firm cooptation of the state due to state links,and test the theory by examining the adoption of the split-share structurereform, a state-mandated corporate governance reform among listed firms inChina. We find that exposure and cooptationinfluenced the speed of adoption and the decoupling from reform intentions. We also found thattheir effects on firm response to coercion weaken when the new rule becomesinstitutionalized. Ourtheory of delayed compliance is also likely to apply tocoercive pressure from other powerful organizations than the state.

Keywords

Resource dependence, power, state rule change, firm compliance, institutional theory

Discipline

Asian Studies | Organizational Behavior and Theory | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Journal of Management

ISSN

0149-2063

Identifier

10.1177/0149206316673719

Publisher

SAGE Publications (UK and US)

Additional URL

http://doi.org/10.1177/0149206316673719

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