Ethics and Governance · Module 5: Corporate accountability
Why Everyone Copies
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Chapters
- 0:00Question
- 0:28Breakdown
- 1:06Rule
In short
Institutional theory explains why organizations come to look alike through three pressures. Coercive pressure comes from laws and powerful stakeholders, normative pressure from professional norms and training, and mimetic pressure from copying successful peers when the situation is uncertain.
- Coercive: required by law, regulators or a powerful party.
- Normative: what the profession expects.
- Mimetic: uncertainty plus copying peers.
Transcript
0:00Question
Three answers sound almost right. Only one is. Kookaburra is about to publish its first sustainability report. The directors aren't sure how stakeholders will react. So they adopt the GRI Standards, mainly because their three closest competitors already use them. Which institutional theory concept is this? Pick one.
0:28Breakdown
Institutional theory names three pressures that make organizations look alike. Coercive: someone you depend on makes you, like a regulator. Normative: your profession's norms and training tell you what's right. Mimetic: you're uncertain, so you copy the peers who seem to know. Now the options. No regulator or customer forced this. Cross out A. No professional body told them to. Cross out C. Decoupling is a gap between what's adopted and what's done. Cross out D. Uncertainty, plus copying peers. That's mimetic isomorphism: B.
1:06Rule
Uncertainty plus copying peers equals mimetic. Ask who is pushing: a power, a profession, or the peers you copy. Want more traps like this? Follow for the next one.
Try a question on this lesson
From the EstatePass Ethics and Governance bank. Answer it, then read the explanation.
Unsure how stakeholders will react to its first sustainability report, the directors of Kookaburra Ltd decide to adopt the GRI Standards mainly because its three closest competitors already use them. Which concept from institutional theory does this illustrate?
Sources
- DiMaggio and Powell (1983), The iron cage revisited
- CPA question bank: cpa-eg-0234
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