This study examines whether board interlock ties facilitate second-order imitation, in which firms imitate an underlying decision process that can be adapted to multiple policy domains, rather than imitating specific policies of tied-to firms (first-order imitation). Longitudinal analyses of archival data for a large sample of Forbes/Fortune 500 companies, as well as analyses of survey data on mimetic processes among these firms, show that network ties to firms that use imitation to determine a particular policy can prompt use of imitation by the focal firm in determining both that policy and a different policy. Firms that have board network ties to firms in other industries that imitate their competitors' business strategy are likely to imitate their own competitors' business strategy, as well as their competitors' acquisition activity and compensation policy. Thus, the findings reveal network effects that are not visible with extant perspectives on interorganizational imitation. We discuss implications for institutional theory and research on interorganizational networks.
Get full access to this article
View all access options for this article.
References
1.
AbrahamsonE.: 2000“Change without pain.”Harvard Business Review, July/August: 75–80.
2.
AllisonP. D.: 1978“Measures of inequality.”American Sociological Review, 43: 865–880.
3.
AllisonP. D.: 1990“Change scores as dependent variables in regression analysis.” In CloggC. C. (ed.), Sociological Methodology: 93–114. San Francisco: Jossey-Bass.
4.
AnandJ.SinghH.: 1997“Asset redeployment, acquisitions and corporate strategy in declining industries.”Strategic Management Journal, 18: 99–118.
5.
AntleR.SmithA.: 1985“Measuring executive compensation: Methods and an application.”Journal of Accounting Research, 23: 296–325.
BanduraA.: 1986Social Foundations of Thought and Action. Englewood Cliffs, NJ: Prentice-Hall.
9.
BarkemaH. G.Gomez-MejiaL. R.: 1998“Managerial compensation and firm performance: A general research framework.”Academy of Management Journal, 41: 135–145.
10.
BarneyJ. B.: 1991“Firm resources and sustained competitive advantage.”Journal of Management, 17: 99–120.
11.
BartunekJ. M.MochM. K.: 1987“First-order, second-order, and third-order change and organization development interventions: A cognitive approach.”Journal of Applied Behavioral Science, 23: 483–500.
12.
BettenhausenK.MurnighanJ. K.: 1985“The emergence of norms in competitive decision-making groups.”Administrative Science Quarterly, 30: 350–372.
13.
BoekerW.: 1997“Strategic change: The influence of managerial characteristics and organizational growth.”Academy of Management Journal, 40: 152–171.
14.
BollenK. A.: 1989Structural Equations with Latent Variables. New York: Wiley.
15.
BrowneL. E.RosengrenE. S.: 1988“The merger boom: An overview.”New England Economic Review, 20: 22–32.
16.
BrushT. H.: 1996“Predicted change in operational synergy and post-acquisition performance of acquired businesses.”Strategic Management Journal, 17: 1–24.
17.
BurnsL. R.WholeyD. R.: 1993“Adoption and abandonment of matrix management programs: Effects of organizational characteristics and interorganizational networks.”Academy of Management Journal, 36: 106–138.
18.
BurtR. S.: 1983Corporate Profits and Cooptation: Networks of Market Constraints and Directorate Ties in the American Economy. New York: Academic Press.
19.
BurtR. S.: 1987“Social contagion and innovation: Cohesion versus structural equivalence.”American Journal of Sociology, 92: 1287–1335.
20.
CarrollG. R.HannanM. T.: 2000The Demography of Corporations and Industries. Princeton, NJ: Princeton University Press.
21.
ChandlerA. D.: 1962Strategy and Structure. Cambridge, MA: MIT Press.
22.
ChavesM.: 1996“Ordaining women: The diffusion of an organizational innovation.”American Journal of Sociology, 101: 840–873.
23.
ChickeringA. W.GamsonZ. F.: 1987“Seven principles for good practice in undergraduate education.”AAHE Bulletin, 39(7): 3–7.
24.
CohenS. G.ChangL.LedfordG. E.Jr.: 1997“A hierarchical construct of self-management leadership and its relationship to quality of work life and perceived work group effectiveness.”Personnel Psychology, 50: 275–308.
25.
CrystalG. S.: 1984Questions and Answers on Executive Compensation. Englewood Cliffs, NJ: Prentice-Hall.
26.
CrystalG. S.: 1991In Search of Excess: The Overcompensation of American Executives. New York: W.W. Norton.
27.
CyertR. M.MarchJ. G.: 1963A Behavioral Theory of the Firm. Englewood Cliffs, NJ: Prentice-Hall.
28.
DaftR. J.SormunenJ.ParksD.: 1988“Chief executive scanning, environmental characteristics, and company performance: An evaluative study.”Strategic Management Journal, 9: 123–139.
29.
DavisG. F.: 1991“Agents without principles? The spread of the poison pill through the intercorporate network.”Administrative Science Quarterly, 36: 583–613.
30.
DavisG. F.: 1994“The interlock network as a self-reproducing social structure.” Working paper, School of Business, Columbia University.
31.
DeephouseD. L.: 1999“To be different, or to be the same? It's a question (and theory) of strategic balance.”Strategic Management Journal, 20: 147–166.
32.
DembA.NeubauerF. F.: 1992The Corporate Board: Confronting the Paradoxes. Oxford: Oxford University Press.
33.
DierickxI.CoolK.: 1989“Asset stock accumulation and sustainability of competitive advantage.”Management Science, 35: 1504–1513.
34.
DiMaggioP. J.PowellW. W.: 1983“The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields.”American Sociological Review, 48: 147–160.
35.
EdelmanL. B.: 1992“Legal ambiguity and symbolic structures: Organizational mediation of civil rights law.”American Journal of Sociology, 97: 1531–1577.
36.
EdwardsJ. R.: 1995“Alternatives to differences scores as dependent variables in the study of congruence in organizational research.”Organizational Behavior and Human Decision Processes, 64: 307–324.
FamaE. F.JensenM.: 1983“The separation of ownership and control.”Journal of Law and Economics, 26: 301–325.
39.
FarmerS. M.MaslynJ. M.FedorD. B.GoodmanJ. S.: 1997“Putting upward influence strategies in context.”Journal of Organizational Behavior, 18: 17–42.
40.
FeldmanD. C.: 1984“The development and enforcement of group norms.”Academy of Management Review, 9: 47–53.
41.
FeldtT.LeskinenE.KinnunenU.MaunoS.: 2000“Longitudinal factor analysis models in the assessment of the stability of sense of coherence.”Personality and Individual Differences, 28: 239–257.
42.
FinkelsteinS.BoydB. K.: 1998“How much does the CEO matter? The role of managerial discretion in the setting of CEO compensation.”Academy of Management Journal, 41: 179–199.
43.
FinkelsteinS.HambrickD. C.: 1990“Top management team tenure and organizational outcomes: The moderating role of managerial discretion.”Administrative Science Quarterly, 35: 484–503.
44.
FletcherG. J. O.SimpsonJ. A.ThomasG.: 2000“The measurement of perceived relationship quality components: A confirmatory factor analytic approach.”Personality and Social Psychology Bulletin, 26: 340–354.
45.
FligsteinN.: 1991“The structural transformation of American industry: An institutional account of the causes of diversification in the largest firms, 1919–1979.” In PowellW. W.DiMaggioP. J. (eds.), The New Institutionalism in Organizational Analysis: 311–336. Chicago: University of Chicago Press.
46.
FligsteinN.: 1995“Networks of power or the finance conception of control? Comment on Palmer, Barber, Zhou, and Soysal.”American Sociological Review, 60: 500–503.
47.
FredricksonJ. W.MitchellT. R.: 1984“Strategic decision processes: Comprehensiveness and performance in an industry with an unstable environment.”Academy of Management Journal, 27: 399–423.
48.
GalaskiewiczJ.: 1985“Interorganizational relations.”Annual Review of Sociology, 11: 281–304.
49.
GalaskiewiczJ.: 1997“An urban grants economy revisited: Corporate charitable contributions in the Twin Cities, 1979–81, 1987–89.”Administrative Science Quarterly, 42: 445–471.
50.
GalaskiewiczJ.WassermanS.: 1989“Mimetic processes within an interorganizational field: An empirical test.”Administrative Science Quarterly, 34: 454–479.
51.
GartrellC. D.: 1987“Network approaches to social evaluation.”Annual Review of Sociology, 13: 49–66.
52.
GeletkanyczM. A.HambrickD. C.: 1997“The external ties of top executives: Implications for strategic choice and performance.”Administrative Science Quarterly, 42: 654–681.
GibbonsR.MurphyK. J.: 1990“Relative performance evaluation for chief executive officers.”Industrial and Labor Relations Review, 43: 30–51.
55.
GioiaD. A.ManzC. C.: 1985“Linking cognition and behavior: A script processing interpretation of vicarious learning.”Academy of Management Review, 10: 527–539.
56.
GoffmanE.: 1967Interaction Ritual. New York: Anchor Books.
57.
Gomez-MejiaL.R.: 1992“Structure and process of diversification, compensation strategy, and firm performance.”Strategic Management Journal, 13: 381–397.
HambrickD. C.: 1981“Environment, strategy, and power within top management teams.”Administrative Science Quarterly, 26: 253–275.
64.
HaunschildP. R.: 1993“Interorganizational imitation: The impact of interlocks on corporate acquisition activity.”Administrative Science Quarterly, 38: 564–592.
65.
HaunschildP. R.MinerA. S.: 1997“Modes of interorganizational imitation: The effects of outcome salience and uncertainty.”Administrative Science Quarterly, 42: 472–500.
66.
HavemanH. A.: 1993“Organizational size and change: Diversification in the savings and loan industry after deregulation.”Administrative Science Quarterly, 38: 20–50.
67.
HaywardM. L. A.HambrickD. C.: 1997“Explaining the premiums paid for large acquisitions: Evidence of CEO hubris.”Administrative Science Quarterly, 42: 103–129.
68.
HillC. W. L.HansenG.: 1991“A longitudinal study of the causes and consequences of changes in diversification in the U.S. pharmaceutical industry 1977–1986.”Strategic Management Journal, 12: 187–199.
69.
HopkinsH. D.: 1987“Acquisition strategy and the market position of acquiring firms.”Strategic Management Journal, 8: 535–547.
70.
IngramP.ClayK.: 2000“The choice-within-constraints new institutionalism and implications for sociology.”Annual Review of Sociology, 26: 525–546.
JudgeW. Q.ZeithamlC. P.: 1992“Institutional and strategic choice perspectives on board involvement in the strategic decision process.”Academy of Management Journal, 25: 766–794.
74.
KennyD. A.: 1975“A quasi-experimental approach to assessing treatment effects in the nonequivalent control group design.”Psychological Bulletin, 82: 345–362.
75.
KennyD. A.CohenS. H.: 1979“A reexamination of selection and growth processes in the nonequivalent control group design.” In SchuesslerK. (ed.), Sociological Methodology, 11: 290–313. San Francisco: Jossey-Bass.
76.
KochharR.HittM. A.: 1998“Linking corporate strategy to capital structure: Diversification strategy, type and source of financing.”Strategic Management Journal, 19: 601–610.
77.
KoppT. J.: 1990Perspectives on Corporate Takeovers. Lanham, MD: University Press of America.
78.
KraatzM. S.: 1998“Learning by association? Interorganizational networks and adaptation to environmental change.”Academy of Management Journal, 41: 621–643.
79.
LevittB.MarchJ. G.: 1988“Organizational learning.”Annual Review of Sociology, 14: 319–340.
80.
LorschJ. W.MaclverE.: 1989Pawns or Potentates: The Reality of America's Corporate Boards. Boston: Harvard Business School Press.
81.
MalletteP.FowlerK. L.: 1992“Effects of board composition and stock ownership on the adoption of ‘poison pills'.”Academy of Management Journal, 35: 1010–1035.
82.
ManzC. C.SimsH. P.: 1987“Leading workers to lead themselves: The external leadership of self-managing work teams.”Administrative Science Quarterly, 32: 106–128.
83.
MarchJ. G.OlsenJ. P.: 1976Ambiguity and Choice in Organizations. Bergen, Norway: Universitetsforlaget.
84.
McKeachieW. J.: 1994Teaching Tips: Strategies, Research, and Theory for College and University Teachers, 9th ed.Lexington, MA: D.C. Heath.
85.
MeyerJ. W.ScottW. R.StrangD.: 1987“Centralization, fragmentation, and school district complexity.”Administrative Science Quarterly, 32: 186–201.
86.
MilesR. E.SnowC. C.MeyerA. D.ColemanH. J.Jr.: 1978“Organizational strategy, structure, and process.”Academy of Management Review, 3: 546–562.
87.
MinerA. S.MeziasS. J.: 1996“Ugly duckling no more: Pasts and futures of organizational learning research.”Organization Science, 7: 88–99.
88.
MintzbergH.: 1978“Patterns in strategy formation.”Management Science, 24: 934–948.
89.
MizruchiM. S.: 1992The Structure of Corporate Political Action: Interfirm Relations and Their Consequences. Cambridge, MA: Harvard University Press.
90.
MizruchiM. S.: 1996“What do interlocks do? An analysis, critique, and assessment of research on interlocking directorates.”Annual Review of Sociology, 22: 271–298.
91.
MongeP.ContractorN. S.: 1997“Emergence of communication networks.” In JablinF. M.PutnamL. L. (eds.), Handbook of Organizational Communication, 2d ed.: 1–72. Thousand Oaks, CA: Sage.
NisbettR.RossL.: 1980Human Inference: Strategies and Shortcomings of Social Judgment. Englewood Cliffs, NJ: Prentice-Hall.
94.
OcasioW.: 1999“Institutionalized action and corporate governance: The reliance on rules of CEO succession.”Administrative Science Quarterly, 44: 384–416.
95.
O'ReillyC. A.MainB. G.CrystalG. S.: 1988“CEO compensation as tournament and social comparison.”Administrative Science Quarterly, 33: 257–274.
96.
PalmerD.BarberB. M.: 2001“Challengers, elites, and owning families: A social class theory of corporate acquisitions in the 1960s.”Administrative Science Quarterly, 46: 87–120.
97.
PalmerD. A.JenningsP. D.ZhouX.: 1993“Late adoption of the multidivisional form by large U.S. corporations: Institutional, political, and economic accounts.”Administrative Science Quarterly, 38: 100–131.
98.
PhanP.H.: 2000Taking Back the Boardroom: Better Directing for the New Millennium. Singapore: McGraw-Hill.
99.
PoracJ. F.ThomasH.WilsonF.PatonD.KanferA.: 1995“Rivalry and the industry model of Scottish knitwear producers.”Administrative Science Quarterly, 40: 203–229.
100.
PoracJ. F.WadeJ. B.PollockT. G.: 1999“Industry categories and the politics of the comparable firm in CEO compensation.”Administrative Science Quarterly, 44: 112–144.
PowellW. W.KoputK. W.Smith-DoerrL.: 1996“Interorganizational collaboration and the locus of innovation: Networks of learning in biotechnology.”Administrative Science Quarterly, 41: 116–145.
103.
QuinnJ. B.: 1980Strategies for Change: Logical Incrementalism. Homewood, IL: Irwin.
104.
RogersW. H.: 1993“Regression standard errors in clustered samples.”Stata Technical Bulletin Reprints, 3: 88–94.
SandersW. G.CarpenterM. A.: 1998“Internationalization and firm governance: The roles of CEO compensation, top team composition, and board structure.”Academy of Management Journal, 41: 179–199.
ScottW. R.: 1992Organizations: Rational, Natural, and Open Systems, 3rd ed.Englewood Cliff, NJ: Prentice-Hall.
109.
ScottW. R.: 1995Institutions and Organizations. Thousand Oaks, CA: Sage.
110.
SegevE.: 1987“Strategy, strategy making, and performance in a business game.”Strategic Management Journal, 8: 565–577.
111.
SewardJ. K.WalshJ. P.: 1996“The governance and control of voluntary corporate spinoffs.”Strategic Management Journal, 17: 25–39.
112.
StantonA. Q.: 1989“The interface of communication and instruction: Conceptual considerations and programmatic manifestation.”Communication Education, 38: 364–371.
113.
ThomasA. S.LitschertR. J.RamaswamyK.: 1991“The performance impact of strategy-manager coalignment: An empirical examination.”Strategic Management Journal, 12: 509–522.
114.
TolbertP. S.ZuckerL. G.: 1983“Institutional sources of change in the formal structure of organizations: The diffusion of civil service reform, 1880–1935.”Administrative Science Quarterly, 28: 22–39.
115.
TushmanM. L.RomanelliE.: 1985“Organizational evolution: A metamorphosis model of convergence and reorientation.” In CummingsL. L.StawB. M. (eds.), Research in Organizational Behavior, 7: 171–222. Greenwich, CT: JAI Press.
116.
UseemM.: 1993Executive Defense: Shareholder Power and Corporate Reorganization. Cambridge, MA: Harvard University Press.
117.
ViranyB.TushmanM. L.RomanelliE.: 1992“Executive succession and organization outcomes in turbulent environments: An organizational learning approach.”Organization Science, 3: 72–91.
118.
WadeJ. B.O'ReillyC. A.IIIChandratatI.: 1990“Golden parachutes: CEOs and the exercise of social influence.”Administrative Science Quarterly, 35: 587–603.
119.
WeickK.: 1979“Commentary on the purpose of leadership research.” In HuntJ. G.LarsonL. L. (eds.), Crosscurrents in Leadership: 88–96. Carbondale, IL: Southern Illinois University Press.
120.
WestphalJ. D.: 1999“Collaboration in the boardroom: The consequences of social ties in the CEO/board relationship.”Academy of Management Journal, 42: 7–24.
121.
WestphalJ. D.FredricksonJ. W.: 2001“Who directs strategic change? Director experience, the selection of new CEOs, and change in corporate strategy.”Strategic Management Journal, 22: 1113–1138.
122.
WestphalJ. D.GulatiR.ShortenS. M.: 1997“Customization or conformity: An institutional and network perspective on the content and consequences of TQM adoption.”Administrative Science Quarterly, 42: 366–394.
123.
WestphalJ. D.ZajacE. J.: 1997“Defections from the inner circle: Social exchange, reciprocity and the diffusion of board independence in U.S. corporations.”Administrative Science Quarterly, 42: 161–183.
124.
WiersemaM. F.BantelK. A.: 1992“Top management team demography and corporate strategic change.”Academy of Management Journal, 35: 91–121.
125.
WiersemaM. F.BantelK. A.: 1993“Organizational demography in Japanese firms: Group heterogeneity, individual dissimilarity, and top management team turnover.”Academy of Management Journal, 36: 996–1026.
126.
WoodR.BanduraA.: 1989“Social cognitive theory of organizational management.”Academy of Management Review, 14: 361–384.
127.
ZajacE. J.: 1988“Interlocking directorates as an interorganizational strategy.”Academy of Management Journal, 31: 428–438.
128.
ZajacE. J.: 1990“CEO selection, succession, compensation and firm performance: A theoretical integration and empirical analysis.”Strategic Management Journal, 11: 217–230.
129.
ZajacE. J.: 1992“Relating economic and behavioral perspectives in strategy research.” In ShrivastavaP.HuffA.DuttonJ. (eds.), Advances in Strategic Management, 8: 69–96. Greenwich, CT: JAI Press.
