1
Social Sustainability implementation in the Bangladeshi
Apparel Industry: Isomorphism, Diffusion, Decoupling
and change in Institutional Logics due to Environmental
Shocks
Fahian Anisul Huq ([email protected])
Lancaster University Management School, U.K.
Dr Mark Stevenson
Lancaster University Management School, U.K.
Dr Marta Zorzini
Lancaster University Management School, U.K.
Abstract Most social sustainability studies are from the developed country buying firm perspective and
lack theoretical underpinning. We examine the implementation of social sustainability in the
apparel industry of Bangladesh using institutional theory, investigating how institutional
pressures exerted by actors, e.g. developing country suppliers, NGOs and trade bodies,
impact the diffusion of socially sustainable practices; and, how changes in institutional logics
affect implementation. Preliminary findings reveal, for example, that conflicts between the
social and (traditionally dominant) economic logic impact implementation. Although the
economic logic is still prevalent, the social logic is gaining in importance, leading to more
effective diffusion of practices.
Keywords: Social Sustainability, Apparel Supply Chain, Institutional Theory.
Introduction
On the 24th of April 2013, the Rana Plaza building that housed five Bangladeshi apparel
factories making clothes for Western brands collapsed, killing 1,129 people. This was by far
the deadliest disaster in the history of the apparel industry and followed shortly after the
November 2012 fire at the Tazreen factory – also supplying major Western buyers – that
killed approximately 110 workers. Tragic events such as these have led to increased public
scrutiny, with Western buying firms being increasingly held responsible for the social
sustainability of their upstream supply chain partners. Adverse publicity as a result of socially
unsustainable practices has caused lasting damage to brands and revenues; and, it has created
increased stakeholder expectations – exerting pressures on Western apparel buying firms to
have acceptable supply chain-wide social sustainability standards (Klassen and Vereecke,
2012).
The environmental aspect of sustainability has been studied extensively, but the social
discourse has only recently joined the mainstream supply chain management literature
(Carter and Rogers, 2008). Even though social sustainability becomes a more critical
management concern when dealing with distant developing country suppliers, most previous
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studies have been conducted in the context of developed country buyers (Ehrgott et al.,
2011). Very few contributions have incorporated multiple stakeholders and, surprisingly,
studies accounting for the views of developing country suppliers and their workers are even
more scarce. There is a knowledge gap concerning how institutional actors influence the
extent of a firm’s pursuit of social sustainability and exert institutional pressures, especially
in response to environmental shocks or jolts, such as the aforementioned Tazreen factory Fire
and Rana Plaza collapse. There is also a gap concerning how environmental shocks impact
the dominant logics and decision making practices in a given context.
In response to the clear practical and academic importance of this topic, we propose the
following research questions:
RQ1. How are the key institutional actors in the apparel industry exerting pressures on: (a)
suppliers, to diffuse socially sustainable practices into their organisations; and (b)
buyers, to diffuse socially sustainable practices into their relevant supply chains.
RQ2. How are the institutional logics in the apparel industry changing in response to
environmental shocks and affecting the implementation of social sustainability in the
apparel industry?
Institutional Theory
Institutional theory provides an overarching framework to guide how organisations respond
to a combination of both internal and external pressures from actors within their institutional
field or environment; and, as the pattern of conducting socially responsible business evolves,
organisations converge on a set of homogeneous business practices (Dimaggio and Powell,
1983, Grewal and Dharwadkar, 2002, Zsidisin et al., 2005). Much like a legal precedent, this
will eventually become the legitimate way of organising a socially sustainable supply chain
(Meyer and Rowan, 1977, Zucker, 1987). Institutional theory asserts that these so-called
isomorphisms occur through mainly normative, coercive, and mimetic pressures (Dimaggio
and Powell, 1983, Grewal and Dharwadkar, 2002), as described below.
Coercive pressures are those exerted by powerful organisations within the network,
alongside cultural or societal pressures. Mimetic pressures occur when an organisation, due
to uncertainty, mimics the actions of successful competitors in the industry. Finally,
normative pressure is associated with professionalisation, primarily the growth of formal
education and professional networks (Dimaggio and Powell, 1983, Scott, 1987). A wide
range of actors are likely to influence the creation of new types of institutions, comprising of
critical exchange partners, such as buyers, suppliers, shareholders, regulatory organisations,
professional and trade associations, special interest groups, the general public and customers,
to even socio-economic norms and belief systems (Dimaggio and Powell, 1983, Eisenhardt,
1988, Hoffman, 2001, Scott, 2008).
Even though institutional theory has been identified as a valuable tool for OM research
(Ketokivi and Schroeder, 2004) – offering important insights into the adoption of various
SCM practices (Kauppi, 2013) – empirical work that adopts it is virtually absent in
sustainable SCM (Zhu and Sarkis, 2007). Institutional theory asserts that firms adapt and may
implement new initiatives to gain legitimacy within society itself (Boxenbaum and Jonsson,
2008). Institutional analyses may answer questions about how social choices are fashioned,
facilitated and directed. Researchers have underlined the significance of social
interconnectedness within institutional theory: “institutionalization is better viewed as the
social process by which individuals come to accept a shared definition of reality” (Scott,
1987, p. 496).
Pressures to be socially sustainable are now originating from a complex and expanding
web of constituents, including NGOs, trade associations, trade unions, competitors, investors,
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governments, local communities and the media – particularly the internet – each of which is
altering the definitions of legitimate socially sustainable behaviour. When such multiple
interest groups have a stake in defining legitimate corporate action, it becomes a central
concern for managers to develop appropriate corporate strategy, especially during periods of
change, instability, and uncertainty (Hoffman, 2001). This is increasingly important in the
apparel industry at this time, as the industry is in a state of flux, and resides at the cross-roads
of its journey towards greater sustainability. After recent high profile social failures, which
we refer to as triggering events, the ‘eyes’ of the world are on the developed world’s buyers
and their suppliers. They need to be seen to be responsive to the interests of external social
actors in order to gain legitimacy amongst their current and future stakeholders.
The institutional field is establishing new socially sustainable standards, and the emergent
institutions – both in terms of developed world buyers and third-world suppliers – will need
to reflect on these evolving perceptions in their core business strategy in order to be viewed
by external parties as complying or exceeding in terms of their social sustainability. This
means firms must devote increasing resources towards social sustainability initiatives in a
way that also simultaneously satisfies their economic objectives (Porter and Kramer, 2011).
Thus, by adopting institutionally defined socially sustainable policies, both the buyer and
supplier firms will be able to create legitimacy to operate in the eyes of their external
stakeholders.
Isomorphism and Decoupling
Institutions can be defined as ‘historical accretions of past practices and understandings that
set conditions on action through the way in which they gradually acquire the moral and
ontological status of taken-for-granted facts which, in turn, shape future interactions and
negotiations’ (Munir and Phillips, 2005, p: 1668). Institutionalization is the process by which
a pattern of action becomes the norm and becomes embedded in an organisation, or in the
industry, or society (Green, 2004). A central idea of institutional isomorphism is that as more
and more organisations conform to socio-cultural prescriptions to gain legitimacy, it leads to
the diffusion of socially rationalised organisational practices in that field (Meyer and Rowan,
1977, Dimaggio and Powell, 1983). However, more recent research using institutional theory
has found that institutional pressures do not always lead to isomorphism – in some cases they
can lead to heterogeneous responses (Bala and Venkatesh, 2007, Bhakoo and Choi, 2013),
which can be in various forms including compromise, avoidance, defiance and manipulation
(Oliver, 1991). Others like Meyer and Rowan (1977) have suggested that, sometimes, firms
respond to institutional pressures through only a superficial conformity, i.e. a firm might
formally adopt a practice, but within the organisation the actual practices are not
implemented. This ‘decoupling point’ arises when adaptations to institutional pressures
contradict internal efficiency needs (Meyer and Rowan, 1977) or because firms fail to
consider local circumstances and practical realities (Scott, 2008). Although the phenomena of
decoupling is a well-recognised organisational response (Boxenbaum and Jonsson, 2008),
according to Greenwood et al. (2011) more in-depth scrutiny is required, particularly on the
motivations behind decoupling, on the conditions under which organisations can continue to
decouple their structures from their practices and on the longer-term implications of
decoupling.
Institutional Logics and Environmental Shocks
A relatively new approach to institutional theory is the institutional logic method of analysis,
which helps us understand the influences of societal-level culture on the cognition and
behaviour of individual and organisational actors (Dimaggio, 1997). Alford and Friedland
(1985) were the first to coin the term ‘institutional logics’ and conceptualised it as a set of
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material practices and symbolic constructions that constitute an institutional order's
organising principles that are available to organisations and individuals to elaborate
(Friedland and Alford, 1991). Thornton and Ocasio (1999, p. 804) further refined the
definition as “the socially constructed, historical pattern of material practices, assumptions,
values, beliefs, and rules by which individuals produce and reproduce their material
subsistence, organise time and space, and provide meaning to their social reality”. Thus,
logics provide a means of understanding the social world and prescribe guidelines on how to
function in it in order to gain legitimacy from institutional actors (Greenwood et al., 2011).
Society is constructed of several institutional logics that are symbiotic and yet also
contradictory (Friedland and Alford, 1991, Greenwood et al., 2011). For example, western
societies are said to be comprised of six major societal sectors: the market, the corporation,
the professions, the family, the religions, and the state (Friedland and Alford, 1991).
Organisational fields are rarely subject to a single dominant logic and typically face multiple
logics that may be in competition if not in conflict (Friedland and Alford, 1991, Thornton et
al., 2005, Lander et al., 2013). This new approach differs from a traditional isomorphism
approach by highlighting that institutional pressures can lead to heterogeneous responses
when contending logics co-exist (Thornton and Ocasio, 2008). For example, the logics of
science, i.e. open publication and the pursuit of knowledge and commercial logics i.e.
exploitation of research results exist together in university academic science departments but
promote different behaviours (Greenwood et al., 2011). Similarly, in accounting firms there
exists the professional logic where the emphasis is to protect public interest by verifying the
legitimacy of client financial statements and the commercial logic of profit maximisation,
which under certain conditions might result in conflicting actions (Thornton et al., 2005). The
institutional logic approach helps explain how separate fundamental societal belief systems
affect the cognition and behaviour of individuals and organisations (Tan and Wang, 2011);
and, conversely, how institutional logics change over time, influenced by economic and
social structural changes (Thornton and Ocasio, 1999).
The traditional focus, while using the institutional theory lens, has been on explaining
organisational similarities based on institutional conditions. But, more recently, the emphasis
has been on the role of institutional actors in transforming institutions (Lawrence and
Suddaby, 2006). Of particular interest is the concept of institutional entrepreneurs, introduced
by Dimaggio (1988) and referring to individual and organisational actors that command key
strategic resources or other forms of power to influence institutionalized rules. According to
Beckert (1999), these entrepreneurs have significant influence on the evolution of institutions
by using their resources to support existing institutions or by destroying established taken-
for-granted rules, since they are reflective and can envision alternate and more profitable
actions. When contradictory logics exist simultaneously and the dominant institutional logic
does not comprise an efficient solution for the organisation, it might lead to a decoupling of
practices (Meyer and Rowan, 1977). Incompatible prescriptions from multiple institutional
logics can also lead to institutional tension and complexity (Thornton et al., 2005, Greenwood
et al., 2011). In such situations, self-interested institutional entrepreneurs are able to exploit
old logics and create new ones, eventually triggering institutional changes (Dimaggio, 1988).
Environmental jolts or significant historical events can also cause a shift or de-legitimise pre-
existing institutional logic structures (Thornton et al., 2005), thereby creating opportunities
for institutional entrepreneurs to re-evaluate the costs and benefits of existing institutional
practices (Sine and David, 2003). Therefore, we can argue that environmental shocks caused
by the Tazreen Fire and the Rana Plaza collapse in the Bangladeshi apparel industry will act
as catalysts for such institutional change.
We have already validated through initial exploratory interviews two separate institutional
logics within the phenomenological experience of multiple stakeholders in the apparel
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industry. The first is the desire to maximise profit, which we refer to as the economic logic;
the second logic – often in opposition to the first – is the imparted need to improve social
standards right through the supply chain. Based on our interviews and historical research,
relevant stakeholders described that, following the many earlier sweatshop scandals in the
1980s and 1990s (e.g. Nike), buyers came under pressure from the media, NGOs and
governments to improve social standards in their suppliers, which led to the formation of the
social logic. The key institutional actors that are likely to play a prominent role in the
diffusion of socially sustainable practices in the apparel sector are illustrated in Figure 1.
Figure 1 – Key Apparel Industry Institutional Actors
Methodology: Multiple Case Study Research
An extensive longitudinal study has been undertaken in Bangladesh, renowned for its
importance to the apparel industry. Interviews were conducted in three rounds, between
2011-2013, which improved the focus of the research and allowed for follow-up questions to
be asked (Van Teijlingen and Hundley, 2001, Bryman and Bell, 2007). Longitudinal data was
collected before and directly after the Tazreen fire in November 2012 – the minor
environmental shock, and after the Rana Plaza collapse – the major environmental shock, in
April 2013. A multi-case study approach covering the perspectives of multiple stakeholders,
including Bangladeshi suppliers, developed countries buyers, trade bodies, workers, Non-
Governmental Organisations (NGOs) and trade unions was adopted.
The primary mode of data collection was through interviews. Other methods employed
included factory tours and secondary data collection, e.g. from audit reports and relevant
news articles. To date, face-to-face semi-structured interviews have been conducted across:
Twelve Bangladeshi apparel manufacturers that export to Europe & North America; plus
the Bangladeshi offices of six major UK, US and European brand retailers and one major
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US Supermarket Retailer with annual apparel, with sales ranging from £2.4bn to £12.3bn
(in 2011).
Other institutional actors interviewed include managers from trade associations, NGOs
and trade unions.
Two worker focus group discussions were also conducted.
Many prior studies have identified individual actors and organisations, such as
governments, trade associations, suppliers, NGOs and employees as being critical to the
process of adopting organisational practices (Hoffman, 2001). But few studies to date have
empirically collected a composite analysis of the field-level effect (Kauppi, 2013). In
response, we will look to combine organisation-level analysis with industry level analysis.
We consider the apparel industry to refer to all central actors in the field, including; suppliers,
buyers, competing firms, regulators, consumer groups and policy makers. In examining RQ1,
the unit of analysis is the buyer and supplier organisations and this core set of cases is
supplemented by evidence from the other stakeholders, NGOs, trade unions & trade bodies.
In the second phase, while investigating RQ2, we will build on and link the individual
analyses that exist, and in doing so, the apparel industry becomes the composite unit of
analysis. The application in context helps us to understand how that particular industry’s
logics affect the diffusion of socially sustainable practices. The industry is considered to be a
relevant boundary for identifying institutional logics since industry actors develop common
identities and values that structure social and economic practices, thereby constituting
commonly understood sets of actions (Thornton and Ocasio, 1999). The interaction of
institutional logics can be focused at the societal level, but the emphasis of this research is on
how institutional logics have changed at the industry level due to recent external
environmental shocks. More specifically, it centres on conducting industry level empirical
research to highlight any shift in institutional logics over time.
Initial Findings
RQ1: Key Institutional Pressures leading to Diffusion of Social Sustainability
Some of our initial findings on the key institutional pressures leading to social sustainability
implementation show that coercive pressures include those by buyers, media, end customers,
NGOs, trade unions, workers and the government. Most prominently, pressure has been
imposed by buyers who now make it mandatory for suppliers to reach certain social standards
in order to be considered for a contract. The buyers themselves are influenced by other
stakeholders – like the media and the expectations of end customers, e.g. in Europe and the
US. In contrast, lesser roles have thus far been played by the government and the
enforcement of regulations has been slack due to the corruption of the government’s labour
agency.
Mimetic pressures on suppliers include competition for orders and skilled labour. For
example, the Managing Director of Supplier 2 stated that: “As an industry, we have a
tremendous shortage of workers ... If we are not socially compliant, the workers won’t come
to our factory or we won’t retain them. Competition to get workers amongst the factories is
forcing us to be compliant”. Surprisingly, there are repeated incidences of negative pressures
being exerted by competitors on the suppliers who are leading the field in social sustainability
implementation to refrain from doing more than the norm that exists in their local industrial
belt.
Finally, more educated personnel, an increased education level of owners/managers, and
the continuous development of trade bodies are leading to increased normative isomorphism.
For example, BGMEA (Bangladesh Garment Manufacturers and Exporters Association), the
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main Bangladeshi apparel trade body, is playing a growing and influential role by inspecting
suppliers to ensure that children are not employed in the factories and they also run
workshops to help suppliers improve their social standards. Gradually, a better trained
workforce, able to deal with social compliance is being created, while a more educated
second-generation of entrepreneurs/managers is coming into the industry. This is resulting in
a more positive attitude towards social issues within the Bangladeshi apparel business
community, and beyond.
RQ2: Change in Institutional Logics in Response to Environmental Shocks
As indicated by our interviews and the trade literature, the traditional ideology of the industry
was founded on the economic logic of maximising profits via cheaper labour and capital
costs, but now, the social logic is gaining in prominence. Our findings show that there have
always been conflicts between these two logics, even prior to recent catastrophic events,
which, historically have affected the diffusion of socially sustainable practices. Furthermore,
before the Rana Plaza disaster, the clear prevalence of the economic logic was exemplified by
comments by Supplier 2’s Deputy Managing Director: “It is a buyer’s market ... buyers are
taking advantage of price wars between supplier factories. But if they buy cheap from
Bangladesh, then the benefits to the workers and society will also be cheap.” He claimed that
by failing to share costs or increase retail end-user prices, buyers were not considering the
long term viability of the suppliers or, indeed, how improved standards could be maintained.
Yet Buyer 1’s Supply Chain Manager felt that the prices they were paying were fair and
could lead to improvements in social sustainability that could also allow suppliers to be
economically sustainable. He questioned: “If they are not making a profit, then how are they
running their factories?” Benefits in terms of greater bargaining power were reported by
Supplier 4, but even this supplier complained about having to bear the costs of implementing
social sustainability.
The interplay of institutional logics have not been analysed previously in global supply
chains, where the added complexity of dealing with different socio-cultural setting arise, for
example. The evidence from the case studies show that the home grown institutional logics
of Western buyers does not align with those of developing country suppliers. Our findings
demonstrate that in such complex settings, the successful diffusion of social sustainability in
the SC depends upon conflicting industry logics, e.g. social logic dictates that child labour
should be removed; but the removal of child labour from apparel suppliers has not only
resulted in a loss of earnings but has simply diverted it to other, less regulated and more
hazardous industries like the construction industry. Therefore, in terms of the diffusion of
social sustainability, such initiatives don’t always provide the intended result There are many
instances of these type of trade-offs, not only between dimensions of social sustainability e.g.
economic vs. social, but also within single dimensions, e.g. social vs. social.
Conflicting logics – such as described above – between buyers and suppliers in the apparel
supply chain lead to heterogeneous responses to institutional pressures and increase the
tendency to decouple. For example, we have found evidence that most firms are only
superficially abiding with institutional pressures to be socially sustainable. For example, the
Deputy Managing Director of one supplier stated: “Buyer 4 [a major US Supermarket
retailer] only allows 8-hour shifts with 2 hours overtime per day. But it is not possible to
conform to this standard in the peak season and workers want more overtime as they get
double the basic rate. If we only gave the workers 48 hours of overtime per month, they
would leave and go elsewhere ... So, unfortunately, we have to maintain 2 timesheets. The
buyer and its auditors are aware of this but decide to turn a blind eye.” One set is shown to
buyers/auditors, which complies with regulations; and one is used to pay workers. It was also
claimed in suppliers 2 and 4 that the workers participate in this mock compliance willingly as
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it is in their interests if they want to retain overtime. This tendency is more evident among reluctant late adopting businesses, rather than
proactive early adopters, indicating heterogeneous responses.
Our analysis further shows that in terms of social sustainability implementation, the environmental shocks are motivating institutional
entrepreneurs to reformulate current institutional logics and thus foster institutional change. Even though the economic logic still dominates,
there is evidence that the environmental shocks or jolts have caused a significant change in social structures and economic forces; and the social
logic – with its emphasis on taking care of the society in which the firm operates in such a way that future generations are not negatively affected
– is gaining in importance, leading to better diffusion of social sustainability in the apparel supply chain.
Figure 2 –Implementation of Socially Sustainable practices: Isomorphic Pressures, Diffusion, Decoupling & change in Institutional Logics due
to Environmental Shocks
Environmental
Shocks
Socially
Sustainable
Practices Implementation Diffusion Mimetic
Normative
Coercive
Barriers to
Institutional
Pressures
Decoupling:
Mock compliance/Cheating by Suppliers
Over-looking of faults (insincerity) by
Buyers
Lack of Enforcement/Corruption by
Government agencies
Cultural & Socio-Economic incompatibility
with Western CoCs
Lack of SC Visibility
Confrontational Relationships with auditors
Disparity in multiple buyer CoCs
Isomorphic
Pressures
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Conclusion
Most prior studies on social sustainability have been in the context of developed countries,
and focused, almost exclusively, on the perspective of the buying firm. This research
contributes to the available literature, for example, by adding to our understanding of the
developing country supplier perspective; dyadic relationships have also been investigated.
We also explored the viewpoints of other stakeholders, both internal to the supply chain and
beyond. We have used institutional theory in the field of social sustainability, where
theoretical lenses have thus far been used sparingly. The research remains ongoing, but
institutional theory is proving to be a useful lens for understanding the diffusion of social
sustainability practices.
Once complete, this research is expected to provoke further work that builds on our
intended contributions. In summary, our research: is a study of a complex supply network in
a dynamic, global environment; employs multiple stakeholder perspectives; is a longitudinal
study conducted in a challenging developing country context; is theory-driven research;
topical and not only practically important for managers but also of social importance to
multiple stakeholders. Currently, we are unpacking and analysing the data by transcribing
each case and coding the dataset with the support of qualitative data analysis software
(NVivo).
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