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Defensive Practice Adoption in the Face of Organizational Stigma: Impression Management and the Diffusion of Stock Option Expensing
Author(s) -
Carberry Edward J.,
King Brayden G
Publication year - 2012
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/j.1467-6486.2012.01075.x
Subject(s) - deviance (statistics) , accounting , corporate governance , impression management , legitimacy , business , public relations , shareholder , dismissal , stock (firearms) , face (sociological concept) , sociology , psychology , social psychology , political science , law , finance , mechanical engineering , social science , statistics , mathematics , politics , engineering
Although most diffusion research focuses on firms adopting new practices to maintain their legitimacy, this paper examines a setting in which firms adopted a controversial practice to defend themselves against challenges relating to corporate deviance. We argue that understanding defensive adoption requires attending to both the dynamics of organizational stigma and impression management, and test our theoretical claims by analysing the diffusion of an accounting practice, stock option expensing ( SOPEX ), following the E nron scandal. We first provide evidence that the media and shareholder activists transformed the practice into a defensive device by theorizing it as a solution to problems relating to corporate fraud and corporate governance. Using event history analysis, we then show that corporations that became targets of stigma‐inducing threats were more likely to adopt SOPEX and that the media were a key force channelling these threats.