Institutional pressures within multinational firms
A good deal of writing and research about institutions is concerned with the way in which common institutional pressures act to bring about similarity of practices between organisations. For example, Barry Staw and Lisa Epstein (2000) provide a research-based account of how large firms adopt popular management techniques for reasons of legitimacy rather than efficiency. They show that these techniques lead, on average, to higher CEO pay and increased corporate reputation, but not to higher economic performance.
While such single-country studies tend to use institutional theory to account for similarities or convergence of management practices between firms, cross-national studies tell a different story. Firms in different parts of the world face different kinds of legitimacy pressures and here institutional theory is more often deployed to account for differences between management practices in different parts of the world.
In multinational organisations, managers are often faced with competing institutional pressures in different parts of the world. This can create particular challenges for managers in such organisations. In the next section you are going to read an account of research on the effects of these pressures on management practices within a multinational firm.