The adoption of institutionally contested organizational practices: The emergence of stock option pay in Germany

Examining the transnational diffusion of organizational practices from institutional environments in which they are legitimate to environments in which key institutional actors contest them, we contrast processes facilitating pioneering adoptions of con-tested practices with processes that diffuse the contested practices. Courageous adopt-ers of contested practices are likely to have (1) exposure to high-status institutional environments in which the practices are legitimate and (2) experience with other contested practices. Regulatory legitimization and institutional isomorphism pro-cesses then diffuse the contested practices within an environment. The results of a study of stock option pay adoption among large German firms generally support our hypotheses. How do new practices that transgress legitimacy standards take root and spread? As Scott (2001) noted, the legitimacy of organizational practices is built on three pillars: the normative, the regulatory, and the cultural-cognitive. A new practice is re