1 THE ADOPTION OF INSTITUTIONALLY CONTESTED ORGANIZATIONAL PRACTICES: THE EMERGENCE OF STOCK OPTION PAY IN GERMANY

We examine the transnational diffusion of organizational practices from institutional environments where they are legitimate to environments where they are contested by key institutional actors. Our study focuses on processes facilitating the adoption of contested practices by pioneers who introduce new contested practices into the environment, resulting in greater variation in practices, and contrasts them with the processes which then diffuse those practices. Courageous adopters of contested practices are likely to be those with 1) unique exposure to institutional environments of high relative standing where the practice is legitimate and 2) prior experience with other forms of contested practices. Regulatory legitimization and institutional isomorphism processes then diffuse the contested practice within the environment. The results of our study of stock option pay adoption among large German firms generally support these hypotheses