Calculating Values, Changing Organizations: Governance Rankings and the Transmission of Institutional Logics

In a world where the actions of firms have profound consequences, and in which existing corporate norms frequently have controversial impacts on the broader society, the issue of transforming corporate institutions is of increasing importance. What mechanisms allow reforms to be proposed, understood, accepted and eventually adopted throughout an organizational field? How do practices which diverge markedly from prior norms become both acceptable and widely imitated? There is an accelerating use of social movement theory and organization theory to understand and explain campaigns for social change and corporate responses. In this study, I explore the influence of governance activists on the norms of corporate governance in Canada. In the years immediately after the introduction of the Sarbanes-Oxley Act in the United States, Canadian governance activists began to advocate a new model of the role of corporate boards. They wished to strengthen the independence of board from management, and their model quickly became normative. Institutions changed swiftly and unmistakably. This setting provides an opportunity to investigate the means by which institutional entrepreneurs introduce new practices to an organizational field, how the practices they advocate acquire value, and the conditions under which new practices are integrated into the decision-making processes of organizations. I first conduct a multi-practice study that examines the importance of rankings as an algorithm or calculative device that is congruent with corporate logics. I then examine the diffusion of these practices using a heterogeneous diffusion model. The logic of activists, the structure of organizational fields and the rational decision making of individual firms each play an essential part in the process of institutionalizing new and divergent practices.Ph