Defensive Practice Adoption in the Face of Organizational Stigma: Impression Management and the Diffusion of Stock Option Expensing

Edward J. Carberry*, Brayden G. King

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

40 Scopus citations

Abstract

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 Enron 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.

Original languageEnglish (US)
Pages (from-to)1137-1167
Number of pages31
JournalJournal of Management Studies
Volume49
Issue number7
DOIs
StatePublished - Nov 1 2012

Keywords

  • Diffusion
  • Impression management
  • Scandal
  • Stigma

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Management of Technology and Innovation

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