Fabrizio Ferraro

The Role of Analogy in the Institutionalization of Sustainability Reporting

We study institutional entrepreneurship in an emergent field by analyzing the case of the Global Reporting Initiative (GRI) and its efforts to purposefully institutionalize the practice of sustainability reporting. We suggest that analogies affect institutionalization processes through two mechanisms. In the early stages of institutionalization, analogy operates primarily as a normative mechanism, and adoption is driven mainly by an instrumental logic. This emphasis on similarity to existing institutions stresses conformity and promotes legitimacy. Yet analogies can also have a cognitive effect on institutional design, especially once initial acceptance from the environment has been secured, by directing attention toward incongruences between the emergent institution and its analogical source. Institutional entrepreneurship can spur innovation and departure from existing institutions by highlighting limitations of the analogical source and providing a compelling value-rational argument that underscores the worth of the new institution. This theoretical contribution helps explain how analogies to existing institutional practices can both provide legitimacy to novel institutions and constitute the basis for a creative process of institutional design.

Tackling Grand Challenges Pragmatically: Robust Action Revisited

In this article, we theorize a novel approach to addressing the world’s grand challenges based on the philosophical tradition of American pragmatism and the sociological concept of robust action. Grounded in prior empirical organizational research, we identify three robust strategies that organizations can employ in tackling issues such as climate change and poverty alleviation: participatory architecture, multivocal inscriptions and distributed experimentation. We demonstrate how these strategies operate, the manner in which they are linked, the outcomes they generate, and why they are applicable for resolving grand challenges. We conclude by discussing our contributions to research on robust action and grand challenges, as well as some implications for research on stakeholder theory, institutional theory and theories of valuation.

How and Why Theories Matter: A Comment on Felin and Foss (2009)

Theories matter because they affect behavior and can, under certain circumstances, become self-fulfilling. For a theory to become self-fulfilling, people must be aware of the theory and have the ability to make choices according to its dictates, social and physical arrangements are altered on the basis of the theorys prescriptions, and the proponents have the power to implement social arrangements consistent with the theory. Economics and other social science theories often fulfill these conditions, with implications not only for the work of scholars, but also for how we think about testing theories that can change the world they describe.

State Mediation in Market Emergence: Socially Responsible Investing in China

Socially responsible investing (SRI) funds depart from mainstream finance by incorporating environmental, social, and governance considerations, but their success varies across regions. By using a historical comparative case design, we identify an empirically puzzling phenomenon in China: despite an initially favorable resource environment and the presence of socially skilled institutional entrepreneurs, SRI wanes over time in Hong Kong but survives in Mainland China where initial resource endowments and actors’ social skills were inferior. By comparing four periods of SRI development, we reveal how state sustainable development policies, a change in the institutional context, led unintentionally to a shared orientation and a public pool of resources, which sustained the SRI niche. Our paper contributes to research on market emergence, institutional change, and cultural entrepreneurship.

Creating Common Ground: A Communicative Action Model of Dialogue in Shareholder Engagement

Despite growing empirical evidence on the effectiveness of dialogue between activists and corporations in stakeholder engagement, scholars have not fully accounted for the mechanisms that explain its success. We address this gap by leveraging Habermas’s theory of communicative action. In our longitudinal qualitative study, we explore the dialogue on climate change between the Interfaith Centre for Corporate Responsibility, a coalition of faith-based investors, Ford, and General Motors. We find that communicative action can emerge from strategic action as a result of three cycles of interaction: establishing dialogue, framing, and deliberation. Our study contributes to the literature on shareholder engagement by integrating communicative and strategic action, thereby offering a new interpretation of how reputational threat and dialogue come together to produce a common ground between activists and companies.

The Rise of Socially Responsible Investment Funds: The Paradoxical Role of the Financial Logic:

Socially responsible investing (SRI) is gaining traction in the financial sector, but it is unclear whether the dominant financial logic complements or competes with the social logic in the founding of SRI funds. Based on insights we gained from observation at an Asian SRI industry association, interviews with SRI professionals in the U.S. and Europe, and other fieldwork, we questioned explanations for SRI’s conflicted relationship with the financial logic. Our observations prompted us to build a panel database of SRI fund foundings from 1970 to 2014 in 19 countries so that we could examine how a dominant logic interacts with alternative logics to promote or stifle institutional change. We decomposed the financial logic into interdependent dimensions as the provider of means (resources, practices, and knowledge) for novel financial ventures to be founded and the enforcer of profit-maximizing ends that constrain such foundings. Our theory suggests a paradoxical role for the financial logic, which explains an intriguing empirical finding: the founding of SRI funds has a curvilinear, inverted-U-shaped relationship with the prevalence of the financial logic. We propose and find that the relationship between the dominant financial logic and the social logic of SRI shifts from complementary to competing as the financial logic becomes more prevalent in society and its profit-maximizing end becomes taken for granted. We examined how certain alternative logics—those of unions, religion, and green political parties—moderate these effects. Our results shed light on how and to what extent institutional change can occur in fields in which one institutional logic is dominant. They also reveal country-level institutional factors that drive SRI.

Starstruck: How Hiring High-Status Employees Affects Incumbents’ Performance

This study investigates the effects of high-status inbound mobility on the performance of incumbents. Leveraging sociological theory on status, we suggest that high-status newcomers generate only l...

Is there a global small world of owners and directors

This chapter investigates whether a global small world of business owners and corporate directors exists. It evaluates the descriptive power of the tools of the new science of networks to understand governance networks and examines how corporate control had changed in the 1990s and to whose advantage. The findings indicate that the global transnational graph is still strongly structured by national governance networks and that owners and directors are strongly connected to their national markets but loosely connected to other national governance networks.

Family Firms and the Contingent Value of Board Interlocks: The Spanish Case

In the last three decades, interlocking directorates have become a prominent area of research in the Corporate Governance literature. An interlocking directorate is created when a person affiliated with the board of directors of one organization sits on the board of another organization (Mizruchi, 1996). Over the years, researchers have studied the embeddedness of commercial banks, insurance companies and industrial corporations in the interlocking directorates (e.g., Davis and Mizruchi, 1999; Davis, Yoo and Baker, 2003; Mintz and Schwartz, 1981; Windolf, 1998). Furthermore, scholars have sought to provide direct evidence of the value that interlocking directorates have for corporations. Previous studies showed that interlocking directors affect organizational learning (see, e.g., Haunschild, 1993, 1994), the corporations’ power and status (e.g., Davis and Robbins, 2004). Resource dependence theory argues that firms use board ties to manage their resource interdependencies (Pfeffer and Salancik, 1978), for instance, when banks directors sit on the boards of the companies to which they have lent financial resources (Davis and Mizruchi, 1999; Mizruchi, 1996). However, most studies on interlocking directorates have studied primarily US-based public companies and neglected the role of family firms in these networks.