LATE ADOPTION OF THE MULTIDIVISIONAL FORM BY LARGE UNITED-STATES CORPORATIONS - INSTITUTIONAL, POLITICAL, AND ECONOMIC ACCOUNTS

This paper presents a refined test of the institutional, political, an d economic accounts of adoption of the multidivisional form (MDF) amon g large U.S. industrial corporations in the 1960s, most notably by ela borating the institutional account. Results suggest that institutional processes, including coercive and normative dynamics, substantially u nderpinned the MDF's diffusion during the 1960s. Firms producing in in dustries that shunned the MDF earlier in this century were slow to ado pt this form in the 1960s, an effect mediated by the percentage of fir ms in a corporation's sector using the MDF at the time. In addition, f irms with high debt-to-equity ratios, whose chief executives had elite business school degrees, and whose directors had nondirectional corpo rate board contacts with the directors of MDF firms adopted the MDF mo re frequently than other firms. Substantial support was also found for the economic account, although little was found for the straightforwa rd political view. In the conclusion we discuss the relationship betwe en institutional, political, and economic theories of formal organizat ion in light of our results.