ORGANIZATIONAL ADAPTATION TO INSTITUTIONAL CHANGE - A COMPARATIVE-STUDY OF FIRST-ORDER CHANGE IN PROSPECTOR AND DEFENDER BANKS

Using grounded theory, we examined a ''defender'' and a ''prospector'' bank's strategic adaptation to the Community Redevelopment Act across seven years during which they were under increasing regulatory pressu re to comply. The interplay of institutional, organizational, and stra tegic issue context patterns led the defender to an aborted adaptation and the prospector to a reorientation. Each demonstrated a different form of resistance to demands for compliance to the act: identity resi stance (change inconsistent with organizational identity) and virtuous resistance (change not needed since already part of the bank's identi ty). We observed both incremental and punctuated equilibrium change mo des, though only incremental change was sustained. Institutional isomo rphism and organizational performance exerted counterintuitive pressur es for initiating and sustaining change. Drawing on our results, we de velop propositions on organizations' adaptations to change.