ORGANIZATIONAL CONSEQUENCES OF INSTITUTIONAL PRESCRIPTIONS: HR PRACTICES AND INNOVATION IN KOREAN MANUFACTURING FIRMS

Organizations face normative pressures from institutional actors to adopt prescribed practices. Much institutional research has offered insights about diffusion processes, adoptions’ implications for legitimacy, strategic resistance to institutional prescriptions, and decoupling of adoption from implementation. However, it appears to have largely overlooked a parallel set of questions about the intended consequences of institutional prescriptions and the extent to which the prescriptions succeed or fail in achieving the intended effects. The questions are important because institutional actors and organizations intend to achieve improvements in organizations and rationalization in the society. In addition, prescribed practices are not only meant to be “symbols” for maintaining organizations’ legitimacy, but also means to achieve specific ends. Based on existing institutional work, we build theory about the types of practices more or less likely to deliver their intended effects and about organizations’ intentions and capability to adopt prescribed practices in ways beneficial to them. The paper examines these theoretical issues in the context of Korean manufacturing firms. Following the 1997 Asian Financial Crisis, Korean firms faced normative pressure to adopt a comprehensive set of new market-oriented HR practices to facilitate innovation. The study shows that the prescribed practices had varying effects on innovation, even though they were prescribed with the same intentions. It also shows that more Korean firms adopted the practices that facilitated innovation while rejecting the ones that undermined innovation, even though the practices espoused the same cultural symbols to external audiences. Such discriminative pattern was less salient for later practice adoption.