ORGANIZATIONAL FIELDS AND CORPORATE CULTURAL REPERTOIRES
Klaus Weber
Northwestern University
Kellogg School of Management
2001 Sheridan Rd.
Evanston, IL 60208-2001
847-491-2201
[email protected]
March 2006
- DO NOT COPY OR CIRCULATE WITHOUT AUTHOR PERMISSION -
Organizational Fields and Corporate Cultural Repertoires
ABSTRACT
This paper provides an empirical assessment of how an organization’s structural location in a
field patterns its use of cultural resources. Cultural resources are the symbolic means with
which organizations give meaning to and negotiate their environment. The study identifies
the repertoires of such resources that U.S. and German pharmaceutical firms deployed in
their public statements over a 21 year period. It examines how four sources of field structure
may account for similarities and differences in organizations’ repertoires: nationality,
industry taxonomies, connectedness in interaction networks and positions of role equivalence
in market interfaces. Methods combine qualitative and statistical analysis. The results support
a model that seeks to situate the use of cultural resources in sensemaking processes in
structural factors at the level of organizational fields.
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Title: Organizational Fields and Corporate Cultural Repertoires
Recent years have seen a growing interest in theorizing about what can be broadly described
as the cultural resources used in organizing collective activity (Swidler, 1986; Clemens, 1993;
Weick, 1995; Swidler, 2001a). These analyses share a focus on the set of symbolic and
discursive elements that actors use for negotiating meaning and social interactions. Two aspects
are common across literatures and central to this perspective: first, the notion that public culture
supplies a set of symbolic tools from which actors select elements to craft identities and lines of
action; and second, an emphasis on communication and meaning creation through framing as a
primary way by which such repertoires surface in social processes (Swidler, 2001a, Mills, 1939,
1940). Hence, Weick (1995: chapter 5), sees “minimal sensible structures” as the vocabularies,
or substance, of sensemaking processes, while Meyer and Rowan (1977) emphasize the role of
“vocabularies of structure” in institutional processes and Clemens (1993) locates “organizational
repertoires” in the diverse logics used in organizing social movement activists.
This understanding of culture as resource has in part been motivated by limitations of earlier
theories that treat cultures as deeply internalized and coherent properties of social groups. The
classic understanding of the role of culture and institutions in organizational analysis is captured
in Max Weber’s switchman metaphor: Action follows from a logically coherent set of shared
values, beliefs and norms that enter actors’ cognitive functioning as motives and preferences for
specific behaviors. While suitable for comparing two cultures in a parsimonious way, this model
has fallen short of accounting for observed variation in the use of common cultural material
within the same social group and actors’ apparent inconsistency in applying values. To address
these problems, the newer approaches have highlighted the discursive-communicative alongside
the internalized-cognitive nature of culture, and the pragmatic use of cultural material alongside
the logical structure of cultural codes (e.g. Suddaby & Greenwood, 2005). Many researchers
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explicitly or implicitly draw on language metaphors to understand culture, and borrow concepts
from semiotics. In Saussure’s (1959[1915]) terms, the shift has been from a concern with langue,
the logical system of distinctions and grammar that permits communication, to a concern with
parole, the pragmatic act of concrete actors speaking in specific situations. This conceptual shift
to pragmatics reintroduces agency into cultural analyses, through studies of actors’ skillful sensegiving, identity crafting and framing efforts and more generally their strategic use of cultural
material to influence audiences.
Initial contributions in the cultural resource perspective have mostly been content to assert the
importance of individual agency in deploying symbolic resources and to highlight the fluidity
and heterogeneity of cultural context. What is left open, however, is how unconstrained people
and organizations are in using these resources, and why different actors respond differently to the
same institutional context. Inevitably, actors seem to develop recognizable differences in styles
and levels of skill (Fligstein, 2001). An open question is thus, what prefigures such actor-level
differences in the use of cultural resources? Some theorists have broadly pointed to institutions
as prods for the elaboration of symbolic elements, and to identity dynamics as an anchor of
individual differences (see, e.g., Swidler, 2001a, 2002). However, to fully understand either
factor, a systematic model of the social context of cultural expression is needed. This study
articulates and tests such a context model, suggesting that cultural resources are linked to
locations in a social field, so that actors are constrained by the structural positions they occupy
(Bourdieu, 1984[1979], 1990[1980]; Lamont and Molnár, 2002).
The paper aims to advance the understanding of cultural resources in organization theory by
(re-) connecting the use of cultural material to the larger structures in which organizations are
necessarily embedded. The basic prediction of a field approach is that proximate or similarly
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situated actors should use similar cultural resources. I test this general prediction in the context
of corporations as actors in organizational fields, and examine the cultural repertoires that U.S.
and German pharmaceutical companies use in presenting themselves to the public between 1980
– 2001. Four alternative bases of structure in organizational populations have been identified in
the literature: national institutional context (Hall and Soskice, 2001), production-based industry
taxonomies (Porac, et al., 1989), the structure of inter-organizational collaboration networks
(Mizruchi, 1993; Podolny, 2001), and positions in market exchange interfaces (White, 1981,
2000). In addition, the study extends the basic argument to examine how different bases of
structure interact and to how stable their influence has been over time. The analysis involved first
identifying the comprehensive register of cultural resources available at the field level, before
modeling the similarity of organizations’ selections from this register, based on the proximity of
their positions in the field. I identified the register of cultural resources using structural semiotic
analysis of company documents. I then examined the repertoires that particular firms selected
from this register at different points in time, quantified the similarity of these selections, and
tested how organizations’ locations in the field can account for these similarities.
The study builds on and extends two existing literatures in which cultural resources have
played a central role. Research on strategic framing and sense-giving processes have explored
the conditions under which organizations adopt or deploy single specific logics, such as
conceptions of the corporation, the classification of strategic issues, or models of change (e.g.,
Gioia and Thomas 1996; Fiss and Zajac 2004; Suddaby and Grenwood, 2005). The present study
moves from specific logics as individual elements in the pool of cultural material, to examine the
conditions under which organizations deploy similar comprehensive assemblies of many such
frames. Second, studies of network structural influences on the adoption and similarity of
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practices in organizational fields have featured prominently in neo-institutional theory.
Researchers have successfully explained cultural dynamics, such as the adoption of a wide rage
of corporate practices or political preferences, through organizations’ position in interaction
networks (e.g., Strang and Soule, 1998, Mizruchi 1989, Burris, 2005). Similar to research on
strategic framing, however, these studies have invariably focused on single practices or ideas.
Diffusion studies moreover tend to interpret their results under the assumption that the adoption
of particular elements by another organization increases the overall similarity between the
innovator and the adopter. However, practices can diffuse without affecting similarity, e.g. in a
continuous innovator – imitator system. The innovator is always one step ahead, so that the
distance between the two remains the same despite continued diffusion. The present study thus
extends this well established line of research by directly examining the structural effects on
overall similarity on many cultural dimensions. It also combines the prevalent focus on ties
between concrete actors in network studies with a second structural basis of relational proximity,
that of abstract positions and identities constituted by classifications and categorical boundaries.
The next section discusses how the cultural resource perspective applies to corporate actors,
and argues how the deployment of cultural resources is situated by organizations’ positions in a
field. I then describe the empirical setting, before developing hypotheses about their influence of
alternative bases of structure in this field on companies’ cultural repertoires. A description of
methods, analysis and results follows, and the paper ends with a discussion of the implications of
the results and contributions to literatures on sensemaking and new institutional theory.
Cultural resources in organizational fields
Culture as resource: registers and repertoires
From the cultural resource perspective, actors use cultural materials as a tool-kit or general
resource for solving practical problems (Swidler, 1986; Lamont and Thévenot, 2000; Swidler,
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2001b). Toolkits include both small elements, such as conceptual categories, interpretative
framings and typified actions, and larger assemblages such as stories and strategies that make the
experienced environment intelligible (Weick, 1995). Corporations, for example, use diagnostic
labels (Dutton and Jackson, 1987), categories of discrete strategic moves and orientations (Miller
and Chen, 1996), and comprehensive strategic scenarios and stories (Fiol, 1989) to make sense
of organizational issues. Cultural resources thus constitute the semiotic toolkit for solving
problems of organizational practice, but also for skilled and even strategic framing processes
(e.g., Fiss and Hirsch, 2005; Fiss and Zajac 2004, Suddaby and Grenwood, 2005). Such framing
efforts combine ready-made meanings and labels for influencing others understanding and
cooperation. While existing research in this arena has tended to look at the use of specific frames
and rhetorical strategies in isolation, at the neglect of the notion of repertoires, the present
interest is in the overall assembly of cultural material that is being deployed at the same time.
Different tool-kits develop for different domains of social life, reflecting the type of problems
and historical solutions of that domain (Swidler, 2001a). For the purpose of this paper, I refer to
the aggregate cultural resources of a domain as a register, a term used analogously in
sociolinguistics to describe the vocabulary used for a particular purpose and in a particular social
setting. The register of discourse around a market, for example, is central for the enactment of
status orders among producers (White, 2000). The management of corporations is another
domain for which a distinct register can be identified. This register overlaps with those of
broader society and of adjacent fields, such as product markets or R&D management, but
remains distinct because of its concern with making sense of corporate entities. This study is
specifically concerned with the cultural register used on behalf of legal entities called
corporations and for the purpose of making sense of corporate conduct in a public arena. There is
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no claim that corporations “talk” as unitary actors, or that executive’s deep cognitive structures
correspond fully to the repertoires they use. Rather, the register comprises cultural resources that
are used by people who evaluate corporations or act on behalf of them when they interact and
communicate in the roles of managers, analysts or commentators. In contrast to this register of
public cultural resources in a larger field, I will reserve the term repertoire more narrowly for the
tool-kit used by particular field participants. As cultural materials are used in discourse,
individual actors hear and know more “culture” than they effectively use, given their skill,
identity and history (Swidler, 2001a). Hence, repertoires are subsets of the overall register.
Why should organization theorists care about cultural resources at the field and corporate
level? Cultural resources around managing corporations control and direct organizational
conduct in several ways. One form of influence is phenomenological. The collective register of a
field circumscribes those “definitions of the situation” that participants can conceive of (Schütz,
1967[1932]: chapter 4; Goffman, 1974: 8). It thus limits the range of problems and solutions that
actors can potentially attended to. In practice, this often poses only a moderate constraint on any
particular actor, as a field’s register offers more resources than can be used by particular actors in
specific situations. The public codes contained in registers do, however, act as discursive
controls of corporate conduct because they are the finite material with which stakeholders
negotiate standards of legitimacy. Discursive control is tighter the more a narrow set of options is
institutionalized. Secondly, actors’ existing repertoires influence their conduct by serving as
inputs into the crafting of comprehensive identities and lines of action (Swidler, 1986, 2001a).
This is because actors usually assemble identities and strategies from the set of problems and
solutions that they already know. In the corporate arena, companies’ existing stock of categories
of problems, capabilities and tactics form the building blocks for strategy formation and delimit
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likely items on strategy agendas. In addition, organizations’ deploy cultural repertoires in
negotiating their external environment and to get cooperation from stakeholders (Collins, 2004).
“Skilled strategic actors provide identities and cultural frames to motivate others” (Fligstein,
2001: 106). Understanding the sources of variation in corporate cultural repertoires is therefore
critical for understanding variation in corporate action.
Organizational fields situate actors’ cultural resources
Organizations may develop unique cultural repertoires for two main reasons. One set of
factors is internal to the organization, for example, the influence of early leaders (Baron, et al.,
1999), a limited capacity to learn and retain a broad repertoire (Miller, 1993) or inertia that
prevents adaptation to a changing environment (Hannan and Freeman, 1984). In the ensuing
analyses, I tried to control for inertia, and focus instead on a second, less frequently examined
external source of differences: an organization’s position in a larger field. Organizational fields
have been defined by institutional theorists as “organizations that, in the aggregate, constitute a
recognized area of institutional life” (DiMaggio and Powell, 1983: 143), characterized by
involvement in a common enterprise and governed by common social forces. Organizational
fields demarcate a social setting as well as the type of activities and concerns to which a register
of cultural resources pertains.
Although neo-institutional theorists have placed great emphasis on the homogenizing
properties of fields, another defining property of fields is that they develop and define internal
distinctions (DiMaggio, 1986, 1987). This is perhaps most evident in Bourdieu’s (1993) view of
fields as structured spaces of positions quite independent from the actors that occupy them. Other
theorists place similar emphasis on the differentiation in fields that organizes the relationships
among participants (Emery and Trist, 1965; Luhmann, 1995; Martin, 2003; Emirbayer and
Johnson, 2004). This internal structuring of fields derives both from symbolic distinctions and
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categories supported by institutions (Douglas, 1986) and from social interaction patterns that
create cliques of unequal exposure to others (DiMaggio and Powell, 1983; DiMaggio, 1986).
The internal structure of the field in turn is a key factor for circumscribing the cultural
repertoires available to actors located at particular positions. Swidler (1986: 283), for example,
calls on researchers to pay more attention to the relationship between culture and social structure,
while Fligstein (2001: 108) observes that “strategic actors behave differently depending on their
positions in fields.” DiMaggio’s study of genre classification systems in the field of artistic
production is based on a similar premise. The association between cultural practices and location
in a field is also the basis for Bourdieu’s concept of the habitus, the embodiment of a structural
position in the type of cultural resources used by an actor (Bourdieu, 1984[1979], 1990[1980]).
The reliable mapping of positions to cultural resources allows cultural practices to also become
markers of positions (Bourdieu, 1984[1979]; Lamont and Molnár, 2002). An organization can
signal the field position it identifies with by using the repertoire associated with that position.
Three interlinked processes underlie the correspondence of cultural repertoires to positions.
The first process is ecological: According to their positions, actors face different local problems
and interact with different others. For example, a regulator, an industry leader and a start-up
company in the same industry need to solve different problems. Moreover, while the start-up
may well know of the cultural resources used by large companies, they are of little immediate
use for the problems it faces. The second process concerns history and cultural transmission,
beyond present ecological conditions. If the mobility of actors in a field is limited and
socialization processes are primarily local, the cultural skills and dispositions developed in a
particular social location are habitually reproduced, even when the ecological context changes
(Bourdieu, 1990[1980]: 56). The third process is based on performative expectations that field
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positions entail. Field positions amount to typified roles and identities that are widely recognized
(Wiley, 1988; Lamont and Molnár, 2002). These roles encapsulate expectations for occupants to
display particular repertoires (Merton, 1957). Hence, the cultural resources deployed by actors
not only express the positions that actors identify with. They also provide a basis for judging
their competence as occupants of a position (Bourdieu, 1984[1979]). External observers evaluate
the performance of the role and incompetent performance is punished in interactions with others
(Collins, 2004), which in turn reinforces the link between field positions and cultural practices.
As a result of the correspondence of field positions and cultural resources, organizations that
occupy proximate locations in the field can be expected to employ similar cultural repertoires.
The proximity of two organizations is defined by the structure of positions and relationships in
the field, the bases of which are elaborated in the next section. The similarity in cultural
repertoires among proximate actors can thus be seen as a form of local isomorphism, where
organizations use similar repertoires to their immediate “neighbors.” Note that such local
variations in similarity are about variations within a field and say little about the absolute level of
field-level similarity that has been central to initial formulations of neo-institutional theory.
Multiple bases of structure in fields
The model presented thus far is simplified in that the positions of an organizational field are
organized in a single space characterized by a single logic of proximity. For example, Bourdieu
similarly seeks to collapse potentially diverse bases of distinction into a coherent space, which
allows him to use correspondence analysis to map a singular structure of positions to the cultural
resources which mark such positions (Breiger, 2000). While conceptually elegant and certainly
appropriate in highly settled contexts, it would seem more prudent to treat as empirical the
questions of a singular order in a field and of a unified code of cultural expression (DiMaggio,
1987; Swidler, 2001a). For example, relationships in organizational fields may be defined by
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actors’ national origin, their market positioning or the type of collaborative relationships. The
analytic challenge is similar to that of multiplexity in network analysis. Collapsing structures
based on different relational logics into one assumes away the possibility that appropriate
cultural practices may be ambiguous in specific situations when roles could be defined by several
relational logics. Yet, concepts of relatively permanent and holistic cultural patterns, such as
habitus or style, depend on some coherent pattern in the use of cultural material across situations.
There is no theoretical consensus about how multiple relational bases of structure interact.
One extreme is a simple relationship, where proximities on different dimensions are convertible
(Bourdieu, 1984[1979]). An organization’s overall position is constituted either by the frequency
with which one or the other basis of location is evoked, or by collapsing several dimensions into
one. The other extreme is a fragmented field in which each dimension of difference coexists with
others so that they provide an inconsistent structural grounding for cultural practices. Research
on economic globalization, for example often claims that global markets and institutions
intersect rather than combine with structures provided by national societies (Giddens, 1990). The
question then becomes how prominent national categories are compared to others.
This study therefore identifies alternative relational logics in an organizational field. Instead
of collapsing them into a coherent overall set of positions I investigate the effect of each
dimension on actors’ cultural resources, examine how dimensions interact, and whether the
strength of different logics to organize cultural resources in the field changes over time. In
principle, change in an organizations’ repertoire may be indicative of three processes. First,
organizations can move between existing and stable positions in the field, a form of social
mobility or situational frame-switching. Second, the structure of positions within an organizing
logic itself changes, in the form of adding and deleting relationships or categories. Third, the
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predominant basis of relations in the field may change, so that different relational structures
situate actors’ cultural practices at different times. This paper focuses on the third source of
change, and controls for the first two to some extent.
The pharmaceutical industry in the United States and Germany, 1980 - 2001
The international pharmaceutical industry provides the empirical setting for this study. I
examine the cultural resources used by for-profit enterprises that supply products to diagnose and
treat human health problems through chemical and biological substances. In industry terms, this
population includes organizations in SIC code 283 (“Medicinal Chemicals, Pharmaceutical
Preparations, Diagnostic Substances, Biological Products,” equivalent to NAICS 325411325414) as well as those firms in SIC code 8731 (“Research and Development in the Life
Sciences”, equivalent to NAICS 54171) that develop such products.
This industry shows all characteristics of an institutionally recognized organizational field
(DiMaggio and Powell, 1983: 143): Organizations in the field share a scientific knowledge base
(medical biochemistry and genetics), a societal task (improving human health), as well as goals
(profit), and customers (the medical profession and healthcare delivery systems). Importantly,
organizations orient their actions towards each other, showing awareness of interdependence and
a common enterprise across national boundaries. The field has also been in existence for a long
time and is recognized as an economic “sector” (Scott and Meyer, 1983) with interest groups,
rankings, publications, and regulatory agencies. My analysis in anchored on the narrower
population of corporations, even though organizational fields include regulators, customers,
suppliers and occupational groups. This choice limits the conclusions to be drawn about the
overall field, but allows for greater precision regrading the central research question. The interest
is in comparing repertoires for managing corporations, based on the position of organizations in
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the field. Health care organizations, regulatory agencies and university research laboratories face
somehow distinct tasks and access overlapping but distinct cultural registers. If anything,
narrowing in on the population of corporations brackets broader positional differences in the
field, for example between commercial and academic research, and focuses instead on more finegrained distinctions within one category. Similarly, limiting the analysis to two countries
prevents a comprehensive account of the evolution of the field, but is sufficient for studying the
importance of nationality as one basis of structure in the field.
The time period of the study, 1980 – 2001, witnessed a number of institutional and industrial
changes in both countries, from regulative interventions such as price controls, managed care and
patent legislation to corporate governance reforms and the emergence of biotechnology and the
generic drug sector. It may be tempting to see differences and changes in organizations’
repertoires as direct outcomes of these environmental conditions. However, as Swidler (2001a)
convincingly argues, institutional structures and environmental conditions pose the problems and
tensions that prompt the elaboration of cultural material, but not the specific solutions that are
put forward. The cultural repertoires specific organizations use for conceptualizing and
navigating contextual conditions are only loosely coupled with the generic problems they face.
Alternative relational bases of field structure
Several logics provide distinctions, affinities and bases of comparability that define
relationships and structure this organizational field. Each creates a social space that allows
organizations to be located and their position relative to each other to be defined. If positions
influence the cultural resources that organizations use, two organizations that occupy proximate
field locations are expected to use similar cultural repertoires. In this section, I develop
hypotheses about three relational bases of field structure: countries and industry groups as
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examples of social-symbolic boundaries, collaborative relationships that form interaction
networks within the population, and product and capital market positioning based on competitive
role equivalence vis-à-vis customers.
Symbolic and social boundaries
Boundaries organize a field by classifying participants into categories or groups, thereby
establishing relationships of difference and equivalence. Proximity of organizations is in this
case based on membership in the same category. Boundaries may have both symbolic and social
bases (Douglas, 1986; Lamont and Molnár, 2002). Symbolic boundaries, conceptual distinctions
that categorize organizations, situate cultural resources. They create expectations and selfunderstandings that infuse with value the cultural practices associated with membership. Social
boundaries influence cultural resources by creating unequal access to resource exchange and
interaction partners. Two types of grouping are particularly consequential for commercial
pharmaceutical companies: country of origin, and industry segment.
Most comparative research assumes that culture is primarily a property of countries, such that
organizations’ national identity is a source of similarity (e.g., Hofstede, 1982). The assumption
of meaningful cross-national differences in culture is so widespread in the social sciences that I
will not review the extensive theoretical and empirical literature. Most arguments center on
social closure, path-dependency, and national institutions and state regulations as sources of
difference (Biggart and Guillén, 1999; Guillén, 2001b; Hall and Soskice, 2001; Kogut, et al.,
2002). It is worth noting, however, that national cultures need not be unified to create country
differences. Rather, “differences between two national cultures are best seen as different
emphases and selections from repertoires with many overlapping possibilities” (Swidler, 2002:
2). Translated to the level of inter-organizational similarity, such differences suggest that,
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H1: Organizations’ cultural repertoires are more similar between firms that share a national
origin than between firms that do not.
Research on cognitive models of rivalry groups in an industry (Porac, et al., 1989; Reger and
Huff, 1993; Porac and Rosa, 1996) suggest that production logics are equally prominent bases
for taxonomies in a field. Production-based taxonomies are shared models of the industry
“space” that allow members to locate and classify organizations based on their core technology
and business model. For example, generics makers are seen as distinct from research-intensive
pharmaceutical companies because R&D is not a central part of their value chain. Biotechnology
firms are contrasted with traditional pharmaceutical companies because their technological core
is biogenetics rather than biochemistry. Firms pay closer attention to others in their industry
segment, and see others in the group as more relevant. As a result of social comparison processes
that are anchored by such classifications, cultural resources spread more within groups (Suls and
Wills, 1991; Porac, et al., 1999). Moreover, when organizations identify as members of a
segment, they become committed to a self-understanding that is commonly expressed through
the use of particular cultural materials, such as framings, values, and actions (Albert and
Whetten, 1985; Dutton and Dukerich, 1991; Fiol, 1991; Gioia and Thomas, 1996). Industrybased taxonomies therefore provide an alternative basis of social proximity, beyond national
origin. Empirically, Garcia-Pont and Nohria (2002) found car makers to imitate the alliance
behavior of others in their industry segment rather than their home country. Therefore:
H2: Organizational repertoires are more similar for firms that share a segment identity.
Interaction networks
Neo-institutional theory identifies social networks as a key mechanism that generates
isomorphism in a field (DiMaggio and Powell, 1983: 148). The relationships that make up a
field’s structure are in this case constituted in interactions among concrete actors, not in
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categorical distinctions as in the previous perspective. While a certain overall density of
interaction in a field may facilitate field-wide isomorphic processes, the structure of the network
also channels exposure and influence unevenly among organizations. A large body of network
research in organization theory suggests that ongoing relationships between firms directs
attention, information flows, and trust in an organizational field (Granovetter, 1985; Powell,
1990; Gulati and Gargiulo, 1998). Inter-organizational ties provide the ‘pipes’ through which
firms influence each other (Podolny, 2001). Interaction networks can therefore also be expected
to foster local isomorphism in denser interaction clusters.
Collaborative relationships at the corporate level effect alignment of cultural repertoires
through the mechanism of information and resource exchange (Mizruchi, 1993). Formal
collaborations, such as board interlocks, alliances and joint ventures, routinize communications
and draw attention to the relationship partner. Corporate-level ties often affect organizational
attention structures, such as regular committee meetings, “due diligence” information gathering
on the partner, and reporting structures (Ocasio, 1997). Inter-organizational ties therefore act in
part independently of the individuals performing the roles created by the tie. In addition,
collaborative ties may become embedded in social, as opposed to economic, relational logics so
that information acquired through the relationship is more contextual, fine-grained and often
more trusted (Granovetter, 1985; Uzzi, 1996). Together, these factors permit a better assessment
of the partner’s specific competencies and perspectives and encourage imitation and learning
processes that facilitate convergence of cultural repertoires. The channeling role of interorganizational networks on the diffusion of a variety of practices is well documented (Davis,
1991; Mizruchi, 1996; Gooderham, et al., 1999; Guler, et al., 2003). Other studies found
evidence for learning and imitation of corporate-level cognitive structures, too. Westphal, Seidel,
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and Stewart (2001) found that companies that share board interlocks come to share similar
decision making approaches. Inkpen and Crossan (1995) found that individual learning in an
international joint venture aggregated to alignment of organization-level policies and systems.
If inter-organizational ties map the social structure of a field, the position of an organization is
equivalent to its position in that network. Two organizations occupy more proximate positions if
they established a direct tie. We would then expect organizations with formal collaborative
relationships to use more similar cultural repertoires than others. The general hypothesis is:
H3: Organizational repertoires are more similar between firms that with formal ties.
Role equivalent positions in market interfaces
Both socio-symbolic boundaries and interaction networks are internal sources of positions,
arising from relationships among participants in the focal population of organizations. Yet, the
position of members of a population may also be defined by their position in exchange interfaces
with third parties (White, 1992, 2002). Especially in market contexts, structure arises from
producer organizations’ role equivalence in exchanges with consumers (White, 1981; Burt,
1992). Organizations are role equivalent when they seek to sell similar products to similar
customers, making both producers and customers interchangeable within this product-customer
segment. Role equivalent firms share similar experiences, watch each other closely, and try to
match competitors in response to customers’ preferences (Mizruchi, 1993). “Competitive
isomorphism” is the result (DiMaggio and Powell, 1983; Kraatz and Zajac, 1996). By contrast,
firms that sell different products to non-overlapping customer bases are not subject to the same
pressures and may be able to remain more distinctive. Role equivalent organizations are expected
to use similar cultural repertoires because they face similar problems and interaction partners,
and because they have incentives to imitate each other’s solutions. White (2000: 117) therefore
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suggests that the “degree of overlap between customer bases [...] is reflected in overlap of the
respective registers [here called: repertoires] in vocabulary and idiom.”
The logic of role equivalence in exchange interfaces applies to both product and capital
markets. In capital markets, the product is stock and the consumers are investors, in product
markets, the product in this study is medical treatments and the consumers are patients. Palepu,
Khanna and Kogan (2002), for example, examined the influence of U.S. institutional ownership
ties on the similarity of firms’ corporate governance practices in Asia. Such a pattern of similar
investor classes constitutes a form of role equivalence among firms. In the area of product
markets, studies on multiple-point competition have long used the overlap of the customer
segments to measure competitive intensity (Karnani and Wernerfelt, 1985; Chen, 1996).
H4: Organizational repertoires are more similar the more role equivalent firms are.
Structural multiplexity and change
As discussed before, there is little theory to specify how alternative relational bases that
structure a field interact. I therefore treat this as to be an exploratory question, using the additive
relationship implied by the independent hypotheses 1-4 as a baseline. The international context
of this study, however, allows for more specific predictions about how changes in the
prominence of alternative logics affect the organization of cultural resources in the field.
The territorial state has often been treated as the natural social boundary for the study of
organizations, as institutions and conventions of economic conduct are treated as characteristics
of countries, sustained by national societies. Lamont and Molnár (2002: 183) call this “the longheld assumption about the isomorphism of places, nation, and culture.” However, recent research
on globalization has challenged this assumption (Meyer, et al., 1997; Guillén, 2001a).
Globalization undermines the national-territorial basis of fields, by making salient alternative
bases of relations, such as transnational communities of experts, international industry identities,
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global market interfaces, and distant interaction networks (Giddens, 1990; Calhoun, 1991;
Robertson, 1992). Economic globalization thus provides an ideal context to examine how
changes in social geography affect the cultural practices. If field structures situate cultural
resources, then changes in these structures should affect the distribution of cultural resources.
And if globalization is seen primarily as the emergence of relationships that span national
boundaries, national boundaries should become less influential for organizing the use of cultural
resources. Cultural resources should thus become more fragmented within countries, country
aggregates become less distinct from each other as a result of hybridization or converge, and
alternative social structures become more influential for situating actors’ cultural practices
(Stark, 1996; Crouch and Streek, 1997; Aguilera and Jackson, 2002). Together, this suggests that
H5a: The impact of national origin on the similarity of cultural repertoires declines over time.
H5b: The impact of alternative field structures on the similarity of cultural repertoires increases
over time.
Data and Methods
The analysis for this study consists of two parts: the identification of the register of cultural
elements in the population, and the test of hypotheses regarding the similarity of repertoires at
the organizational level.
Sample.
The sample includes 94 companies (50 U.S., 44 German) with an average of 10 annual data
points in the years between 1980 and 2001, resulting in 943 observations at the firm level (544
U.S., 402 German). Measurement points per firm range from 3 to 22 (mean=10.2), and
measurement points per year range from 26 to 62 (mean 44).This sample is the result of a “split
design” approach (Firebaugh, 1997), which combines a panel component of repeated measures
18
of the same companies with a survey component of changing companies over time. The panel
component enables the assessment of changes in similarity between the same organizations. The
survey component corrects for the fact that entry and exit processes change the overall
composition of the industry after initial sampling. Proportions were corrected separately for both
country samples according to size distributions and strata of industry categories described below.
I identified companies from separate sampling frames for each country in the years 1983, 1990
and 2000. The frames combine the listings of several industry directories available for these
years. Companies were drawn at random from these sampling frames and substituted at random
when no company data was available. While it is difficult to know whether the sampling frames
were representative of the populations in question, weighing the observations by their
representativeness of the sampling frame did not affect the results.
Data sources.
Language provides a good way to assess cultural repertoires (Swidler, 1986: 273; 2001a).
Weick (1995: 106) accordingly suggests that “sense is generated by words that are combined into
the sentences of conversation to convey something about our ongoing experience”. To permit
longitudinal analysis of changes I analyzed written language. The documents were letters to
shareholders and reviews of operations sections in annual reports (henceforth: letters to
shareholders (LTS)). LTS are free format sections at the beginning of annual reports in which top
officers, usually the CEO, address the readers. Their content is not legally regulated. These
communications therefore reflect what their authors deem important to communicate about the
company. I retrieved 943 annual reports from paper archives and databases, 544 created by 50
U.S. companies and 402 created by 44 German companies. Their length ranged from about 20 to
110 sentences (5th - 95th percentile).
19
Data from LTS have been criticized on two accounts: first, that they do not reflect “hard”
corporate actions, and second, that they do not reflect the cognitive structures that executives
“actually” use in decision-making processes. Annual reports may reflect “cheap talk,”
announcements of intentions that are not necessarily followed through with actions (e.g.,
Westphal and Zajac, 2001). Several studies have also suggested that statements in annual reports
reflect impression-making efforts, implying that the concepts used in the report differ from top
executives’ cognitive structures (Bettman and Weitz, 1983; Staw, et al., 1983; Salancik and
Meindl, 1984). It is clear that letters to shareholders only partially report the actions and
cognitive structures of organizations. However, the present study is not premised on either
assumption, as it is concerned on meaning making, not action, and cultural, not private cognitive
elements. Being used in communication, cultural resources capture precisely the collective,
public and discursive aspect of culture that this study is concerned with (see, e.g., Palmer, et al.,
1997, for an example of this perspective). In my analysis, I treat annual reports as
communication on behalf of an abstract organizational entity, crafted by several organizational
members, and designed to appeal to their audience’s cultural beliefs.
Analysis of the field register.
This study identifies and compares comprehensive sets of cultural resources rather than the
use of one particular element. If cultural similarity is based on “different emphases and
selections from repertoires with many overlapping possibilities” (Swidler, 2002: 2), then
similarity cannot be ascertained from looking at only selective elements. I developed a category
scheme of cultural elements in an iterative procedure, entering the process of category
development with a broad analytic framework derived from the sensemaking literature, which
suggest three main components of cultural resources (Daft and Weick, 1984): perceptions,
interpretations, and actions.
20
Techniques developed by structural semioticians allowed me to identify signs (words and
phrases) and to cluster them into categories that represent particular meaning categories, or
“cultural logics” (Saussure, 1959[1915]; Barthes, 1967[1964]; Eco, 1976; Greimas, 1987; Mohr,
1998). Within a meaning category, the phrases are substitutes and only one of them needs to be
used in a particular instance to evoke the logic. Cultural logics that constitute categories were
identified by relating the practical usage of a phrase in the narrower context of the document to
connotative meanings outside that context. In the present case, cultural notions of what
corporations are and how they should be managed (outside context) organize the phrases that are
used in the context of writing annual reports (within context) into categories. For example, an
organization can be seen as a production vehicle or as a set of property rights (= meaning
categories), but multiple phrases to describe organizational action can mobilize that logic.
I initially sampled 10 documents, reflecting a cross-section of countries, years, and
companies. I went through the category development process described below, and then added
another 10 documents to revise, simplify and complete the category scheme. After 4 iterations, I
found no necessary modifications and decided that the coding scheme had reached saturation. In
each iteration, I first read through the documents, classifying words and phrases as perceptions,
interpretations and actions. Phrases could be classified into more than one group. Within each
group, I then looked for groupings of phrases into categories. I used semiotic clustering (Barthes,
1967[1964]; Feldman, 1995: 22-30) and commutation tests (Barthes, 1967[1964]) to identify and
validate categories. Semiotic clustering identifies categories based on connotative meanings and
broader institutional concerns. In commutation tests, the researcher tests that phrases evoke
equivalent meanings by substituting other words from the same meaning category into a
sentence. After having arrived at a preliminary set of categories, I looked for higher-order
21
clusters within the three sensemaking groups. For example, interpretations involve evaluations
that relate stimuli to the self, such as “positive,” “important,” “negative.” But interpretations also
put the observed in a temporal context, e.g., seeing events as “continuous,” “cyclical,” or
“accelerating.” Commutation tests with the meaning categories were used to constitute the
clusters, and also to create mutually exclusive meaning categories within clusters. Finally, I used
semiotic square analyses (Greimas, 1987) to check the set of meaning categories for
completeness and logical consistency. The square helps mapping logical conjunctions and
disjunctions. As a result, the underlying dimensions of a symbolic system be exploited more
fully. Whether such logical categories are used in the actual text is another matter. Some of the
logical categories with negative valence were hardly used at all in the documents I analyzed, e.g.,
“run down” as the logical contrary of the aspiration to “improve.” These categories were
therefore not used for coding.
Qualitative results at the register level
The resulting register of cultural elements comprises 63 empirically observable meaning
categories in 6 clusters and three sensemaking groups. Together they account for the largest part
of the cultural register used by the corporations in this study. Table 1 shows the category scheme,
including, from left to right: the grouping according to the sensemaking process, the clusters, the
logical dimensions underlying binary opposites of categories as suggested by the semiotic square
analyses, the meaning categories as the individual units of the cultural register, and an abridged
description of the connotative meaning of the category.
-------------------------------------Table 1 about here
-------------------------------------The cluster “environmental domains” contains environmental dimensions that receive
attention. Domains divide the world into conceptually distinct spheres, each governed by its own
22
rules and causalities. The connotative meaning of different domains suggest the rules and
causalities under which corporations operate and defines a conceptual space in which firms can
craft identities distinct from others. For example, product markets are governed by competitive
market mechanisms and allow a company to identify as a cost leader, while the medical
profession is governed by a desire to improve human health and allows the company to identify
itself as a contributor to human welfare.
The cluster “evaluation” contains concepts that relate a piece of information to the company's
identity and interests, shifting the perspective from “objective” to “subjective”. Categories in this
cluster include evaluations of importance, certainty, and positiveness. Evaluations appraise what
an observation means for the self or for some moral standard (Dewey, 1939).
The cluster “temporal assessment” contains framings of temporal developments, which are
the basis for extrapolating observations and evaluations to the future, and for forming
expectations. Zerubavel (2003), for example, demonstrates how collective representations of
temporal patterns in history bind together communities and influence their actions. For example,
a negative situation due to a poor economy can be seen as part of a cyclical ebb and flow of the
business cycle, or as part of a continued state of economic weakness. The connotation of
different types of trends taps into larger beliefs how time organizes social and economic life.
The cluster ‘aspirations’ contains framings used to direct organizational effort and energy.
Categories include, for example, reaching goals, comparisons with peers, and serving
stakeholders. Aspirations direct attention and spurn actions to perform according to the chosen
standard. They connote ideas about appropriate standards and comparisons of performance.
The cluster ‘means of action’ contains specific corporate strategic actions that can be used in
the pursuit of aspirations, in response to evaluations, and in the light of temporal trends. Action
23
strategies describe how a company can act on its environment. Examples are organizational
restructuring, developing new products, geographic expansion, and alliances. Types of action
strategies connote ideas about the nature of corporations and how are competently managed. The
concept of strategic repertoires has been used in strategy research, although with more technical
categories (Chen, 1996; Miller and Chen, 1996). Miller and Chen (1996), for example, identified
21 common competitive moves in the airline industry, although they do not address the logics
that organize their categories or what connotative meanings they carry.
The cluster ‘action styles’ contains attributes used to describe attributes of competent
management. Categories include being rational, committed, careful or decisive. By describing
appropriate styles, these categories again evoke connotations about the norms and rules of
conduct that should govern corporate management.
Dependent variable.
The dependent variable is the similarity between the cultural repertoires of two companies. I
used the Euclidean similarity across all 63 categories to measure similarity, calculating this
metric for each possible dyad in a given year. I developed coding dictionaries (key phrase lists)
for each category in the coding scheme, following the procedure outlined by Porac et al. (1999)
and used computer-automated content analysis to code all documents accordingly (see Evans,
1996; West, 2001, for reviews of computer-aided content analysis). The coding unit (the lowest
level at which categories were recorded as present or not) was the sentence. The text corpus
analyzed in this way included 54,243 sentences.
To ensure correspondence between the English and German versions of the coding scheme, I
obtained inter-coder reliabilities between the two dictionaries for each category on a sample of
1509 sentences (28 documents) that were available in both languages. To assess the unavoidable
slippage between human coding and automation as well as the replicability of the coding
24
scheme, I also recruited two coders, who manually coded a sample of 1909 sentences (40
documents). Inter-coder reliabilities between the manual coders and the computer program
combines factors of human-computer reliability and inter-coder reliability between the second
coders and the developer of the coding scheme. I used Krippendorf’s alpha to assess both
reliabilities (Krippendorff, 2003). The measure takes into account chance agreement and sample
sizes. Table 2 shows that reliabilities were sufficiently high.
-------------------------------------table 2 about here
-------------------------------------A document’s emphasis on particular elements of the cultural register was operationalized as
the pervasiveness with which they were used in a document. A category that is evoked in every
single sentence is emphasized more than one that occurs in only one. For each category, I
counted the number of sentences in the document in which it was found, and then standardized
these raw counts by the total number of codes counted for all categories. For example, if the
evaluative category “capital market” was found five times out of a total of 20 codes in the
document, it carries more weight than if it were five out of 50.
To quantify the overall similarity in emphasis between two observations, I used a Euclidean
distance metric and converted this measure of distance into one of similarity by subtracting the
distance score from the sample maximum (the distribution of the distance variable was near
normal). The similarity measure used is:
S=M−
∑( p
i
− qi )
2
i
where two points p and q are spatially located in i dimensions. The document-level emphasis
score for category i provides the two point’s coordinates on that dimension. M is a constant, the
observed sample maximum, used to convert distance to similarity.
25
To check the robustness of this measure regarding the effect of frequent zero-scores of some
categories, I also explored the Jaccard binary similarity coefficient. The measure is defined as:
S=
∑c
11
∑ c11 + ∑ c01 + ∑ c10
where S is the number of categories c present in both the compared observations, over the
total number of categories present in at least one of the two. This measure does not count as
“agreements” when a category is absent from both documents. Two companies that do not use
the same repertoire element may not necessarily appear similar. The Euclidean distance formula,
in contrast, does not make this distinction and treats two zeros as more similar than a small
difference on the continuous score. On the other hand, for those categories with non-zero
occurrences, the Jaccard measure does not make full use of the information in continuous
category scores. The analyses yielded substantially the same results for both measures and all
results are thus presented with the Euclidean distance variable only.
Independent variables.
Parallel to the dependent variable, all independent and control variables were constructed at
the level of the firm dyad.
National origin. National origin was coded as 1 if both companies were founded and
headquartered in the same country and 0 otherwise.
Shared industry segment. Initial interviews with managers and industry experts indicated that
participants and observers in both countries distinguish 4 major segments of the organizational
field: large pharmaceutical companies with a broad product portfolio and substantial in-house
R&D (“big pharma”), pharmaceutical specialist with a narrow product range and in-house R&D,
producers of generic drugs and diagnostics who use expired patents to develop their products,
and medical biotechnology firms who are research-oriented and distinguished by their
technology rather than their product portfolio. To check if this taxonomy had remained stable
26
throughout the study period I reviewed news articles and trade journals from the early 1980s.
The same categories had been used, although the size of the sectors obviously changed. I then
classified each company based on their self-identification in their annual report. During the 20year period no significant identity changes occurred. I resolved borderline cases in consultation
with industry participants. Based on these classifications, I coded a variable as 1 when both dyad
members were in the same segment and 0 otherwise.
Interaction ties. I operationalized direct ties between companies in two ways: as strategic
alliances and as board of director interlocks. Alliances can take various forms ranging from
industry standard groups, to licensing and cartel agreements, R&D investments and joint
ventures (Knocke, 2001: 123). I focused on the most common forms of alliances in this industry:
licensing agreements in marketing or production, R&D collaborations, and joint ventures. I
counted only alliances at the corporate level, and, for multi-divisional firms, alliances of the
biomedical business unit, and obtained data on alliance announcements from online news
databases, annual reports, and annual trade publications. The dyadic variable is coded as 1 during
the existence of an alliance and 0 otherwise.
For board interlocks, I concentrated on direct personal ties, i.e. an executive or director sitting
on another company’s board. This operationalization excludes interlocks in which two directors
that share a board seat at a third company constitute an interlock between the focal organizations
(Mizruchi, 1996). Including indirect interlocks was not feasible as it would require board data for
all potential third parties across countries. I collected directors’ names from SEC databases and
the annual reports of small and German companies. In addition, I used a dataset assembled on the
German corporate networks for 1992-1995 (Windolf, 2002). The dyadic variable is coded as 1
when at least one interlock was present and 0 otherwise. Because assembling network data is
27
time consuming in an international context, I used interlock data for 1980, 1986, 1992 and 2000,
assuming that ties persisted at the corporate level, if not necessarily the personal level.
Role equivalence. I measured role equivalence with two dyadic variables: multi-market
overlap and investor segment overlap. In the pharmaceuticals, market segments are defined by
the therapeutic indications for which products can be used. Significant consensus exists around
this segmentation of the market, as companies, regulators and customers use essentially the same
classifications. Product categories derive from specializations of the medical profession. For
example, pain relief products fall within neurology (the nervous system), treatments for
hypertension fall in the realm of cardio-vascular indications (heart and blood circulation), etc.
Hence, a company specializing in hypertension drugs sells different products to different
customers than a company producing treatments for gastritis. A scheme of 16 therapeutic
categories combines the almost identical systems used in the U.S. and Germany. Appendix A
shows the categories. I then coded annual reports and trade publications to determine the
categories in which a company was active, either with existing products or with research. Few
companies break down their sales according to indications, so that I coded a market segment’s
presence as 1 or zero. The degree of product market overlap between pairs of companies is the
Jaccard matching coefficient (described above for the dependent variable).
I developed a parallel measure of role equivalence in the capital market, segmenting equity
holders into categories such as institutional owners (mutual and pension funds), commercial
banks and insurance companies, venture capitalists, etc. The categories are detailed in appendix
A. Data for U.S. listed companies are available for the entire study period through the Spectrum
and Compact D/SEC databases. I classified each 5% holder and summed institutional and
executive share ownership to arrive at a percentage distribution. I assumed that the remaining
28
percentage is attributable to dispersed ownership. German companies do not have to disclose
their ownership structure. I accessed a variety of sources to establish approximate annual
ownership data for the sampled companies. Windolf’s dataset covers 1992-1995 (Windolf,
2002). In addition, Hoppenstedt publishes ownership data in annual company directories of
larger German corporations (“Handbuch der deutschen Aktiengesellschaften,” “Handbuch der
Grossunternehmen”), and the German Commerzbank has published a regular ownership
directory (“Wer gehoert zu wem?”). Both sources focus on block ownerships. In addition, some
companies occasionally report their share ownership structure in annual reports. While none of
these sources is exhaustive, no better historical data are available to my knowledge. I updated
company data annually as available and otherwise extrapolated the previous years’ profile.
Based on the proportion of shares held by each type of owner, I created a dyadic investor
segment overlap as the sum of Euclidean distances. As institutional ownership is not consistently
distinguished from dispersed ownership for German companies, I also created a second variable
for which these categories were collapsed. The results were identical for both variables.
Control variables.
I controlled for organizational size, internationalization, diversification and performance in
the models predicting organizational convergence. Organizations of similar size may employ
similar repertoires simply because they face similar tasks that come with size. I measured size
annually as the natural logarithm of sales using current exchange rates for international
comparisons. I then computed a dyadic variable of size similarity by calculating the Euclidean
distance between the two scores and subtracting it from the sample maximum. Similarly,
organizations with a similar level of international business may face similar challenges and
employ similar repertoires. I measured internationalization annually as the percentage of sales
generated abroad and generated a dyadic variable by taking the absolute difference between the
29
companies’ scores. When companies have operational units outside the biomedical field, their
repertoires may partly reflect issues and norms in those alternative fields. As a result, they may
be less similar than firms that only operate in biomedicine. I computed a rough measure of the
importance of pharmaceuticals at the corporate level, as the percentage of revenue generated by
business units other than pharmaceuticals. I created a dyadic measure of two companies’ level of
involvement in the field as the absolute difference of their participation scores.
Company performance has been found to influence the use of framings (Bettman and Weitz,
1983) and strategic action repertoires (Miller and Chen, 1996). Thus, two companies that
perform similarly well may also use similar repertoires to make sense of their performance. I
measured performance annually as operating return on sales. As different industry segments and
countries experience different rates of return I standardized each organization’s performance by
the average in its segment-country combination for the observation year. Hence, a comparably
“well-performing” biotechnology firm can be compared to a comparably “well-performing”
generics maker. I then created a dyadic variable by taking the absolute difference between the
two standardized variables.
Analyses
I used hierarchical linear models (HLM) to analyze these data (Bryk, et al., 2000). HLM has
three distinct advantages. First, it provides an elegant way to account for non-independence in a
dataset of dyadic observations by including a random intercept for each dyad, described below.
Secondly, HLM provides a simple implementation of growth curve analysis (Rogosa, et al.,
1982) which is necessary to estimate changes in the effects of different bases of similarity.
Lastly, HLM models can handle the unbalanced data structure created by the split-sample design.
In the models, similarity is estimated over repeated observations within organizational dyads.
Time-varying covariates, such as performance differences are included at this level, as is a
30
general variable for time (year of observation). These dyad-level models are in turn nested within
stable properties of the dyad, such as the nationality and industry segment of the constituting
organizations. Both the time variable and the time-varying covariates can be interacted with the
higher-level variables to model variations in effects across dyads.
I used the step-wise procedure for model selection and hypothesis testing recommended by
Bryk and Raudenbusch (1992: 131) and Hoffman (1997). Initially, I specified a linear withindyad model predicting similarity as a function of time. I then modeled the intercepts of this basic
growth model with dyad-level variables that are invariant over time (e.g., cross-national dyad,
same-segment dyad). After testing each of these variables individually I arrived at a “best fit”
model for the intercept of each dyad. This model captures the average effect of dyad-level
variables. Next, I specified models for the slope coefficients of the time variable and timevarying covariates, using the same fixed dyad-level variables as predictors. These slope models
test the time-dependence of stable properties of the dyad such as nationality. I again tested each
dyad-level predictor individually and then specified a “best fit” model to test the hypotheses.
Finally, I added time-varying covariates, such as the level of role equivalence. Appendix B
describes the modeling approach in more detail.
Because the analysis operates on a matrix of all possible dyads in each given year, each
organization is present in multiple dyads. Non-independence of statistical units is thus a concern.
Fixed and random effects models are frequently used to address this issue. In “Least Squares
with Dummy Variables” (LSDV) regression models (Hannan and Young, 1977), fixed effects
dummies can be included for each participating organization (see Mizruchi, 1989, for an
application with dyads). This approach amounts to partialling out constant organizational effects
from the covariance matrix analyzed in the model. The drawback is that stable properties of the
31
dyad are collinear with the dummies and cannot therefore be estimated, especially in situations
with many dyads but few temporal observations within (Chamberlain, 1985). An alternative to
fixed effects is to use random effects for each dyad. Such a model is easily implemented in HLM
by allowing for a random error term in intercept and slope models. I performed all analyses with
hierarchical models, specifying random dyad effects as needed. I carefully examined diagnostics
to assess the degree to which violations of statistical assumptions, such as homogeneity of
within-dyad variance, were present. As a robustness check, I then implemented the same analysis
as a two-stage procedure, in which I first ran a LSDV regression model with only firm fixed
effects, and used the residuals from this model in a growth curve analysis without fixed dyadic
variables. This procedure replicated the substantive findings of the analysis presented here.
Results
Table 3 shows the selection models for the hypothesized variables. Model 1 estimates the
average effects of nation and industry segment, across time and dyads. The basic time-based
growth model is presented in models 2 and 3. Separate estimates for each network-structural
covariate are shown in models 4 to 7. No international board interlocks were found, so that the
cross-national variable is excluded from that model. Selection models for the control variables
are not shown. Firm size and internationalization were significant in these models and thus
retained for the combined best-fit model shown in table 4. Model 2 in table 4 shows average
effects, model 3 includes those interactions with nationality and industry segment membership
indicated by the selection models.
----------------------------------------tables 3 and 4 about here
----------------------------------------Model 2 in table 3 suggests that the average similarity is –0.264 lower than the grand mean at
the time of a dyad’s entry. It then increases by 0.026 standard deviation units for every year.
32
Model 3 explains part of the variation around this trend: Cross-national dyads are significantly
less similar than others at inception (β01 = -0.457) and converge slightly more than average (β11
= 0.005). The same general pattern holds in the combined models in table 4. Hypothesis 1, that
cross-national differences exist at any point in time, is thus supported for the duration of this
study. Cultural differences among firm are greater between nations than within nations.
Hypothesis 2 predicted that similarity be greater for firms that share an industry identity. Models
1 and 4 to 7 in table 3, as well as the combined models support this hypothesis (β02). Additional
analyses also confirmed that convergence in international dyads is marginally greater when the
participating firms share a segment identity. Hypothesis 3 predicts that direct ties are associated
with similarity of repertoires. Neither the alliance variable nor the interlock variable is significant
in models 4 and 5 in table 3 (β10 non-significant). Hypothesis 3 is therefore not supported.
Hypothesis 4 predicted that role equivalence is associated with similarity. Both indicators of role
equivalence, product market overlap and similarity of ownership are significant and positive in
models 6 and 7 in table 3 (β10 > 0), lending support to hypothesis 4. Moreover, the effect is not
reduced, and in the case of ownership similarity even enhanced in cross-national dyads. This
suggests that role equivalence in markets offers a relational structure that is independent of
national contexts, as assumed in the hypotheses. Note, however that the average effect of product
market overlap becomes non-significant in the combined model (β10 in table 4). Interestingly,
role equivalent positions in product market are associated with dissimilarity when both firms are
members of the same industry segment (β12 in model 6 of table 3 and model 3 in table 4). It thus
appears that competition in product markets induces differentiation not only on dimensions of
products, but also in the cultural resources used to make sense of the organization. In support of
hypothesis 5a, the negative coefficient β11 suggests a gradual weakening of national origin as a
33
basis for organizing cultural repertoires over the 21 year period. Hypotheses 5b suggested that
alternative bases gain prominence instead. The effect of industry segments is not time-dependent,
as β12 in model 3, table 3 is non-significant. Direct ties and role equivalence are time-varying
variables. A proximate test would be a significant coefficient in the models and a positive
correlation of similarity with the interaction term of ties or role equivalence with the observation
year. Note that the models, by contrast, use dyad-specific time, not historical time (see appendix
B). Direct ties yield no significant effect in the model. The dependent variable correlates 0.15
with the year-ownership overlap interaction term, and 0.11with the year-product market overlap
interaction term. Both effects are statistically significant. There is therefore some support for
hypothesis 5b in terms of an increasing effect of market position on cultural similarity over time.
The combined model 3 in table 4 explains 6.8% of within-dyad variance in similarity, and
14.4% of between-dyad variance. The relatively low variance explained is not unusual with
dyadic data. Part of the reason is that dyadic variables have relatively low reliabilities as they
multiply the reliabilities of the constituent variables (see, e.g., Mizruchi, 1989). The limited time
observations also affects the reliability of repeated measures estimates of slope coefficients.
Discussion and Conclusion
This study examined how the internal structure of an organizational field influences the
cultural resources deployed by organizations. The overall prediction that organizations in
proximate locations would use similar cultural repertoires was borne out for several alternative
dimensions that structure the field internally. In addition, the results suggest that these alternative
bases of proximity in the field are not merely additive but interact in complex ways, and that the
prominence of particular dimensions for organizing cultural resources may change over time.
Overall, these findings suggest a situated contextual approach for studying organizations’
34
cultural resources. This work contributes to two key organizational theories, suggesting a more
nuanced view of field dynamics in new institutional theory and amendments to sensemaking
research. I discuss the findings and consider each contribution in more detail below.
The main question this paper addresses is whether organizations that occupy proximate
positions in a field deploy similar cultural resource. Interestingly, I found no effect for interorganizational alliances and board interlocks, both of which have featured prominently in
institutional research as conduits of diffusion and isomorphism. This result may in part be due to
data limitations in the case of board interlocks and in not capturing informal and indirect ties
within an industry. Another explanation for the non-effect of alliances is that companies often
enter alliances in search of complementarity rather than learning. However, the findings prompt
more general questions for the role of networks in isomorphic processes. The non-finding for
inter-organizational ties perhaps also suggests that while sparse, but probably small-world like,
networks may be sufficient to enable swift diffusion of some specific ideas and practices, they
are not cohesive enough to trigger significant variations in the overall toolkits that organizations
use. The adoption of any single cultural element, for example, language about shareholder
responsibility, does not alter much the overall toolkit with which the organization works.
Paradoxically, the network may speed up diffusion, but not affect local isomorphism in the
comprehensive repertoires of actors. This possibility warrants further research, and calls for
caution in attributing broader homogeneity to relatively sparse interaction networks.
The second question was whether and how different field dimensions that define locations and
positions exert influence on cultural repertoires. Nation and industry-based boundaries, as well as
organization’s positioning in competitive markets affected similarities at the repertoire level.
While each dimension confirms the importance of national, industrial and market communities
35
for structuring the cultural resources used by actors, it is important to note that no dimension
completely dominated. Rather than being subject to a unified structure based on a single logic,
the companies in this population are better seen as located at the intersection of several logics,
each of which defines positions and provides identities that come with expectations for demeanor
and expression. The question is, how do these multiplex structures interact to organize cultural
resources among actors in the field?
The discovery of an interaction effect between industry segment and market position suggests
that multiple dimensions of proximity do not necessarily have an additive effect on cultural
similarity. Role equivalence in markets fosters repertoire similarity across but difference within
industry segments. The likely explanation is that organizations that are proximate on too many
dimensions seek to differentiate themselves in their cultural expressions in order to maintain
minimal necessary difference. The effect highlights the importance of the classic tradeoff of
establishing similarity to attain membership and preserving difference to avoid comparison
(Durkheim, 1933[1893]). In this case, the use of a particular style, in the form of emphasizing a
set of cultural symbols, serves not as a marker of category membership and affinity, but as a
differentiator within a category for which membership is already secure. It may be no
coincidence that this effect was only found in combinations of the market overlap variables with
categories that classify based on logics internal to the population of firms.
Whether the importance of field structures may change over time was the other central
concern of this study. I found evidence that the influence of national origin as a basis of cultural
similarity among pharmaceutical firms declined between 1980 and 2001. At the same time, there
appeared to be a slight increase in the importance of market positions in the form of overlapping
customer and investor bases. Together, these results provide some support for claims that
36
economic globalization heightens the role of markets and undermines the role of nations in
patterning business activities. It should be added, though, that national differences did not
disappear, and that the convergence found in the public language of corporations does not
suggest a sweeping trend in other areas, such as operational work practices. One implication for
institutional researchers is to carefully assess the boundaries of an organizational field when
conducting research. While areas such as health care delivery are still very much nation-based,
many commercial industries span national boundaries. Analyses that focus on purely domestic
populations are therefore likely to yield an incomplete picture of the dynamics of the field. A
useful advance for institutional theory in this area would be to develop multi-level models of
fields (Emirbayer and Johnson, 2004), integrating for example, sector-based (Scott and Meyer,
1983) and international (Meyer, et al., 1997) institutional arenas.
Contributions to new institutional theory and framing research
This paper contains two key contributions to neo-institutional theory. First, institutional
theorists should find a fruitful area of research by renewing their interest in the internal
structuring of populations and fields, not only in terms of networks between concrete actors but
also in terms of categories that define identities and role equivalence (DiMaggio, 1986). Fields
are constituted by their external boundaries that establish a community as the social carrier of
institutions but also by the internal relational structure they provide (Emirbayer and Johnson,
2004). One very simple implication of this aspect of organizational fields is that institutional
norms and expectations may apply to particular positions and roles rather than across the board
(Merton, 1957). If institutions do the classifying (Douglas, 1986), then studies of isomorphic
37
pressures, logics and diffusion of practices need to take into account categories and positions that
provide diverse identities for actors in a field.
A second implication follows from the examination of multiple bases of structure in
organizational fields, and the fact that the structural factors examined here did not explain all
variance in repertoires. Both point to a need to revisit the micro-processes “instituting”
institutions, including when and how particular affinities and positions are mobilized and
switched. Literatures about frame switching (Goffman, 1974), situational priming processes
(Klein, 1998) and status mobility processes (Lounsbury, 2002) may provide a good starting point
in this respect. Institutional theorists are also in a good position to theorize how exactly such
situational processes combine into the patterns observed at a macroscopic level, be it in the form
of aggregate patterns emerging from local improvisation or of ultimate changes to field
structures as a result of collective action (Clemens, 1993; Rao, et al., 2000). This paper is only a
first step in this direction, but it does not address questions regarding the stability of actors’
repertoires over time and situations, or non-structural, discursive processes.
To research on strategic framing and sense-giving, this paper contributes a refined focus on
the content and the context of meaning making. A concern on cultural repertoires supplements
the often dominant concern with process and single frames (Weick, 1995). If the “quality” of
meaning making is not in the accuracy with which a single thing is represented, it may instead be
in dimensions such as the requisite variety of the toolkit brought to bear on a problem, the
combination of framing elements appropriate for the actors’ position and situation, and the skill
in using words that mobilize collective cultural meanings (Clemens, 1993; Fligstein, 2001).
More generally, from the cultural perspective taken in this paper, the “minimal sensible
structures” that make up a repertoire are not only cognitive schemas but also socially conditioned
38
and discursively controlled resources. Sensemaking is grounded not only in individual
experience. By examining the public repertoires of organizations, I sought to draw attention to
the often public nature of sensemaking and the accompanying communicative and situated rather
than individual-cognitive control over the material with which sense is made. Factors such as the
way sense is produced in the media and the situatedness of cognitive and communicative
processes in roles as much as in individuals offer fruitful ground for sensemaking researchers. A
better understanding the cultured nature and the situatedness of sensemaking activities addresses
a common critique of the perspective as neglecting the macro-context of interactions. Not only is
sensemaking the “feedstock of institutionalization” (Weick, 1995), institutions reciprocally
influence that same process. The field positions and public registers of cultural resources
examined in this study are two types of “institutional scaffolding” for sensemaking processes.
Conclusion
As the previous discussion shows, a cultural resource perspective has great potential to draw
connections between and inform institutional theory at the macro level and sensemaking research
at the micro level. Culture plays a key role in both, and provides an avenue for creative theory
development in both areas. The notion of culture used in this paper pays close attention to
discursive and language aspects, and by doing so also highlights the usefulness of ideas from
sociolinguistics and semiotics for understanding organizational practices at multiple levels.
While the empirical results cautions researchers from seeing organizations as entities equipped
with some sort of “habitus,” it provides clear support for the view that structures which map out
the space of an organizational field shape the cultural resources available to particular
organizations.
39
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46
TABLES
Table 1: Categories of cultural elements
d#
dimension
ATTENTION
Environmental domain
001 system
002 community
003 stakeholders
004 supply chain
005 location
Evaluation
006 salience
007 closure
008 valence
009 magnetism
INTERPRETATION
010 utility
Temporal trends
011 monotony
011
012 vertical
012
013 repetition
013
014 pace
014
Aspirations
015 comparative
016 historical
017 dependence
018 future
019 ends
Means of action
020 people
021 organization
022 scale
023 bus scope
024 money
025 product
ACTION
026 market position
027 geo scope
028 collaboration
029 business units
Style of action
030 obligation
031 emotion
032 energy
033 longevity
034 risk
035 enactiveness
c# category
connotation
001
002
003
004
005
006
007
008
009
010
macro-economy
society
product market
business partners
labor market
capital market
medical
technology
geographical
state
company as part of an economic system
company as part of a social system
community defined by market rivalry
community defined by exchange relations
company as an employment provider
company as investment vehicle (private enterprise)
company delivers human health
company uses technological knowledge
company as situated by locale
company as situated by citizenship
011
< >
012
013
014
015
016
017
018
019
important
incidental
certain
ambiguous
positive
negative
attractive
repellant
helpful
impeding
stands out, deserves attention
not worth attention
implication is known, facts
implication is equivocal, uncertain
valued as positive to self or morality
valued as negative to self or morality
desire to move towards realization
desire to move way from / avoid realization
assists own projects and interests
hinders own projects and interests
020
021
022
023
024
<*>
025
026
continuous
novel
rise
fall
cyclical
directed
accelerate
slow down
future is continuation of past, stable and long-lived
future is a break from the past
movement towards a higher quality
movement towards a lower quality
movement oscillates, repeats itself
movement has direction
continuation of direction, but increasing pace
continuation of direction, but decreasing pace
027
028
029
< >
030
031
032
033
034
035
exception
normal
improve
destruct
service
independence
vision
tradition
goal
journey
perform outside existing comparisons
perform within comparison to others
seek to perform better than own past
seek to perform worse than own past
authority delegated by stakeholders
authority vested in self
guided by a desired future
guided by a valued past
achievement in a plan-act-evaluate sequence
achievement in ongoing process of becoming
036
037
038
039
040
041
042
043
044
<**>
045
046
047
< >
048
< >
049
< >
050
051
select people
develop people
optimize organization
restructure organization
build capacity
downsize
diversify business
focus business
invest money
earn money
develop product
sell product
strengthen position
reduce position
expand geo scope
contract geo scope
enter alliance
exit alliance
acquire
divest
organization as a system of job positions to be filled
organization as an assembly of individuals to be improved
corporation as a designed organism, mange within structure
corporation as designed organism, mange structure itself
corporation as a throughput system, improve by growth
corporation as a throughput system, improve by down
corporation as an entity to spread risk, realize synergies
corporation as an entity with an singular, core identity
corporation as a financial vehicle, manage input side
corporation as a financial vehicle, manage output side
corporation as a product portfolio, manage innovation
corporation as a product portfolio, manage marketing
corporation as a market player, improve by increasing market power
corporation as a market player, improve by reducing market power
corporation as a global actor, improve by extending presence
corporation as a global actor, improve by reducing presence
corporation as part of an industrial network, seek centrality/cohesion
corporation as part of an industrial network, seek isolation
corporation as a portfolio of businesses, improve by buying
corporation as a portfolio of businesses, improve by selling
052
053
054
055
056
057
058
059
060
061
062
063
assertive
responsible
rational
emotional
efficient
effortful
decisive
committed
bold
careful
venturing
exploring
competent action as serving own interests and values
competent action as stewardship for external interests and values
competent action applies norms of (instrumental) rationality
competent action is driven by passion and emotional involvement
competent action achieves ends with minimal energy
competent action expends high energy without concern for return
competent action swiftly seizes opportunities
competent action sustains a course over longer time
competent action takes risks
competent action analyzes and avoids unnecessary risks
competent action creates opportunities through action
competent action creates opportunities through learning
< > not observed frequently enough to warrant coding
< * > direction is implied in rise, fall, continuation categories; therefore no separate category
<**> earning money is reported frequently in annual reports, but rarely treated as an action
47
Table 2: Inter-rater reliabilities
Reliability estimates (Krippendorf's alpha)
Cat# Name
human-computer* English-German**
Environmental domains
001 macro-economy
0.72
0.92
002 society
0.66
0.95
003 product market
0.77
0.89
004 business partners
0.59
0.80
005 labor market
0.92
0.88
006 capital market
0.88
0.94
007 medical
0.77
0.90
008 technology
0.82
0.96
009 geographical
0.93
0.93
010 state
0.76
0.93
Evaluation
011 important
0.82
0.88
012 certain
0.82
0.90
013 ambiguous
0.71
0.82
014 positive
0.84
0.96
015 negative
0.70
0.98
016 attractive
0.80
0.86
017 repellant
0.95
0.92
018 helpful
0.75
0.79
019 impeding
0.59
0.78
Temporal trends
020 continuous
0.69
0.85
021 novel
0.68
0.84
022 rise
0.81
0.95
023 fall
0.66
0.96
024 cyclical
0.98
0.99
025 accelerate
0.66
0.86
026 slow down
0.74
0.86
Aspirations
027 exception
0.85
0.90
028 normal
0.71
0.77
029 improve
0.84
0.87
030 service
0.72
0.89
031 independence
0.56
0.88
032 vision
0.85
0.98
033 tradition
0.66
0.81
034 goal
0.78
0.77
035 journey
0.71
0.86
Means of action
036 select people
0.91
0.83
037 develop people
0.72
0.82
038 optimize organization
0.72
0.93
0.92
0.97
039 restructure organizatio
040 build capacity
0.72
0.91
041 downsize
0.80
0.95
042 diversify business
0.75
0.87
043 focus business
0.92
0.91
044 invest money
0.92
0.94
045 develop product
0.77
0.90
046 sell product
0.81
0.92
047 strengthen position
0.81
0.70
048 expand geo scope
0.75
0.78
049 enter alliance
0.81
0.94
050 acquire
0.91
0.96
051 divest
0.66
0.92
Style of action
052 assertive
0.83
0.86
053 responsible
0.85
0.88
054 rational
0.90
0.89
055 emotional
0.50
0.73
056 efficient
0.71
0.91
057 effortful
0.75
0.96
058 decisive
0.83
0.89
059 committed
0.83
0.93
060 bold
0.66
0.85
061 careful
0.75
0.79
062 venturing
0.66
0.76
063 exploring
0.83
0.91
* N = 1909 sentences, 40 documents
** N = 1509 sentences, 28 documents
48
Table 3: HLM estimates, model selection
Level 1 Covariates
Model
π0 Intercept
β00 Intercept
β01 Cross-national dyad
β02 Same industry segment
Intercept
(1)
β12 Same industry segment
Model fit
Chi-square statistic (deviance over base model*)
(3)
0.026 ***
0.020 ***
0.073
(0.001)
(0.002)
(0.091)
0.007 **
0.040
(0.003)
(0.132)
0.004
-0.041
(0.003)
(0.134)
β11 Cross-national dyad
Variance explained
Level 1 (over base model*)
π0 Intercept (over matching l-1 random intercept model)
π1 Covariate (over level 1 model)
(2)
Interlocks
(5)
Alliances
(4)
Market
overlap
(6)
Owner
overlap
(7)
0.149 *** -0.264 *** -0.043
0.147 ***
0.149 ***
0.148 ***
0.148 ***
(0.015)
(0.018)
(0.026)
(0.015)
(0.015)
(0.015)
(0.015)
-0.393 ***
-0.457 *** -0.407 *** -0.393 *** -0.392 *** -0.391 ***
(0.019)
(0.035)
(0.019)
(0.019)
(0.019)
(0.019)
0.066 **
0.047
0.066 ***
0.067 ***
0.066 ***
0.066 ***
(0.022)
(0.039)
(0.022)
(0.022)
(0.022)
(0.022)
π1 Covariate
β10 Intercept
Reliability estimates
π0 Intercept
π1 Covariate
Time
-0.013
(0.418)
-0.248
(0.435)
0.387 **
(0.155)
0.189
(0.213)
-0.589 *
(0.234)
0.236 ***
(0.039)
0.132 *
(0.057)
+
-0.124
(0.069)
0.40
0.21
0.06
0.18
0.05
0.43
0.04
0.23
0.00
0.52
0.16
0.44
0.09
0.00
0.04
0.04
0.18
0.17
0.00
0.26
0.00
0.00
0.26
0.00
0.02
0.25
0.04
0.03
0.24
0.04
391.4 ***
426.6 ***
793.9 ***
390.2 ***
390.6 ***
486.9 ***
617.7 ***
*** p < 0.001; ** p < 0.01; * p < 0.05; + p < 0.1;
Base model = random l-1 intercept (b00) only;
Level-1 N = 20357 dyad-years; Level-2 N = 3397 dyads
49
Table 4: HLM estimates, combined models
Covariate
Model
π0 Intercept
β00 Intercept
β01
Cross-national dyad
β02
Same industry segment
Base
(1)
-0.030 ***
(0.010)
π1 Covariate 1: Product market overlap
β10 Intercept
β12
β21
Cross-national dyad
β31
Same industry segment
π3 Covariate 3: Time
β30 Intercept
-0.028
(0.026)
-0.434 ***
(0.035)
0.086 ***
(0.022)
-0.016
(0.098)
0.092
(0.114)
-0.361
(0.211)
0.180 ***
(0.039)
0.102 *
(0.053)
-0.055
(0.063)
0.020 ***
(0.001)
0.018 ***
(0.002)
0.004 *
(0.002)
-0.032 ***
(0.008)
-0.001
(0.010)
-0.073 ***
(0.017)
-0.190 **
(0.065)
-0.350 ***
(0.090)
0.260 *
(0.134)
0.13
0.06
0.04
0.03
fixed
0.13
0.05
0.04
0.03
fixed
0.07
0.17
0.07
0.14
0.10
0.01
0.06
Cross-national dyad
Reliability estimates
π0 Intercept
π1 Product market overlap
π2 Owner overlap
π3 Time
π4-5 Controls
Variance explained
level 1 (over base model)
π0 Intercept (over l-1 random intercept model)
π1 Product market overlap (over l-1 model)
π2 Owner overlap (over l-1 model)
π3 Time (over l-1 model)
0.46
+
0.214 ***
(0.026)
Cross-national dyad
π5 Control 2: Difference in foreign sales
β50 Intercept
β51
-0.060 **
(0.021)
-0.381 ***
(0.019)
0.084 ***
(0.022)
Cross-national dyad
π4 Control 1: Difference in size
β40 Intercept
β41
L-2 interactions
(3)
Same industry segment
π2 Covariate 2: Ownership overlap
β20 Intercept
β31
L-1 main
effects
(2)
Model fit
Chi-square statistic (deviance over base model)
970.8 ***
982.1 ***
*** p < 0.001; ** p < 0.01; * p < 0.05; + p < 0.1;
Base model = random l-1 intercept (b00) only; Level-1 N = 20357 dyad-years; Level-2 N = 3397
dyads
50
APPENDICES
Appendix A: Product market and owner categories
Product market categories
#
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Category
digestive system
metabolic system
hematology / blood
cardiovascular system
dermatology / skin
urology / gynecology
hormones
infectious diseases
oncology / cystostatics
immune system
muscular & skeletal
nervous system
respiratory system
pharmagenetics
psychopharmaceuticals
diagnostics
Sample indications and treatments
gastritis, laxatives, antidiarrheals
diabetes, obesity, endocrinic disorders
haemostatics, infusions, dyalytics
hypertension, arteriosclerosis, diuretics, beta blockers
fungal infections, alopecia, burns
erectile dysfunction, incontinence
thyroid gland defects, menopause, contraceptives
vaccines, antibiotics, antiseptics
leukemia and all types of cancers
HIV, related to organ transplants, allergies
rheumatology, arthritis
migraine / headaches, analgesics, Alzheimer
asthma, bronchitis
gene therapy, genomics
anti-depressants, schizophrenia, sedatives
in vitro & in vivo, gentic diagnostics
Owner categories
#
1
2
3
4
5
6
Category
institutions (money managers)
banks and insurance companies
private owners
executive owners
venture capitalists
dispersed shareholders
Examples
CALPERS, AETNA
Allianz, Deutsche Bank
Mohn family, Boehringer foundation
founders of biotech firms
Kleiner Perkins, 3i, DRK
-
51
Appendix B: Model specification procedure
The hierarchical implementation of growth curve analysis used in the analyses consists of two
sets of equations. The level-1 equation models similarity within dyads as a function of time. The
time-varying covariates of alliances, board interlocks, product and capital market overlap, and
controls were also entered at that level. A second set of equations at level-2 explains betweenunit variations in any one of the level-1 parameters, based on stable properties of the dyad. The
composition of dyads in terms of national origin and industry segments was entered at that level.
The time variable in growth curve analysis usually refers to within-unit time, i.e. here, the
time since the dyad came into existence. However, in the present case this would amount to
estimating the average annual change in a dyad’s similarity with data from the last 20 years, even
when that dyad had existed, for example, since 1883. Because neither theory nor data reach that
far, I censored the time variable at 1979, the year before the first data were collected. For older
dyads in the sample, the intercept thus estimates initial differences in 1979 and the slope their
convergence since then. For later entrants it refers to their actual entry date and their
convergence since. In line with the scope of the theory presented in this paper, the time variable
therefore represents only temporal trends during the study period.
The general model for dyadic convergence was specified as follows:
L-1:
L-2:
π0i +
π1i Time +
πt2 DirectTie +
π t3 RoleEquivalence +
π tn Controls + εti
π0i = β00 + β01 Nationality + u0i
π1i = β10 + β11 Nationality + β12 SameSegment + u1i
πt2 = β20 + β21 Nationality + β22 SameSegment + u2i
π t3 = β30 + β31 Nationality + β32 SameSegment + u3i
π tn = βn0 + uni
Sti =
I used a step-wise procedure for model selection and hypothesis testing (Bryk and
Raudenbusch, 1992: 131; Hofmann, 1997). In an initial step, I partitioned the variance
components between the two levels: temporal variance in similarity within dyads, and spatial
variance between dyads. 83.4% of the variance in similarity occurred within dyads (over time),
and 16.6% between dyads (p<0.0001). This step indicates that hierarchical modeling is
appropriate as stable dyadic properties, such as nationality and industry segment membership are
likely to contribute explanatory power. In a second step, I specified a linear level-1 model with
similarity a function of time. I tested a quadratic functional form but found that adding the
quadratic term did not explain much additional variance. In addition, some dyads in the sample
had as few as three observation points, so that a quadratic term would use up scarce degrees of
freedom. In the absence of a substantially improved model fit with a higher-order model and no
strong theoretical prediction regarding the form of temporal changes, I retained the linear
functional form. I then modeled the intercept of this basic growth model with level-2 variables
that are invariant over time (cross-national dyad, same-segment dyad). Because the time variable
is set to zero at the inception of the dyad, the coefficients obtained in this equation reflect
differences in initial conditions due to properties of the dyads. The coefficients of level-2
52
variables in the intercept model are equivalent to their main or average effects. I tested each
level-2 variable individually and then specified a “best fit” intercept model. Next, I specified a
model for the time slope coefficient, using the same level-2 variables. The slope model contains
the cross-level interactions between time and constant properties of the dyad. I again tested each
level-2 predictor individually and then specified a “best fit” model.
While this basic growth model treats similarity as a function of time, time-varying covariates
at level-1 explain differences in similarity that that do not depend on time. In the next step, I thus
retained the intercept model and entered each time-varying covariate individually. These models
show the “main” or average effects of time-varying covariates across all dyads, controlling for
different conditions at the dyad level. For example, the coefficient for an alliance tie in this
model represents the effect of alliances on similarity across all industry segments, countries and
cohorts. I then specified equations for the slope of each covariate using the level-2 variables. For
example, the coefficient for the dummy for a cross-national dyad indicates whether alliance ties
affect similarity more strongly internationally than domestically. I again tested each variable
separately and then specified a best-fit model for that covariate. Finally, I combined the models
of significant level-1 covariates into an overall best-fit model.
The rationale for this stepwise procedure is twofold (Bryk and Raudenbusch, 1992: 201).
First, specifying an overly saturated level-1 model may require a very large number of iterations
and result in a fragile solution. Second, estimating a saturated level-1 model requires a large
number of repeated measurements. The present within-unit sample size is between 3 and 21,
which is clearly not enough to estimate many parameters at the same time. Hence, selecting out
non-significant covariates individually was preferable.
53