Once a Conformist, Always a Conformist? Firms’ Discontinued Conformity to Global Sustainability Standards

Abstract

Although scholars have established the importance of conformity to institutional pressures, limited research has examined the phenomenon of discontinued conformity, that is, when some firms withdraw from institutionalized practice after initial conformity. We propose that institutional immunity is a key mechanism by which firms enact such changes in response to institutional pressures. We identify ownership as the internal source of institutional immunity and interactions with external groups as the external sources. Institutional immunity filters insti- tutional pressures and enables firms to withdraw after initial conformity. Using an event history analysis with 19,438 global observations concerning an institutionalized sustainability practice from 2012 to 2017, we find support for the proposed relationship between institutional immu- nity and discontinued conformity as well as the boundary condition of institutional quality. This study highlights organizational change away from conformity owing to the persistence of institu- tional contradictions and enriches our understanding of institutional immunity.