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

This paper presents a refined test of the institutional, political, and economic accounts of adoption of the multidivisional form (MDF) among large U.S. industrial corporations in the 1960s, most notably by elaborating the institutional account. Results suggest that institutional processes, including coercive and normative dynamics, substantially underpinned the MDF's diffusion during the 1960s. Firms producing in industries that shunned the MDF earlier in this century were slow to adopt this form in the 1960s, an effect mediated by the percentage of firms in a corporation's sector using the MDF at the time. In addition, firms with high debt-to-equity ratios, whose chief executives had elite business school degrees, and whose directors had nondirectional corporate board contacts with the directors of MDF firms adopted the MDF more frequently than other firms. Substantial support was also found for the economic account, although little was found for the straightforward political view. In the conclusion we discuss the relationship between institutional, political, and economic theories of formal organization in light of our results.