Institutional forces and divestment performance of South African conglomerates: Case study evidence

Abstract

The history of South Africa serves as a natural experiment in how a changing institutional environment impacts corporate structure. Based on institutional theory, we anticipate higher performance through emulating successful strategies or through restructuring consistent with mimetic isomorphism. Conversely, coercive isomorphism results from restructuring driven by regulation, and we anticipate that they are associated with lower performance. To examine these relationships, we consider divestment by South African firms over two periods, using mixed methods. We find tentative support for our predictions, and we outline implications for policymakers, as well as for management research and practice.

Does institutional logic matter in microfinance delivery? An empirical study of microfinance clients

“…These isomorphic institutions are discussed below in the Ghanaian context. (King et al 2015;McGaughey et al 2016;Smith et al 2016). Usually, such conformity means acquiring legitimacy for their operation and outreach services (King et al,2015;Trapczynski and Banalieva, 2016).…”

“…DiMaggio and Powell (1983) indicated that FNGOs are likely to mimic or imitate other organisations which they come into contact with. Thus, FNGOs in their attempt to provide financial services to MSEs are likely to be influenced by their peers or competitors (King et al ,2015). According to Meyer and Rowan (1977), mimetic changes occur when organisations import rules and practices which may not couple properly with internal structures and may cause a wide internal variation in organisational behaviour.…”

“…In delivering financial services to MSEs in Ghana, FNGOs are influenced by coercive institutions which are regulatory in nature. Coercive isomorphic institutions bring both formal and informal pressures on FNGOs and change their behaviour and structures in conformity to societal expectations (King et al, 2015;McGaughey et al, 2016;Smith et al, 2016). Usually, such conformity means acquiring legitimacy for their operation and outreach services (King et al, 2015;Trapczynski and Banalieva, 2016).…”

“…Coercive isomorphic institutions bring both formal and informal pressures on FNGOs and change their behaviour and structures in conformity to societal expectations (King et al, 2015;McGaughey et al, 2016;Smith et al, 2016). Usually, such conformity means acquiring legitimacy for their operation and outreach services (King et al, 2015;Trapczynski and Banalieva, 2016). Legitimacy refers to the perception of an organisation's actions as acceptable and appropriates based on a well-defined regulatory framework in a country (McQuarrie et al, 2013;Deephouse et al, 2016).…”

Financialization as a New Regime of Accumulation: Business, Apartheid, and the Neoliberal Transition

“…23 Diversification by South Africa's core mining firms through their acquisition of non-core businesses eventually led to the emergence of six giant conglomerates that dominated the Johannesburg Stock Exchange (JSE), which together represented 80% of market capitalization by 1992. 24 As a result of this development, by the late 1980s South Africa's economy was effectively controlled by six wealthy families. 25 The post-1948 period was thus marked by a coalitional class alliance consisting of white organized labour and conglomerate groupings with investments in mining, finance, and industry, operating in the context of state protection and racialized capitalism.…”