Legal Environments and Organizational Governance: The Expansion of Due Process in the American Workplace

Edelman, Lauren B.

doi:10.1086/229459

Cited by 677 publications

(607 citation statements)

References 26 publications

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“…those that are serving their communities well, are constrained in their pursuit of acquisitions out of fear of jeopardizing their clean records. While other institutional research on effects of legal ambiguity has shown how ambiguity provides opportunity for interested organizations (Edelman, 1990(Edelman, , 1992, in our case, because the CRA rating is ambiguous there is considerable risk and uncertainty involved in acquisitions for highly rated firms. Thus, this federal legislation has the dual effect of encouraging banks to improve their ratings but suppressing acquisition activity among banks that earn the highest ratings.…”

Section: Resultsmentioning

confidence: 79%

“…This ambiguity creates a dynamic that is very much in line with the body of institutional research that suggests that regulations are often ambiguous and that firms experiment with different practices to navigate the institutional environment (Edelman, 1990(Edelman, , 1992. As noted, the rating process is somewhat subjective in that a numerical value is assigned by an examiner as opposed to having concrete thresholds for certain activities.…”

Section: Federal Regulation Of Community Reinvestmentmentioning

confidence: 88%

“…For example, in a study of the effectiveness of firm anti-discrimination activities, Kalev et al (2006) discussed how corporations' affirmative action and diversity policies designed in response to the Civil Rights Act are typically a result of experiments with different types of ''best practices.'' This focus of firms searching for different alternative responses to federal regulations is also described by Dobbin and Sutton (1998), and Edelman (1990. This body of work suggests that there are important state-level effects.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…For example, Fligstein (1990) showed how the Celler-Kefauver Act of 1950, which prohibited vertical mergers, limited the options available to corporations and how one result was increased cross-industry acquisition activity and the rise of conglomerates. On the normative side, a number of studies have shown how changes in the legal environment in the wake of the Civil Rights Act of 1964 disposed organizations in the 1960s and early 1970s to adopt different organizational structures that signaled normative compliance with the emerging regulatory regime (Dobbin et al, 1993;Edelman, 1990Edelman, , 1992Sutton et al, 1994).…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…Shifts in federal laws have been shown to cause corporations to interpret their environments differently and to influence the economic decisions of organizations. Research has shown that firm structure (Fligstein, 1990;Roy, 1997;Zorn, 2004), strategy (Davis et al, 1994), and even internal policy (Dobbin et al, 1993;Edelman, 1990Edelman, , 1992Sutton et al, 1994) are shaped by legal changes at the federal level. For example, Fligstein (1990) showed how a number of federal regulatory changes in the twentieth century drove the evolution of the corporate form.…”

Section: Introductionmentioning

confidence: 99%

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State activism and the hidden incentives behind bank acquisitions

Marquis

Guthrie

Almandoz

2012

Social Science Research

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a b s t r a c tA number of studies have shown that, as a result of the ambiguity of US legal mandates, organizations have considerable latitude in how they comply with regulations. In this paper, we address how the different agendas of the federal and state governments increase ambiguities in state-firm relations and how states are interested actors in creating opportunities for firms to navigate the federal legislation. We analyze the institutional forces behind bank acquisitions within and across state lines in order to illuminate the ways that US states take advantage of federal ambiguity and are able to shape corporate practices to their benefit. We specifically examine how patterns of bank acquisitions are shaped by the crucial relationship between the federal Community Reinvestment Act (CRA) and a littleunderstood provision in the federal tax code that is implemented at the state level, the Low-Income Housing Tax Credit (LIHTC). The relationship is complex because, while the federal government uses the CRA to control bank acquisition activity, states promote use of the LIHTC, through which banks can address federal CRA concerns, and thereby promote bank acquisitions in their jurisdictions. Thus, our findings suggest that the implementation of social legislation at one level in a federal regulatory system undermines the mechanisms of social legislation at another level. We use archival research and in-depth interviews to examine the interaction between these institutional processes and formulate hypotheses that predict the ways in which bank acquisitions are constrained by banks' CRA ratings and the way states in turn help banks overcome their CRA constraints. Quantitative analyses of all bank acquisitions in the United States from 1990-2000 largely support these hypotheses.

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Section: Resultsmentioning

confidence: 79%

Section: Federal Regulation Of Community Reinvestmentmentioning

confidence: 88%