Behind the Iron Cage: An Institutional Perspective on ISO 9000 Adoption and CEO Compensation

Andy C. L. Yeung (), Chris K. Y. Lo () and T. C. E. Cheng ()
Additional contact information
Andy C. L. Yeung: Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong
Chris K. Y. Lo: Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong
T. C. E. Cheng: Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

Organization Science, 2011, vol. 22, issue 6, 1600-1612

Abstract: Although institutional theorists maintain that the widespread diffusion of ISO 9000 is the result of institutional forces, they have neglected the potential gains to top management in the perpetuation of the standard. Based on a long-horizon event study with control firms to detect long-term abnormal financial gains, we investigate the impact of ISO 9000 adoption on CEO compensation in the U.S. manufacturing industry from 1994 to 2006. We find that the CEOs' total cash compensation was positively adjusted when their firms received ISO 9000 certification, and they received higher-value stock options when their firms embarked on ISO 9000 certification. However, the performance of the ISO 9000 certified firms was not improved throughout this period. Our further analyses suggest that it is likely that the CEO influences the board to obtain higher compensation under an institutionalized environment. Contrary to the traditional institutional theory-based view, we argue that a highly institutionalized environment does provide political opportunities for organizational actors to garner personal advantages.

Keywords: ISO 9000; CEO compensation; institutional theory (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/orsc.1110.0652 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:22:y:2011:i:6:p:1600-1612

Access Statistics for this article

More articles in Organization Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().