On the Relationship Between Firms and Their Legal Environment: The Role of Cultural Consonance

Simona Giorgi (), Massimo Maoret () and Edward J. Zajac ()
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Simona Giorgi: School of Management, University of Bath, Bath BA2 7AY, United Kingdom
Massimo Maoret: IESE Business School, Barcelona 08034, Spain
Edward J. Zajac: Kellogg School of Management, Northwestern University, Evanston, Illinois 60208

Organization Science, 2019, vol. 30, issue 4, 803-830

Abstract: In this study we seek to reconcile diverging dominant views on the relationship between firms and their legal environment by offering a cultural contingency perspective. We begin by accepting the notion that a new law will likely exert a powerful influence on targeted firms and that firms’ strategic responses include efforts to shape the impact of the new law. However, we suggest that the success of such response will be contingent on the degree of cultural consonance of firms’ strategic responses and the dominant cultural context at that time. We elaborate this view in our detailed qualitative and quantitative analyses of the automotive Safety Act of 1966 and the response by targeted firms. We provide evidence showing that the changes in the degree of cultural consonance of firms’ strategic response and the predominant cultural beliefs/values explain both the early failure of firms’ efforts to shape the impact of the law in the mid-1960s and the later success by the end of the 1970s. We highlight how firms’ cultural context provides both a constraint and an opportunity for firms seeking to shape legal environmental pressures, and we conclude by discussing the implications of our dynamic contingency perspective for research on law, culture, and strategy.

Keywords: culture; law; institutions; consonance; qualitative methods; semantic networks; topic modeling; history; consumer movement (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:30:y:2019:i:4:p:803-830

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