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Institutional Sources of Boundary-Spanning Structures: The Establishment of Investor Relations Departments in the Fortune 500 Industrials

Author

Listed:
  • Hayagreeva Rao

    (Goizueta Business School, Emory University, Atlanta, Georgia 30322)

  • Kumar Sivakumar

    (Georgia State University, University Plaza, Atlanta, Georgia 30303)

Abstract

The authors analyze the coercive and mimetic conditions leading to the establishment of investor relations departments among Fortune 500 industrial firms during the 1984–1994 period. The results show that antimanagement resolutions brought to a vote by social movement activists significantly contributed to the establishment of investor relations departments. Intense scrutiny by financial analysts also impelled firms to create such departments. Whereas social movement activists framed shareholder rights as a problem and compelled organizations to uphold them, professional analysts subtly coerced organizations to signal their commitment to investor rights by creating boundary-spanning structures. That solution was transmitted through board interlocks to other organizations.

Suggested Citation

  • Hayagreeva Rao & Kumar Sivakumar, 1999. "Institutional Sources of Boundary-Spanning Structures: The Establishment of Investor Relations Departments in the Fortune 500 Industrials," Organization Science, INFORMS, vol. 10(1), pages 27-42, February.
    • Handle: RePEc:inm:ororsc:v:10:y:1999:i:1:p:27-42
    DOI: 10.1287/orsc.10.1.27
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