The Dominance of Firm-Level Competitive Pressures Over Functional-Level Institutional Pressures: The Case of the Finnish-Based Forest Industry Firms

Abstract

Previous management and organization literature has recognized the contradictions between competitive and institutional pressures. Firms must simultaneously secure competitiveness by being different from their competitors, and legitimacy by being similar to them. While trade-offs between these conflicting pressures have been studied at the population and firm levels, little attention has been paid to the same phenomenon within firms. This paper suggests that, in order to achieve competitiveness at the firm level, firms need to deviate from some institutionally legitimate practices at the functional level. For example, we show how being strategically different at the firm level forces the Finnish-based forest industry firms to dismantle isomorphic practices in their organizational functions. Thus, we extend the previous work in this field by showing that the ability of firms to adopt and develop new practices is path-dependently biased in the sense that the firm-level definition of the strategic context can have a major impact on the types of organizational practices that are adopted, nurtured and abandoned within the functions.