Institutional Intermediaries and Firm Choices in Response to Regulations

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

3 Scopus Citations
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Detail(s)

Original languageEnglish
Pages (from-to)981–1007
Journal / PublicationAcademy of Management Journal
Volume64
Issue number3
Online published9 Apr 2020
Publication statusPublished - Jun 2021

Abstract

This study develops a nuanced framework to unpack the heterogeneous mechanisms of institutional intermediaries’ efforts by aligning their bridging and buffering roles with the information and certification support they offer to clients. I further examine how these mechanisms explain firms’ intermediary choices in response to government regulations. Using a novel dataset of power plants across China, I find that the theorized intermediation mechanisms and way firms assess them are partially bounded by institutional complexities. Firms’ inexperience with regulations and their adoption of novel technologies are positively related to their selection of public intermediaries, with the former relationship strengthened when regulatory changes suggest a continuous need for policy updating. Meanwhile, firms’ non-compliance records and a lack of institutional linkage to the government are positively related to their reliance on private intermediaries’ buffering competency, with the latter relationship evident only in settings with an interventionist government. These findings contribute to the literature on the complex and dynamic value of intermediaries and firms’ intermediary choices at the intersection of management and government.