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How Golden Parachutes Unfolded: Diffusion and Variation of a Controversial Practice

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  • Peer C. Fiss

    (Marshall School of Business, University of Southern California, Los Angeles, California 90089)

  • Mark T. Kennedy

    (Marshall School of Business, University of Southern California, Los Angeles, California 90089)

  • Gerald F. Davis

    (Stephen M. Ross School of Business, University of Michigan, Ann Arbor, Michigan 48109)

Abstract

We contribute to a growing focus on variation in diffusion processes by examining the ways in which contested practices are modified as they spread among adopters. Expanding on prior diffusion accounts, we argue that the extensiveness and similarity of a practice will vary in response to both population- and organization-level mechanisms. To examine these issues, we study variation in “golden parachute” contracts, a controversial corporate governance practice that emerged and spread widely during the hostile takeover wave of the 1980s. Using a concept network approach to analyze the composition of parachute plans, we find evidence of mechanisms that both increase and decrease extensiveness and variation of golden parachutes. Our findings hold implications for accounts of practice diffusion over contested terrain by revealing substantial variation in the course of diffusion.

Suggested Citation

  • Peer C. Fiss & Mark T. Kennedy & Gerald F. Davis, 2012. "How Golden Parachutes Unfolded: Diffusion and Variation of a Controversial Practice," Organization Science, INFORMS, vol. 23(4), pages 1077-1099, August.
    • Handle: RePEc:inm:ororsc:v:23:y:2012:i:4:p:1077-1099
    DOI: 10.1287/orsc.1110.0685
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    References listed on IDEAS

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    9. Maskara, Pankaj K. & Miller, Laura S., 2018. "Do golden parachutes matter? Evidence from firms that ultimately filed for bankruptcy," The Quarterly Review of Economics and Finance, Elsevier, vol. 67(C), pages 63-78.
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