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Following versus breaking with precedent : organizational conformity and deviation in the British Columbia… Cliff, Jennifer E. 2000

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F O L L O W I N G V E R S U S B R E A K I N G W I T H P R E C E D E N T : O R G A N I Z A T I O N A L C O N F O R M I T Y A N D D E V I A T I O N I N T H E B R I T I S H C O L U M B I A L E G A L P R O F E S S I O N By JENNIFER E. CLIFF Bachelor of Commerce, Carleton University, 1990 A THESIS SUBMITTED I N P A R T I A L F U L F I L M E N T OF T H E R E Q U I R E M E N T S FOR T H E D E G R E E OF D O C T O R OF P H I L O S O P H Y in T H E F A C U L T Y OF G R A D U A T E STUDIES (Department of Commerce and Business Administration) We accept this thesis as conforming to the required standard T H E UNIVERSITY OF BRITISH C O L U M B I A Spring 2000 © Jennifer E. Cliff, 2000 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department of //VltUl^yi ^ 42JU.OS> ' MSI ^X^^^^^r ^ ^ ^ ^ ^ 1 ^ ^ The University of British Columbia Vancouver, Canada Date //I/IACA. 3t- . £ O T O DE-6 (2/88) A B S T R A C T This study investigates the effect of founders socialization experiences and contextual interpretations on the deviation of recently-established law firms from the dominant organizational form in the B.C. legal profession. Through this research I address three issues fundamental to the neo-institutional perspective on organizational analysis: 1) whether consensually-understood frameworks exist in highly-institution-alized environments, 2) the extent to which new entrants to such industries reproduce or depart from these prescribed arrangements, and 3) why some conform while others deviate. In the first phase of my investigation, I ascertained the nature of the legal profes-sion s dominant template for organizing by analyzing qualitative data collected from multiple data sources including both observers of and practitioners within this indus-try. I subsequently validated this template by collecting quantitative data through a survey administered to a panel of lawyers. The results support the existence of a com-monly-perceived template for organizing in the B.C. legal profession. In the second phase of my research, I investigated sixty recently-established law firms in B.C. Through a background questionnaire and personal interview conducted with the founder of each firm, I collected data on multiple dimensions of form, the founder s experience, and his or her rationale for designing the firm in a certain way. I also administered a survey to a separate panel of lawyers, to obtain their perceptions of the extent to which alternative arrangements differed from those of the dominant template. This data was used to calculate deviation measures for the recently-established firms. The results revealed that, despite the prevalence wi th which founders voiced disenchantment with the dominant template, 85% of their firms exhibited very little deviation from the normative form. Thus, it appears that most new entrants to a highly-institutionalized setting act primarily as agents of institutional perpetuation rather than entrepreneurship. The 15% that exhibited greater deviation tended to be headed by founders wi th less experience in the industry s most prominent organizations and by those who most strongly questioned the moral legitimacy of prevailing organizational arrangements. Experience in marginal organizations or other industries, as wel l as doubts about the dominant template s pragmatic legitimacy, were insufficient triggers of new entrant deviation. ii T A B L E O F C O N T E N T S Page A B S T R A C T i i T A B L E O F C O N T E N T S i i i L I S T O F T A B L E S v i i i A C K N O W L E D G E M E N T S ix C H A P T E R 1: S T U D Y I N G O R G A N I Z A T I O N A L C O N F O R M I T Y A N D D E V I A T I O N F R O M A N I N S T I T U T I O N A L P E R S P E C T I V E 1 1.1 RESEARCH TOPIC, RATIONALE, A N D QUESTIONS 1 1.2 OVERVIEW OF THE CONCEPTUAL FRAMEWORK 6 1.3 OVERVIEW OF THE EMPIRICAL INVESTIGATION 7 1.4 C O N C L U D I N G R E M A R K S O N T H E SETTING FOR THIS RESEARCH A N D ITS POSITIONING IN THE NEO-INSTITUTIONAL LITERATURE 9 C H A P T E R 2: E X P L A I N I N G N E W E N T R A N T C O N F O R M I T Y A N D D E V I A T I O N : A F O U N D E R - D R I V E N C O N C E P T U A L F R A M E W O R K 11 2.1 INTRODUCTION 11 2.2 TERMINOLOGY 13 2.2.1 A Definition of Organizational Form 13 2.2.2 A Definition of Deviation 15 2.3 T H E EXISTENCE OF P R E C E D E N T S : C O M M O N L Y - P E R C E I V E D D O M I N A N T T E M P L A T E S I N HIGHLY-INSTITUTIONALIZED SETTINGS 17 2.4 F O L L O W I N G P R E C E D E N T : T H E TENDENCY FOR NEW ENTRANTS TO C O N F O R M RATHER T H A N DEVIATE 18 2.5 F O L L O W I N G VERSUS B R E A K I N G WITH PRECEDENT: PREDICTING INSTITUTIONAL PERPETUATION A N D ENTREPRENEURSHIP 19 2.5.1 Overview 19 2.5.2 The Unconstrained Actor Argument for Challenging the Invariant Cognitive Legitimacy of the Dominant Template 20 2.5.3 A Disenchanted Actor Argument for Challenging the Invariant Pragmatic and Mora l Legitimacy of the Dominant Template 24 2.5.4 A Comparative Argument Regarding who w i l l be Most Likely to Break the Rules 29 2.6 SUMMARY 30 C H A P T E R 3: I D E N T I F Y I N G A N I N D U S T R Y S D O M I N A N T T E M P L A T E : M E T H O D O L O G I C A L P R O C E D U R E S A N D F I N D I N G S F R O M T H E B R I T I S H C O L U M B I A L E G A L P R O F E S S I O N 32 3.1 INTRODUCTION 32 iii 3.2 METHODOLOGY 32 3.2.1 Selection of the Legal Profession as the Focal Industry 32 3.2.2 Data Collection Methods '. 39 3.2.3 Determining the Relevant Features of the Dominant Template 40 3.3 RESULTS 44 3.3.1 Qualitative Findings Supporting the Nature of the Legal Profession s Dominant Template 44 3.3.2 The Quantitative Validation Procedure 52 3.3.3 Q U A N T I T A T I V E FINDINGS VERIFYING T H E D O M I N A N T TEMPLATE FOR THE BRITISH COLUMBIA L E G A L PROFESSION 53 3.4 SUMMARY A N D DISCUSSION 59 3.4.1 Strong Support for the Existence of Dominant Templates (Hypothesis 1) 59 3.4.2 The Sedimented Nature of the Dominant Template 59 3.4.3 Conclusion 63 C H A P T E R 4: C A L C U L A T I N G M U L T I D I M E N S I O N A L M E A S U R E S OF F O R M A N D D E V I A T I O N : A M E T H O D O L O G I C A L P R O T O C O L 65 4.1 INTRODUCTION 65 4.2 SAMPLING A N D D A T A COLLECTION PROCEDURES 65 4.2.1 Eligibility Criteria for Inclusion in the Sample 65 4.2.2 SAMPLING FRAME 66 4.2.3 Participating Firms and Founding Partners.. 67 4.2.4 Data Collection Methods 70 4.3 OPERATIONALIZING ORGANIZATIONAL FORM 71 4.3.1 Overview 71 4.3.2 Interpretive scheme 71 4.3.3 Structural Aspects 76 4.3.4 Decision systems 77 4.3.5 Human resource practices 77 4.3.6 Construct Validity Assessments 81 4.4 CALCULATING ORGANIZATIONAL DEVIATION 82 4.4.1 Overview 82 4.4.2 A Modified Consensual Assessment Technique for Obtaining Quantitative Deviation Weights 82 4.4.3 Calculating Difference Scores for Each Feature of Form 84 4.4.4 The Profile Analysis Technique for Calculating Global Deviation Measures 85 4.4.5 Construct Validation of the Overall Deviation Measures 86 4.5 SUMMARY 87 iv C H A P T E R 5: N E W E N T R A N T C O N F O R M I T Y A N D D E V I A T I O N I N A H I G H L Y - I N S T I T U T I O N A L I Z E D S E T T I N G : F I N D I N G S F R O M T H E B R I T I S H C O L U M B I A L E G A L P R O F E S S I O N 88 5.1 INTRODUCTION 88 5.2 L A W FIRM F O U N D E R S EXPERIENCES W I T H A N D INTERPRETATIONS OF T H E L E G A L PROFESSION S D O M I N A N T TEMPLATE 88 5.2.1 D o Founders i n a Highly-Institutionalized Setting Vary in their Socialization Experiences? 88 5.2.2 Do Founders in Highly-Institutionalized Settings Vary Their Interpretations of the Dominant Template? 90 5.3 D O N E W E N T R A N T S TO THE LEGAL PROFESSION TEND TO ACT AS INSTITUTIONAL PERPETUATORS OR INSTITUTIONAL ENTREPRENEURS? 97 5.3.1 Overview 97 5.3.2 A Mode-Matches-Norm Assessment 98 5.3.3 A Dispersion-of-Deviation-Scores Analysis 106 5.4 W H I C H N E W E N T R A N T S A R E T H E INSTITUTIONAL P E R P E T U A T O R S A N D W H I C H A R E THE INSTITUTIONAL ENTREPRENEURS? 109 5.4.1 Alternatives to the Unconstrained and Disenchanted Actor Explanations 109 5.4.2 The Effects of Founders Socialization Experiences and Contextual Interpretations on Overall Deviation I l l 5.4.3 Determinants of Deviation on the Separate Dimensions of Form 117 5.4.4 A Summary of the Effects of Founders Socialization Experiences and Contextual Interpretations 121 5.5 W H A T A R E T H E M I C R O - L E V E L MECHANISMS ASSOCIATED WITH S O C I A L I Z A T I O N EXPERIENCES A N D C O N T E X T U A L INTERPRETATIONS? 122 5.5.1 Mechanisms Postulated to Underlie the Unconstrained and Disenchanted Actor Perspectives 122 5.5.2 Measures of Knowledge and Motivation 123 5.5.3 Linking Experiences with Knowledge and Interpretations with Motivation 126 5.6 DISCUSSION 129 5.6.1 Variability in Founders Interpretations of the Dominant Template 129 5.6.2 The Predominance of N e w Entrant Conformity to Institutional Prescriptions 131 5.6.3 The Power of Prominent F i rm Experience in Perpetuating Institutional Prescriptions 132 V 5.6.4 T H E R O L E OF M O R A L L E G I T I M A C Y C O N C E R N S I N C R E A T I N G DEPARTURES F R O M INSTITUTIONAL PRESCRIPTIONS 133 5.6.5 The Independent Effect of Subjective Contextual Interpretations 134 5.6.5 Respective Micro-Mechanisms Associated wi th Socialization Experiences and Contextual Interpretations 135 5.6.7 Conclusion 136 C H A P T E R 6: I N V E S T I G A T I N G N E W E N T R A N T C O N F O R M I T Y A N D D E V I A T I O N I N T H E L E G A L P R O F E S S I O N : S O M E C O N C L U D I N G R E M A R K S 137 6.1 OVERVIEW 137 6.2 THE CONCEPTUAL FRAMEWORK A N D ITS CONTRIBUTIONS 137 6.3 CONTRIBUTIONS OF T H E FIRST P H A S E OF M Y E M P I R I C A L RESEARCH 139 6.3.1 Methodological Contributions 139 6.3.2 Theoretical Contributions 141 6.4 CONTRIBUTIONS OF T H E S E C O N D P H A S E OF M Y E M P I R I C A L RESEARCH 141 6.4.1 Methodological Contributions 141 6.4.2 Theoretical Contributions 144 6.5 LIMITATIONS 146 6.5.1 Limitations of M y Measure of the Dominant Template 147 6.5.2 Limitations of M y Measures of Organizational Form, Deviation, and Contextual Interpretations 148 6.5.3 Limitations of M y Sample 149 6.5.4 Limitations of M y Conceptual Framework 150 6.6 IMPLICATIONS A N D EXTENSIONS 151 6.7 CONCLUSION 152 R E F E R E N C E S 154 A P P E N D I C E S 162 A P P E N D I X 3.1: PANELIST QUESTIONNAIRE (FORMA) VALIDATION OF T H E N O R M A T I V E O R G A N I Z A T I O N A L F O R M FOR THE BC LEGAL PROFESSION 163 APPENDIX 3.2: SEMI-STRUCTURED INTERVIEW GUIDE 168 APPENDIX 4.1: INTRODUCTORY LETTER TO FOUNDERS 171 APPENDIX 4.2: TELEPHONE SCRIPT 172 A P P E N D I X 4.3: PRELIMINARY BACKGROUND QUESTIONNAIRE FOR NEW ENTRANTS 175 APPENDIX 4.4: INTERVIEW GUIDE 183 A P P E N D I X 4.5: PANELIST QUESTIONNAIRE (FORM B) BC L E G A L PROFESSION ORGANIZATIONAL F O R M DEVIATION ASSESSMENT 216 A P P E N D I X 4.6: D E V I A T I O N WEIGHTS FOR CATEGORICAL INDICATORS OBTAINED T H R O U G H THE SECOND PANELIST SURVEY 223 vi APPENDIX 4.7: ETHICS BOARD A P P R O V A L FORM 226 A P P E N D I X 5.1: C O N T E N T V A L I D I T Y ASSESSMENT OF T H E C A T E G O R I Z A T I O N S C H E M E FOR T H E FOUNDERS RATIONALES FOR DESIGNING THEIR FIRMS IN A CERTAIN W A Y 227 A P P E N D I X 5.2: RESULTS OF REGRESSION A N A L Y S E S E X A M I N I N G THE I N F L U E N C E OF F O U N D E R S SOCIALIZATION EXPERIENCES A N D C O N T E X T U A L INTERPRETATIONS O N THEIR FIRMS O V E R A L L EXTENT OF DEVIATION MEASURE 2A 228 A P P E N D I X 5.3: C O R R E L A T I O N S B E T W E E N T H E PREDICTORS A N D THE DIFFERENCE SCORES FOR THE FIFTEEN FEATURES OF FORM 229 v i i LIST OF TABLES Table 3.1: The Relevant Features of the Dominant Template for Organizing in the Legal Profession 42 Table 3.2: Qualitative Evidence from Mult iple Data Sources Supporting the Dominant Form for Law Firms 45 Table 3.3: Quantitative Evidence from the Panelist Survey Validating the Dominant Template for B.C. Law Firms 55 Table 3.4: The Sedimented Nature of the Currently-Dominant Template for the British Columbia Legal Profession 60 Table 4.1: Participant Versus Non-Participant Comparison 67 Table 4.2: Additional Descriptive Characteristics of Participating Firms 68 Table 4.3: Descriptive Statistics for the Interviewed Founding Partners 70 Table 4.4: Thematic Categories and Representative Interview Excerpts for the Firms Interpretive Schemes 73 Table 5.1: Variability in the Nature of Founders Socialization Experiences 89 Table 5.2: Thematic Categories, Interview Excerpts, and Descriptive Statistics for the Founders Reactions to Dubious Pragmatic and Moral Legitimacy 92 Table 5.3: A Mode-Matches-Norm Assessment of the Deviation Exhibited by New Entrants to the British Columbia Legal Profession 99 Table 5.4: A Dispersion-of-Difference-Scores Analysis of the Extent of New Entrant Deviation 108 Table 5.5: Control Variable Inclusion Analysis 110 Table 5.6: Correlation Matrix for the Control, Independent, and Dependent Variables 112 Table 5.7: Results of Regression Analyses Examining the Influence of Founders Socialization Experiences and Contextual Interpretations on their Firms Overall Extent of Deviation Measure 1 113 Table 5.8: Relative Effects of Founders Socialization Experiences and Contextual Interpretations on their Firms Overall Extent of Deviation Measure 1 117 Table 5.9: Results of Hierarchical Regression Analyses Examining the Influence of Founders Socialization Experiences and Contextual Interpretations on their Firms Extent of Deviation for each Dimension of Form 118 Table 5.10: Thematic Categories, Interview Excerpts, and Descriptive Statistics for the Founders Additional Rationales for Designing Their Firms in a Certain Way 124 Table 5.11: Correlation Matrix for the Explanatory Variables and Underlying Micro-Mechanism Indicators 128 viii A C K N O W L E D G E M E N T S I would like to dedicate this dissertation to my family. To my parents, Richard and Elaine, who demonstrated in a myriad of ways how their love and pride were not conditional upon the completion of this project. To my sister and brother, Al l i son and Jonathan, for the wonderful way they had of not asking detailed questions about the dissertation s content, process, or progress. A n d to my daughter, Emily, who, unbe-knownst to her at the time, helped me put the entire endeavour into its proper perspective. But most of all to my husband, John, who taught me, through the depth of his knowledge about the art of science, that you can t bui ld a paper mache whale all at once first you have to construct a wire skeleton of a single fin. I would also like to acknowledge the members of my support network, without whose assistance this research would not have been possible. M y mother-in-law, Carol, our first nanny, Connie, and our daughter s current group of caregivers, all of whom generously gave a young mother the most precious gifts of all time and sanity. Yoni , my first department chair, and the rest of my new colleagues at the University of A l -berta, for providing a welcoming and supportive environment conducive to finishing this project. But most of all my research assistant, editor, and computer consultant Jennifer, Erika, and Paul, respectively without whose expertise this dissertation would have easily taken at least another year to complete and without whose friendship I would have surely aged another ten. Finally, I would like to express the depth of my appreciation to each of my dissertation committee members. To Raffi, who, by founding the SSHRCC-funded Entrepreneurship Research Alliance at the University of British Columbia, provided not only the financial resources for this investigation but more importantly the opportu-nity to apprentice under more experienced researchers prior to conducting a scientific study of my own. To Howard , for being the role model for the type of scholar I truly aspire to a scholar deeply passionate about listening to and nurturing the ideas of others. To Dev, who, through his interest in my academic development, assumed numerous roles throughout the life of this endeavour from being the muse behind the study s theoretical perspective, to proposing a variety of interesting analytic techniques, to supporting my decision to find a better venue for completing the project. But most of all to my dissertation chair, Nancy, whose methodological brilliance helped me resolve the actual technical difficulties that arose during the process and whose empathy, i x ethic of care, and commi tmen t to m y g r o w t h as an i n d i v i d u a l he lped me see the h u -m o u r i n the imag ina ry catastrophes that I had created a long the w a y . I d o n t bel ieve that I c o u l d have asked for a better g roup of mentors to suppor t and gu ide me o n this incredib le journey. C H A P T E R 1 : S T U D Y I N G O R G A N I Z A T I O N A L C O N F O R M I T Y A N D D E V I A T I O N F R O M A N I N S T I T U T I O N A L P E R S P E C T I V E 1.1 R E S E A R C H T O P I C , R A T I O N A L E , A N D Q U E S T I O N S One of neo-institutional theory s central insights, and perhaps most influential contribution to the field of organizational analysis, is that organizations exist in an institutional environment that defines and delimits social reality (Scott, 1987: 507). A particularly important constraint of these institutional environments is the existence of prescribed frameworks or templates for organizing ( DiMaggio & Powell , 1991: 28) configurations of organizational structures, systems, and practices that have come to be accepted as the appropriate, taken-for-granted, rule-like means for accomplishing business activities (Meyer & Rowan, 1977; Scott & Meyer, 1994). Neo-institutionalists argue that organizations tend to adopt these institutional prescriptions in response to powerful coercive, normative, and mimetic isomorphic pressures (DiMaggio & Powell , 1983) regardless of whether the prescribed organizational arrangements are of any economic value (Meyer & Rowan, 1977; Scott & Meyer, 1994). Non-adoption is either unthinkable (Zucker, 1977) or detrimental to an organization s legitimacy and survival prospects (Meyer & Rowan, 1977; DiMaggio & Powell , 1983). Thus, over time, organiza-tions come to exhibit structural homogeneity an implication supported by many notable empirical investigations of the diffusion of administrative innovations (e.g., Baron, Dobbins & Jennings, 1986; Fligstein, 1985; Tolbert & Zucker, 1983). Although neo-institutionalism has generated an impressive corpus of theoretical and empirical work, and has become one of the dominant paradigms in organizational analysis, it has definitely not gone unchallenged. Some have criticized neo-institutional research for failing to empirically establish the validity of its fundamental assumptions (e.g., Donaldson, 1995; Hirsch, 1997; Hirsch & Lounsbury, 1997; Oliver, 1991,1992). One such assumption that has received surprisingly little research attention is the asserted existence of contextually-prescribed templates for organizing. Very few neo-institutionalists have explicitly examined whether institutional environments do, in fact, contain configurations of organizational structures, systems, and practices that are widely understood and normatively sanctioned. Two important exceptions include Greenwood & Hinings (1993) investigation of the British municipal government sector l and their subsequent research on the Canadian legal profession (Cooper, Hinings, Greenwood & Brown, 1996). In both studies, these researchers found that their focal institutional environments contained two idealized organizational archetypes. How-ever, a close examination of their work reveals that these idealized archetypes can most accurately be described as the researchers perceptions of the rules for organizational design in these institutional settings. Neither investigation systematically assessed the extent to which these observer-derived archetypes were commonly perceived by the actual actors within the focal contexts. Neo-institutionalists have also been loudly criticized for their over-emphasis on organizational homogeneity and consequent lack of attention to structural heterogene-ity particularly amongst organizations facing the same institutional environment (e.g., Donaldson, 1995; Powell, 1991; Oliver, 1991, 1992). According to Hirsch & Lounsbury, scholars of neo-institutionalism have historically relegated organizations that deviate from the norm as error terms and noise that can simply be ignored rather than having to be explained (1997: 80). The costs of doing so are well-articulated in Hirsch & Lounsbury s emphatic plea for greater theoretical and empirical attention to organiza-tions that depart from, as well as conform to, institutional prescriptions: Although we may believe we have developed generalizable knowledge with elaborate models that explain 30% of the variance, the unexplained portion could still invalidate what we thought we had shown. We must actually investigate and explain variation, not just use sophisticated statistical controls or fall back on assertion to simply rule out its importance (1997: 86). Admit t ing the potential for organizational variation to develop within the con-fines of existing institutions, and investigating the extent to which organizations in a focal institutional milieu exhibit structural isomorphism, w i l l contribute to resolving the much-debated but empirically under-explored question of whether organizations tend to exhibit startling homogeneity (DiMaggio & Powell , 1983: 148) or remarkable heterogeneity (Donaldson, 1995: 126). The existing studies that have explicitly a d-dressed this issue provide contradictory results. Oliver s (1988) study of voluntary social service firms, for example, revealed that the degree of goal multiplexity, speciali-zation, centralization, and formalization of these organizations exhibited diversity rather than similarity. As a result, Oliver concludes that the environment is not highly deterministic in shaping organizational characteristics (1988: 543). In contrast, the findings of Greenwood & Hinings investigation of British municipal government agencies, although not quite so clear-cut, led these researchers to conclude that organi-zations tend to operate wi th structures and systems that approximate [contextually -2 prescribed] archetypes (1993: 1073). Thus, it appears that further empirical research is necessary to determine the predominance with which organizations adhere to or depart from institutional prescriptions. Neo-institutionalists have also been criticized for weakness in exploring the endogenous, micro-level mechanisms that are postulated to maintain exogenous, macro-level institutionalized arrangements (e.g., DiMaggio & Powell , 1991; Greenwood & Hinings, 1996; Hirsch & Lounsbury, 1997; Tolbert and Zucker, 1996). Although such processes are often explicated in considerable conceptual detail, they are rarely explic-itly examined. A s a result, the findings from many empirical investigations of neo-institutionalism are open to alternative interpretations although these studies may reveal that a relationship exists between certain constructs, the observed association may be attributable to reasons other than the institutional mechanisms articulated in their conceptual frameworks (e.g., Donaldson, 1995; Scott, 1995; Westphal, Gulati & Shortell, 1997). For example, in the conclusion to her own investigation of mimetic isomorphism in the acquisition activities of organizations, Haunschild (1993) cautioned that her findings do not lend unequivocal support for institutional theory; although imitation may have been undertaken to increase legitimacy, it could also reflect interor-ganizational learning, a strategic response to competitor activities, or a response to uncertainty. Because of their focus on organizational homogeneity, neo-institutionalists have historically been particularly weak in explaining, let alone testing, the related issues of why certain organizations do not completely adhere to contextually-prescribed ar-rangements and how alternative ideas for organizing emerge that is, the acts of institutional entrepreneurship that may ultimately contribute to changes in, or the erosion of, existing institutional prescriptions (Greenwood & Hinings, 1996; Hirsch & Lounsbury, 1997; Oliver, 1991, 1992; Tolbert & Zucker, 1996). The recent theoretical expositions of Oliver (1991,1992) and Greenwood & Hinings (1996) represent initial and important efforts to correct for this oversight of the neo-institutional literature. In the first essay, for example, Oliver outlined how organizational behavior may vary from passive conformity to active resistance in response to the nature and context of the [institutional] pressures themselves (1991: 146). In her subsequent essay, Oliver (1992) delineated an extensive set of exogenous and organizational factors that can potentially induce deinstitutionalization; that is, the erosion or discontinuance of previously-legitimated organizational arrangements. Similarly, in a more recent essay, Greenwood & Hinings postulated the precipitating and enabling dynamics by which individual 3 organizations retain, adopt, and discard templates for organizing (1996: 1022). A l l of these theoretical expositions, however, have implicitly placed the locus of non-conformity in the existing members of an organizational population. A s such, they have overlooked another likely source of institutional entrepreneurship namely, newly-established firms. Similarly, although Oliver (1991, 1992) and Greenwood & Hinings (1996) espoused the role of active human agency, and included such factors as inter-group dissensus in their conceptual frameworks, they have nevertheless over-looked plausible individual-level determinants of organizational non-compliance. Conceptually, new entrants represent particularly intriguing subjects for an investigation of organizational compliance wi th and deviation from contextually-prescribed templates for organizing. O n the one hand, some argue that new entrants are especially likely to perpetuate existing institutional prescriptions, given their concern wi th establishing legitimacy in order to overcome the liability of newness (e.g., Dacin, 1997). O n the other hand, others argue that new entrants are particularly likely sources of institutional entrepreneurship, their shorter histories contributing to less understand-ing of and/or commitment to prevailing structures, systems, and practices (Kraatz & Moore, 1998; Kraatz & Zajac, 1996; Leblebici, Salancik, Copay & King , 1991; Powell , 1991). This theoretical tension calls for an empirical resolution. As of yet, however, there have been few systematic investigations of new organizational entrants in neo-institutional literature a notable exception being Dacin s (1997) investigation of Fin-nish newspaper foundings. In addition to this systematic lack of attention to new entrants, the collective work of neo-institutionalists exhibits a parallel under-emphasis on organizational leaders. Although this lacuna is not surprising given these scholars emphasis on ex-ogenous macro-structures, Staw & Sutton (1993) have presented a strong case for the inclusion of individual-level variables in analyses of organizational phenomena. A d -dressing neo-institutionalists in particular, Scott has argued that individuals need to be explicitly recognized because contextually-prescribed scripts exist not only in the wider environment as widely held beliefs but also as ideas or values in the heads of organizational actors (1995: 53). Despite these arguments, new institutionalists have been slow to incorporate individual-level variables in their conceptual models and empirical investigations. Kraatz & Moore s (1998) study of the impact of executive migration on the adoption of alternative organizational arrangements represents a noteworthy exception. Although these researchers found support for the effect of individual-level considerations, their focus was limited, however, to the objective 4 nature of an organiza t ional leader s b a c k g r o u n d experience (i.e., whether the executive h a d migra ted f rom a per iphera l o rganiza t ion w i t h i n the focal ins t i tu t ional f ie ld or f rom another f ie ld altogether) 1 . In add i t i on to the nature of their b a c k g r o u n d experiences, leaders subjective interpretations of an indus t ry s prescr ibed template for o rgan iz ing appears to represent another po ten t ia l ly -powerfu l , i n d i v i d u a l - l e v e l determinant of an organiza t ion s extent of conformi ty or devia t ion . E v e n though ins t i tu t ional ly- legi t imated structures and practices are, b y def ini t ion, those that are w ide ly -unde r s tood b y organiza t iona l actors, H i r s c h & L o u n s b u r y have argued that there w i l l be some i n d i v i d u a l s for w h o m these rules are not so comprehensible or taken for granted (1997: 85). Besides d i f fer ing i n terms of wha t they know about p r e v a i l i n g organiza t iona l arrangements, o rganiza t iona l actors are also l i ke ly to va ry w i t h respect to h o w they feel about them. Some are l i k e l y to feel that exis t ing ins t i tu t ional ized practices are of questionable funct ional u t i l i t y (e.g., O l i v e r , 1991, 1992). Others are l i ke ly to feel that cus tomary structures, systems and practices are unfair and unjust even though they are commonly -unde r s tood and wide ly -p rac t i ced (e.g., G r e e n w o o d & H i n i n g s , 1996; M a r t i n , 1993). A l t h o u g h these observations i m p l y a possible conceptual f ramework for unders tand ing of h o w conte x-tua l pressures are interpreted and acted u p o n b y organiza t ional actors (Greenwood & Hinings,1996: 1024), such a f ramework does not appear to exist as of yet i n the neo-ins t i tu t ional li terature at least w i t h respect to the effect of these subjective percept ions o n n e w entrant conformity and devia t ion . This dissertat ion represents an effort to address the above gaps i n and cr i t ic isms l ev i ed against the neo-inst i tut ional literature. In par t icular , this research examines the role of o rgan iza t iona l founders objective soc ia l iza t ion experiences a n d subjective contextual interpretations i n de te rmin ing whether and w h y var ia t ion i n the forms of n e w entrants can develop w i t h i n the confines of a h igh ly- ins t i tu t iona l i zed setting. M o r e specif ical ly, m y w o r k strives to answer the f o l l o w i n g three questions: 1) do c o m m o n l y -unders tood templates for o rgan i z ing exist i n h igh ly- ins t i tu t iona l ized environments? ; 2) to wha t extent do n e w organiza t ional entrants c o m p l y to or depart f rom these ins t i tu-t ional prescript ions; and , 3) w h y do some n e w entrants conform w h i l e others deviate? 1 A corresponding emerging interest in the prior experience of organizational leaders can be found in the organizational ecology literature (e.g., Boeker, 1988,1997; Carroll, 1993; Romanelli, 1989). 5 1.2 O V E R V I E W O F T H E C O N C E P T U A L F R A M E W O R K In Chapter 2, I present my conceptual framework regarding the existence of commonly-understood organizational templates in a highly-institutionalized setting, the extent to which new entrants will conform to these institutional prescriptions, and the determinants of adherence and non-compliance. Before doing so, however, I define two of the more complex constructs that are the focus of my investigation organiza-tional form and deviation. With respect to the concept of organizational form, I adopt Greenwood & Hinings (1993) comprehensive yet parsimonious four-dimensional definition, conceptualizing this construct as the configuration of a firm s structural aspects, decision systems, human resource practices, and interpretive scheme (i.e., its system of values and beliefs). I depart, however, from their more taxonometric measure of deviation, in which an organization is categorized as either congruent with institu-tional prescriptions or not, by emphasizing the need for continuous measures of deviation that capture variation along the multiple dimensions of form. As Westphal and his colleagues have observed, neo-institutionalists in general tend to treat organiza-tional conformity as a discrete phenomenon even though the classification of adoption as an either -or proposition is somewhat arbitrary (1997: 367; see also Oli ver, 1991). I begin my series of propositions by posing the existence of consensually agreed-upon, rule-like scripts for organizing in highly-institutionalized settings as a founda-tional hypothesis of my investigation rather than as a fundamental yet untested assumption underlying my work. I then turn to the rhetorical debate and seemingly contradictory empirical findings regarding the tendency of new organizational entrants to act primarily as agents of institutional perpetuation (e.g., Dacin, 1997) versus institu-tional entrepreneurship (e.g., Kraatz & Moore, 1998; Kraatz & Zajac, 1996; Leblebici et al., 1991; Powell, 1991). Drawing on Low & Abrahamson s (1997) essay on organiza-tional imitation versus innovation, which appears in the entrepreneurship literature, I propose that most but not all new entrants to a highly-institutionalized setting will exhibit little deviation from the prescribed organizational framework. Finally, I present two complementary arguments for the role that founders objective socialization experiences and subjective contextual interpretations play in shaping the extent of deviation exhibited by their firms: I term these the uncon-strained actor perspective and disenchanted actor perspective, respectively. For guidance in formulating these arguments, I draw heavily upon the legitimacy typolo-gies of Aldrich (1999), Aldrich & Fiol (1994), and Suchman (1995). More specifically, in developing the unconstrained actor perspective, I question whether as a result of 6 differences in their socialization experiences organizational founders invariably perceive an industry s prescribed framework for organizing as cognitively legitimate. Likewise, in developing the disenchanted actor perspective, I question whether foun-ders invariably perceive prevailing organizational arrangements as pragmatically and morally legitimate. I then draw implications for the extent of deviation likely exhibited by their newly-created firms. In sum, the essence of my argument is that although highly-institutionalized settings may contain templates for organizing that are commonly understood, this does not necessarily imply that these prescriptions are invariably considered by organiza-tional founders to possess cognitive, pragmatic, and/or moral legitimacy nor that these prescriptions w i l l be reproduced in their entirety in the firms established by these individuals. Founders differential experiences with and interpretations of an industry s prevailing organizational arrangements may help explain the extent to which their organizations conform to or depart from the prescribed framework for organizing. 1.3 OVERVIEW OF THE EMPIRICAL INVESTIGATION In Chapter 3, I present the methodology and results for the first phase of my empirical investigation testing the foundational hypothesis that highly-institutionalized industries contain contextually-legitimated templates for organizing. Although the existence of such institutional prescriptions is widely asserted by neo-institutionalists (e.g., Cooper et al., 1996; DiMaggio & Powell , 1983; Greenwood & Hinings, 1988, 1993; Meyer & Rowan, 1977; Scott & Meyer, 1994), there have been very few empirical investigations that examine the validity of this assumption. Prior to presenting my findings, I describe the novel two-step methodological procedure that I developed for identifying and then verifying the nature of an industry s institutional-ized organizational framework. The identification component involves distilling the characteristic features of such frameworks from qualitative data obtained through multiple sources, using a blend of theory-based deduction and empirically-grounded induction. The validation component involves collecting quantitative data through a survey administered to a panel of practitioners within the focal setting. In Chapter 4, I describe my methodology for calculating multidimensional measures of both organizational form and deviation. More specifically, the first half of this chapter is dedicated to how I collected contextually-relevant, yet theoretically-consistent, indicators tapping fifteen features of organizational form. These include 7 indicators of the values and beliefs of a firm s interpretive scheme measures that to-date have been collected primarily through case study research (e.g., Bartunek, 1984; Cooper et al., 1996). Although most neo-institutionalists appear to conceptualize organ-izational form in multivariate terms, the majority of their empirical research is based on unidimensional or bivariate operationalizations. For example, the oft-cited administra-tive innovation adoption studies conducted by Baron et al. (1986) and Tolbert & Zucker (1983) examined the spread of specific personnel policies, while those conducted by Fligstein (1985) and Palmer, Jennings, & Zhou (1993) focused on the structural aspect of divisionalization. A similar lack of multidimensionality can be found in Eisenhardt s (1988) investigation of compensation practices in retail firms, Haveman s (1993) exami-nation of diversification in savings and loan associations, and Tolbert s (1985) study of differentiation in colleges and universities. Oliver s (1988) investigation of the goals, specialization, centralization, and formalization of voluntary social service organiza-tions is a noteworthy exception; however, each of these attributes of organizational form was analyzed separately. In the latter half of this chapter, I describe the novel methodological protocol that I developed for calculating an organization s deviation from institutionally-prescribed templates for organizing. This procedure involves collecting independent, quantitative deviation weights from a panel of industry practi-tioners through an adaptation of Amabile s (1982) consensual assessment technique; aggregating these scores into a set of Euclidian distance indices of overall similarity; then validating the global indices against measures of overall deviation collected through other sources and methods. This protocol results in continuous, construct-validated measures of deviation based upon a multidimensional operationalization of organizational form. In Chapter 5,1 present my analytical procedures and results regarding whether and why new entrants to a highly-institutionalized setting tend to conform to or depart from the prescribed template for organizing and thereby act primarily as agents of institutional perpetuation or institutional entrepreneurship, respectively. Prior to doing so, I describe my measures and findings for founders subjective perceptions of prevail-ing prescriptions. A s Greenwood & Hinings (1996) have noted, the neo-institutional literature currently lacks systematic investigations of how organizational actors inter-pret and subsequently react to contextual pressures. I then describe and present the findings from the two analytical procedures that I developed for examining the extent of new entrant conformity. Both of these techniques examine the distribution of devia-tion scores for the sampled firms rather than simply the mean amount of departure from the institutionally-prescribed framework for organizing. Organizational theorists 8 in general, and neo-institutionalists in particular, have been criticized for their focus on measures of central tendency rather than on the variability (e.g., Hirsch & Lounsbury, 1997; Pinder & Moore, 1979). I then present my findings regarding the effect of foun-ders socialization experiences and contextual interpretations on the amount of deviation exhibited by their firms. I intersperse interview excerpts throughout the interpretation of my statistical results so as to provide a more holistic portrayal of the phenomenon of new entrant conformity and deviation in a highly-institutionalized setting. Finally, I conduct additional analyses to examine the micro-mechanisms postu-lated to underlie the relationships between founders socialization experiences and contextual interpretations and the amount of deviation exhibited by their firms. Neo-institutionalists have been criticized for explicating such mechanisms in considerable conceptual detail yet rarely examining them empirically (e.g., Donaldson, 1995; Hirsch, 1997; Hirsch & Lounsbury, 1997). Kraatz & Moore (1998) certainly are not alone in this tendency, but their study of the link between executive migration and institutional change does provide an illustrative example. These researchers formulated an impres-sive theoretical argument for why leaders wi th certain types of prior organizational experiences w i l l be more inclined to introduce controversial changes in their institutions delineating and describing such processes as knowledge transfer and interorganiza-tional learning, the introduction of new mental models and assumptions, and the attenuation or replacement of institutional values. Yet these mechanisms were not measured in the empirical research subsequently reported in their article. The qualita-tive methodology employed in my dissertation research allows me to provide some insights into the validity of the micro-level mechanisms underlying my conceptual arguments. 1.4 CONCLUDING REMARKS O N THE SETTING FOR THIS RESEARCH A N D ITS POSITIONING IN THE NEO-INSTITUTIONAL LITERATURE This research is set in the Canadian legal profession a particularly intriguing context for an investigation of whether and why new organizational entrants tend to act primarily as agents of institutional perpetuation versus institutional entrepreneurship. Two aspects of this setting make it particularly appropriate for a study of this nature. First, although law firms clearly represent organizations that are highly infused with value (Selznick, 1957), they have been relatively overlooked rather ironically as a context for building and testing neo-institutional theory. Notable exceptions include the work of Cooper et al. (1996) and Tolbert (1988) on law firms per se as wel l as the work of Edelman and Suchman on the intersection of neo-institutional theory and the study of law and legal environments (e.g., Edelman, 1995; Edelman & Suchman, 1997; Such-man, 1997; Suchman & Edelman, 1996). Second, although highly-institutionalized (Galanter & Palay, 1991), the legal profession is currently in the midst of a profound transition (Cooper et al., 1996; Galanter & Palay, 1991; Hagan & Kay, 1995) character-ized by increasing disenchantment with prevailing organizational and managerial practices (Brockman, 1990; Hagan & Kay, 1995). This second aspect renders the ques-tion of whether organizational founders are able to overcome the powerful isomorphic pressures of this industry, and translate their disillusionment into the creation of organ-izational arrangements that depart from institutional prescriptions, especially timely and interesting at this point in the legal profession s history. In sum, this dissertation questions both whether contextually-prescribed tem-plates for organizing exist as shared typifications (DiMaggio & Powell , 1991: 15) even in a highly-institutionalized setting and whether these typifications tend to be viewed by organizational founders as impersonal prescriptions (DiMaggio & Powell , 1991: 15) that are subsequently reproduced in their newly-established firms in the passive and taken-for-granted manner emphasized in new institutionalism. In sum, by treating new entrant conformity and deviation as equally-important phenomenon to be investigated and explained and by emphasizing individual-level mechanisms driven not only by cognitions but also by interests, values, and emotions this research strives to make at least a minor contribution to Hirsch & Lounsbury s (Hirsch, 1997; Hirsch & Lounsbury, 1997) vision of a more inclusive and integrated institutional perspective. 10 C H A P T E R 2: E X P L A I N I N G N E W E N T R A N T C O N F O R M I T Y A N D D E V I A T I O N : A F O U N D E R - D R I V E N C O N C E P T U A L F R A M E W O R K 2.1 I N T R O D U C T I O N By posing the startling homogeneity of organizational forms (DiMaggio & Powell , 1983: 148) as the central issue to be addressed by organizational scholars and emphasizing powerful external pressures as the primary determinants there is no question that neo-institutionalism has had a major influence on the direction of organ-izational research over the past two decades. Nevertheless, several critics have vociferously attacked this theoretical paradigm for its over-emphasis on both organiza-tional conformity and environmental determinism (e.g., Donaldson, 1995; Hirsch, 1997; Oliver, 1991, 1992; Perrow, 1985). Most recently, Hirsch & Lounsbury have argued that neo-institutionalists must actually investigate and explain variation, not just use sophisticated statistical controls or fall back on assertion to simply rule out its impor-tance (1997: 86). These scholars further assert that greater attention needs to be paid to micro-level mechanisms particularly to the issues of intentionality, interests, and values that were emphasized in the old institutionalism. The overarching objective of this chapter is to develop such an explanation for the extent of deviation exhibited by new organizational entrants to a highly-institutionalized industry. I start by providing a definition of deviation that is capable of capturing the fundamental complexity of organizational form. With their emphasis on institutionally-prescribed templates for organizing (DiMaggio & Powell , 1991: 28), neo -institutionalists appear to conceptualize organizational form in multidimensional terms. Their empirical measures, however, have tended to be unidimensional in nature, with studies focusing on such aspects as specific personnel policies (e.g., Baron et al., 1986; Eisenhardt, 1988; Tolbert & Zucker, 1983), divisionalization (e.g., Fligstein, 1985; Palmer et al., 1993), diversification (e.g., Haveman, 1993), and differentiation (e.g., Tolbert, 1985). N e w institutionalists have also tended to view conformity in a similarly simpli-fied manner, typically measuring whether or not a particular administrative innovation is adopted rather than variation in the extent of adoption a concern raised by Oliver (1991) and Westphal et al. (1997). In the first section of this chapter, I present definitions 11 of organizational form and deviation that are more compatible with the inherently multidimensional nature of these constructs. The second section of this chapter examines the extent to which institutionally-prescribed means for accomplishing business activities are likely to be commonly understood by both observers of, and actors within, a highly-institutionalized industry. Rather than simply asserting that such settings contain consensually agreed-upon, rule-like scripts regarding appropriate organizational, structures, and practices (e.g., DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Scott & Meyer, 1994; Zucker, 1977), I pose this fundamental assumption as a foundational hypothesis warranting empirical validation. In doing so, I attempt to address the criticism that neo-institutionalists have tended to be weak in investigating the validity of the basic premises underlying their theoretical assertions (e.g., Donaldson, 1995; Hirsch, 1997; Hirsch & Lounsbury, 1997; Oliver, 1991, 1992). In the third section, I turn to the question of whether newly-established firms w i l l be more likely to conform to or deviate from an industry s institutionally-prescribed template for organizing. Although neo-institutionalism presents a compel-ling theoretical case in favour of new entrants as reproducers of prevailing prescriptions, some empirical findings support the view that these organizations repre-sent a critical source of institutional change. Leblebici and his colleagues, for example, found that radically new practices in the U.S. radio broadcasting industry tended to be introduced by the newer and/or less powerful participants on the fringe of this institutional setting (1991: 358). A s a potential resolution to this issue, I draw upon L o w & Abrahamson s (1997) essay on movements, bandwagons, and clones, which appears in the entrepreneurship literature. I devote the fourth section to developing a conceptual framework for explaining which new entrants w i l l tend to act as institutional perpetuators and which w i l l tend to act as institutional entrepreneurs. In order to understand why firms respond in differ-ent ways to the same set of contextual pressures, several scholars (e.g., Greenwood & Hinings, 1996; Oliver, 1991,1992; Zucker, 1983) have argued that attention must be paid to mtra-organizational factors. A particularly important intra-organizational factor in the case of new entrants is the role of organizational founders (Staw & Sutton, 1993). I focus on two aspects of founders in my explanation: the objective nature of their so-cialization experiences and the subjective nature of their interpretations of an industry s institutional prescriptions. Although Kraatz & Moore (1998) and Greenwood & Hinings 12 (1996) have respectively postulated these factors as potential drivers of institutional change, they have been relatively under-explored thus far in the neo-institutional literature particularly in the context of newly-established firms. Thus, the fourth section of this chapter represents an effort to address this gap. 2.2 TERMINOLOGY 2.2.1 A Definition of Organizational Form Organizational form is a difficult concept to define as evidenced by the variety of definitions that abound in the broader organizational literature (see, for example, those provided by Aldr ich , 1979; Hannan & Carroll , 1995; Greenwood & Hinings, 1993; Hannan & Freeman, 1977, 1984,1989; McKelvey, 1982). What these different definitions tend to share, however, is a configurational orientation to organizational analysis (e.g., Meyer, Tsui & Hinings, 1993; Ketchen et al., 1997). A configurational approach concep-tualizes organizational form holistically as a basic pattern or template for organizing (DiMaggio & Powell, 1991; Hannan & Freeman, 1977; Van de Ven & Drazin, 1985), or, more specifically, as a multidimensional constellation of conceptuall y distinct charac-teristics that commonly occur together (Meyer et al., 1993, 1175). It is in the specification of these constituent characteristics that the various definitions of organiza-tional form tend to differ. Pinder & Moore identified this problem two decades ago, when they stated that a major challenge of organizational analysis at the time lay in the selection of the parameters to be employed in capturing the multidimensionality of organizational similarity and difference (1979:108). Hannan & Carroll circumvent this difficulty by defining organizational form as the core properties that make a set of organizations ecologically similar (1995: 29), without specifying the exact nature of these core properties. It is my opinion that the core properties of organizational form should be specified by researchers a priori albeit in a manner broad enough to allow for context-specific operationalizations of these primary parameters. Greenwood & Hinings (1993) definition possesses these characteristics. These scholars have noted a growing consensus around three essential dimensions of organizational form 2: the structure of a firm s roles and responsibilities, the nature of its decision systems, and the character of its human resource practices. To 2 It should be noted that Greenwood & Hinings (1993) actually used the term organizational design rather than organizational form; however, they did acknowledge the conceptual similarity of the two terms. 13 these three consensually-derived dimensions Greenwood & Hinings have added a fourth derived from their earlier work (Ranson, Hinings & Greenwood, 1980; Green-wood & Hinings, 1988): a firm s interpretive scheme. A n interpretive scheme is defined as the set of values and beliefs that underpin and embody the more observable aspects of organizational form. I use Greenwood & Hinings (1993) definition of organizational form in this dissertation primarily because of its conceptual merits merits that relate both to what is included in, and excluded from, their definition. By including decision systems and human resource practices, Greenwood & Hinings explicitly and appropriately acknowl-edge that the structural characteristics that have traditionally been emphasized in organizational classification such as the extent of differentiation, formalization, and integration are not the definitive dimensions of form. A complete definition of organ-izational form includes the processes and systems that connect and activate structural frameworks (Greenwood & Hinings, 1993: 1054). This inclusion of decision systems and human resource practices is consistent wi th parallel definitions of form found in the work of organizational ecologists and evolutionary theorists, which refer not only to an organization s formal structure but also to its characteristic activity patterns (e.g., Aldr ich , 1979; Hannan & Freeman, 1977). Greenwood & Hinings (1993) definition differs from those provided by some organizational ecologists, however, in its exclusion of attributes that are arguably more appropriately labeled as the function rather than the form of an organization. These include such attributes as a firm s goals and marketing strategy (e.g., Hannan & Free-man, 1984, 1989). This distinction between form and function is consistent with that purported by evolutionary theorists who conceptualize organizational form as the internal structures, processes, and interrelationships that contribute to the unity of the whole of the organization and to the maintenance of its characteristic activities, func-tion, or nature (McKelvey & Aldr ich , 1983: 110). This distinction is also consistent wi th the insights of Boeker (1988), Kimberly (1980), and Schein (1983), who have suggested that founders make two separate sets of decisions when designing their organizations: decisions about what the organization should be and do (i.e., its function), and deci-sions about the structure of work and internal social control (i.e., its form). A further merit of Greenwood & Hinings (1993) definition is the inclusion of a firm s interpretive scheme the system of values and beliefs that underpin the more observable dimensions of organizational form. A s noted by these scholars, the inclusion 14 of the interpretive scheme builds on the notion that structures and systems are not neutral, disembodied attributes of organizations but reflect intentions, aspirations, and purposes. Schein (1983) demonstrated this quite v iv id ly in his description of how the theories, assumptions, and values of organizational founders became manifest in the structure, decision-making style, and reward and control systems of their firms. Simi-larly, Bartunek s (1984) case study of a religious order s transformation clearly showed how fundamental changes in the order s interpretive scheme were linked to organiza-tional restructuring. In addition to suggesting that interpretive schemes underlie structures and practices, Greenwood & Hinings (1993) further argued that these value and belief systems lend coherence to the pattern of a firm s observable aspects, thereby providing a useful starting point for the classification of different organizational forms (1993:1055). In addition to its conceptual merits, Greenwood & Hinings (1993) definition possesses a number of desirable methodological implications. For one, Greenwood & Hinings (1993) definition contains multiple dimensions, most capable of being further subdivided into component features. This multidimensional nature should help ensure that the resultant measure of organizational form is commensurate with the fundamen-tal complexity of this construct (Pinder & Moore, 1979:102). The definition also contains a parsimonious number of dimensions, the majority of which are commonly under-stood by organizational theorists: both qualities should aid in the interpretation and generalization of the results (Pinder & Moore, 1979: 109). A t the same time, however, the dimensions are not so narrowly defined that researchers are restricted in their ability to develop field-specific operationalizations. Latitude in inductively developing contextually meaningful measures is important in that it helps to foster real unde r-standing of what the units have in common (Pinder & Moore, 1979:110). 2.2.2 A Definition of Deviation Having addressed the issue of what dimensions the new entrants w i l l be com-pared on (i.e., their interpretive schemes, structural aspects, decision systems, and human resource practices), I turn now to the question of what they w i l l be compared to. Rather than focus on the extent to which they differ from one another as was the case in Oliver s (1988) investigation of homogeneity versus heterogeneity I emphasize the degree to which newly-established firms depart from an industry s prevailing organiza-tional arrangements. More specifically, I define a new entrant s degree of deviation as the multivariate extent to which its structural aspects, decision systems, human re-15 source practices, and interpretive scheme differ from those of an industry s commonly-perceived dominant template for organizing. Several aspects of this definition warrant further elaboration. First, I adopt an institutional rather than an ecological interpretation of an indus-try s dominant template for organizing; that is, I conceptualize this construct as the configuration of organizational design elements that is commonly perceived to charac-terize the prominent organizations in an institutional setting rather than that which is exhibited by the majority of firms. Prominent organizations are those that comprise the core of an industry: they are the central and influential organizations that tend to impose models for organizing upon others, whether directly through the use of power or indirectly through the socialization of newcomers and the encouragement of imita-tion (DiMaggio & Powell , 1983). These prominent organizations may or may not represent the majority of firms in an organizational population. Second, I have deliberately emphasized the perceptual nature of an industry s dominant template for organizing. A s neoinstitutionalists have stressed, contextually-prescribed scripts are social constructions common understandings that have become so ingrained that they reflect a rule-like status (e.g., DiMaggio & Powell , 1991; Meyer & Rowan, 1977; Scott & Meyer, 1994; Zucker, 1977). However, Greenwood & Hinings (1993) have noted that in practice, organizations approximate these institutionally-prescribed templates to a greater or lesser extent. In keeping wi th the socially-constructed nature of an industry s dominant template, I focus on that which is com-monly perceived by observers of and actors in an institutional setting rather than that which is actually enacted in practice by its most prominent organizations. Although it may be argued that my notion of a commonly-perceived dominant template is identical to Greenwood & Hinings (1988, 1993) notion of an organizational archetype, I believe that the two constructs are conceptually distinct. Greenwood & Hinings define an archetype as an idealized template for organizing that exhibits inter-nal coherence; that is, as a set of structures and systems that reflects a single interpretive scheme (1993: 1052). I focus instead on the template that is widely unde r-stood within an institutional setting at a given point in time whether this commonly-perceived dominant configuration can be considered archetypal, in the sense of exhibit-ing internal congruence with a single interpretive scheme, or not. Moreover, my notion of a dominant template emphasizes that this organizational configuration is widely understood by both observers of and actors within an institutional setting: an em-16 phasis not evident in Greenwood & Hinings (1988, 1993) notion of an organizational archetype. Finally, my work differs from that of these scholars in stressing the multidimen-sional nature of organizational deviation. By classifying organizations as within an archetype if all of its structures and systems [are] consistent with the theoretical tem-plate (199 3: 1068), Greenwood & Hinings implicitly define non-conformity in dichotomous terms: an organization either conforms to the dominant template or it does not. In contrast, I subscribe to Westphal et al. s (1997) argument for the conceptu-alization of conformity and deviation in continuous terms; that is, I believe that organizations can exhibit varying degrees of adherence to, or departures from, institu-tional prescriptions. 2.3 T H E E X I S T E N C E O F P R E C E D E N T S : C O M M O N L Y - P E R C E I V E D D O M I N A N T T E M P L A T E S I N H I G H L Y - I N S T I T U T I O N A L I Z E D S E T T I N G S One of neo-institutionalism s basic premises is that institutional contexts contain prescriptions for organizing; that is, widely-held, socially-constructed understandings regarding appropriate structures, systems, and practices for accomplishing business activities (DiMaggio & Powell , 1983; Meyer & Rowan, 1977; Scott & Meyer, 1994; Zucker, 1977). Although the assumed existence of such contextually-prescribed organ-izational templates warrants empirical testing (cf., Donaldson, 1995), very few researchers have explicitly examined this issue. Greenwood & Hinings (1993) investigation of the British municipal government sector and their subsequent research on the Canadian legal profession (Cooper et al., 1996) represent notable exceptions. Although both of these studies reveal the existence of institutionally-specific organizational archetypes, in each case the archetypes represented the researchers perceptions of the industry s rules for organizational design. Neither study syst em-atically assessed the extent to which these observer-derived archetypes were also commonly perceived and understood by the actual actors within the focal contexts themselves. Yet establishing that actors within highly-institutionalized settings hold common perceptions of such idealized configurations appears to represent a necessary precursor to understanding new entrant conformity and deviation. I thereby pose the existence of dominant templates as an explicit foundational hypothesis of my investiga-tion, rather than as an implicit underlying assumption of my arguments. 17 Hypothesis 1: In highly institutionalized environments, such as the legal profession, both observers and practitioners will express a high level of agreement on the industry's dominant template for organizing. 2.4 F O L L O W I N G P R E C E D E N T : T H E T E N D E N C Y F O R N E W E N T R A N T S T O C O N F O R M R A T H E R T H A N D E V I A T E Neo-institutionalists offer two basic arguments for why contextually-derived prescriptions act as a potent conforming force on organizations. Some argue that these templates have typically achieved such a taken-for-granted, rule-like, and scripted status that organizational actors are limited in their ability to even conceive of alterna-tives; as a result, adherence is virtually automatic and preconcious (e.g., Zucker, 1977). Others argue that organizational actors comply in a more intentional and instrumental manner, purposely adopting institutionally-sanctioned arrangements in an effort to enhance their organizations legitimacy and survival prospects (e.g., Meyer & Rowan, 1977; Scott & Meyer, 1994; DiMaggio & Powell, 1983). Regardless of their differences of opinion wi th respect to which cognitive mechanism provides a better account for conformity, new institutionalists in general present a compelling theoretical case for compliance rather than resistance. Nevertheless, just as empirical tests of the assumed existence of contextually-prescribed templates for organizing are notably absent from the neo-institutional literature, so too are investigations of the rhetorical corollary that these institutional prescriptions exert a powerful conforming force on organizations. Greenwood & H i n -ings (1993) study of the British municipal government sector represents an important exception. Although these scholars admitted that their results were not clear-cut, they nevertheless concluded that organizations in highly-institutionalized settings tend to operate with structures, systems, and practices that approximate contextually-prescribed archetypes (1993:1073). Seemingly contradictory findings from two other neo-institutional investigations highlight the importance of testing whether Greenwood & Hinings (1993) conclusion pertains to new organizational entrants. O n the one hand, Dacin argued that because newly-established organizations face special concerns surrounding issues of legitimacy and survival, they w i l l be likely to adopt characteristics consistent wi th the prevailing normative conditions (1997: 52). Although based on a unidimensional measure of institutional prescriptions, the empirical results from her investigation of Finnish news-paper foundings clearly supported this proposition. O n the other hand, Leblebici and 18 his colleagues (1991) found that new entrants to the U.S. radio broadcasting industry were a critical source of institutional change rather than institutional perpetuation. L o w & Abrahamson s (1997) essay on movements, bandwagons, and clones, which is presented in the entrepreneurship literature, provides a potential resolution to the apparently-discrepant findings of Dacin (1997) and Leblebici et al. (1991). These scholars argued that conformity amongst new entrants is particularly prevalent in mature (and thus likely more highly-institutionalized) industries albeit for reasons of efficiency rather than perceived legitimacy. When entering a mature industry: [An] organization needs to draw upon the knowledge that others have learned about the form. Consequently, it adopts a more conservative strategic posture and is less l ikely to deviate from established practice (Low & Abrahamson, 1997: 437). Low and Abrahamson further argued that although most newly-established firms in such settings w i l l tend to clone existing organizational forms, some w i l l attempt to introduce innovative structures and practices that may have the potential to restructure the industry. Combined, these theoretical arguments and empirical findings suggest that most but not all new entrants to a highly-institutionalized industry w i l l tend to act primarily as agents of institutional perpetuation rather than institutional entrepre-neurship. Hypothesis 2: The majority of new organizational entrants to a highly-institutionalized industry will exhibit little deviation from the dominant template for organizing. 2.5 F O L L O W I N G V E R S U S B R E A K I N G W I T H P R E C E D E N T : P R E D I C T I N G I N S T I T U T I O N A L P E R P E T U A T I O N A N D E N T R E P R E N E U R S H I P 2.5.1 O v e r v i e w In this section, I develop arguments for predicting which new entrants w i l l be more likely to act as institutional perpetuators who conform to an industry s dominant template for organizing, and which w i l l be more likely to act as institutional entrepre-neurs who depart from this prevailing configuration and why they might do so. The legitimacy typologies of Ald r i ch (1999), A ld r i ch & Fiol (1994), and Suchman (1995) provide an excellent conceptual framework for grounding and structuring my discus-sion. A distillation and synthesis of their classification schemes suggests that the legitimacy of organizational templates can be assessed along three dimensions: 1) cognitive legitimacy the extent to which the template s structures, systems, and prac-19 tices are perceived as understandable and taken for granted, 2) pragmatic legitimacy3 the extent to which these arrangements are viewed as contributing to a firm s ability to effectively and efficiently perform its business activities, and 3) moral legitimacy4 the extent to which the structures, systems, and practices are considered appropriate and right in light of more broadly-based governmental rules and regulations, societal val-ues, and ethical principles. A n implicit assumption of neo-institutionalism is that actors in a given institu-tional setting hold relatively invariant assessments of the cognitive, pragmatic, and moral legitimacy of prevailing organizational arrangements (e.g., DiMaggio & Powell , 1983; Meyer & Rowan, 1977; Zucker, 1977). In the ensuing discussion, I present two complementary arguments that challenge the validity of this assertation. I start with the unconstrained actor perspective. The essence of this argument is that variability in the objective experiences of organizational founders calls into question the invariable cognitive legitimacy of an industry s dominant template for organizing. Because foun-ders are likely to differ in terms of what they know about an industry s prevailing organizational arrangements, the forms of their firms are likely to exhibit varying degrees of deviation from the dominant template. I then develop a disenchanted actor argument. The essence of this perspective is that variability in founders subjective interpretations of an industry s contextually-prescribed rules for organizing calls into question their invariant pragmatic and moral legitimacy. Because founders are likely to differ in terms of how they feel about an industry s prevailing organizational arrange-ments, the forms of their firms are likely to exhibit varying degrees of deviation from the dominant template. 2.5.2 T h e U n c o n s t r a i n e d A c t o r A r g u m e n t fo r C h a l l e n g i n g the Invar iant C o g n i t i v e Leg i t imacy of the D o m i n a n t Temp la te A s Hirsch & Lounsbury have suggested, the prevailing organizational arrange-ments in an institutional setting are unlikely to be invariably cognitively- legitimated by all actors: not all action and institutions are taken for granted (1997:85). If this is the case, the question then becomes: Which actors are less likely to perceive the dominant structures, systems, and practices as understandable? Answers can be found in the 3 It should be noted that Aldrich s (1999) most recent taxonomy does not include this dimension. How-ever, like Suchman (1995), I view pragmatic legitimacy as a distinct and important dimension of legitimacy. 4 Aldrich (1999) and Aldrich & Fiol (1994) labeled this dimension sociopolitical legitimacy. 20 recent work of neo-institutionalists interested in the phenomenon of institutional entre-preneurship (i.e., the sources and processes of instituitonal change). The dominant view appears to be that the locus of change resides in the marginal members of an organiza-tional population a notion borrowed from the innovation literature and emphasized in the work of such neo-institutionalists as Kraatz & Moore (1998), Powell (1991), and Leblebici et al. (1991). Below, I summarize two separate arguments articulated by adherents to the unconstrained actor perspective and delineate their implications for new entrant conformity or deviation. "Not knowing the rules" - deviations due to an incomplete and unconstrained understanding of the dominant template for organizing. The first implication derived from the unconstrained actor argument is that founders with less experience in the centrally located organizations of an institutional setting w i l l tend to establish firms whose forms exhibit greater deviation from the dominant template for organizing. Kraatz & Moore, for example, recently pointed out that: It has previously been widely noted that institutions are diffused and perpetuated (at least in part) by prominent organizations who stand at the top of the status hierarchy and compose the core of an institutional field (1998: 12). These dominant organizations diffuse administrative innovations not only through the process of mimetic isomorphism, by constituting the more legitimate and successful organizations that others model, but also through the process of normative isomorphism, by contributing to the professionalization of their members through formal and informal on-the-job socialization (DiMaggio & Powell , 1983). Through socialization experiences in an industry s prominent organizations, individuals gain greater exposure to, and thus greater understanding of, contextually-prescribed structures, systems, and practices. Socialization experiences also contribute to the development of cognitive frames, or schema, regarding appropriate ways to organize in the industry (Weick, 1995). Individuals with greater experience tend to develop tighter cognitive frames, which can result in perceptual blindspots that restrict consideration of alternatives, constrain creativity, and facilitate habitual reactions (Ford, 1996; Weick, 1995). As DiMaggio & Powell have stated, professionalization obtained through on-the-job socialization creates a pool of virtually interchangeable individuals who tend to view problems in a similar fashion and approach decisions in much the same way (1983: 153). Likewise, Greenwood & Hinings have suggested that those within the centrally-located organizations of an institutional context may lack the capacity to enact radical departures from the norm because they may be less like ly to 21 develop the specialties and competencies of an alternative archetype (1996: 1041). Preliminary indirect support is provided by Boeker s (1988) study of the semiconductor industry, which demonstrated that an entrepreneur s functional background signifi-cantly limited the range of strategic options initially implemented by the firm. In contrast, individuals wi th less socialization experience in an industry s promi-nent organizations should be less constrained to thinking within the confines of existing taken-for-granteds and thus more able to conceive of alternatives. Because they have had less exposure to an industry s dominant organizational arrangements, they w i l l l ikely have less comprehensive knowledge of its institutionalized prescriptions. Thus, even if they were deliberately attempting to reproduce the prevailing template in an effort to enhance legitimacy, founders with less experience in an industry s core organi-zations w i l l be more likely to introduce unintentional deviations from the norm. This micro-level cognitive dynamic is consistent with both Zucker s (1987) natural entropy process of deinstitutionalization and the parallel random variation argument of organ-izational ecologists and evolutionary theorists (e.g., A ld r i ch & Kenworthy, 1998; Hannan & Freeman, 1977; McKelvey, 1982). This logic also accords wi th the conven-tional belief that most innovations in an industry are perpetrated by outsiders who do not know the rules (Smircich & Stubbart, 1985: 729). In sum, the preceding arguments suggest: Hypothesis 3: Founders with less experience in the prominent organizations of a focal industry will tend to establish firms that exhibit greater deviation from the dominant template for organizing. "Playing by different rules" - deviations due to knowledge of alternative tem-plates for organizing. The second implication derived from the unconstrained actor perspective is that founders wi th more extensive experience in either the marginal organizations of a focal industry or the organizations of other industries w i l l tend to establish firms exhibiting greater deviation. In both cases, it is argued that these indi-viduals w i l l be more likely to possess knowledge of alternative templates for organizing and w i l l partially reproduce them in the design of their own firms. As a result of incor-porating aspects of these non-dominant organizational forms, their firms w i l l exhibit greater deviation from the focal industry s prevailing template for organizing. Drawing on the innovation literature, several neo-institutional scholars have suggested that institutional changes are likely to be introduced by organizations on the periphery of an organizational population (e.g., Kraatz & Moore, 1998; Kraatz & Zajac, 1996; Leblebici et al., 1991), primarily because these marginal organizations are less fully 22 socialized by the institutional context and thus more able to develop competencies associated with an alternative template for organizing (Greenwood & Hinings, 1996: 1041). It follows that individuals with greater experience in these peripheral organiza-tions w i l l likely have greater understanding of different and potentially functionally superior organizational arrangements; moreover, they w i l l likely possess different mental models and assumptions regarding the natural and appropriate means for accomplishing business activities. A s a result, such individuals are likely to be the initiators of institutional change. The results of Kraatz & Moore s (1998) investigation of liberal arts colleges lend empirical support for this argument, revealing that such col-leges were more likely to introduce controversial institutional changes when their recently-appointed presidents had migrated from lower-status, peripheral organiza-tions. Neo-institutionalists aligned wi th the unconstrained actor perspective also view individuals who have greater experience in organizations outside the focal institutional setting as influential change agents. Greenwood & Hinings, for example, suggested that employees recruited from other fields might increase an organization s capacity for enacting radical departures from an industry s archetypal organizational form because they have the experience of governing and organizing in fundamentally different ways (1996: 1040). Kraatz & Moore (1998) t ook this argument one step further by suggesting that the different mental models of individuals migrating from other indus-tries may contribute to an organization s unlearning of a focal industry s potentially-limiting assumptions regarding the obvious w ay to organize. Their empirical investi-gation lent some support for the power of individuals from other fields to initiate institutional change: liberal arts colleges were marginally more likely to adopt profes-sional programs when led by presidents who had migrated from non-liberal arts colleges. Similar arguments and results are likely to apply and be found in the context of organizational founding. Even if they are striving to replicate an industry s prevailing template in order to establish legitimacy, founders wi th more extensive experience in either the peripheral organizations of the focal industry or those of other industries w i l l likely incorporate aspects of the non-dominant forms with which they are more famil-iar. Moreover, as a result of their socialization experiences, these founders are likely to perceive non-dominant structures, systems, and practices as at least equally natural and appropriate ways of organizing and may therefore be reluctant to completely abandon them in favour of the industry s contextually-prescribed organizational arrangements. 23 A s such, the forms of their newly-established firms w i l l likely reflect a synthesis of the dominant and alternative templates. This micro-level cognitive dynamic is consistent wi th that emphasized by Schumpeter (1936) in his classic definition of entrepreneurship as the carrying out of novel combinations. It is also consistent wi th the processes re-cently described in both ecological and institutional accounts of organizational change. In their evolutionary computer simulation, for example, Bruderer & Singh s (1996) primary method for creating new organizational designs involved amalgamating the structural elements of two pre-existing forms. Similarly, institutional theorists such as Cooper et al. (1996) and Sahlin-Andersson (1996) have respectively described processes of sedimentation, or accretion, in which existing organizations change by layering new structures and systems upon old rather than by completely shifting from one archetypal template to another. The discussion above leads to the following additional hypotheses derived from the unconstrained actor perspective: Hypothesis 4: Founders with greater experience in the marginal organizations of a focal industry will tend to establish firms that exhibit greater deviation from the dominant template for organizing. Hypothesis 5: Founders with greater experience in other industries will tend to estab-lish firms that exhibit greater deviation from the focal industry's dominant template for organizing. 2.5.3 A Di senchan t ed A c t o r A r g u m e n t for C h a l l e n g i n g the Invar ian t Pragmat ic a n d M o r a l Leg i t imacy of the D o m i n a n t Templa te In the preceding section I presented the unconstrained actor argument that variability in the extent of deviation exhibited by new entrants is partially attributable to heterogeneity in the objective socialization experiences of their founders. More specifically, I argued that because of their background experience, certain founders w i l l have either less understanding of an industry s dominant template for organizing or greater knowledge of alternative structures, systems, and practices; as a result, they w i l l be more likely to create organizational forms that depart from the prevailing design. I don t believe, however, that the nature of a founder s prior socialization experience is the only nor even the most important predictor of the extent of deviation exhibited by his or her firm. Thus, in this section I explore a second plausible individual-level factor: a foun-der s subjective interpretations of an industry s dominant template for organizing. 24 Although a number of scholars have emphasized the explanatory potential of individ-ual interpretations of contexts in accounts of institutional persistence and change (e.g., Greenwood & Hinings, 1996; Hirsch & Lounsbury, 1997), this variable has so far been under-investigated even by those researchers interested in the role of individual actors in shaping organizational-level attributes. Drawing once again on the legitimacy typologies of Aldr ich (1999), Aldr ich & Fiol (1994), and Suchman (1995), I suggest that departures from an industry s dominant template for organizing are likely to be enacted by founders who question the pragmatic or moral legitimacy of prevailing structures, systems, and practices regardless of whether these founders had extensive experience in either the central or peripheral organizations of a focal industry, or in another indus-try altogether. I view the variation in founders subjective interpretations of the dominant template s pragmatic and moral legitimacy as exerting a powerful and inde-pendent effect above and beyond that of heterogeneity in founders objective socialization experiences 5. A s such, I present the following disenchanted actor argu-ment, with its focus on how founders feel about institutionally-prescribed organiza-tional arrangements, as a complement to the previously-described unconstrained actor argument, which focused on what founders know about the dominant and alternative templates. "Questioning the rules (part one)" - deviations resulting from pragmatic objec-tions to the dominant template. Greenwood & Hinings (1996) have recently proposed that dissatisfaction with contextually-prescribed arrangements can act as a precipitating pressure for institutional change. One plausible source of dissatisfaction is the prag-matic legitimacy of prevailing structures, systems, and practices; that is, the extent to which these arrangements are perceived as contributing to the efficient, effective, and profitable functioning of the organization. A s several empirical investigations of the spread of administrative innovations have shown (e.g., Baron et al., 1986; Tolbert & Zucker, 1983), early adopters tend to implement such reforms because of their func-tional superiority whereas late adopters tend to comply even if these innovations don t enhance their economic performance. Thus, at some point, certain organizational actors 5 This view differs somewhat from that of Kraatz & Moore (1998), who posit a lack of commitment to an institution s prevailing values as one of the reasons why individuals hailing from outside an industry or its periphery are more likely to initiate institutional change. In contrast, I view an individual s percep-tions of the dominant template s moral legitimacy as operating independently of his or her background experience. I suggest that even those migrating from the central organizations of a focal industry may question the moral legitimacy of prevailing organizational arrangements and the values that they represent. 25 are bound to raise questions regarding the pragmatic legitimacy of institutionalized structures, systems, or practices. A s Oliver observes: A n institutionalized practice is one which is perceived by organizational mem-bers to possess intrinsic worth or legitimacy beyond its technical requirements. The perceived worth of an institutional practice, however, is not invulnerable to re-evaluation or reconsideration in technical terms (1992: 571). In her essay on the strategic responses to institutional pressures, Oliver (1991) linked such doubts about an institution s pragmatic legitimacy to organizational devia-tion, postulating that organizations w i l l be more likely to resist conformity to institutionalized arrangements when they perceive a negligible economic gain to be attained by compliance. Similarly, in her essay on the antecedents of deinstitutionaliza-tion, Oliver argued that Institutionalized practices w i l l be under threat of erosion or displacement when the utility of such practices is seriously called into question (1992: 568). She further argued that the utility of established procedures is particularly likely to be questioned when organizations experience performance crises. In such situations, it is hard to deny the economic reality that institutionalized practices although possibly technically superior in the past are no longer efficient or effective. Performance crises, however, are not a necessary precursor of institutional change. A s Kraatz & Moore (1998) and Oliver (1992) herself have argued, the introduction of novel, functionally-superior alternatives may also be sufficient to provoke the displacement of existing institutions. Whether doubt about the functionality of an industry s dominant organizational arrangements is triggered by a performance crisis or the emergence of technically superior alternatives, it follows that individuals who more strongly question the prag-matic legitimacy of prevailing procedures w i l l be more likely to agitate for their abandonment or revision. In the context of new venture creation, where founders have greater power to translate their beliefs into organizational arrangements (Staw & Sut-ton, 1993), it is likely that those aspects of the dominant template that founders perceive to be of questionable pragmatic legitimacy w i l l be replaced by alternatives that they perceive to be functionally superior. A s a result, their firms w i l l exhibit less isomor-phism with an industry s prevailing organizational arrangements. The following hypothesis summarizes this first implication derived from the disenchanted actor perspective: 26 Hypothesis 6: Founders who more strongly question the pragmatic legitimacy of an in-dustry's prevailing organizational arrangements will tend to establish firms that exhibit greater deviation from the dominant template for organizing. "Questioning the rules" (part two) - deviations resulting from moral objections to the dominant template. Disenchantment with an industry s template for organizing need not, however, be limited to doubts about its pragmatic legitimacy. Discontent is also likely to be aroused by perceptions that prevailing structures, systems, and prac-tices are of dubious moral legitimacy; that is, that these dominant organizational arrangements are not appropriate or right in an ethical sense, even though they may be widely understood or of functional utility. Some individuals are likely to feel that institutionalized practices are of questionable moral legitimacy because they don t adhere to broadly-based societal values and ethical principles; others are likely to feel that prevailing arrangements are morally illegitimate because they conflict wi th their own personal values and code of ethics. Mart in (1993) presented a compelling case for the former source of moral ille-gitimacy perceptions. As she so eloquently explains: For a set of organizational arrangements to be considered legitimate, it is not enough that they be implemented in a similar manner in a wide variety of con-texts. In addition these similar practices must be considered right and just This definition acknowledges the possibility tha t individuals and groups might have different beliefs about the legitimacy of commonly observed ar-rangements (1993: 297). In the remainder of her critical essay, Mart in explicitly emphasized one broadly-based ethical principle that has been widely researched by micro-level organizational scholars: distributive justice. This ethical principle is also implicit in the recent work of several proponents (and critics) of neoinstitutional theory. Greenwood & Hinings (1996), Oliver (1991, 1992), and Tolbert & Zucker (1996), for example, have all argued that group dissatisfaction regarding the structure of advantage and disadvantage created by prevailing organizational arrangements can be a critical antecedent of non-conformity, deinstitutionalization, and change in existing organizations. Empirical support is pro-vided by Leblebici et al. s (1991) study of the U.S. radio broadcasting industry, which revealed that alternative practices were initiated by those organizations that had his-torically been disadvantaged by previously-institutionalized arrangements. A parallel dynamic is likely to operate in the context of organizational foundings. More specifi-cally, when designing the forms of the organizations, founders w i l l likely modify those aspects of an industry s dominant template that they perceive as distributively unjust. 27 In such cases, deviations from the institutionalized form can be viewed as attempts to resolve perceived injustice an argument similar to that articulated by Folger (1993). Other individuals are likely to question the moral legitimacy of an industry s dominant organizational arrangements because they are inconsistent with their own personal code of ethics (which may not necessarily represent the internalization of more broadly-based societal norms). Several institutional theorists have emphasized how commitment to alternative values or convictions can precipitate organizational non-compliance and change, which may ultimately result in deinstitutionalization at the field level of analysis (Greenwood & Hinings, 1996; Oliver, 1991, 1992). Most recently, for example, Kraatz & Moore have argued that the migration of individuals who do not hold institutionally defined values is a vital perhaps necessary part of the process through which existing institutions are overturned (1998: 2; italics in original). Such arguments echo those found in the broader organizational literature, where scholars have suggested that the tensions experienced by individuals who perceive inconsisten-cies between their own values and those of their organizations, or instances of poor person-organization fit, can fuel organizational transformation and innovation (Dutton & Dukerich, 1991; Meyerson & Scully, 1995). Some indirect empirical support can be found in Dutton & Dukerich s (1991) case study, which demonstrated how perceptions of incompatibility between organizational- and self-images acted as a catalyst for organ-izational adaptation. Although institutionally-prescribed values may be explicitly defined in certain contexts, it is more likely that they w i l l be inferred from the structures, systems, and practices of the dominant template for organizing. A s noted by Greenwood & Hinings (1988, 1993), these observable attributes of an organizational form reflect its underlying set of values and beliefs, which they term the interpretive scheme. The implication for the discussion here is that individuals whose personal values conflict wi th contextually-prescribed values w i l l attempt to reduce this dissonance by agitating for changes in the observed structures, systems, and practices of existing institutions. In the context of new venture creation, this line of reasoning suggests that founders who perceive certain aspects of an industry s dominant template as manifesting values inconsistent wi th their own personal code of ethics w i l l likely modify such features when designing their own firms. A s a result, the forms of these newly-founded organizations w i l l deviate from the prevailing template for organizing. 28 Combined, the preceding arguments suggest that heterogeneity in the degree of non-conformity exhibited by new entrants to an organizational population is partially attributable to variability in the extent to which founders consider an industry s domi-nant template to be morally legitimate. Founders who perceive greater conflict wi th ethical principles that are either commonly valued by society (such as distributive justice) or personally valued by themselves w i l l be more likely to establish alternative organizational arrangements in their own firms. The following hypothesis summarizes this second implication derived from the disenchanted actor perspective: Hypothesis 7: Founders who more strongly question the moral legitimacy of an indus-try's -prevailing organizational arrangements will tend to establish firms that exhibit greater deviation from the dominant template for organizing. 2.5.4 A C o m p a r a t i v e A r g u m e n t R e g a r d i n g w h o w i l l be M o s t L i k e l y to Break the R u l e s In their recent essay, Greenwood & Hinings (1996) distinguished between pre-cipitating and enabling dynamics of organizational change. The former relate to the pressures for organizational change whereas the latter pertain to an organization s ability to carry out change. A similar distinction between motivation and ability is evident in the preceding discussion. The essence of the unconstrained actor argument is that founders with less extensive experience in the prominent organizations of a focal industry or those wi th more experience in other industries or the organizations occu-pying the margins of the focal industry have greater latent ability to enact forms that deviate from the norm. This ability is present because they are less likely to be con-strained to thinking within the prevailing taken-for-granteds and/or more likely to possess knowledge of alternative organizational templates. The essence of the disenchanted actor argument is that founders who question the pragmatic or moral legitimacy of an industry s dominant organizational arrange-ments have greater motivation to modify those elements perceived to be of dubious functionality or ethicality when designing their own firms. This is likely to be particu-larly so for founders who more strongly question the moral legitimacy of prevailing administrative practices. In such cases, it seems that a founder s attitudes would consist not only of a cognitive element (i.e., he or she perceives certain institutionalized ar-rangements to be distributively unjust or otherwise incompatible wi th his or her own personal code of ethics) but also of a very strong emotional component. Micro-level organizational research on both perceived injustice and value-incongruity between organizational- and self- images suggests that such perceptions often provoke powerful 29 negative affective reactions such as dissatisfaction, chronic anger, and frustration (e.g., Mart in, 1993; Meyerson & Scully, 1995). Because their subjective interpretations of an industry s institutionalized organizational arrangements are likely to be more emotion-ally charged, it follows that founders who most strongly question the dominant template s moral legitimacy possess greater motivation to introduce alternative struc-tures, systems, and practices when designing their own firms. A s a result, the forms of the new organizational entrants enacted by such founders w i l l likely exhibit the most extensive amount of deviation from the norm. Thus, I conclude this section on the predication of new entrant conformity versus deviation with a comparative hypothesis: Hypothesis 8: Founders' subjective perceptions of the moral legitimacy of an industry's dominant template for organizing, rather than either their subjective perceptions of its pragmatic legitimacy or the nature of their objective socialization experiences, will have the strongest effect on the extent of deviation exhibited by the forms of their newly-established firms. 2.6 S U M M A R Y One of the major criticisms of neoinstitutional theory has been its overemphasis on organizational conformity and consequent lack of attention to organizational hetero-geneity (e.g., Donaldson, 1995; Hirsch, 1997; Oliver, 1991, 1992; Perrow, 1985). In response, Hirsch & Lounsbury (1997) have recently called for an integration of the new and old institutionalisms. Their vision for a synthesized institutional theory requests researchers to not only admit variability in the responses of organizations operating within the parameters of existing institutions (Hirsch & Lounsbury, 1997: 86), but also to develop explanations exhibiting analogous pluralism. In particular, these scholars have called for theoretical accounts capable of accommodating both new institutional-ism s view of organizational action as a passive and preconscious response to exogenously-determined rules and scripts, as wel l as ol d institutionalism s view of organizational action as a proactive and intentional response to endogenously-derived interests and values. The conceptual framework developed in this chapter represents an effort to extend the work of others who have already either implicitly (e.g., Oliver, 1991, 1992) or explicitly (e.g., Greenwood & Hinings, 1996; Kraatz & Moore, 1998) embarked upon the agenda set out by Hirsch & Lounsbury (1997). I have attempted to do so by addressing a phenomenon not described by any of these researchers conformity versus deviation in the organizational forms of new entrants to a highly-institutionalized setting. 30 By focusing on the socialization experiences and contextual interpretations of organizational founders, my conceptual framework is clearly consistent wi th the call for greater attention to active human agency and micro-level dynamics in the neo-institutional literature in general (e.g., Donaldson, 1995; Hirsch, 1997; Hirsch & Louns-bury, 1997; Oliver, 1992; Tolbert & Zucker, 1996) and in neo-institutional studies of conformity versus resistance in particular (Oliver, 1991: 173). To date, investigations of the role that individuals play in shaping organizational-level structural attributes have tended to emphasize either an individual s personality characteristics (e.g., Mi l le r & Droge, 1986; Mil le r & Toulouse, 1986; Mil ler , Toulouse & Belanger, 1985) or background experience (e.g., Boeker, 1988,1997; Kraatz & Moore, 1998). M y framework extends this line of work by incorporating a factor that has so far been under-explored in individual-level accounts: the role of an actor s subjective interpretations of an industry s institu-tionally-prescribed template for organizing. In my explanation of the underlying mechanisms l inking such individual perceptions to organizational deviation, I drew on two well-researched micro-level topics: organizational injustice and person-organiza-tion fit. In sum, by integrating processes driven by interests, values, and emotions, and by drawing on existing research from the micro organizational behaviour, my argu-ments are aligned with Hirsch & Lounsbury s recommendation that institutional scholars in organizational sociology should take a more eclectic posture toward analy-sis, crossfertilizing new and old institutionalisms as wel l as other approaches (1997: 84). 31 C H A P T E R 3: I D E N T I F Y I N G A N I N D U S T R Y S D O M I N A N T T E M P L A T E : M E T H O D O L O G I C A L P R O C E D U R E S A N D F I N D I N G S F R O M T H E B R I T I S H C O L U M B I A L E G A L P R O F E S S I O N 3.1 I N T R O D U C T I O N The primary objective of this chapter is to present the methodology and results for the first phase of my empirical investigation testing the foundational hypothesis that highly-institutionalized environments contain dominant templates for organizing that are commonly perceived and understood by both observers of, and actors within, a focal setting. In so doing, I also accomplish a secondary objective articulated so elo-quently by Meyer et al.: [Mapping] the multidimensional contours of a social system as a prelude to studying focal u nits nested within a system at a lower level of analy-sis (1993: 1185). In other words, this chapter also serves to describe the referent for my subsequent investigation of new entrant conformity and deviation; that is, the com-monly-perceived dominant template for organizing in the legal profession. 3.2 M E T H O D O L O G Y 3.2.1 Se lec t ion of the L e g a l P rofess ion as the Foca l Indus t ry In devising the overarching research design for this study, I followed the prece-dent set by other recent empirical analyses of change in organizational forms (e.g., Cooper et al., 1996; Greenwood & Hinings, 1993; Usher & Evans, 1996) and restricted my investigation to a single, clearly-defined industry; in this case, the legal profession. Like these researchers, I agreed conceptually with the compelling argument of several noted scholars that our understanding of organizational phenomena w i l l progress more productively if it is based on careful and detailed empirical analyses of well-specified populations (e.g., McKelvey, 1982; McKelvey & Aldr ich , 1983; Meyer et a l , 1993; Pinder & Moore, 1979). Moreover, it was important that I limit my research to organizations facing similar institutional pressures (Greenwood & Hinings, 1993, 1996). Certain characteristics of the legal profession make this industry a particularly appropriate and intriguing context for a study of whether and why new entrants to highly-32 institutionalized environments tend to conform to or deviate from dominant templates for organizing. These characteristics are described in detail below. A highly-institutionalized setting. First and foremost, the legal profession represents a highly-institutionalized environment. With in this industry it is virtually common knowledge that the dominant organizational form is that exhibited by large law firms, emulated by other legal service providers, and espoused by institutional carriers. The following excerpts from Galanter & Palay s historical account of the legal profession s transformation attest to the dominance of the large law firm and to its distinctive institutional character (1991: 4) as a widely -modeled template for organiz-ing in the twentieth century: Before the Second World War the big firm had become the dominant kind of law practice. It was the kind of lawyering consumed by the dominant economic ac-tors. It commanded the highest prestige. It attracted some of the most highly talented entrants to the profession. It was regarded as the state of the art, e m-bodying the highest technical standards. In the post-war years, this position of dominance was solidified [By the early 1960s] the form had been tested; it was well established; it exercised an unchallenged dominance (p. 20). In an earlier excerpt, Galanter & Palay also note: The big law firm is also a success in a deeper sense, as a social form for organiz-ing the delivery of comprehensive, continuous, high-quality legal services. Like the hospital as a way to practice medicine, the big firm provides the standard format for delivering complex services. Many features of its style... have been emulated in other vehicles for delivering legal services. The specialized boutique firm, the public-interest law firm, the corporate law department all model themselves on a style of practice developed in the large firm. A n d legal profes-sions in other countries have increasingly emulated the American big firm (p. 2). In addition to the above-noted mimetic pressures, strong normative pressures, exerted by a variety of institutional carriers, also exist in the legal profession (Galanter & Palay, 1991: 71). Perhaps most visible to those outside the industry are the national and regional regulatory associations such as the Canadian Bar Association and the British Columbia Law Society to which all practising lawyers must belong. These institutions regularly distribute materials and sponsor seminars on the organization and management of law firms. Less visible sources of normative isomorphic pressures include: various industry publications, such as Canadian Lawyer, to which many law firms subscribe; numerous consulting firms that specialize in the organizational and managerial practices of the profession; the educational requirement that all practitioners possess an L L . B . ; the preliminary apprenticeship period known as articling (which is 33 typically conducted for at least one year, usually in a large firm) that all law school graduates must complete prior to being called to the bar in Canada; and the severe pressure typically experienced by lawyers in dominant organizations to conform to professional standards (Galanter & Palay, 1991:137). Although specific organizational structures and practices are certainly espoused by the national and provincial professional self-regulatory agencies, for the most part these are neither legally-mandated nor enforced by these institutions 6. As noted in a recent Canadian Bar Association report, for example, its model policies are intended to provide guidance as to what the content might be it is up to the firm to adapt the content to its own needs (Canadian Bar Association, 1993:1). The majority of law firms are also founded as autonomous entities rather than as subsidiaries of other firms; as such, their forms tend not to be constrained by the structures and practices of parent companies. Both of these characteristics suggest that although new entrants to the legal profession may face strong mimetic and normative pressures, they also have the discre-tion to organize as they desire. The following discussion articulates why firms founded at this particular point in the industry s history may be facing greater opportunities than ever before to translate this discretionary potential into observable departures from dominant organizational arrangements thus making the question of whether they actually do so a particularly intriguing one. An industry in transition. Although highly-institutionalized, it is widely recog-nized that the lengthy period of stasis enjoyed by the North American legal profession has given way, over the past decade or so, to a chaotic period of dramatic change, turmoil, and restructuring (Altman Wei l Pensa, 1998; Ellis, 1993; Galanter & Palay, 1991; Hagan & Kay, 1995). The combined effects of several significant economic and social trends have ushered in a period of environmental volatility and organizational innova-tion. The legal marketplace has changed dramatically, from an environment of explosive growth in the 1970s and 1980s (Hagan & Kay, 1995), to one of consumer maturation and intensified competition in the 1990s (Altman Wei l Pensa, 1998). This shift has placed severe economic pressure on many firms (Stock & Leishman, 1998). A t the same time, the internal demographic composition of law firms has undergone a radical change. The increasing representation of women in the professional ranks is seen by many as an important social catalyst for organizational reform, particularly 6 An important exception that applies across Canada, however, is the prohibition on the ownership of shares in law firms by non-lawyers (Daniels, 1991: 71) 34 with respect to the relationship between work and personal lives (e.g., Al tman Wei l Pensa, 1998; Hagan & Kay, 1995; Stock & Leishman, 1998). These economic and social environmental pressures are stimulating not only the reconceptualization of a law firm s markets and services, but also the reconsideration of many of the accepted ways of organizing private practice (Hagan & Kay, 1995: 95). A s two industry co nsultants put it, the profession is in the midst of a fundamental re -thinking of law firm structur-ing (Stock & Leishman, 1998: 8). Cooper et al. (1996), for example, have suggested that the Canadian legal profes-sion is currently undergoing a transition from the historically-dominant Professional Partnership (P2) organizational archetype to a new one which they term the Managerial Professional Business (MPB). Firms consistent wi th the P2 archetype emphasize profes-sional values such as autonomy, collegiality, and democracy, and view lawyers as professionals who apply esoteric knowledge in the service of public interests. Such firms are governed as partnerships wi th few levels of hierarchy, consensus-style deci-sion-making, minimal individual accountability for the firm s financial performance, compensation systems based on principles of equality and seniority, and little in the way of formal monitoring, control, and integrating mechanisms. In contrast, those consistent with the M P B archetype conceptualize the law firm first and foremost as a commercial enterprise and the lawyers within it as businesspersons and profit centres. Efficiency, effectiveness, and the provision of value-added client service are the ideals that are emphasized, monitored, and rewarded. Decision-making is more directive, strict financial and marketing targets for individuals are introduced, compensation systems emphasize inequity rather than equality or seniority, and under-achievement (particularly in terms of revenue generation) is no longer tolerated. Cooper and his colleagues argue further that the transition of the Canadian legal profession is sedimented rather than transformational in nature, wi th the emerging M P B archetype being layered upon, rather than sweeping away, the P2 archetype. One important implication for my investigation is that the organizational template which currently dominates the legal profession is likely to be hybrid in nature, combining aspects from both the P2 and M P B archetypes. In their analysis, however, Cooper and his colleagues d id not present any systematic empirical evidence indicating whether this is in fact the case. Moreover, they did not explicate the exact nature of the sedi-mented structure likely to characterize the prominent firms of the Canadian legal profession at the present time. For example, it is not clear from their research whether some dimensions of the dominant organizational form have remained consistent wi th 35 the P2 archetype while others now reflect the M P B template, or whether there is sedi-mentation within the individual dimensions themselves. A s such, further empirical research is needed to clarify the current nature of the legal profession s commonly-perceived dominant template for organizing. Nevertheless, the work of Cooper et al. (1996) and others clearly demonstrates that the legal profession is in the midst of a profound transitional period. This makes the question of whether a dominant template can be identified in such an institutional context especially interesting. A setting resounding with voices of disenchantment. While the restructuring of the legal profession should help ensure sufficient variation in my study s primary dependent variable, the extent of deviation exhibited by new entrants, additional characteristics of this industry should help ensure adequate variability in the key ex-planatory variables: the objective backgrounds of founders and their subjective interpretations of prevailing organizational arrangements. In the legal profession, foundings tend to occur in one of two ways: either by practitioners, freshly called to the bar, who hang up the proverbial shingle announcing their status as lawyers; or by more experienced practitioners displaced by the dissolution of former partnerships. These prototypical founding patterns imply a wide range of variation in the objective backgrounds of law firm founders. Recent research findings revealing that the practice of law is a pleasure to some and a source of dissatisfaction to others (Hagan & Kay, 1995: 155) po int to variation in lawyers subjective interpretations of the profession s existing organizational arrange-ments. Some of the defining features of the large law firm, once considered unsurpassed in terms of their technical performance, now appear to lack pragmatic legitimacy for many founders: Today more than ever the partnership structure is being called into question: [some believe] that it is the most inefficient form of governance ever in-vented (Anderson, Penner & Ryan, 1991: 11). Other anecdotal evidence points to the existence of even more widespread, and more fundamental, soul-searching about the moral legitimacy of the dominant form: Until recently, the big law firm was not only accounted a success in terms of in-stitutional survival and technical performance, it was accepted as the paradigm of legal professionalism. But the sense that such firms are the chosen vehicles of the professional ideal has waned. They have been assailed for abandoning their responsibilities as officers of public justice in favour of anarrow devotion to client interests. As they have grown and been transformed, they have been at-tacked as having sacrificed client interests to market considerations as well as having abandoned the collegiality and self-governance that made them good 3 6 work-places. The relationship of the large firm to professionalism now seems quite problematic (Galanter & Palay, 1991: 137 138). The literature further indicates that questions are being raised not only about the dominant form s abandonment of professional ideals, but also about its basic ethical obligation, as an organization, to provide a good work environment for its members. The following examples further illustrate this aspect of the norm s waning moral le-gitimacy. Most relate to the human costs the loss of sensitivity, as individuals, to the needs of each other associated wi th the law office economics of the dominant firms (Kaye, 1988). A s noted by one lawyer in Brockman s study: The relentless pressure on associates to produce more billable hours (profits) makes law firms rigid and inflexible re: hours, job sharing, etc. (1990: 28). Similar concerns were voiced by several lawyers in Hagan & Kay s (1995) investigation, who commented that the fixation on billable hours and the bottom line has created a soul-destroying, destructive, and dehumaniz-ing environment that contributes to a poor quality of life and a lack of accommodation for lawyers wi th families. One lawyer lamented, I would like to see our society, including the legal profession, embrace or at least approve of a healthy work ethic (Hagan & Kay, 1995: 110). In general, the portrait painted by existing research on the legal profession is one of growing disenchantment wi th the pragmatic and moral legitimacy of the dominant template for organizing. This trend although troubling for the profession should help ensure sufficient variation in the subjective interpretations of a sample of law firm founders. An industry in which deviations in form are not necessarily a function of size or strategy. The fourth requirement of the selected research context pertains to the a priori minimization of potential confounding explanations. More specifically, it was impor-tant that the chosen industry be one in which deviations from the dominant template are not primarily attributable to differences in terms of either size or function. For example, if the dominant form happened to be that exhibited by large firms, it must be possible for smaller firms to replicate the dimensions of the dominant template on a lesser scale. This appears to be the case in the legal profession. In their analysis of the Canadian legal profession s transition from the P2 to the M P B archetype, Cooper and his colleagues cautioned that they were clearly writing ab out large organizations relative to their sectors (1996: 644), but also noted that their experience led them to believe that both archetypes can be found in firms of all sizes (1996: 645). Galanter & Palay (1991) presented the parallel observation that the internal organization of a law firm is not necessarily determined by its function (i.e. its area of practice and type of client). Although these scholars acknowledged that the profession s dominant form is 37 that exhibited by the upper strata of firms engaged in corporate and commercial work for large organizational, rather than individual , clients (1991: 1), they also noted that its features are emulated by legal service providers serving other clients and prac-tising in other areas of law such as th e specialized boutique firm, the public-interest law firm, [and] the corporate law department (1991: 2). An interesting yet relatively uncharted domain. Finally, the ideal context for my investigation would be one that is easily identifiable by convent ional wisdom and of interest to people outside the field (McKelvey & Aldr ich , 1983: 118), yet also a setting in which little organizational research has been conducted to date. The popularity of novels (e.g., John Grisham s The Firm, The Pelican Brief, and The Client), television series (e.g., Ally McBeal, The Practice, LA Law, Law and Order, and Perry Mason), and feature-length movies (e.g., A Few Good Men, Paper Chase) based on the legal profession certainly attests to the general public s enduring fascination with the practice of law. Interest-ingly enough, however, this intrigue is not reflected to the same extent in academic research conducted by social scientists in general nor by organizational analysts in particular. Stager (1990), for example, has noted that: Until recently, lawyers have escaped rigorous attention of social science research; much of the writing on the profession has been by lawyers, about lawyers, for lawyers (p. 8) The question of the internal organization of law firms has been not only neglected by scholars, but veiled in silence (p. 184). Similarly, the legal profession has only occasionally been selected a focal context by neo-institutional researchers even though law firms are clearly a set of organizations infused wi th value (Selznick, 1957). Edelman and Suchman, for example, have only recently developed a line of work integrating neo-institutional concepts into the study of law and legal environments (e.g., Edelman, 1995; Edelman & Suchman, 1997; Such-man, 1997; Suchman & Edelman, 1996). A n d only a handful of empirical neo-institutional investigations have selected law firms as their focal organizations (e.g., Cooper et a l , 1996; Tolbert, 1988). In sum, the legal profession represents an especially appropriate and interesting setting for a study of whether and why new entrants tend to conform to or deviate from dominant templates for organizing. Although highly-institutionalized, the industry is in the midst of a profound transitional period accompanied perhaps not surprisingly by increasing disenchantment wi th the manner in which law firms are structured and managed. A n d yet in spite of these interesting dynamics, the legal profession has been relatively neglected by organizational researchers in general and institutional theorists 3 8 in particular. In the following section, I describe my methodology for identifying this industry s commonly-perceived dominant template for organizing. 3.2.2 D a t a C o l l e c t i o n M e t h o d s I obtained data on the dominant interpretive scheme, structural aspects, decision systems, and human resource practices of Canadian law firms through multiple source and methods. I collected perceptions from outside observers of the legal profession through a literature review and set of semi-structured interviews wi th scholars who had recently conducted empirical investigations of the industry; I collected perceptions from actors within the legal profession through a set of semi-structured interviews with highly-experienced practitioners and a series of structured interviews with law firm founders. Details on each of these data collection methods are provided below. Literature review. M y first data collection method consisted of a literature re-view of recent research on the organization and management of law firms. Given my interest in determining the legal profession s currently-prevailing dominant template, I limited this review to studies published in the 1990s. Pivotal sources included: Galanter & Palay s (1991) historical account of the industry; the empirical investigations of lawyers careers conducted by Brockman (1990, 1991) and Kay & Hagan (Hagan & Kay, 1995; Kay, 1997; Kay & Hagan, 1993); and, to a lesser extent, the work of Daniels (1991) and Stager (1990). I also reviewed a number of industry consultant reports that I had obtained while attending a workshop on law firm management sponsored by the British Columbia Law Society. These included publications by A l m a n Wei l Pensa (1998), Stock (1996), and Stock & Leishman (1998). Semi-structured interviews with scholars. M y second data collection method consisted of semi-structured interviews with three scholars who had recently conducted empirical studies of the Canadian legal profession. These scholars were affiliated wi th three different academic institutions and three different faculties (i.e., business, sociol-ogy, and law). Two of the interviews were conducted in person and the third was conducted by telephone; each interview lasted for approximately one hour. The inter-viewees were asked open-ended questions regarding their perceptions of the legal profession s dominant form as wel l as their knowledge of existing and emerging alter-native organizational arrangements (an interview guide is presented in Appendix 3.2). Semi-structured interviews with practitioners. M y third data collection method consisted of semi-structured interviews with three practitioners in British Columbia. To 3 9 control for potential confounding effects caused by different environmental factors across provinces (Stager, 1990: 8), I decided to limit my investigation to a single prov-ince. To obtain data on this province s dominant template, I conducted semi-structured interviews wi th a British Columbia Law Society representative and two partners wi th different law firms, all of whom had practised law for many years in the province. These practitioners were asked open-ended questions about the dominant form of law firms in British Columbia. They were also asked about existing and emerging alterna-tive organizational arrangements in the province s legal profession (an interview guide is presented in Appendix 3.2). Structured interviews with founders. M y final data collection method consisted of structured interviews with eight highly-experienced lawyers who had recently founded separate law firms in British Columbia. For several aspects of organizational form (i.e., guiding values, types and structure of positions, recruitment and promotion policies, compensation systems, performance evaluation procedures, and work ar-rangements), I asked these founders whether they thought a norm existed for law firms in the province; and if so, to describe its nature. I also asked each founder whether he or she was aware of any novel organizational arrangements in the British Columbia legal profession. 3.2.3 D e t e r m i n i n g the Relevant Features of the D o m i n a n t Templa te Selection process. Through the multiple data collection methods described above, I obtained numerous potential features along which the legal profession s domi-nant template could be described. To determine those that were most relevant for my investigation, I first listed the commonly-used features that Greenwood & Hinings (1993) had identified for their dimensions of organizational form. For example, these scholars noted that frequently-measured structural aspects include an organization s extent of differentiation, criteria of differentiation, and extent of integration. I then examined my data and assessed the extent to which each feature was discussed both within and between my sources. Those identified by Greenwood & Hinings (1993) that did not appear with sufficient consistency (i.e., frequently within at least two data sources) were deleted from my list of relevant features. A case in point is a law firm s decision-making assertiveness; that is, the extent to which it engages in reactive or proactive behaviour and is prepared to assume risk in pursuit of competitive advan-tage (Greenwood & Hinings, 1993: 1055). Although these scholars noted that this feature has been utilized in several other investigations of organizational form, it was 40 not discussed wi th sufficient consistency across my data sources; as such, I did not retain it as a salient feature of the legal profession s dominant template. I then re-examined my data to determine whether there were any features that had not been identified by Greenwood & Hinings (1993) yet appeared wi th sufficient consistency across my data sources. These context-specific salient indicators were added to my list of relevant features. Two examples include the extent of flexibility and privilege equality in the human resource practices of dominant law firms. Although Greenwood & Hinings (1993) did not identify these features as commonly-measured aspects in the extant organizational literature, they were themes that appeared wi th adequate frequency across all of my data sources and were thus included in my final list. Likewise, because interpretive schemes are institutionally specific (Greenwood & Hinings, 1993), all of the relevant features of the legal profession s dominant interpre-tive scheme were determined in this empirically-grounded manner. Finally, I reviewed each entry on my list to ensure that it was possible for new organizational entrants to exhibit variation on the feature under consideration, such that each had the potential to contribute to my subsequent measures of organizational deviation. I operationalized this requirement by retaining only those features for which I found satisfactory evidence supporting either the historical existence or the recent emergence of alternative organizational arrangements. For example, I retained a firm s promotion system as a relevant human resource feature not only because it appeared wi th overwhelming consistency across the data sources, but also because sufficient evidence pointed to the likelihood of observing some departures from the norm. Ga l -anter & Palay (1991: 64), for instance, described how some law firms are starting to modify the long-dominant promotion to partnership or up or out model by creat-ing new types of positions for professionals, such as contract lawyers and associate counsel, as wel l as new tiers of associates and partners, such as senior associates and non-equity partners. This trend was corroborated through the interviews I conducted with scholars and practitioners. The fifteen relevant features. Through this inductive selection process, I isolated a total of fifteen relevant features related to Greenwood & Hinings (1993) four dimen-sions of organizational form for the legal profession. These fifteen features are summarized in Table 3.1. 41 T a b l e 3.1: T h e Re levan t Features of the D o m i n a n t Temp la te for O r g a n i z i n g i n the L e g a l P ro fess ion Dimension-1 Feature Definition Interpretive scheme Emphasis on commercialism The extent to which business values such as efficiency and profitability are emphasized and the extent to which lawyers are viewed as businesspeople as providers of profitable, value-added servicesb. Emphasis on professionalism The extent to which professional values such as autonomy, democracy, and the provision of justice are emphasized and the extent to which lawyers are viewed as professionals as possessors of esoteric knowledge who represent public interests0. Emphasis on lifestyle promotion The extent to which lifestyle values such as creating a more flexible and supportive work environment are emphasized and the extent to which lawyers are viewed as multi-role individuals with commitments beyond the organization or profession. Emphasis on crusading The extent to which crusader values such as revolutionizing aspects of the legal profession or society in general are emphasized and the extent to which lawyers are viewed as missionaries of these idealistic pursuits. Structural aspects Form of governance Whether the firm is governed as a partnership, cost-sharing arrangement, or solo-owned practiced Personnel configuration The extent to which the ratios of lawyers to partners and support staff to professionals align with the pyramid model; that is, a g reater number of lawyers than partners and a greater number of support staff than professionals for leverage. Divisionalization criteria The basis for grouping lawyers; more specifically, whether this grouping is based on area of legal specialization or some other criterion. Decision systems Centralization The degree to which decision-making authority is concen-trated in the partners of the firm. Interaction The degree to which decision-making processes are individ-ual and directive versus collective and consensual.e Human resource practices Recruitment policies The extent to which the apprenticeship model is approxi-mated (i.e., hiring from a pool of articling students on the basis of their potential legal ability). Promotion system The degree to which the up or out system is approximated (i.e., promoting from within on the basis of demonstrated business performance). Compensation The relative emphasis on performance versus seniority for 42 j D i m e n s i o n 3 F e a t u r e < D e f i n i t i o n criteria both partners and associates. Control The extent to which performance is monitored and under-mechanism achievement is tolerated. severity-Flexibility The extent of time demands and degree of accommodation for commitments beyond the organization. Privilege equality The extent of stratification between hierarchical levels in the organization. a dimensions from Greenwood & Hinings (1993) b definition based on Cooper et al. (1996) c definition based on Cooper et al. (1996) d A partnership is defined as a group of lawyers, whether incorporated individually or not, who share both revenues and expenses. A cost-sharing arrangement is defined as a group of lawyers who share expenses, personnel, and/or office space but not revenues. A solo-owned practice is defined as a firm that is owned by only one lawyer but that employs other lawyers (this distinguishes it from a solo practitio-ner, which refers to a firm comprised of only one lawyer). e Greenwood & Hinings (1993:1055) The relevant features of a law firm s interpretive scheme revolve around the manner in which the identities of both the law firm itself and the lawyers within it are conceptualized. As indicated in Table 3.1, four distinct orientations are salient: commer-cialism - viewing the firm as a business venture and the lawyers within it as business persons; professionalism - viewing the firm as a vehicle for representing public interests and the lawyers within it as professionals 7; lifestyle promotion viewing the firm as accommodating personal lives and the lawyers within it as individuals wi th commit-ments beyond the organization or profession; and crusading viewing the firm as a vehicle for making systemic changes to the profession or society as a whole and the lawyers within it as missionaries of this endeavour. These orientations are not mutu-ally-exclusive: theoretically, it is possible for a law firm to simultaneously emphasize multiple orientations. The most relevant structural aspects appear to be the overarching form of governance, the configuration of personnel, and the criteria of divisionalization. Two features of a law firm s decision systems are particularly relevant: the extent of centralization and the extent of interaction. Finally, the most relevant features of a law firms human resource practices include recruitment policies, promotion practices, 7 The traditional meaning of the term professional is implied here; that is, an individual who exhibits civilized behaviour in the application of esoteric knowledge and skills to public interest activities, such as the provision of justice and the maintenance of property rights (Cooper et al.,1996: 627). An interesting discussion of the evolving meaning of the term professional is presented in the cited article. 43 compensation criteria, control mechanism severity, and the extent of flexibility and privilege equality. 3.3 R E S U L T S 3.3.1 Qua l i t a t i ve F i n d i n g s S u p p o r t i n g the Na tu re of the L e g a l P ro fess ion s D o m i n a n t Temp la te Following Glaser & Strauss (1967) and Miles & Huberman (1995), I used an inductive, iterative process to determine the nature of the legal profession s dominant template along each of the fifteen relevant features. Starting wi th a plausible description inspired by one data source, I then compiled evidence from the others to see if it could be empirically grounded; based on the strength of supporting evidence across the data sources, plausible descriptions were abandoned, modified, or retained. Table 3.2 sum-marizes the qualitative evidence supporting the retained descriptions of the dominant organizational form for the legal profession. A s indicated in Table 3.2, the four data sources were very consistent in describ-ing the interpretive scheme of the legal profession s dominant template for organizing. A l l four sources stressed the tension created by the high emphasis placed on the seem-ingly contradictory values of commercialism and professionalism. Although the sources tended to agree wi th Galanter & Palay s observation that firms have become more openly commercial and profit-oriented (1991: 52), they also supported these scholars further observation that increasing commercialism does not necessarily mark a dec i -sive break from professional ideals (1991: 3). Similarly, all four sources stressed the low emphasis placed by dominant firms on lifestyle promotion. Notions such as creating a more flexible and supportive work environment are not highly valued. Similarly, dominant firms tend to under-appreciate the reality that many lawyers are individuals with roles and commitments beyond the firm and the profession, operating instead by an all -or-nothing principle (Hagan & Kay, 1995:109) that obstructs] and penalize[s] child-rearing (Galanter & Palay, 1991: 58). 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CHHHI CO (-01 71 U ^ 3 01 co SH g CO 01 0) 01 _, it! H3 a 3 CO Ol bO co 0) CS s <u 3 C u 7 3 § ^ •> ai cu > .S •- £ o> -•C J H C M gj co •HH CS a C3-<U cu £o cu 50 A s indicated in Table 3.2, the four data sources were also quite consistent in terms of describing the structural aspects of the legal profession s dominant template for orga-nizing. There was very strong agreement that dominant law firms tend to be governed as partnerships rather than as either solo-owned practices or as cost-sharing arrange-ments 8. Moreover, some evidence was found across all data sources supporting the pyramid model of personnel configuration; that is, the use of high ratios of both lawyers to partners and support personnel to professionals for leverage. Less agreement was found, however, for the structural aspect of divisionalization criteria. Although observ-ers of the legal profession noted that the dominant practice is to group lawyers according to their area of legal expertise (e.g, criminal, corporate-commercial, family law), none of the data collected from actors within the British Columbia legal profession emphasized this structural aspect. Table 3.2 further indicates that the data sources were fairly consistent with respect to how they described the decision systems of the legal profession s dominant form. Decision-making authority tends to be highly concentrated in the partners of the firm; more specifically, as noted by one practitioner, in the power partners who run the f i r m . Amongst the partners, decision -making processes tend to be collective and consensual rather than individual and directive, with the majority of key decisions being made through partnership committees. Finally, as indicated in Table 3.2, the data sources were remarkably consistent in describing the characteristic human resource practices of the legal profession s domi-nant template for organizing. A high level of consistency was found both within and between data sources in support of the notion that dominant firms tend to recruit according to the apprenticeship model; that is, hiring students directly out of law school on the basis of their potential legal ability, and then training and observing them during a one-year articling period. A very high level of consistency was also found both within and between the data sources in support of the promotion -to-partner tournament (Galanter & Palay, 1991: 3); as one practitioner noted: Firms typically groom people to come up through the ranks. There s an up or out policy . Partnership decisions appear to be made primarily on the bases of business ability, as indicated by such measures as billings and number of new clients attracted to the firm. The data sources were also 8 A partnership is defined as a group of lawyers, whether incorporated individually or not, who share both revenues and expenses. A cost-sharing arrangement is defined as a group of lawyers who share expenses, personnel, and/or office space but not revenues. A solo-owned practice is defined as a firm that is owned by only one lawyer but that employs other lawyers (this distinguishes it from a solo practitio-ner, which refers to a firm comprised of only one lawyer). 51 remarkably consistent in describing the dominant compensation system for partners as based primarily on principles of equity and merit, as measured by billable hours and billings, wi th that of associates based primarily on the principle of seniority, as meas-ured by year of call. A l l four data sources painted a very clear portrait of the strict control mechanisms in place at dominant law firms. Partners and associates in such firms are typically responsible for attaining extremely high revenue quotas often up to two thousand billable hours a year (Hagan & Kay, 1995: 168). Progress towards these targets is monitored frequently and typically reported publicly, with waning tolerance of under-performance the latter including financial repercussions in the case of part-ners and relegation to the non-partnership track in the case of associates. A l l four data sources described the consequent work environment as one of considerable inflexibility, wi th excessive demands on time, a poor quality of life, and a lack of accommodation for lawyers with families (Hagan & Kay, 1995: 82). Three of the four data sources also emphasized the high degree of inequality in the privileges accorded to support person-nel, associates, and partners. A s noted by Hagan & Kay: There are acute power differences, some obvious and others more subtle, associated wi th positions in the profession (1995: 35). In sum, the considerable consistency with which the four data sources described the dominant template for organizing in the legal profession attests to the validity of this construct (cf. Eisenhardt, 1989). For ten of the fifteen relevant features of form, all four sources provided consistent evidence supporting the identified description. For four features, three of the four sources provided corroborating evidence (in each case, however, only one practitioner source corroborated the observer sources). There was only one feature divisionalization by area of legal expertise which was described by observers of the legal profession in general but for which no corroborating evidence could be found in the qualitative data collected from actors within the British Columbia context. In spite of these consistent qualitative findings regarding the nature of the legal profession s dominant template, I implemented a more rigourous, quantitative valida-tion procedure to further verify that the results pertained in my selected province. 3.3.2 T h e Quant i t a t ive V a l i d a t i o n Procedure I conducted a more robust check on the validity of the dominant template in the British Columbia context by administering a questionnaire to a separate panel of law-yers chosen for their familiarity with the provincial legal profession. Six practitioners were invited and agreed to act as panelists. To help ensure adequate understanding of the various aspects of the dominant form, the panelists had to have either at least five 52 years experience practising law in British Columbia or at least three years experience working in a large firm; that is, one wi th twenty or more lawyers (Stager, 1990). To help secure commonly-held perceptions of the norm rather than those of a narrowly-defined, elite segment of the profession I also attempted to assemble a panel reflecting a mix of genders, ethnicities, experience levels, types of positions, and sizes of employ-ing firms. The questionnaire administered to these panelists consisted of four different types of items. In the first type, the panelists were asked to rank order a discrete num-ber of alternatives for a particular indicator of organizational form in terms of how closely each alternative resembled the industry standard. For the most part, the alterna-tives were distilled from the initial literature and interviews. A n example of this type of item is form of governance , which was presented as having three possible alternative arrangements: partnership, cost-sharing arrangement, or solo-owned practice. The highest-ranking alternative was deemed to describe the norm for the British Columbia legal profession. In the second type of questionnaire item, the panelists were asked to indicate whether a particular arrangement or activity was characteristic of the industry standard. A n example is the creation of different categories of partnership (e.g., equity and non-equity partners). The arrangements or activities selected by at least two-thirds of the panelists were deemed to typify the norm for British Columbia law firms. In the third type of questionnaire item, the panelists were asked to provide numerical esti-mates for the industry standard. A n example is the number of support staff per lawyer. The mean value assigned by the panelists was deemed to describe the norm for the province. The fourth type consisted of five-point Likert items tapping the dominant pattern of beliefs about law firms and lawyers such as the extent to which business values are emphasized. The mean scores were used to describe the nature of the domi-nant interpretive scheme. A copy of the entire panelist questionnaire is presented in Appendix 3.1. A summary of the questionnaire items that I utilized to measure each feature of the domi-nant template is presented in Table 3.3. This table also presents the results of the quantitative validation procedure. 3.3.3 Quant i t a t ive F i n d i n g s V e r i f y i n g the D o m i n a n t Templa te for the B r i t i s h C o l u m b i a L e g a l P rofess ion In sum, the findings reported in Table 3.3 lend strong support for the feature-by-feature construct validity of the legal profession s dominant form in the British Colum-53 bia setting. O n average, the panelists indicated that dominant firms in the province place a moderate to high emphasis on both commercialism (mean emphasis on business values = 3.67; mean emphasis on lawyers as business persons = 3.33) and professional-ism (mean emphasis on professional values = 3.67; mean emphasis on lawyers as professionals = 3.33)9. They also agreed that the dominant firms place little emphasis on either lifestyle promotion or crusading (on average, four out of six panelists indicated that neither of these orientations was characteristic of the norm). This pattern of quanti-tative results corroborates the nature of the legal profession s prevailing interpretive scheme distilled from the qualitative data. Similarly, the quantitative findings from the panelist survey validated the quali-tative evidence regarding the dominant form s distinguishing structural aspects. A s indicated in Table 3.3, the majority rated partnerships as the dominant form of govern-ance (four out of six panelists), and divisionalization by area of legal expertise as characteristic of the industry norm (five out of six panelists). The panelists perceptions of the dominant form s personnel ratios, indicated by means of 2.00 lawyers per partner and 1.06 support staff per professional, were remarkably consistent with figures re-ported in the existing literature: Galanter & Palay (1991: 59) presented evidence indicating an average associate to partner ratio of 1.47, whereas Ellis noted that most firms today strive for a 1:1 ratio [of support staff to professionals] (1993:14). The nature of the dominant form s decision systems was also validated by the quantitative data. A s indicated in Table 3.3, the panelists were almost unanimous in describing decision-making authority as highly centralized in the partners of the firm: all six agreed that non-professional supervisors are uncharacteristic of the norm, and five of the six agreed that attendance at partnership meetings by non-partnered lawyers or senior support staff is not a standard practice. The majority described the dominant decision-making process as collegial in nature, wi th four of the six selecting decisions-by-committee as the highest-ranking alternative. The apprenticeship model of recruitment was the first of only two features that were not completely validated by the quantitative data obtained through the panelist survey. In contrast to the qualitative data, which had revealed that dominant firms tend to hire associates directly out of their articling period, the majority (four out of six panelists) believed that the normative practice was to recruit individuals who already 9 These value orientations were measured on a five-point scale ranging form l=very low emphasis to 5=very high emphasis. 54 »•*</) C o-' CH X OI •i. > » flj # T3 : s 01 s 01 n G G o H-» 'to o> 5 o> z i cn 01 oi CO I X ND CO II C rt 0 1 X bp X O 0 1 o cn 0 1 J 3 "rt > cn cn 0 1 C cn o cn rt x O H g X 6 0 CO o CO CO CO II c rt 0 1 g g X bp X o OI O cn C o cn rt O) O H cn cn OI c 'in X cn rt 0 1 > N fe rt O rt X O H g W 01 c ism o hen cn 'u hen 'cn rt rt OI u cn X g O H HJ c C G rt W o CO i-H O CM CO CO CO II C rt oi X o 0 1 T 3 O cn 0 ) J 3 "rt > "rt _o 'cn cn 0 1 M H o rt O H c o rt X O H X bO NO CO g g X X bO bO X o 0 1 Xi o rt c _o 'in cn Oi M H O S H O H cn rt cn S H 0 1 > N rt o rt X O H c o cn g cn • r t "rt C O rt 1 0 rt cn O H £ g a W O H o 2 o o rt OI u rt rt rt X u cn 0 1 J 3 " r t > 0 1 * > N -rt cn oi C o rt X O H g fe o rtJ S3 O cn cn oi rt - T - 1 X O H 12 g & W X o 2 rt Xi • i - H > • rtH X <3 • i - H "3 3 g cn rt cn rt oi > N _r t bO g .5 3 fe c oi QJ O 2 rt 0 1 - r t U rt rt rt X u 0 1 3 "rt > rt 0 1 XI rt cn 3 o cn • rt cn rt Xi O H W O o rtJ o _cn bO 'cn g rt 73 O H g 6 g NO CO o 2 S H 0 1 - r t U rt tH rt X u l H rt C .2 'in cn cn rt cn rt 0 1 l>> fe ^ JS g bO o s « > -H-NO O H X cn S H 0 1 B In rt PH Oi _> rt C 0 1 u S3 rt C w Oi > o bO bO g c rt cn 0 1 X bO O H X cn l H O) S3 -rt rt rt P H > O <U 6 0 3 •B O O CO o o rt OI I H 0 1 c l H rt O H l H 0 1 O H 0 1 fe rt O) X g 2 P H 0 0 CO NO o rt C _o 'cn cn M H O S H O H l H 0 1 O H - r t ! 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The panelists were unanimous in ranking promoting from within rather than cherry -picking from outside as the prevailing method, and five of the six selected business ability as the highest-ranking decision criterion. There was also considerable agreement that the dominant law firms in the province were not yet experimenting with either new types of positions for professionals, such as contract lawyers or associate counsel (five of the six panelists stated that positions other than articles and associates were not the norm), or with new tiers of associates and partners, such as senior associates and non-equity partners (four of the six panelists stated that differentiation within hierarchical levels was not the norm). The second feature not completely corroborated by the quantitative results was the dominant compensation criteria. Although the panelists were unanimous in select-ing a salary system based on year of call as the prevailing practice for associates, only three of the six agreed that the dominant firms tended to implement a merit-based point system for partners, wi th calculations of merit based on demonstrable contributions to the firm s business performance (i.e., billable hours, value of billings). A s indicated in Table 3.3, the quantitative findings provided considerably stronger support for the construct validity of the dominant form s strict control mecha-nisms. The panelists were virtually unanimous in stating that the normative practice is to set billable hours and billings quotas (five of the six agreed that these were the stan-dard types of quotas) for both partners and other lawyers in the firm (all six agreed that quotas tended to be set at both levels of the hierarchy). The majority described the dominant firms tolerance of under-achievement as moderate in nature, with four of the six panelists stating that actions are typically taken to determine the cause and correct an individual s failure to meet his or her quota. Finally, the dominant monitoring frequency in the province appears to be monthly, although there was less agreement amongst the panelists on this aspect of the prevailing control mechanisms (three of the six selected monthly as the typical monitoring frequency). Finally, the panelists were in almost complete agreement wi th respect to describ-ing the human resource practices of the dominant firms in the British Columbia legal profession as inflexible in general as wel l as unequal in terms of the privileges accorded 58 to different hierarchical levels. A l l six agreed that the standard practice is not to provide any flexible work arrangements for lawyers (such as part-time positions, telecommut-ing, or job-sharing) nor to implement any family-friendly practices for all personnel (such as extended maternity leave, paternity leave, or family leave). Similarly, five of the six stated that profit-sharing arrangements are not characteristic of the norm and all six agreed that flexible work arrangements for support staff are atypical, pointing to the inequality of privileges across hierarchical levels. 3.4 S U M M A R Y A N D D I S C U S S I O N 3.4.1 S t rong Suppor t for the Existence of D o m i n a n t Templa tes (Hypothes i s 1) The first phase of my empirical research sought to test a widely-asserted, yet relatively under-examined, basic premise of neo-institutional theory; namely, that institutional environments provide prescriptions for appropriate patterns of organized activity (Greenwood & Hinings, 1993: 1073; DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Scott & Meyer, 1994; Zucker, 1977). Set in a highly-institutionalized context the British Columbia legal profession the qualitative and quantitative find-ings reported in this chapter lend strong support for this fundamental assumption. The high level of consistency with which the various data sources described the component features of the dominant template suggests that this framework for organizing is com-monly perceived and understood by both observers of, and actors within, this institutional milieu. In other words, the British Columbia legal profession appears to contain a dominant template with a high degree of cognitive legitimacy across different constituents. This finding is particularly striking given that the legal profession is currently in the midst of a profound transition. 3.4.2 T h e S e d i m e n t e d Na tu re of the D o m i n a n t Templa t e Beyond demonstrating the existence of a commonly-perceived dominant tem-plate in the British Columbia legal profession, the qualitative and quantitative data presented in this chapter also reveal interesting findings regarding the nature of this institutional contexts prevailing framework for organizing. Overall, the pattern of findings support the implication drawn from Cooper et al. s (1996) analysis of the Canadian legal profession s transition; namely, that this industry s currently-dominant form is a sedimented structure, a hybrid or layering of the historical P2 and emerging M P B archetypes identified by these scholars. Table 3.4 summarizes how the British 59 Columbia legal profession s currently-dominant template represents a synthesis of Cooper et al. s (1996) two idealized archetypes. As indicated in Table 3.4, the interpretive scheme of the British Columbia legal profession s dominant template clearly reflects an intermingling of the P2 s and M P B s respective ideologies of professionalism and commercialism. Commercial values such as efficiency and effectiveness are highly-emphasized as are professional values such as collegiality and democracy. Analogously, the lawyers within these dominant firms are viewed as both profit centres who provide value-added client service as wel l as mem-bers of an elite class who apply esoteric knowledge through their role as servants of public interests. T a b l e 3.4: T h e S e d i m e n t e d Na tu re of the C u r r e n t l y - D o m i n a n t Templa te for the B r i t i s h C o l u m b i a L e g a l P ro fess ion | Dimension- The P2 Archetype3 The MPB Archetype^ ' The Currently-Dominant 1 Template,. , ] Interpretive scheme • high emphasis on professional values such as autonomy, collegiality, and democ-racy • high emphasis on commercial values such as efficiency, effective-ness, and the provision of value-added client service Mixture of P2 and MPB: * high emphasis on both professional and com-mercial values • lawyers viewed as professionals as members of an elite class who apply esoteric knowledge in the ser-vice of public interests • lawyers viewed as businesspeople and profit centers as indi-viduals who should be client-oriented and ca-pable of providing value-added service • tendency to view lawyers both as profes-sionals and as businesspeople Structural • firms governed as • firms still governed as Mixture of P2 and MPB: aspects partnerships with few hierarchical levels partnerships but hierar-chical complexity increases with the intro-duction of new tiers of associates and partners; notion of pyramiding for leverage recognized and implemented hierarchical complexity still low but notion of pyramiding incorpo-rated through use of high ratios of lawyers to partners and support personnel to profession-als 60 Dimension The P2 Archetype1 The MPB Archetype1' 1 The Currently-Dominant } Template • differentiation based • differentiation based • differentiation s t i l l u p o n area of legal spe- u p o n area of legal spe- based u p o n area of legal c ia l izat ion (e.g., c ia l izat ion as w e l l as specialization cr imina l , corporate- functional a n d / o r i n -commercial). dustry special izat ion Decis ion • decis ion-making • ult imate decision- Primarily P2: systems authori ty concentrated w i t h i n the partnership level but dis t r ibuted amongst partners m a k i n g authori ty s t i l l resides w i t h partners, yet non- lawyer man-agement specialists are in t roduced into the f i rm • decis ion-making authori ty s t i l l h igh ly concentrated i n partners; lit t le evidence of non-lawyer specialists i n posit ions of authori ty • consensus-style deci- • decis ion-making • collective, consensual s ion-making processes processes are more i n d i -v idual is t ic and directive processes H u m a n • recruitment policies resource resemble the appren-practices ticeship model , w i t h associates h i red o n the basis of their legal abi l -i ty from a poo l of art icl ing students lawyers recrui ted more on the basis of demon-strated abi l i ty to generate revenues Mixture of P2 and MPB: • recruitment policies i n Br i t i sh C o l u m b i a n o w approach those of the M P B archetype, w i t h associates h i red pr imar-i l y on the basis of their experience p romot ion system based on the up or out mode l an inter-nal job market, w i t h decisions based pr imar-i l y on legal abil i ty, w i t h no positions available to those denied partner-ship yet guaranteed tenure for those admit-ted as partners compensation at both partner and associate levels based p r imar i ly on principles of equality and seniori ty p romot ion decisions based p r imar i l y on demonstrated business abi l i ty; no guarantees of cont inuing tenure for those admit ted to part-nership; non-partnership track pos i -tions and different tiers of associates and part-ners in t roduced compensation at both partner and associate levels emphasize ine-qual i ty and meri t t ied to business performance p romot ion policies reflect a m i x of both archetypes: the up or out rule prevai ls yet admiss ion decisions are based p r i m a r i l y on demonstrated f inancial contr ibut ion compensation policies also reflect a m i x of both archetypes: merit-based compensation is n o w the n o r m for partners but seniori ty-based remu-nerat ion is s t i l l the n o r m for associates 61 ^Dimension The P2 Archetype1 The MPB Archetype^ I he Curiently-Dominant Template somewhat lenient monitoring mecha-nisms: performance targets may be estab-lished yet tolerance of under-achievement is high strict monitoring mechanisms: specific financial and market targets established and monitored frequently, with little tolerance of under-performance • monitoring mechanisms now approach those of the MPB archetype, with high financial quotas (yet typically not mar-keting quotas) established and moni-tored frequently at partner and associate levels, with only moder-ate tolerance of under-performance a Descriptions of the Professional Partnership (P2) archetype based primarily upon Cooper et al. (1996) pp. 626-628, supplemented by Galanter & Palay (1991). b Descriptions of Managerial Professional Business (MPB) archetype based primarily upon Cooper et al. (1996) pp. 626-635, supplemented by Galanter & Palay (1991). The sedimented nature of the dominant template s interpretive scheme is mani-fested in its configuration of structural aspects, decision systems, and human resource practices. Within this set of more observable dimensions it is apparent that elements of the traditional P2 template have been combined with those of the emerging M P B arche-type. The nature of the dominant template s structural features is a case in point: here, it is clear that the P2 practice of divisionalizing lawyers according to their area of legal expertise has been retained, while the M P B notion of pyramiding uti l izing high ratios of both lawyers to partners and support personnel to professionals for leverage has been incorporated. The decision systems of the dominant template, on the other hand, do not yet appear to incorporate many M P B concepts. Decision-making authority is still highly concentrated in the partners of the firms, and, consistent with the continued emphasis on professional values, decision-making processes tend to be collective and consensual rather than individual and directive. The pattern of prevailing human resource practices clearly illustrates the sedi-mented nature of this dimension of the dominant organizational form. While the normative recruitment policies of the British Columbia legal profession now approach those of the M P B archetype, with associates hired on the basis of their experience rather than their potential legal ability, promotion policies reflect a mix of both archetypes. The P2 s up or out rule, which prescribes that after a probationary period the young 62 lawyer w i l l either be admitted to the partnership or w i l l leave the firm (Galanter & Palay, 1991: 28), is still the norm; yet admission decisions are now based on the M P B notion of demonstrable contribution to the firm s financial performance rather than the quality of the candidate s legal work. The dominant compensation practices are simi-larly hybrid in nature. Wi th its emphasis on revenue generation, as measured by billable hours and billings, the merit-based compensation system for partners is clearly in accordance with the M P B archetype. In contrast, the lockstep system for associates, in which an individual receives a fixed salary commensurate with his or her year of call, regardless of hours worked or revenue generated, is compatible wi th the principle of seniority characteristic of the P2 template. The strict control mechanisms consistently described across the various data sources are perhaps the most obviously-incorporated aspects of the commercialistic M P B archetype. The practices of setting high performance quotas for both partners and associates, monitoring progress frequently, and exhibiting only a moderate tolerance of under-achievement are all compatible with the M P B s emphasis on efficiency and effectiveness and view of lawyers as profit centres. In sum, the currently-dominant template in the British Columbia legal profession is clearly a hybrid of the traditional P2 and the emerging M P B templates identified by Cooper et al. (1996) a sedimented form combining features of how dominant law firms tended to be organized in the past with aspects of how the dominant law firms are expected to be structured in the future. Given that the legal profession is currently in a period of profound transition, this finding provides preliminary support for Green-wood & Hinings (1996: 1030) proposition that institutional change in tightly-coupled fields such as law is likely to be convergent rather than transformational. In contrast to a transformational view of institutional change, in which one archetype sweeps away an earlier one (Cooper et al., 1996: 635), a con vergent view of institutional change empha-sizes the modification of features within the parameters of existing archetypal templates (Greenwood & Hinings, 1996). This appears to be the case for the British Columbia legal profession, where the currently-dominant form clearly contains features of the tradi-tional P2 archetype as wel l as those that have been modified in the direction of the emerging M P B archetype. 3.4.3 C o n c l u s i o n In conclusion, the results of this first phase of my research support the basic neo-institutional premise that highly-institutionalized environments contain common 63 understandings regarding prevailing administrative values, structures, systems, and practices. By adding the quantitative validation component to Greenwood & Hinings (1993) recommended protocol for unearthing institutionally-prescribed frameworks for organizing, I obtained sufficient assurance of the identified configuration s validity amongst both observers of, and actors within, the selected setting. A s a result, I am satisfied that I have uncovered the commonly-held perceptions of the British Columbia legal profession s dominant template, and am confident in using its component features as the referents upon which to base my subsequent calculations of new entrant devia-tion. The methodology for making such calculations represents the focus of the following chapter. 64 C H A P T E R 4 : C A L C U L A T I N G M U L T I D I M E N S I O N A L M E A S U R E S O F F O R M A N D D E V I A T I O N : A M E T H O D O L O G I C A L P R O T O C O L 4.1 I N T R O D U C T I O N The primary objective of this chapter is to present the methodology for the second phase of my empirical investigation calculating multivariate measures of both the organizational forms of new entrants to the British Columbia legal profession as wel l as their extent of deviation from the industry s dominant template. The procedures described in this chapter bui ld upon the empirical work of those neo-institutional scholars who have emphasized the importance of, and utilized, multidimensional rather than unidimensional operationalizations of organizational structures, systems, and practices (e.g., Cooper et a l , 1996; Greenwood & Hinings, 1993; Oliver, 1988). M y techniques also extend the work of other new institutionalists who have called for, and calculated, continuous rather than dichotomous measures of isomorphism (e.g., Oliver, 1988; Westphal et al., 1997). Through these extensions, I hope to provide novel meth-odological tools for future researchers interested in investigating the phenomenon of organizational variation. 4.2 S A M P L I N G A N D D A T A C O L L E C T I O N P R O C E D U R E S 4.2.1 E l i g i b i l i t y C r i t e r i a for I n c l u s i o n i n the Sample I placed a number of preliminary screening restrictions on the new entrants to the British Columbia legal profession that would be eligible for participation in the second phase of my empirical investigation. For one, the sample was geographically-restricted to firms located in the province s two largest metropolitan areas, the greater Vancouver and Victoria regional districts, in order to control for potential differences in organizational form attributable primarily to a rural versus urban office location (Stager, 1990: 169). I also limited the pool of eligible firms to those founded in 1990 or later. This cut-off year was selected to help ensure that the firms were relatively newly-established, that participants would be able to recall decisions about their firm s organi-zation as accurately as possible, and that potential confounds attributable to differences 65 in institutional contexts at the time of founding would be minimized. Research on the Canadian legal profession conducted during the first phase of my investigation sug-gested that law firms founded during the mega -firm mania of the 1980s faced a very different operating environment than those founded during the 1990s (e.g., Ell is , 1993; Stock, 1996; Stock & Leishman, 1998). It was also necessary that the firms employ more than five individuals. I imposed this size restriction because human resource practices constitute a major component of how I have conceptualized organizational form: many of these practices would be irrelevant in a smaller-sized firm. 4.2.2 Sampling Frame I identified eligible law firms that met these preliminary screening criteria from the 1998 British Columbia Business to Business Directory, a computerized database con-taining contact names and basic descriptive data on all law firms in the province. Prior to selecting the sample and sending out introductory letters, I checked the accuracy of the contact names and descriptive data against the 1998 British Columbia Lawyers Tele-phone, Fax & Services Directory. Because neither of these directories included law firms established in 1998 the year during which this stage of the research was conducted the sampling frame was incomplete. Thus, to identify the most recently-established firms, I compared the 1997 and 1998 versions of the BC Tel Yellow Pages Directory for Vancouver, and compiled a list of firms appearing in the latter but not the former edition. The eligibility of the firms on this list was then verified through a brief prelimi-nary phone call. A total of 130 firms obtained from these sampling frames met the preliminary screening restrictions. I sent an introductory letter to one of the founding partners of each firm, with the request that it be directed to the founder who played a lead role in the initial decisions about the firm s organization and management. Follow-up phone calls were then conducted to encourage participation and to verify the size and found-ing year restrictions (copies of the introductory letter and follow-up telephone script are presented in Appendices 4.1 and 4.2 respectively; a copy of the ethics board certificate of approval is presented in Appendix 4.7). The phone calls were also used to ensure that the firms met two additional eligibility requirements. First, the firms could not have been founded as branch offices or mergers of existing firms: in order to adequately test my hypotheses, founders had to have latitude regarding the internal design of their firms without being constrained by parent or partnering organizations. Second, given my interest in the objective backgrounds and subjective interpretations of founders as 66 potential explanatory variables, it was critical that the firms were still managed by at least one of the founding partners. Unfortunately, 25 firms failed to meet all of these screening requirements, despite the partners interest in participating in the study. This reduced the pool of eligible firms to 105. 4.2.3 Pa r t i c ipa t ing F i r m s a n d F o u n d i n g Partners A founding partner from 60 of the 105 eligible firms agreed to participate, which resulted in a response rate of 57% 1 0 . A l l of these founding partners confirmed in ad-vance that they had been highly involved in decisions about the organization and management of the firm, particularly with respect to human resource practices. The majority of the 36 who declined participation cited lack of time as their primary reason for doing so. Nine founding partners could not be contacted, despite repeated attempts via follow-up letters and phone calls. A s indicated in Table 4.1, the 60 firms that partici-pated in the study were not significantly different in terms of year founded, size, or geographic region from the 45 eligible firms that d id not participate 1 1. Thus, I am fairly confident that the sample is representative of the population of eligible law firms estab-lished in British Columbia in the 1990s. T a b l e 4.1: Par t ic ipan t V e r s u s Non-Pa r t i c ipan t C o m p a r i s o n F i r m C h a r a c t e r i s t i c s P a r t i c i p a n t s (n=60) \ o n -P a r l i c i p a n t s (n=45) T e s t S t a t i s t i c P - V a l u e M e a n y e a r f o u n d e d 1993.48 1993.86 t = 0.83 0.41 S i z e c a t e g o r y : % with 6-10 employees 78.30 86.70 % with 11-25 employees 18.30 11.10 % with over 25 employees 3.30 2.20 = 1.21 0.55 G e o g r a p h i c r e g i o n : % in Greater Vancouver 86.70 84.40 X2 = 0.10 0.75 % in Greater Victoria 13.30 15.60 1 0 I was very encouraged by this response rate, particularly given that the partners of these law firms would be forgoing the high hourly rate that they could have charged for their time. 1 1 I obtained data on the eligible non-participants from the 1998 British Columbia Business to Business Directory. 67 In Table 4.2 below, I present additional descriptive statistics for the firms in the sample. On average, the sampled new entrants had been in operation for less than five years (mean = 4.83 years). Given their young age, it was not surprising that the sample contained a high proportion of small and medium firms those consisting of two to four lawyers (58.33%) and five to nineteen lawyers (40.00%) respectively and a low proportion of large firms (1.67%)12. The inclusion of support staff, however, raised the average size of the sampled firms from 5.05 lawyers to 11.77 personnel in total. The remaining descriptive statistics presented in Table 4.2 indicate that, in general, the sample was comprised of a fairly wide range of law firms in terms of practice type and area, strategic focus, and performance. Table 4.2: Additional Descriptive Characteristics of Participating Firms 1-irm Characteristics Mean 1 SD I M m Max Percentage Age Years since founding 4.83 [2.28] 0.33 8.66 Size by category3: Small (2-4 lawyers) M e d i u m (5-19 lawyers) Large (20 or more lawyers) Size by personnel type: N u m b e r of partners N u m b e r of other lawyers N u m b e r of support staff Total number of personnel Type of practice: Li t iga t ion on ly Solici tor s w o r k on ly Both l i t iga t ion and solici tor s w o r k Major areas of practiceb: Corporate / commerc i a l 56.70 Real estate 41.70 Personal injury 36.70 2.73 [1.99] 1.00 14.00 2.32 [2.27] 0.00 13.00 6.72 [5.81] 1.00 32.00 11.77 [8.96] 5.00 59.00 46.70 26.70 26.70 2 Size categories for Canadian law firms were based on Stager (1990). 68 rirm Characteiistks - Mean , ., [ SI) | M m Max Percentage Q Major areas of practice, continued: Fami ly 35.00 W i l l s / estates 26.70 C r i m i n a l 20.00 Admin i s t r a t ive 18.30 Securities 16.70 Other 45.00 Strategic aspects: Bout ique / specialist 0 65.00 Focused on organizational cl ients d 33.30 Performance: Personnel turnover 1 5 0.48 [0.42] 0.00 1.67 Approx imate annual bi l l ings (in $ M ) f 1.69 [1.53] 0.53 9.99 a Size categories for Canadian law firms based on Stager (1990). b Percentages total to more than 100% because a firm could have more than one major area of practice. c Self-report by founder in response to the question, Would you characterize the firm as a boutique or general practice? d A firm was coded as organizational client focused if more than 50% of its time and revenues were based on this type of client. e Percentage of the current number of lawyers who had left the firm since founding f Calculated by multiplying the founder s average annual billable hours by the number of lawyers in firm and an average billing rate of $200 per hour; n=40 due to non-responses to the question about the foun-der s annual billable hours Table 4.3 provides descriptive statistics on the founding partners who were interviewed. In terms of their demographic characteristics, although the participants exhibited considerable heterogeneity in age (ranging from 32 to 56 years old), they were remarkably homogeneous in terms of gender and ethnicity. Only seven (11.67%) were female and only nine (15.00%) were ethnic minorities (i.e., not Caucasian). These figures are in keeping with previous research indicating that men are more likely than women to become partners of law firms (Hagan & Kay, 1995: 92), and that the profession has tended to exclude visible minorities from its ranks (Galanter & Palay, 1991: 25). The majority of the interviewees were also married (91.67%) and had children l iving at home (66.67%). In terms of their educational background, the majority (70.67%) possessed at least one university degree in addition to their L L . B : 6.67% held an advanced law 69 degree, 13.33% had a business degree, and 51.67% had another type of degree. The participants varied considerably with respect to the extent of their work experience in the legal profession, ranging from two to twenty-eight years practicing law in total and two to twenty-seven years practicing law in British Columbia. The number of firms they had worked for prior to starting the one that was the focus of my investigation varied from one to five. O n average, the interviewed founders had been practicing law for 15.35 years in total and for 14.66 years in British Columbia, and had worked for 2.17 firms prior to starting their own. Almost half (46.67%) had attended seminars on law firm management sponsored by one of the industry s professional associations. Table 4.3: Descriptive Statistics for the Interviewed Founding Partners Characteristics Mean I SD ] M i n Max Percentage Demographics: Age 42.92 [5.72] 32.00 56.00 Female Ethnic minority 3 Married Children at home Education: L L . B only L L . B + advanced law degree LL.B + business degree L L . B + other degree Work experience: Years practicing law in total 15.35 Years practicing law in BC 14.66 Number of prior firms 2.17 Professional association participation: Has attended seminars on 46.67 law firm management a includes participants who identified themselves as Asian/Asian-Canadian (n = 6), East Indian/Indo-Canadian (n = 1), Black/Afro-Canadian (n = 1), and First Nations/Metis (n = 1) 4.2.4 Data Collection Methods Questionnaires. Participants were faxed a preliminary background questionnaire prior to their personal interview. The first part of this background questionnaire fo-11.67 15.00 91.67 66.67 29.33 6.67 13.33 51.67 [5.91] 2.00 28.00 [5.80] 2.00 27.00 [1.01] 1.00 5.00 70 cused on the firm, asking questions about its service offering, strategy, and certain aspects of its organizational form. The second part of the questionnaire focused on the founding partner, asking questions about his or her educational background, years of experience in the legal profession, and general demographics. A copy of the back-ground questionnaire is presented in Appendix 4.3. Interviews. The majority of the data was collected through a structured, in-depth personal interview with each participant, conducted by either me (n=36) or a trained research assistant (n=24). Most interviews took place on the participant s busi-ness premises and lasted for at least one hour. Each covered a standard set of closed-and open-ended questions on elements of the firm s organizational form, the founder s rationale for both starting the firm and selecting the particular elements of the firms s design, the founder s prior work experience, and his or her perceptions of the degree to which the firm differed from the industry norm. A copy of the interview guide is pre-sented in Appendix 4.4. 4.3 OPERATIONALIZING ORGANIZATIONAL FORM 4.3.1 Overview In this section, I describe in detail how I measured the fifteen features of Green-wood & Hinings (1993) four dimensions of organizational form. Just as the features themselves emerged through the grounded approach summarized in the preceding chapter, so too d id the more specific indicators of each feature. Rather than limiting myself to the commonly-used indicators of existing research, I selected those that were emphasized consistently within and between the data sources from the first phase of my investigation. In many cases, these indicators were similar but not identical to those in the extant literature. 4.3.2 Interpretive scheme To obtain the quantitative measures of a firm s interpretive scheme required for the systematic examination of its form and deviation, I implemented a multi-step content analysis procedure. First, I isolated excerpts from the interview notes in which the founder referred to the values of the firm or the identities of lawyers. Most of these excerpts came from responses to planned, open-ended questions such as, What is the guiding philosophy or mission of the firm? , Can you describe your vision regarding the organization and management of people within the firm? , and Do you consider 71 yourself to be more of a lawyer than a businessperson, or the other way around more of a businessperson than a lawyer? . These structured questions were posed at different points in the interview to help ensure that I had broached the issue of a firm s interpre-tive scheme from a number of different angles. Some excerpts were also obtained from the tangential yet relevant comments that the founders made throughout their inter-views. I identified a total of 329 excerpts relating to the firms interpretive schemes (an average of 5.5 excerpts per interview). I then designed a set of thematic categories and classification criteria for coding the excerpts. The literature review and interviews I had conducted during the first phase of my research suggested four overarching orientations for law firms: commer-cialism, professionalism, lifestyle promotion, and crusading. Table 4.4 presents the classification criteria and representative interview excerpts for the emergent thematic categories consistent wi th each of these four overarching value orientations (descriptive statistics appear in the discussion of my findings in Chapter 5). A s indicated in Table 4.4, the first thematic category consistent with a commer-cialistic orientation included excerpts emphasizing business values such as efficiency, effectiveness, productivity, or competitiveness. One founder, for example, responded as follows when asked about the overarching vision for his firm: I was with a downtown firm for four to five years. I always had a vision that I could do a better job in terms of management. I could make things work like clockwork. In law firms there are too many papers, things get misplaced. There is not much efficiency from a business standpoint 1 3. The second thematic category consistent with a commercialistic orientation included excerpts emphasizing the corresponding view of lawyers as business persons who provide profitable, value-added services. The following excerpt provides a rather striking example of the tendency to view lawyers as profit centers comparable, in this case, to fixed assets such as photocopiers: We have it arranged so that our rent is paid by the self-employed office-sharer, the legal assistant s billings cover her salary and that of the junior staff, the pho-tocopier pays for itself and the other machines, and our associate more than covers the rest. Each is a profit center. We look at all of them this way. 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The collegial and democ-ratic aspects of a professional orientation are evident in the following description of a firm s decision-making style: We try not to make decisions unilaterally because it is a partnership, which is like a marriage 1 5 . The second thematic category consistent wi th a professional orientation included excerpts emphasizing the corresponding view of lawyers as professionals who represent public interests by applying esoteric knowledge to ensure that justice prevails. For example, when asked whether he considered himself to be more lawyer or more businessperson, one founder responded: I sort of go back and forth on that. What s very important to me is the law the professional aspect of all this. It s critical that myself and the entire firm conduct ourselves very professionally 1 6. A s indicated in Table 4.4, the first thematic category consistent with a lifestyle promo-tion orientation included excerpts emphasizing lifestyle values such as creating a less stressful, more flexible work environment that accommodates the needs of its members. For example, when asked to describe the overarching vision for her firm, one founder replied: The big firm life was not something we were interested in Big firms are built in the image of men. [The big firm we were previously at] had a difficult envi-ronment. Although never explicitly stated, the environment was one of constant work work, work, work 1 7 . The second thematic category consistent wi th a lifestyle promotion orientation included excerpts emphasizing the corresponding view of lawyers as multi-role indi-viduals wi th commitments beyond the firm or the profession. The same participant, for example, also commented that she and her partner had come to the realization that there was no way for either of [ them] to have children at the large firm . As a result of starting their own practice, they have each been able to have two children without jeopardizing their careers. As indicated in Table 4.4, the first thematic category consistent with a crusading orientation included excerpts emphasizing crusader values such as the desire to revolu-tionize aspects of the profession or society in general. The second thematic category 5 Comment made by a male founding partner of an eight-person litigation boutique. 6 Comment made by a male founder of an eight-person solo-owned corporate/commercial firm. 7 Comment made by a female founding partner of a ten-person litigation boutique. 75 consistent wi th this orientation included excerpts emphasizing the corresponding view of lawyers as missionaries of the firm s endeavour to enact these systemic changes. The following description of a new entrant s guiding philosophy depicts a very strong crusading orientation: We both wanted to incorporate a feminist analysis both in our approach to law and in how to run a firm We actively seek women particularly those that are feminists. Those that are very in your face . We are actively seeking to address the lack of representation of women in the legal profession and the problem that the law is written by white men. When we re hiring, we look at how [a candidate believes she] can change things 1 8. In the third step of the content analysis procedure, I coded each relevant inter-view excerpt according to whether it contained each of the eight thematic categories just described. To assess the reliability of my coding decisions, I conducted an interrater reliability analysis. Following the precedent established by others (e.g., Ely, 1994), I trained a second coder to independently classify a subset of the data. The subset con-tained 93 randomly-selected excerpts, or 28% of the total; we agreed on 79, or 85%, of the categorization decisions. This very high level of interrater consistency provides evidence supporting the reliability of my coding decisions. Finally, I converted the coding decisions into quantitative measures of a firm s interpretive scheme. To do this, I collapsed the value types (i.e., business, professional, lifestyle, and crusader) and corresponding views of lawyers (i.e., business persons, professionals, multi-faceted individuals, and missionaries) into the four overarching orientations of the firm. To indicate a firm s level of emphasis on each orientation, I calculated the percentage of the relevant interview excerpts classified into each orienta-tion category. A s a result, I obtained quantitative measures for four features of a firm s interpretive scheme: the level of emphasis on commercialism, professionalism, lifestyle promotion, and crusading orientations. 4.3.3 St ructural Aspects I measured a firm s overarching form of governance by whether the firm was organized as a partnership, a cost-sharing arrangement, or a solo-owned practice. A partnership was defined as a group of lawyers, whether incorporated individually or not, who shared both revenues and expenses. This is the dominant form of governance for the British Columbia legal profession. A cost-sharing arrangement was defined as a Comment made by a female founding partner of a six-person litigation boutique. 76 group of lawyers who shared expenses, personnel, and/or office space but not reve-nues. A solo-owned practice was defined as a firm that was owned by only one lawyer but that employed other lawyers (this distinguishes it from a solo practitioner, which refers to a firm comprised of only one lawyer). A firm s personnel configuration was measured by two ratios that are commonly referred to in the legal profession: the number of lawyers per partner and the number of support staff per professional. The higher a firm was on both values, the more closely it approximated the prevailing leveraged, or pyramid, structure of law firm organization. I measured a firm s criteria of divisionalization by whether its lawyers were organized into divisions, or practice groups, based on their area of legal expertise, which is the normative arrangement, or on some other basis (e.g., by geographic region, type of client). 4.3.4 Decision systems Two indicators served as measures of a firm s extent of centralization: 1) whether any non-lawyers were responsible for supervising divisions (e.g., non-lawyer managers of certain geographic regions), and 2) whether any non-partners and/or support staff attended partnership meetings or were responsible for key operat-ing decisions (e.g., hiring or firing other lawyers). Affirmative answers suggest the decentralization of some decision-making responsibility and thus represent departures from the norm, where authority is typically highly concentrated in the partners of the firm. I measured a firm s extent of interaction by whether major decisions tended to be made by: a) only one partner (i.e., very directive decision-making); b) individual part-ners in some cases, jointly in other cases (i.e., moderately directive decision-making); c) committees of partners (i.e., moderately collegial decision-making); or, d) all partners (i.e., very collegial decision-making). Processes other than committees represent breaks from the dominant extent of decision-making interaction in the legal profession. 4.3.5 Human resource practices Recruitment policies. I used two indicators to assess the degree to which a firm s recruitment policies resembled those of the dominant apprenticeship model. The first indicator was whether a firm: a) preferred to hire associates straight out of their arti-cling period; b) preferred those with prior associate experience; or, c) had no preference, hiring either type of associate depending on the firm s needs at the time. The second indicator was whether the hiring of associates was based on: legal ability, business ability, and personality compatibility. I determined whether a firm used each of these criterion in its hiring decisions by content-analyzing the founding partner s response to 77 the following open-ended question, What are the primary criteria by which you would evaluate potential associates? . If the interviewee mentioned such qualities as academic standing, intellect, problem-solving ability, or analytic skills, the firm was coded as having legal ability as a hiring criterion. If the interviewee mentioned such qualities as client generation, productivity, billings, or client management, the firm was coded as having business ability as a hiring criterion. If the interviewee mentioned such qualities as sharing similar values, being able to fit in , or being trustworthy, the firm was coded as having personality compatibility as a hiring criterion. A s one founder v iv id ly ob-served: Needs to have a good personality. Can fit in around here. Cannot be brash, aggressive or egotistic. The person should pass the good sh*t test meaning you should feel like going out for a beer with them . It should be noted that these categories were not mutually exclusive a firm could be coded as having more than one hiring decision criterion. Firms that preferred to hire associates straight out of their articling period and that based their decisions solely on legal ability were deemed to more closely approximate the dominant apprenticeship model of recruitment. Promotion system. I used several indicators to assess the degree to which a firm s promotion system approximated that of the dominant promotion to partne r-sh ip , or up or out , model. This first indicator was whether a firm: a) preferred to promote from within, only admitting those who had previously been associates wi th the firm; b) preferred to go outside, cherry -picking individuals from other firms; or, c) had no preference, promoting from within or cherry-picking from outside depending on its needs at the time. Policies other than promoting from within represent departures from the norm. The second indicator was whether partnership admission decisions were based on the following criterion: legal ability, business ability, and personality compatibility. I determined whether a firm used each of these criterion by content-analyzing the founding partner s response to the following open-ended question, What are the primary factors that are taken into account when considering someone for partnership? . The coding scheme used to classify the responses was identical to that described above. Promotion decisions based on criteria other than business ability represent departures from the normative practice. The third indicator was the type of positions available to non-partnered lawyers in the firm. The existence of positions other than articles and associates such as contract lawyers and associate counsel suggest that the firm was modifying the classic model by creating categories of profes-sionals not eligible to move up to partnership (Galanter & Palay, 1991: 65). The fourth indicator was the extent of differentiation within each stratum of lawyers. Different tiers of associates and partners such as senior associates and non-equity partners, respec-7 8 tively suggest that the firm was modifying the traditional model by creating alterna-tive positions for lawyers who might otherwise have been forced out of the firm (Galanter & Palay, 1991: 64). Compensation criteria. I measured the primary criterion for remunerating partners by the type of compensation system in place at the firm; more specifically, whether it was classified as: a) an equal system, with the partners receiving the same amount regardless of seniority or performance; b) a lockstep system based on seniority; c) a point system based primarily on non-business performance; d) a point system based primarily on business performance; or, e) an eat-what-you-kill-system, where partners received the value of their own billings less expenses. These five basic partner compensation systems were distilled through a content analysis of the interviewees responses to the open-ended question, H o w are the partners compensated? , and to subsequent probes about the criteria used to determine the different levels in a lockstep system or the basis for allocating points in a point system. Compensation systems based on principles of equality or seniority represent departures from the normative practice of remunerating partners according to the principle of equity, with output measured in terms of business performance. The eat-what-you-kill system represents an extreme form of equity-based compensation, wi th no sharing amongst the partners. I measured the primary criterion for remunerating associates by determining whether the follow-ing types of compensation systems were in place at the firm: a) salary only, b) salary plus a percentage of revenue generated, c) percentage of revenue generated only, or d) hourly wage. Because some firms remunerated different levels of associates by different methods (e.g., senior associates were often compensated by salary plus a percentage of revenue generated while junior associates were often compensated by salary only), I created an index consisting of the proportion of associates remunerated by each method. Compensating associates by methods other than pure salary for all levels represent a departure from the industry standard. Control mechanism severity. I used several indicators to measure the severity of a firm s control mechanisms. These pertained to the type of quantitative targets set by the firm (i.e., none, billable hours, billings, collections, client generation), the levels at which they were set (i.e., associates, partners, both levels), the frequency with which they were monitored (i.e., quarterly, monthly, weekly, more than weekly), and the firm s tolerance of under-achievement (i.e., very low, low, moderate, high). I deter-mined a firm s tolerance level by content-analyzing the founding partner s response to the open-ended question, What actions would be taken if someone failed to achieve the target? . Those who responded that under-achievement was grounds for dismissal 7 9 were coded as having a very low tolerance level; those who referred to the monetary penalization of under-achievers were coded as having a low tolerance level; those who stated that actions would be taken to determine the cause and correct the problem were coded as having a moderate tolerance level; and those who admitted that the problem would be brought to the individual s attention but that no corrective action would be taken were coded as having a high tolerance level. In sum, the greater the number of quantitative targets, the more levels that the targets are set at, the more frequent the monitoring, and the greater the intolerance of under-achievement, then the greater the severity of the firm s control mechanisms. Flexibility. Two measures were used to assess the flexibility of a firm s human resource practices. The first pertained to whether any of the following work arrange-ments were available for lawyers: part-time positions for partners, part-time positions for non-partnered lawyers, telecommuting, job-sharing, and/or sabbaticals. The second pertained to whether any of the following forms of support for family obligations were available to all types of personnel wi thin the firm: extended maternity leave, paternity leave, family leave, and/or childcare benefits. The greater the availability of these work arrangements and family support policies, the greater the flexibility of the firm s work environment. Firms that offered any of these options were viewed as departing from the industry norm of having absolutely none. Privilege equality. Operationalizing the extent of privilege equality between hierarchical levels was considerably more challenging. I felt that the self-reports of founding partners would be of questionable validity, as I doubted that many would honestly admit to the existence of acute privilege differentials within the firm. Likewise, I believed that self-reports obtained from support personnel or non-partnered lawyers might be systematically biased but in the opposite direction. A s such, I turned to two objective, but less direct, indicators. The first pertained to whether the firm imple-mented a profit-sharing system for non-partnered lawyers and/or support staff. The existence of a profit-sharing system seemed to indicate that efforts were being made to reduce privilege differentials between partners and other organizational members, at least in terms of their right to a share in the firm s financial success. The second indica-tor was whether any of the following work arrangements were available for support personnel: flexible hours, reduced work weeks, job-sharing, and/or telecommuting. The existence of any of these work arrangements seemed to suggest that the firm was according this lower tier of secretaries, typists, and receptionists (Hagan & Kay, 1995: 55) considerably more privileges in terms of their hours, pace, and place of work. Firms that offered either form of profit-sharing system or any of the flexible work arrange-80 merits for support personnel were viewed as departing from the industry norm of having absolutely none. 4.3.6 Cons t ruc t V a l i d i t y Assessments Multimethod-multitrait analysis. A s a preliminary assessment of the construct validity of my organizational form measures, I followed Campbell & Fiske s (1959) multimethod-multitrait approach and conducted a series of correlation analyses. The criterion for establishing convergent validity is to demonstrate that alternative meas-ures of the same construct obtained through either different sources or different methods are significantly correlated. Although resource and practicality constraints prevented me from obtaining a parallel measure for all of the organizational form variables, there were some indicators for which I had collected data in two ways. Meas-ures of a firm s control mechanisms and work environment flexibility, for example, were both collected through two methods: the background questionnaire and the personal interview. In the background questionnaire, the founder was asked to identify whether specific types of quantitative quotas were set for lawyers in the firm (e.g., billable hours, billings, etc.). A firm was coded as having quantitative quotas if the founder answered in the affirmative to at least one type of target. During the subsequent personal inter-view, the founder was asked whether the firm set any quantitative targets for lawyers. The responses to this interview question were very highly correlated wi th the measure derived from the questionnaire data (r = .97, p<.001). Similarly, in the background questionnaire, the founder was asked to identify whether specific types of flexible work arrangements were available to organizational members (e.g., job sharing, condensed work week, etc.). A firm was coded as having flexible work arrangements if the founder answered in the affirmative to at least one type of practice. During the subsequent personal interview, the founder was asked whether the firm offered any unusual work arrangements. The responses to this interview question were moderately yet signifi-cantly correlated with the measure derived from the questionnaire data (r = .37, p<.01). Although based on a limited sample of organizational form indicators, these results attest to the convergent validity of the measures used in this investigation. 81 4.4 C A L C U L A T I N G O R G A N I Z A T I O N A L D E V I A T I O N 4.4.1 O v e r v i e w In the following sections, I describe the protocol that I devised for calculating and validating a new entrant s deviation from an industry s dominant template for organizing. This protocol involved four steps: 1) obtaining independent, quantitative deviation weights from multiple credible evaluators through a modified version of Amabile s (1982) consensual assessment technique for assessing organizational creativ-ity, 2) incorporating these weights into an aggregated difference score for each feature of form, 3) calculating global deviation measures through Cronbach & Gleser s (1953) profile analysis technique, and 4) validating these global deviation measures against the interviewer s overall impression of the firm s degree of departure from the industry norm. To the best of my knowledge, this protocol for assessing an organization s extent of deviation has not yet been implemented in neo-institutional or other sociological analyses of organizations. 4.4.2 A M o d i f i e d C o n s e n s u a l Assessment T e c h n i q u e for O b t a i n i n g Quan t i t a t ive D e v i a t i o n We igh t s The first step of the protocol that I devised for calculating a new entrant s devia-tion involved an adaptation of Amabile s (1982) consensual assessment technique, which is often used in studies of organizational creativity. This technique requires that independent, quantitative assessments be obtained from multiple, credible evaluators bl ind to the researcher s hypotheses. To do this, I developed and administered a second survey to the same panel of practitioners who had validated the British Columbia legal professions dominant form in the first phase of my research 1 9. The task facing these panelists differed, however, from that facing the judges in Amabile s consensual as-sessment technique. Typically, these judges are presented wi th descriptions of a subset of cases and then asked to assign scores to each case for the variables of interest (e.g., originality, quality, feasibility, etc.). The analogous task for my investigation would have been to present the panelists with descriptions for a sample of the new entrants organizational forms and to ask them to assign an overall deviation score to each firm. This is the aspect of Amabile s technique that I modified. 1 9 This second panelist survey was administered after the interviews with law firm founders. I used the interview responses to help generate a set of alternatives to each dominant practice. 82 Instead of presenting the panelists with descriptions of a sample of new entrants, I presented them with their previously-elicited, commonly-held perceptions of the industry norm for each indicator of organizational form (e.g., partnership for the form of governance indicator). I then presented the set of alternatives to each dominant practice (e.g., cost-sharing arrangement and solo-owned practice for the form of gov-ernance indicator). The panelists were asked to rate each alternative in terms of its degree of difference from the norm, on a scale ranging from l=very small difference to 5=very large difference. A copy of the second panelist survey is presented in Appendix 4.5. By calculating the mean scores assigned by the panelists, I obtained a numeric deviation weight for each alternative to the dominant practice; these are summarized in Appendix 4.6. The panelist-derived values can be conceived of as weights because they indicate the extent to which a particular practice is perceived to contribute to a firm s overall amount of deviation. For example, as indicated in Appendix 4.6, the panelists assigned a mean score of 4.67 to the practice of governing a law firm as a solo-owned firm, and a mean score of 4.00 to the practice of governing a law firm as a cost-sharing arrangement, yet a mean score of only 2.00 to the practice of offering profit-sharing for non-partnered lawyers. These values provide several pieces of information. First, they reveal that both forms of governance alternatives are perceived to be highly deviant from the dominant practice of governing a law firm as a partnership. Second, they reveal that a solo-owned form of governance is perceived as more deviant than a cost-sharing form of governance. Finally, they indicate that the implementation of either form of governance alternative is perceived as considerably more deviant than the implementation of a profit-sharing system for non-partnered lawyers. As the above example illustrates, the primary benefit of this approach to calculat-ing an organization s extent of deviation is that it acknowledges that non-conformant practices are not equally deviant. As such, the resulting data for each new entrant is capable of revealing not only the number of non-dominant practices that have been implemented; but more importantly, the extent to which each of the selected practices is commonly-perceived to depart from the industry norm. Addit ional benefits of this data collection method are also worth highlighting: these stem from the fact that the panel-ists were asked to rate the degree of deviation exhibited by alternatives to the dominant practice for each indicator of organizational form, rather than the degree of deviation exhibited by a subset of the sampled new entrants. This procedure is far less fatiguing for the panelists than reading and evaluating a subset of cases, and it also ensures that the panelists are basing their assessments on a common referent their previously-83 elicited, commonly-held perception of the characteristic features of the industry s dominant template. Moreover, it prevents the panelists from making inappropriate comparisons between the firms in their subset rather than the appropriate comparison between each firm and the industry norm. These aspects of the chosen data collection method likely contributed to the inter-rater agreement and validity of the panelist-derived deviation weights. I assessed the extent of inter-rater agreement by calculating the value of rwG for each of the deviation weights. A s noted by James, Demaree & Wolf (1993), TWG repre-sents a meaningful indicator of perceptual convergence on a single-item measure of a given construct (i.e., in this case, the extent to which the six panelists assigned the same difference score to each of the alternative practices to the norm). The entire set of rwG statistics is also reported in Appendix 4.6. Given the small sample size, the extent of inter-rater agreement is respectable: 48% of the deviation weights exhibit a moderate level of panelist convergence (i.e., values that range from 0.37 to 0.73) while 21% exhibit a high level of panelist convergence (i.e., values that range from 0.74 to 0.95)2 0. I conducted a rough check of the construct validity of the deviation weights by asking a prominent scholar of the Canadian legal profession to identify the most devi-ant alternative to the industry norm for each indicator of organizational form. In the vast majority of cases, this scholar s selection corresponded to the alternative with the highest mean score assigned by the panelists. 4.4.3 Calculating Difference Scores for Each Feature of Form The next step in the process involved calculating an overall difference score, Df, for each of the fifteen features of organizational form. This was accomplished by sum-ming a firm s degree of difference from the industry norm for each of the indicators used to measure the focal feature, according to the formula: D, = X (D, x 1/n) i=i I calculated the degree of difference between the firm and the industry norm for a specific indicator, Di , in one of three ways depending on how the indicator was meas-ured. In each case, my objective was to obtain a difference score measured on a five-point scale so that effects resulting from differences in scale variances would be Ranges and interpretation of VWG values based on Kozlowski & Hattrup (1992). 84 eliminated. For categorical indicators, such as a firm s form of governance, I simply set D i to the deviation weight assigned by the panelists for the particular practice imple-mented by the firm; dominant practices were assigned a deviation weight of zero. For the interpretive scheme indicators, I first converted a firm s score to a five-point scale 2 1 , and then subtracted the value for the industry norm that had previously been deter-mined by the industry panelists. For the remaining interval-level indicators, such as a firm s ratio of support personnel to professionals, I transformed a firm s score onto the five-point scale by basing D i on the number of standard deviations that the firm s value lay above or below the value of the industry norm previously determined by the panel-ists 2 2 . To control for the different number of indicators used to measure the fifteen features of organizational form, I followed the precedent set by Doty, Glick & Huber (1993) and multiplied D i by the inverse of the total number of indicators, n, that were used to describe a focal feature. For example, a firm s personnel configuration was measured by two indicators, the number of lawyers per partner and the number of support personnel per professional. Thus, the difference between the firm s value and that of the industry norm for each indicator was weighted by 0.5 so that the overall difference score for the feature received a total weight of one. A t the end of this step, I had a set of fifteen difference scores, all measured on a scale from zero to five, for each of the sampled firms. 4.4.4 The Profile Analysis Technique for Calculating Globa l Deviation Measures The final step in the process involved calculating global measures of a new entrant s deviation. Given my multidimensional conceptualization and operationaliza-tion of organizational form, I used profile analysis (Cronbach & Gleser, 1953) for these calculations. More specifically, I used the following weighted Euclidian distance for-2 1 Because the interpretive scheme indicators had been measured as a percentage of the relevant interview responses coded into a specific value orientation category, this conversion simply involved dividing each score by twenty. 2 2 The values of Di were determined as follows: Di = 0 if s.d. = 0.0-0.50; Di = 1 if s.d. = 0.51-0.85; Di = 2 if s.d. = 0.86-1.20; Di = 3 if s.d. = 1.21-1.55; Di = 4 if s.d. = 1.56-2.00; and, Di = 5 if s.d. > 2.00. The cut-points for the standard deviations were based on the distribution of scores within a normal curve. For example, the cut-point for virtually no difference (i.e., Di=0) was set at s.d.<0.5 because the ma jority of scores in a normal distribution (i.e., approximately 40%) fall in this range. The cut-point for a very large diffe r-ence (Di=5) was set at s.d.> 2.00 because very few scores in a normal distribution (i.e., approximately 5%) fall in this range. The remainder of the cut-points represent equal increments of 0.35 standard deviations between these two extremes. 85 mula to assess the extent of similarity between a new entrant s form and that of the industry s commonly-perceived template for organizing: D represents the overall distance from the focal firm and the industry norm; Df is a vector of the firm s difference scores for the component features of the global measure; and W is a matrix of weights representing the relative theoretical importance of each feature to the global measure of deviation. I calculated six separate global measures. The first four represent aggregate measures of a firm s deviation on each of Greenwood & Hinings (1993) major dimen-sions of organizational form: interpretive scheme, structural aspects, decision systems, and human resource practices. I then calculated two overall measures, both comprised of all fifteen features of form, wi th each dimension weighted equally in the former case and each feature weighted equally in the latter case 2 3. These two overall deviation measures were highly correlated (r = .95, p<.001). 4.4.5 Construct Val idat ion of the Overall Deviation Measures I assessed the construct validity of the two overall deviation measures by corre-lating them with impressionistic data that had been collected by me and my research assistant. A t the end of each meeting, the interviewer had classified the firm into one of five categories representing increasing degrees of departure from the industry norm. A s such, I had an alternative quantitative measure of each firm s overall extent of devia-tion. These impressionistic scores assigned by the interviewers were significantly correlated wi th both of the overall deviation measures: r = .40 (p<.01) for the first overall deviation measure, in which the four dimensions of form were weighted equally; r = .32 (p<.05) for the second overall deviation measure, in which the fifteen features of form were weighted equally. These results thus provide support for the construct validity of my study s principal dependent variable a new entrant s overall deviation from an industry s commonly-perceived dominant organizational form. 2 3 To weight the dimensions equally, I multiplied each feature of a dimension by the inverse of the number of features comprising that dimension. 86 4.5 SUMMARY The primary objective of this component of the second phase of my empirical research was to calculate continuous measures of a new entrant s deviation from an industry s dominant template, based upon a multidimensional operationalization of its organizational form. The novel methodological protocol that I developed for doing so resulted in construct-validated measures of overall deviation, and is offered as an extension the procedures of other researchers who have called for continuous rather than dichotomous measures of conformity in empirical investigations of neo-institutional theory (e.g., Oliver, 1988, 1991; Westphal et al., 1997). 87 C H A P T E R 5: N E W E N T R A N T C O N F O R M I T Y A N D D E V I A T I O N I N A H I G H L Y - I N S T I T U T I O N A L I Z E D S E T T I N G : F I N D I N G S F R O M T H E B R I T I S H C O L U M B I A L E G A L P R O F E S S I O N 5.1 I N T R O D U C T I O N In this chapter, I present three sets of findings from the second phase of my empirical investigation. The first set consists of descriptive results for my key explana-tory variables: founders prior experiences with, and interpretations of, an industry s dominant template for organizing. The second set consists of my findings regarding the extent of deviation exhibited by their firms. These results address the question of whether new organizational entrants to highly-institutionalized settings tend to con-form to the dominant template and thus act primarily as agents of institutionalization or whether they tend to depart from the prevailing organizational configuration, and thus act primarily as agents of deinstitutionalization. The third set of findings pertains to the issue of why certain newly-created firms adhere to institutional prescriptions while others depart from them. In this section I test my hypotheses derived from both the unconstrained and disenchanted actor perspectives. The results provide insights into the question of which new entrants tend to act as institutional perpetuators and which tend to act as institutional entrepreneurs and their founders reasons for doing so. 5.2 L A W F I R M F O U N D E R S E X P E R I E N C E S W I T H A N D I N T E R P R E T A T I O N S O F T H E L E G A L P R O F E S S I O N S D O M I N A N T T E M P L A T E 5.2.1 D o Founders i n a H i g h l y - I n s t i t u t i o n a l i z e d Set t ing V a r y i n their S o c i a l i z a t i o n Exper iences? Measures. The underlying premise of the unconstrained actor perspective is that founders exhibit variability in the nature of their socialization experiences; more specifi-cally, that they vary in their extent of prior experience in a focal industry s prominent organizations, the industry s peripheral organizations, and those of other industries. I measured a founder s extent of experience in the legal profession s prominent organiza-tions by the number of years that he or she had worked in a large law firm prior to starting the firm that was the focus of the interview. Following Stager (1990), I defined a 88 large law firm as one comprised of at least twenty lawyers. A s was clearly evident through my preliminary research, large law firms comprise the core of this institutional setting: they are the prominent organizations through which most members obtain the on-the-job socialization aspect of their professionalization. These are also the models that other legal service providers tend to emulate (Galanter & Palay, 1991). I measured a founder s extent of experience in the marginal organizations of the legal profession by the number of years that the participant had worked as a solo practitioner, in a small or medium sized law firm, and/or wi th a legal aid organization prior to starting the firm focused upon in the interview. Finally, I measured a founder s extent of experience in other industries by the number of years that the participant had worked in fields other than law prior to starting the firm focused upon in the interview. These other fields included business, government, and education. A l l of this information regarding the nature of the founder s background experience was obtained through a series of ques-tions posed at the end of the personal interview. Results. A s indicated by the descriptive statistics presented in Table 5.1, below, the findings support the underlying premise of the unconstrained actor perspective. The sixty law firm founders whom I interviewed demonstrated considerable variation on most aspects of their prior socialization experiences. In terms of their experience in the prominent organizations of the legal profession, the founders ranged from having zero to twenty-two years of previous work experience in large law firms, averaging 5.55 years in firms of this size prior to starting the organizations that were the focus of my investigation. A similar extent of variability was found for the founders experience in the legal profession s marginal organizations: the number of years spent working in T a b l e 5.1: V a r i a b i l i t y i n the Na tu re of Founders S o c i a l i z a t i o n Exper iences Characteristics Mean 1 SD 1 Mm Max ' Years of prior experience in prominent organizations3 5.55 [6.17] 0.00 22.00 Years of prior experience in peripheral organizations'3 4.58 [4.95] 0.00 18.00 Years of prior experience in fields other than law c 1.23 [ 2.88 ] 0.00 15.00 a Based on Galanter & Palay (1991), the prominent organizations of the legal profession were defined as large law firms (i.e., for Canadian law firms, those comprised of at least twenty lawyers Stager, 1990) b Peripheral organizations of the legal profession include solo practitioners, small- and medium-sized law firms (i.e., those comprised of two to twenty lawyers) and legal aid organizations c Includes business, government, and education 89 such peripheral organizations as solo practices, small and medium firms, and legal aid organizations ranged from zero to eighteen, with a mean of 4.58. The participants were much less likely to have worked in fields other than law, averaging only 1.23 years in such fields as business, government, and education. This low mean is attributable to the fact that seventy-five percent d id not have any experience in other fields whatsoever. Considerable variability was apparent for those who did, however, wi th values ranging from one to fifteen years of prior experience. 5.2.2 D o Founders i n H i g h l y - I n s t i t u t i o n a l i z e d Sett ings V a r y T h e i r Interpretations of the D o m i n a n t Templa te? The underlying premise of the disenchanted actor perspective is that founders exhibit variability in their interpretations of an industry s prevailing organizational arrangements; more specifically, that they vary in the extent to which these are per-ceived to be pragmatically and morally legitimate. I obtained quantitative measures of these two perceptual variables by implementing a multi-step content analysis proce-dure to transform relevant qualitative data collected during the personal interviews. Collecting and content-analyzing relevant qualitative interview data. The first step of the content analysis procedure involved isolating excerpts from the interview notes in which the founders expressed their attitudes towards existing practices in the legal profession. Through my pilot tests, I had discovered that I would not be able to pose direct questions addressing the extent of perceived pragmatic and moral legiti-macy, as several subjects had admitted that they lacked sufficient familiarity wi th various aspects of the industry s dominant template for organizing. A s such, it was questionable whether their perceptions of its functionality and ethicality would be of adequate reliability and validity. I thus experimented with several sets of less direct questions designed to elicit a founder s attitudes towards prevailing organizational practices in the legal profession. The most effective pertained to a founder s rationale for designing the firm in a certain way first offering their prior experience as a frame of reference and then probing for other motivations and decision-making processes. The following set of questions is an illustrative example: In designing the compensation policies of this firm, were you purposely trying to do things differently from your prior experience? , then either, If so , in what sense? , or, If not, how did you come up with the compensation policies that you have? I developed seven sets of questions based on this format, and posed them at different points during the interview to help ensure that I returned to the issue of a founder s subjective contextual interpre-90 tations as often as possible. From the responses to these sets of questions, as wel l as the tangential yet relevant comments often interspersed throughout the interview notes, I isolated a total of 484 excerpts relating to the founders rationales for designing their firms in a certain way (an average of approximately eight excerpts per interview). The next steps of the content analysis procedure involved designing a classifica-tion scheme and then coding each of the 484 interview excerpts. The conceptual arguments of the disenchanted actor perspective suggested two overarching themes for the classification scheme: reactions to the pragmatic and moral legitimacy of the legal profession s prevailing organizational arrangements. Table 5.2 presents the classifica-tion criteria and representative interview excerpts for the emergent lower-order thematic categories consistent wi th both of these higher-order themes. The table also includes descriptive statistics pertaining to the proportion of participants who referred to a particular theme at least once in the interview. The nature of founders' pragmatic legitimacy perceptions. A s indicated in Table 5.2, the participants most common belief consistent with the theme of dubious prag-matic legitimacy was the perception that some of the prevailing organizational arrangements in the legal profession were uneconomical. When describing their ration-ales for designing their firms in a certain way, almost three-quarters of the participants (73%) made at least one statement referring to their belief that existing structures, systems, and practices either had a negative impact on profitability or did not contrib-ute to revenue growth. One founder, for example, responded as follows when asked how motivated he was to create structures and practices that differed from the norm for the legal profession: We were very motivated to differ from the norm in terms of remuneration. We ve tried to make everything based on performance rather than years of ex-perience. This is due to our concern for the bottom line Law firms have existed in an antiquated model [i.e., a seniority-based compensation system for associ-ates] that can t continue 2 4. The next most common belief consistent wi th the theme of dubious pragmatic legitimacy was the perception that some of the legal profession s existing structures, systems, and practices were inefficient. When describing their rationales for designing their firms in a certain way, almost two-thirds of the founders (63%) made at least one comment consistent wi th the belief that commonly-implemented organizational ar-rangements resulted in inefficient internal operations particularly with respect to 2 4 Comment made by a male founding partner of a twenty-five person corporate/commercial firm. 91 Q, cjf X t u •1-4 ? >*-> *; Cl on",' 01 'i V l * «&,'; .-3 ID -*C 4 O' ( 60 r 01 HH « u. PS 6 01 H 60 c 3. 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X QJ rt 3 « c 3 o M3 U SH m '3 y •£ 3 ° 3 X . rt CO fe Oi , 2 iS O • SH S OJ -5 x i o o u 0 1 Xi x i 3 rt Qj a 8 £ 2 ^ | l_l CAl -•—' u •i-H 3 3 £ £ o cj 5 xi x • rt ^  cs S t CD o cu cn 3 >~ cu cs a . ts H - i S t 3 cs CU cs >~ CS out sa. om ics, u - S t S t •—i <u 3 . SH "rt bp . r t 0 1 P; „ rt rt 60 co SH rt O 3 6o y 3 £ Xi QJ £ „ rt -JH co 3 rt -a ° % £ x QJ _u rt CO 3 rt CO rtH U X'3 G • £ o " QJ >-. 3 QJ x i rt > oi SH PH QJ HH 60 •£ 3 fe "rt X 3 co O oi co 3 SH rtH QJ rt OH > OI u o >H OH SH O 93 wasted time. Not surprisingly, such perceptions were often raised about the legal profession s dominant practice of tracking billable hours. A s one participant explained: A t large firms you must docket your time and account for every minute spent working on a client s file. This is wasted time. Especially when you have a good client and you want to retain that client, you sometimes give an estimate of what the service w i l l cost. Well sometimes it costs more (especially when you look at the amount of time you spent according to the docket) and you won t end up charging the client the real amount since you want to keep the customer happy. So all the time you spent recording is for naught and a wasted practice 2 5. Finally, approximately half of the participants (52%) made at least one statement referring to their belief that some of the profession s existing structures, systems, and practices were ineffective particularly in terms of quality and client value. As indi-cated in the quotation found above, many felt that the tendency to set billable hours or billings quotas particularly detracted from the effective delivery of legal services. One founder, for example, stated: I believe the b i l l , b i l l , b i l l philosophy leads a degradation in the quality of work. I d rather see lawyers do a good job rather than jam stuff through 2 6 . The nature of founders' moral legitimacy perceptions. Overall, as Table 5.2 reveals, the participants were more likely to express perceptions regarding the dubious moral legitimacy rather than those regarding the dubious pragmatic legitimacy of the legal profession s existing organizational arrangements. The most common of these dubious moral legitimacy perceptions was the belief that some practices were proce-durally unjust that they resulted in the inappropriate and unfair treatment of organizational members above and beyond the issue of resource or reward distribution. When describing their rationales for designing their firms in a certain way, 83% made at least one statement consistent with this thematic category. Somewhat surprisingly, the founders often expressed concerns about existing administrative practices that had resulted in procedural injustice for others and not necessarily themselves. A s one participant noted: Through our friends in downtown offices we know that lots of large firms have what s analogous to your publish or perish system. Some of them have been released because they couldn t meet their quotas. We didn t want that sort of 2 5 Comment made by a male founding partner of a six-person general practice. 2 6 Comment made by a male founder of a six-person solo-owned general practice that exhibited the third-highest amount of overall deviation (i.e., a score of 2.64 on overall deviation measure 1). 94 stressful situation. We don t think it s very fair. As long as a person s doing their share, we don t need to stand over them with a whip to produce 2 7 . Interestingly, and notably, this most frequently-cited thematic category was not explic-itly mentioned in the theoretical arguments underlying the disenchanted actor perspective. The next two categories consistent wi th the theme of dubious moral legitimacy were mentioned in the theoretical arguments behind the disenchanted actor perspective on new entrant deviation. For example, when describing their rationale for designing their firms in a certain way, over three-quarters (77%) made at least one statement emphasizing reactions to perceived distributive injustice. Not surprisingly, such com-ments were often made about prevailing compensation systems in the legal profession. One founder, for example, responded as follows when asked why he had started his own firm: What I fundamentally objected to at [my prior firm] was that I was asked to do administrative and training duties that I was not compensated for. When I was evaluated, none of these responsibilities, which were time-consuming, were taken into account. This is a fundamental problem of large firms 2 8 . Finally, 70% of the participants made at least one statement referring to their belief that some of the profession s existing structures, systems, and practices were incompatible with their own code of ethics, morals, or values. One founder provided this v iv id response when asked what had motivated her to start her own firm: We disliked the blowing your own horn mentality of bi g firm life. Both of us preferred a more consultative, interactive approach with other lawyers, where, for example, we could discuss our insecurities. This was seen as a sign of weak-ness at the prior firm. Also, neither of us like to brag, to pee around t he office marking out our territory and our accomplishments. We found this uncomfort-able like wearing tight shoes. We did it in order to fit in but we felt like we had mutated ourselves in doing so that we weren t being true to ourselves and our values 2 9 . Findings supporting variability in contextual interpretations. To examine whether law firm founders varied in their pragmatic and moral legitimacy assessments of the legal profession s prevailing organizational arrangements, I calculated the per-centage of each participant s relevant interview excerpts that were coded into each thematic category. Thus, for each participant, I obtained quantitative measures of the 2 7 Comment made by a male founding partner of a seven-person general practice. 2 8 Comment made by a male founding partner of a six-person corporate/commercial firm. 2 9 Comment made by a female founding partner of a ten-person litigation boutique. 95 strength of his or her beliefs about the dominant template s pragmatic and moral legiti-macy. In support of the underlying premise of the disenchanted actor perspective, these descriptive statistics reveal the existence of considerable variability in founders contex-tual interpretations even though the legal profession is highly-institutionalized. For example, the overall proportion of a participant s interview excerpts emphasizing reactions to perceptions of dubious pragmatic legitimacy ranged from 0% to 75%, wi th a mean of 31% and a standard deviation of 16%. Likewise, the overall proportion of the interview excerpts emphasizing reactions to perceptions of dubious moral legitimacy were similarly varied, ranging from 0% to 88%, with a mean of 47% and a standard deviation of 19%. Reliability and validity assessments. I conducted an interrater agreement analysis to assess the reliability wi th which I had coded the qualitative interview data. Following the precedent established by others (e.g., Ely, 1994), I trained a second coder to independently classify a subset of the data. The subset contained 323 randomly-selected excerpts, or 66% of the total; we agreed on 279, or 86%, of the categorization decisions. The large subset size and very high level of interrater consistency provides strong evidence supporting the reliability of my coding decisions. I assessed the content validity of my thematic categories by comparing them to a set developed independently by my research assistant. This enabled me to examine whether an individual bl ind to my specific hypotheses would derive a similar coding scheme. Although our terminology differed as a result of her unfamiliarity with organ-izational theory, the essence of our independently-derived thematic categories overlapped in the majority of cases thereby providing evidence supporting the con-tent validity of my categorization scheme (the two sets of thematic categories are presented in Appendix 5.1). Consistent with Campbell & Fiske s (1959) multimethod-multitrait approach, I assessed the construct validity of the founders subjective contextual interpretations by conducting a series of correlation analyses. The criterion for establishing convergent validity is to demonstrate that alternative measures of the same construct are signifi-cantly correlated. To obtain the first measure, I aggregated the proportion of a founder s interview excerpts coded as reactions to dubious pragmatic legitimacy and the pr o-portion coded as reactions to dubious moral legitimacy into an indicator of general disenchantment with the legal profession s prevailing organizational arrangements. I then derived an alternative measure from the data obtained through the background questionnaire. 96 This questionnaire contained six Likert-type items through which the founder rated satisfaction wi th various aspects of his or her most recent law firm experience (i.e., type and structure of positions, recruitment and promotion policies, compensation systems, performance evaluation practices, work arrangements, hours of work). A l l of the items were measured on a five-point scale ranging from l=very dissatisfied to 5=very satisfied. I created an index of these six satisfaction items (alpha = .61) and correlated it with the general disenchantment indicator: the two measures were moder-ately yet significantly correlated in the direction indicative of construct validity (r = -.40, p<.01). Summary remarks. In summary, the findings pertaining to the participants contextual interpretations are quite interesting. They suggest that although an industry may be highly-institutionalized and contain a widely-understood dominant template for organizing (as I demonstrated to be the case for the legal profession in the first phase of my empirical investigation), this does not necessarily imply that these institutional prescriptions are also widely considered to be either pragmatically or morally legiti-mate. The overwhelming majority of law firm founders in my study 98% and 97% respectively expressed at least some doubt about the dominant template s pragmatic and moral legitimacy. The prevalence wi th which functionality and ethicality concerns were raised renders the question of whether founders w i l l in turn create organizations that depart from these institutional prescriptions or w i l l succumb to the isomorphic pressures of this highly-institutionalized setting all the more intriguing. This line of inquiry represents the focus of the following section. 5.3 D O N E W E N T R A N T S T O T H E L E G A L P R O F E S S I O N T E N D T O A C T A S I N S T I T U T I O N A L P E R P E T U A T O R S O R I N S T I T U T I O N A L E N T R E P R E N E U R S ? 5.3.1 O v e r v i e w I had initially hypothesized that new entrants to highly-institutionalized indus-tries would tend to exhibit little deviation from the dominant template for organizing, thereby acting primarily as agents of institutional perpetuation rather than institutional entrepreneurship in such settings. I developed two analytic procedures for testing this hypothesis: a mode-matches-norm assessment and a dispersion-of-deviation-scores analysis. The methodology and findings for each procedure are described below. 97 5.3.2 A M o d e - M a t c h e s - N o r m Assessment Analytic procedure. For the mode-matches-norm assessment, I first created a frequency distribution for each indicator of organizational form. In the case of categori-cal indicators, such as a firm s form of governance, I calculated the proportion of the sampled new entrants exhibiting each of the alternatives (e.g., partnership, cost-sharing arrangement, and solo-owned firm). In the case of continuous indicators, such as the firm s emphasis on the various value orientations of the interpretive scheme, I chose cut-points that would result in meaningful and interpretable categories (e.g., very low through very high, for consistency with the panelist survey developed to determine these characteristics of the legal profession s dominant template). For each indicator, I then determined whether the modal alternative exhibited by the new entrants matched that of the dominant template. To do this, I compared the modal response with the nature of the industry norm that had been determined through the panelist survey administered in the first phase of my research 3 0. Table 5.3 summarizes the results of this mode-matches-norm assessment for all component indicators of organizational form. Empirical findings. Overall, the pattern of findings reported in Table 5.3 lends support for the hypothesis that new entrants to a highly-institutionalized industry w i l l tend to conform to its dominant template for organizing (Hypothesis 2). For twenty-four of the thirty-three indicators of organizational form (73%), the alternative exhibited by the majority of new entrants matched that of the previously-determined dominant template. For one other indicator, the type of positions available to non-partnered lawyers, a partial match was found. Thus, the majority of the newly-established law firms sampled differed from the legal profession s dominant template on less than one quarter of the indicators of form. In addition to providing information on the extent of new entrant deviation, the findings presented in Table 5.3 reveal the nature of the sampled firms departures from the legal profession s dominant template. The interpretive scheme dimension is a case in point. Although similar to the norm in terms of placing a very low emphasis on both the lifestyle promotion and crusading orientations, the new entrants tended to differ from the norm in terms of their emphasis on commercialism and professionalism. The results of the first-phase panelist survey had indicated that dominant firms in the legal 3 0 The characteristics of the legal profession s dominant template were summarized in Table 3.3, which was presented in Chapter 3. 98 > H-» C 01 60'.: T3 , CO - v u 0 C •S i—i to, C 01 • . 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In contrast, the sampled firms tended to place less emphasis on these aspects: 55% and 43% placed a very low to low emphasis on commercialism and professionalism respectively. Sizeable proportions of the new entrants also emphasized these two value orientations to a greater degree than dominant firms in the legal profession: 13% and 18% placed a very high emphasis on commercialism and professionalism respectively. In terms of their structural aspects, the vast majority of the new entrants were similar to the dominant template in terms of being governed as partnerships (70%) and being differentiated by area of legal practice (93%). However, they tended to exhibit rather atypical personnel configurations. For both indicators of this feature, most new entrants tended to be within one-half and two standard deviations of the value per-ceived to characterize the legal profession s prominent organizations. In the case of the lawyer per partner ratio, the vast majority (87%) of the sampled firms exhibited ratios below the mean value of 2.00 obtained for the dominant template through the first panelist survey. In the case of the support staff per professional ratio, the majority (63%) exhibited ratios above the dominant template s value of 1.06. Wi th respect to their decision systems, the overwhelming majority of new en-trants were similar to the prevailing template in terms of exhibiting a high degree of centralization limiting both the supervision of divisions to professionals (95%) and partnership meeting attendance to partners (95%). They tended to depart, however, from the legal profession s dominant extent of decision-making interaction. The major-ity (67%) exhibited a very collegial style in which all partners rather than committees of partners are involved in the firm s major decisions. Notably, not a single new entrant had implemented the dominant practice of making decisions primarily by partnership committees. Given the large number of indicators measuring human resource practices, it is surprising how infrequently the modal practice of the sampled firms departed from that of the dominant template. Wi th respect to recruitment policies, for example, the most frequently reported practices included hiring associates with prior experience (47%) and basing decisions primarily on the candidate s demonstrated legal ability (68%). The new entrants promotion policies exhibited similar conformity to the norm. The most frequently reported practices included promoting from within (38%) and basing part-nership admission decisions primarily on the candidate s demonstrated business performance (45%). Very few new entrants offered atypical positions for lawyers: only 5% had contract positions, only 10% had associate counsel positions, only 13% had 104 created different tiers for partners, and only 7% had created different tiers for associ-ates. Rather interestingly, however, 18% of the new entrants consisted of only the partners and their support staff, with no positions available for other lawyers. Compensation was one feature for which some deviation was observed. A l -though the majority of new entrants (52%) implemented the dominant policy of remunerating associates by salary only, they tended to depart from the prevailing practice of compensating partners according to a point system, preferring instead to remunerate partners equally (32%). The majority of new entrants also tended to deviate from the prevailing practice of setting billable hours and bil l ing targets, most preferring to establish no targets whatsoever (58%). Those that d id implement these formal control mechanisms, however, d id so in a manner similar to that of the dominant template: setting targets at both the partner and associate levels (20%), monitoring progress monthly (32%), and exhibiting moderate to high tolerance of underachievement (27%). Finally, the new entrants were similar to the dominant template in terms of the inflexibility and privilege inequality inherent in their human resource practices. A l -though the majority of the sampled firms (53%) differed from the norm by offering at least one type of flexible work arrangement for professionals (i.e., part-time positions for partners, part-time positions for other lawyers, telecommuting, job-sharing, or sabbaticals), the majority (53%) were similar to the dominant template in terms of not offering any policies in support of employees family obligations (i.e., extended mater-nity leave, paternity leave, family leave, or childcare benefits). The sampled firms also tended to match the prevailing template s pattern of privilege inequality: the over-whelming majority (93%) had not implemented a profit-sharing system for either non-partnered lawyers or support personnel, and over half (53%) d id not provide any flexible work arrangements for the latter group of employees, such as reduced work weeks, flexible hours, telecommuting, or job-sharing. During the process of content-analyzing the interview notes, a number of novel, leading-edge practices emerged that d id not fit neatly into any of the context-specific features of Greenwood & Hinings (1993) four dimensions of organizational form. Most of these practices were described by the founders in response to the open-ended ques-tion, Besides those that we ve already discussed, are there any other elements of your firm s internal design that are quite different from other law firms ? . A s summarized in the final row of Table 5.3, these atypical practices included: 1) contracting out overhead expenses such as office equipment, leases, and support staff to an affiliated company owned by the founding partner; 2) sharing office space, personnel, and clients with a 105 non-law professional service firm; 3) establishing a network of satellite offices that were either staffed only by support personnel, wi th lawyers on-call, or staffed only on an as-needed basis; 4) being either the hub or a node in a hierarchical, nationwide network of 150 law firms that process legal work in a highly-standardized manner (i.e., the Canadian Lawyers Network); 5) compensating support staff by salary plus a per-centage of the revenue they generated; and, 6) evaluating the performance of lawyers through client satisfaction surveys. These practices represent obvious and interesting deviations from the legal profession s dominant template and are possible harbingers of how many law firms may be organized and managed in the near future. Very few of the firms, however, mentioned any of these leading-edge practices (i.e., less than 10% for most aspects). Although the results presented in Table 5.3 illuminates the organizational ar-rangements enacted by the sampled firms, they do not tell the complete story with respect to the extent of new entrant deviation. For one, the mode-matches-norm as-sessment neglects one of the fundamental premises of a configurational approach to organizational analysis: that is, that the patterning of organizational elements sho u ld be the focus of inquiry rather than bivariate or sharply circumscribed multivariate analysis (Meyer et al., 1993: 1181). A n important implication of this premise is that, when examined on a feature-by-feature basis, as in the analysis conducted above, organizations may appear to exhibit little deviation. However, if firms tend to exhibit coherence between organizational elements such that these elements correlate in understandable and stable ways (Meyer et al., 1993: 1181), then it may be the cas e that departures from the norm cluster together to create substantial deviation. Second, the mode-matches-norm assessment does not take into account the fact that non-compliant alternatives may not be perceived as equivalently deviant. A n important implication is that a firm that departs from the norm on a greater number of indicators of organiza-tional form than another firm may not necessarily exhibit greater deviation if it enacts only a minor departure for each indicator. I thus conducted a subsequent analysis, more consistent with a configurational line of enquiry, as a further test of the hypothesis that new organizational entrants to a highly-institutionalized industry w i l l tend to exhibit little deviation from its commonly-perceived dominant template for organizing. I termed this procedure a dispersion-of-deviation- scores analysis. 5.3.3 A Dispers ion-of -Devia t ion-Scores A n a l y s i s Analytic procedure. A s its name implies, this analytic procedure involved ana-lyzing the spread of the deviation measures that I had previously calculated for the new 106 entrants (details regarding these calculations were presented in Chapter 4). To do this, I created frequency distributions for the firms difference scores for the fifteen features of organizational form, their deviation scores for the four dimensions of organizational form, and their two overall deviation measures. As noted in Chapter 4, the first overall deviation measure weighted the four dimensions of organizational form equally; whereas, the second overall deviation measure weighted the fifteen features of organ-izational form equally. Because some of these scores had been measured on different scales, I first converted them onto a scale ranging from zero to f ive 3 1 . To represent the data as a set of frequency distributions, I then assigned the scores to one of six degree-of-difference categories. In order for these categories to be conceptually meaningful, I selected mid-points corresponding to the value labels that the panelists had used to rate the degree to which alternative practices differed from the norm (e.g., l=very small difference from the norm, 2=small difference from the norm, etc.). Table 5.4 summarizes the results of this dispersion-of-difference-scores analysis. Empirical findings. The pattern of findings reported in Table 5.4 lend further support for the hypothesis that new entrants to a highly-institutionalized industry w i l l tend to conform to the dominant template for organizing (Hypothesis 2). The means of the six global deviation measures (i.e., those for a firm s interpretive scheme, structural aspects, decision systems, human resource practices, and the two overall measures) ranged from 1.63 to 2.28, values which all correspond conceptually to a small degree of difference from the dominant template. Moreover, the standard deviations of these global deviation measures were all relatively small, ranging from 0.33 to 1.08. These findings suggest that few new entrants exhibited deviation scores either much greater than, or much less than, those corresponding to a small degree of departure from the norm. This conclusion was substantiated by the more detailed data displayed in the frequency distributions. A s indicated in Table 5.4, the majority of the new entrants exhibited virtually no, to only a small degree of, difference from the dominant template on all four dimensions 3 1 The fifteen difference scores for the fifteen features of form were already based on a scale ranging from zero to five. To transform the six global deviation measures onto this scale, I multiplied each score by the following factor: 5/Dmax- The denominator, Dmax, represents the theoretical maximum aggregated amount of deviation for the specific global deviation measure. This was calculated by substituting the maximum deviation for each component indicator (i.e., a value of 5) in lieu of the panelist-determined deviation weight into the respective weighted Euclidian distance formula. 107 2 *4S O • u MH 0) ' cj 01 01 Ol s rti 60; 01 Q 60 C , x UH< T3 o> CL x „ rt 01 60 rt c * u s PH Oi oi jiL, 60 U- o is c ,o* HH If) > *a a. 01 * u OI, C 60 )H oi lH La 01 M  •HH «rH T3 CO oj vU„iV 2 g *^ Ol „ CO S MH" O O MH If)} 2=3 LN LN vO vo VO VD vd VO tN CO S II * b*. vU , u5' c « Ol cn 01. rt • Cv • o, .rti; tn C oi s o o o o o o o o o d o d o o o o d d CO CO CO CO CO CO o p co d (N CN tN vo O O d IN vO O o oo CM O o d tN vo vd CO CO 8 M o C O LN C O vo C O O O O p LO d tN tN vO vO VO tN vO O o o CO CO IN CO O r-i ° q CO CO vo co © O P d oo CO r-i CO L O o ° C O tN CO CN CO L O ° CO o o o o o o LO LO CO o o IN vq vd LO o o CO CO O O IN o q vo d d vd o o o o d d o o o o o o o d d CO CO o co co o co co d O O IN vo p p vq l-i d LO H co •* co CO IN IN co vq q^ oo vd T—i rt CO tN O 00 LO tN L O VO 00 CO vO LO oo Ov ON CO CM 00 IN oo IN o o rH 11 O ON IN tN o o O oo C O LO LO VO O LO co oq IN CO •>* d rt d d d rH tN rt d d d d d rt d rt rt d d d d •5f rt tN vO C O CO oo CO 00 LN tN 00 av IN CM co Ov C O CM VO rt O CO LO vq CO oq tN CM rt rt rH vq rt LO CO vo CM o o rH tN tN d d rH rt rt d CM d CO CM rt rt CM CO d d CM CM 6 S o U rt c o c o o 6 o OH bo co x7 PH rt U £ Ol CJ c C3 tn C u t-H a> 0) > (A o rj bo rt _S o c rt U 3 CH rt o C. PH t/5 c o 3 .SP rt c o cj C c o cn u oi PH E 01 cn In £ cn s cu o OH IN ^ ai X rt rt u e I-, rt « rt VH « C oi e o> 5 H JI -> -> Ol •Pi 6 o u C _ 2 2 co X 3 CJ rt i ^ ° rt H-> bO X > rt rt HH PH o o o o o o o o rH CM 01 01 > > o o 6 2 o rt c e .CN cfi c OJ M U 01 Ol _ M^ O -3 ^ CD «J rt tj rt c lH QJ 0 "H i i ai MH cn M H rt rt cn TJ A _ 01 rt c <s UH cn rt >^  —H >H rt QJ fr JO ll T3 1-1 QJ cn S3 oi 3 X) cn rt rt .2 > 1! 2J C^ SH Trt cn .3 c cn O >^  °H X? cn rt 0) rt in ° rt 8 2 0 «J TJ rt 01 O rt VJ CJ rt rti s % o " OH .rt^ g 6 6 0 0) •£ rt u 01 U C cn cu • r t rt. o rt rt rt =3 H^ MH cn 0 rt ^ <" ^ -H 01 QJ 6 0 rt rt QJ rt R T J CO i\ O nil oi cu s M H LH CJ cn O C QJ M H O 6 0 •£> 4H I ^2 W X C * 0) CU 108 of organizational form: the interpretive schemes of 97%, the structural aspects of 73%, the decision systems of 70%, and the human resource practices of 67% of the sampled firms showed little departure from the norm. Moreover, approximately 85% of the new entrants displayed only a very small to a small degree of overall deviation from the dominant template a finding that held for both overall measures. Although it is clearly the case that most of the new entrants tended to exhibit greater conformity to, than deviation from, the legal profession s dominant template, sizeable proportions d id display at least a moderate degree of departure on the structural aspects, decision systems, and human resource practices dimensions i.e., 27%, 30%, and 33% respec-tively. Moreover, close to 15% of the sampled firms exhibited a moderate degree of overall deviation from the norm. In sum, the results presented thus far certainly suggest that founders in highly-institutionalized settings tend to create organizations that adhere to rather than depart from the dominant template in spite of their doubts about the pragmatic or moral legitimacy of these institutional prescriptions. Nevertheless, the findings also indicate that variation can occur within the confines of strong institutional pressures. Although most of the firms in this study tended to act as institutional perpetuators, a sizeable proportion (i.e., 15%) behaved as institutional entrepreneurs, exhibiting at least a mod-erate degree of non-conformity. In the following section, I examine the question of why some new entrants conform to institutional prescriptions while others deviate from them. 5.4 W H I C H N E W E N T R A N T S A R E T H E I N S T I T U T I O N A L P E R P E T U A T O R S A N D W H I C H A R E T H E I N S T I T U T I O N A L E N T R E P R E N E U R S ? 5.4.1 Alternatives to the Unconstrained and Disenchanted Actor Explanations Prior to examining the effects of founders objective socialization experiences and subjective contextual interpretations, I investigated whether any control variables should be included in the models. This two-step procedure was necessary due to the study s relatively small sample size (n = 60), which limited the number of variables that could simultaneously be entered into the regression equations. The basic variables of structural contingency theory (i.e., size, strategy, and age) were plausible controls given the findings of the first phase of my research, which had revealed that the legal profes-sion s commonly-perceived dominant template tends to be that exhibited by large, established firms engaged primarily in corporate-commercial work for organizational clients (Galanter & Palay, 1991). M y preliminary contextual research also suggested that 109 deviations from the industry norm might be a function of the new entrant s geographic location (Stager, 1990: 169). I thus included a variable representing whether the firm was located in the Greater Vancouver or in the Greater Victoria metropolitan district of British Columbia. Depending on the nature of the plausible control variable, I assessed whether it was significantly associated with a firm s overall deviation through correla-tion analysis, a difference of means test, or analysis of variance. These analyses were conducted on both overall deviation measures; the results are summarized in Table 5.5. T a b l e 5.5: C o n t r o l V a r i a b l e I nc l us i on A n a l y s i s O v e r a l l D e v i a t i o n ^ ' P l a u s i b l e C o n t i o l V a r i a b l e s M e a s u r e 1 M e a s u r e 2 , S i z e : Size category1" F = 0.96 F = 2.99f Overall firm size c r =-0.13 r =-0.25 t S t r a t e g y : Practice type d F = 0.62 F = 0.19 Corporate-commercial emphasis*" t =0.58 t =0.82 Specialist' t =0.45 t =0.30 Focus on organizational clientss t =1.38 t =1.82* A g e : Years since founding r =0.13 r =0.20 L o c a t i o n : Geographic region1 1 t =0.32 t =-0.25 *p<-i0 a overall deviation measure 1 weights the four dimensions of form equally; measure 2 weights the fifteen features equally b small = 2 to 4 lawyers, medium = 5 to 19 lawyers, large = 20 or more lawyers (Stager, 1990) c total number of personnel d solicitor s work, litigation, both e A firm was coded as having a corporate-commercial emphasis if the founder identified this as a primary area of practice. f A firm was coded as a specialist if the founder had identified the firm as a boutique rather than a general practice. s A firm was coded as focused on organizational clients if more than 50% of its time and revenues came from this type of client. h Greater Vancouver or Greater Victoria A s indicated in Table 5.5, none of the plausible control variables were signifi-cantly related to the first overall deviation measure. However, in partial support of structural contingency theory implications, a firm s size category, total number of 110 personnel, and organizational client focus were negatively related to the second overall deviation measure although only marginally significant in all three cases. I neverthe-less controlled for these findings in my subsequent hypotheses-testing analysis. More specifically, I entered a firm s total number of personnel along with the other explana-tory variables into the regression equations based on the second overall deviation measure. I selected the total number of personnel as the sole control because a post-hoc correlation analysis had revealed that this variable and a firm s size category and organizational client focus exhibited multicollinearity. A firm s total number of person-nel was most strongly correlated with the other two, being positively and significantly related to both the size category indicator (r = .73, p<.001) and the organizational client focus indicator (r = .39, p<.01). A correlation matrix for the final set of control, explanatory, and dependent variables is presented in Table 5.6. The pattern of correlations previews the findings from my tests of the unconstrained and disenchanted actor arguments, which are described in detail in the following section. 5.4.2 T h e Effects of Founder s S o c i a l i z a t i o n Exper iences a n d Con tex tua l Interpretations o n O v e r a l l D e v i a t i o n The hypotheses derived from the unconstrained and disenchanted actor argu-ments posit that certain characteristics of founders objective socialization experiences and their subjective contextual interpretations, respectively, determine the extent of deviation exhibited by their newly-established firms from an industry s dominant template for organizing. I tested these hypotheses through two sets of regression analy-ses. Table 5.7 summarizes the results for the first measure of the firms overall extent of deviation, in which the four dimensions of organizational form are weighted equally. Appendix 5.2 presents the findings from a parallel set of analyses based on the second overall deviation measure, in which the fifteen component features are weighted equally. The results from this parallel set of analyses replicated those described below in their entirety, even after controlling for firm size. I focus my ensuing discussion of the hypotheses-testing results on the first overall deviation measure for two reasons. For one, the first overall measure exhibited greater construct validity than the second, as it was more highly-correlated with an alternative measure of overall deviation. The interviewers impressions (r =.40, p < .01 for the first overall measure; r = .32, p < .05 for the second overall measure). Second, Pinder & Moore (1979) have raised concerns about the tendency of researchers to assign 111 ro CM ON O o CM LO LO 0 0 O tX o ON CM o CO O LO r# o CM CM LO CM 0 0 o LO LO CM CM CM tx O 0 0 o o LO LO o o CN Ov LO o 0 0 o * 0 0 CO o CM CO CM CO CO IX CO CM CO CO CN CO CO CM 0 1 N cS n 0 1 > O 0 1 cj C _QJ 0 1 OH X Ol s Ol CJ 3 CU 'CH Ol OH X 0 1 CH CS c 6 o P 0 1 A OH • F H I—I 0 1 C H 0 1 CJ 3 QJ • • H >H 0 ) OH X 0 1 "cu l H 0 1 A CJ CS u cS 0 0 0 1 oo cS l H OH C/l 3 O • i-H "§ Q LO VO 3 o > 0 ) xi c o 3 o 3 o > 0 1 Xi cn 0 1 cj x -2 AHH ni •rH. 2 60 Ol CS l H o cn O • i-H A 3 P> 0 ) X! cj cu OH Ol A cj cn cu > 0 1 3 •3 *H 3 > oi xi cn 6 0 ) HH cn cn 3 O Ix LO o VO CM 0 0 CO CM CM O IX o CM * CM CO cj cS SH OH 0 1 cj 3 cn cs 0 1 6 3 o > 0 ) Xi 3 cS A C D 3 K ® * H 0 1 > o LO ON ON tx 0 0 CO 0 0 vO o vo CM LO CM CM i-4 4-t 3 o cn 0 1 l H > 0 1 xs CM 112 ,co O*' CN O o CO CM CM T-H CN CO O o O o p I* —~> I* -—^  LN IN O O <=> <=> O CM o 2 O "I QJ XI o' L O o 01 TJ o* S >N ° o CM o 01 XI o O N v£> ^ o 01 Tj o O N CO o CM O o 01 TJ o • L O o N O cu « • HH )-cu Ol cu CJ cj u c c C O) 0 1 ne erii ieri cu O H O H CH X X 0 1 X Ol tu £ e c n o U H • *H H H HHCl Cll za an Cl Cll , - H c J H ocia lUUO( enp C/l ( - J P H 0 1 CJ C "in 0 ) OH X 0 1 0 1 A, CO C O a u cu H H X cu CO C a, 0 1 u >H 0 1 OH CJ cC s 60 Ol 60 ns )H OH o ° 5 U P CO c H H OH 0 1 CJ SH Ol OH C J 60 Ol cd SH O CO O P Xi 0 1 HH co XS 113 equal rather than theoretically consistent weights to the parameters selected for studies of organizational similarity and difference. Weighting each dimension rather than each feature equally is more compatible with Greenwood & Hinings (1993) conceptualiza-tion of organizational form, in which they imply that the four dimensions are of equivalent importance. Interestingly enough, however, in their subsequent empirical investigation, these scholars weighted the component measures of each dimension equally: this essentially resulted in an unequal weighting scheme for the four dimen-sions, wi th those measured by more indicators weighted more heavily. Hypothesis 3 predicted that founders with less experience in the dominant organizations of a focal industry w i l l tend to establish firms that exhibit greater devia-tion. The findings presented in Table 5.7 strongly support this first hypothesis derived from the unconstrained actor argument. When entered as the sole independent variable in the regression equation (model 1), a founder s years of prior experience in the legal profession s dominant organizations was negatively and significantly related to the overall extent of deviation exhibited by his or her firm. As indicated by model 6, this relationship remained negative and significant even after controlling for all of the other hypothesized explanatory variables. The following interview excerpt clearly depicts the tendency of founders with more extensive prior experience in the legal profession s prominent organizations to replicate aspects of the dominant template for organizing. When asked why he had implemented quantitative quotas, one participant wi th eleven years of previous large law firm experience rather curtly replied, It s the same system that s in place at all big firms 3 2 , implying that the answer to the question was rather obvious. The response also reveals the taken-for-granted nature of this feature of organ-izational form for this individual; interestingly, his firm exhibited the third-lowest amount of deviation (i.e., a score of 1.37 on overall measure 1). Hypothesis 4 predicted that founders wi th greater experience in the peripheral organizations of a focal industry w i l l tend to establish firms that exhibit greater devia-tion. The findings presented in Table 5.7 partially support this second hypothesis derived from the unconstrained actor argument. When entered as the sole independent variable in the regression equation (model 2), a founder s prior years of experience in the legal profession s peripheral organizations was positively and significantly related to the overall extent of deviation exhibited by his or her firm. However, the amount of explained variance was low (adjusted K2=.04) and, as indicated by model 6, the relation-3 2 Comment made by a male founder of a seventeen-person corporate/commercial firm. 114 ship between peripheral firm experience and overall deviation was no longer significant after controlling for all of the other hypothesized explanatory variables. Hypothesis 5 predicted that founders with greater experience in other industries w i l l tend to establish firms that exhibit greater deviation from the focal industry s dominant template for organizing. As indicated by the findings presented in Table 5.7, no support was found for this third hypothesis derived from the unconstrained actor argument. A founder s number of years of prior experience in fields other than law was not significantly related to the overall extent of deviation exhibited by his or her firm, in either the restricted (model 3) or the full regression equations (model 6). Hypothesis 6 predicted that founders who more strongly question the pragmatic legitimacy of an industry s prevailing organizational arrangements w i l l tend to estab-lish firms that exhibit greater deviation. As indicated by the findings presented in Table 5.7, no support was found for this first hypothesis derived from the disenchanted actor argument. The strength with which a founder questioned the economic soundness, efficiency, or effectiveness of the legal profession s existing organizational arrangements was not significantly related to the overall extent of deviation exhibited by his or her firm. This result was found for both the restricted regression equation (model 4) and the full regression equation (model 6). Hypothesis 7 predicted that founders who more strongly question the moral legitimacy of an industry s prevailing organizational arrangements w i l l tend to estab-lish firms that exhibit greater deviation. The findings presented in Table 5.7 support this second hypothesis derived from the disenchanted actor argument. When entered as the sole independent variable in the regression equation (model 5), the strength wi th which a founder questioned the procedural justice, distributive justice, or personal value congruity of the legal profession s existing organizational arrangements was positively and significantly related to the overall extent of deviation exhibited by his or her f i rm 3 3 . As indicated by model 6, this relationship remained positive and significant even after controlling for all of the other hypothesized explanatory variables. The results from the full regression model thus also lend support for the underlying argument that founders subjective interpretations exert an independent effect above and beyond that of their objective socialization experiences at least for their moral legitimacy perceptions. The following interview exchange with the founder of the firm exhibiting the second-3 3 These findings should be interpreted with caution as the explained variance for this model was low (i.e., adjusted R2 = .04). 115 highest amount of overall deviation v iv id ly portrays his reactions to perceived proce-dural injustice and personal value-incongruity: Interviewer Why did you decide to start this firm? Participant: I hated working at a big firm the corporate mentality, the false smugness, the hypocrisy. For example, clients with torn jeans that were paying a lot of money to the firm weren t considered proper clients I felt they were missing the point of what being a lawyer is all about Interviewer: How did you come u p with your vision for how the people within the firm would be organized and managed? Participant: It was a real reaction to my most recent past position. I [had] had enough I had an epiphany where it all came together and I realized that this was not what I wanted. For instance, I recall one incident where I was chewed out for flying in jeans But I was also influenced by my background. I come from a working-class family. I look at the world from a working perspective. I wanted to create a place where the staff feel like they re working for themselves, where they have a vested interest 3 4 . Finally, Hypothesis 8 predicted that founders subjective perceptions of the moral legitimacy of an industry s dominant template for organizing, rather than either their subjective perceptions of its pragmatic legitimacy or the nature of their objective socialization experiences, w i l l have the strongest effect on the extent of deviation exhib-ited by the forms of their newly-established firms. To indicate the strength of these effects, Table 5.8 presents the standardized coefficients for the full regression equation. This comparative hypothesis was only partially supported. Although subjective percep-tions of moral legitimacy were more strongly associated wi th deviation than subjective perceptions of pragmatic legitimacy, a founder s level of prior experience in the indus-try s dominant organizations actually emerged as the strongest predictor. In sum, the results of this set of analyses suggest that certain characteristics of organizational founders particularly the extent of their prior socialization in an indus-try s prominent firms and the strength with which they question the ethicality of existing institutional prescriptions partially shape the overall degree of deviation exhibited by their firms. In the following section, I examine whether these findings hold for the separate dimensions of organizational form. 3 4 Comment made by a male founder of an eight-person, solo-owned litigation boutique. Sixty-nine percent of his relevant interview excerpts were coded as reactions to dubious moral legitimacy. The firm exhibited the second-highest amount of deviation (i.e., a score of 2.68 for overall measure 1). 116 Table 5.8: Relative Effects of Founders Socialization Experiences and Contextual Interpretations on their Firms Overall Extent of Deviation Measure 1 Beta " (s.e.) * 1 Socialization Experience Dominan t f i rm experience -.479** (.020) Peripheral f i rm experience -.083 (.024) Other f ield experience -.188 (.034) Contextua l Interpretations Dubious pragmatic legit imacy perceptions .138 (.007) Dubious mora l legit imacy perceptions .293* (.006) Adjus ted R2 .19 + p<.10, * p<.05, ** p<.01, *** p<.001 (one-tailed tests) 5.4.3 Determinants of Deviation on the Separate Dimensions of Form Analytic procedure. I considered the effects of the variables measuring a foun-der s objective socialization experiences and subjective contextual interpretations on each dimension of organization form through a series of hierarchical regression analy-ses. In the first step of each analysis, I entered all of the hypothesized predictors of new entrant deviation; in the second step of each analysis, I entered the firm s overall size as a control variable. In all cases, the dependent variable was the firm s global deviation score for the particular dimension. Table 5.9 summarizes the results. To gain even deeper insights, I also calculated correlations between the predictors and the difference scores for the fifteen features of organizational form; these are presented in Appendix 5.3. Findings. A s indicated in Table 5.9, a founder s extent of prior experience in the legal profession s dominant organizations emerged as the only significant predictor of deviation along the interpretive scheme dimension. Those who had spent more years working in large law firms were less likely to instill value and belief systems in their own firms that differed from those of the industry s dominant template. As indicated in Appendix 5.3, they were particularly less likely to deviate from the norm of placing a very low emphasis on a crusading orientation i.e., viewing the firm as a vehicle for making systemic changes to the profession or society as a whole and the lawyers within it as missionaries of this endeavour. In general, founders with prior and more extensive 117 .8 , V *-rt H"» , u £ OS' 05 OJ h 1/1.3. 4H* u <Ut" 3 3 rt "* C73 s i s u 01 > • o> e-0) fN rtH o> TJ O Ol TJ O 5 fN "a* TJ O ; oi fN o Ol TJ* O s fN • Ol xs o 01 TJ c o rH O LN CN vO CN rH vO O o p O O O • * i—i O 0 0 LN 0 0 I N r o rH rH VO o O O o O O 1 v ' * * * * * * 0 0 r o i n m i n CN LO rH r o rH m CN o o p O p o i * i * * •»- * o O N tN 0 0 rH CN rH i n CM o O O O p o 1 r • 4-m 0 0 CN* o v E T IN i n rH VO 0 0 o o O o rH o 1 1 1 +• v o 0 0 rH o i n IN rH VO 0 0 o o O O rH o 1 1 1 * o LN ON" i n CM CN CN CO o O O o o p • •*-LN r o ~ CN ON" CN r o CM CO CN CO O p o o o p > —V —V —V fS • l"H* U * fS • > 01 u 3 oi • rt Ul 01 PH X tu 3 —* N o C/3 Ol o 3 oi 'C 0 1 CH X Ol 3 ns 3 O Q 0 1 cj 3 0 1 • rt H 0 ) OH X 0 1 0 ) X 'SH 0 1 PH cj 3 .2 'in Ol DH X 0 1 T3 Ol X CN rH O CO rH O rH O rH O cn 3 o *-rt DH 0 1 u SH 0 ) DH >-. u ( 0 cn c; 3 _o H '5b ( 0 0 1 pre) tic 1 lH CO 0 ) 3 -rt 3 3 60 rtH ro H CO DH xtu cn 3 0 ) o 3 X o 3 U Q o rH O V O rH O LN CO O O O O O c-> O O CO LO rH J^H o o o o o o o o vO 0 0 o o o o vO 0 0 o o o o i n CN oo CN f"* 13! ro , - , O O O O CN LN CO n H n s o o O o LN IN ° 2 o o •HH LN o o o o cn 3 o DH 0 1 u lH Ol DH >N CJ CO bD 0 ) O S cn 3 O X 3 o LN CO CN o o CN av CN o 0 0 o o CN CO CN O O CO o o IN o ON o CN CN H o o _2J 0 1 3 .a fS cn ' c 3 " c > -3 "o =< 3 O U oi > o CH T J 0 1 - r t CO 3^  TJ < 118 large law firm experience did not make comments such as the following when discuss-ing their firms: We re trying to become community builders. Initially, we saw ourselves as peacemakers. We re trying to help organizations primarily business to make the lifelong journey toward community ... We re all committed to the concept of community. We use our relationships with our clients as an opportunity to do more. We re taking the methods of mediation and moving it upstream into busi-nesses. As part of our community building activities with businesses, we re sitting on boards and promoting profitable, sustainable, purpose-driven organi-zations. We re helping companies discover and articulate their purpose and we re trying to build relationships of credibility as lawyers that we care about them and their organizations35. With respect to the firms structural aspects, Table 5.9 reveals that a founder s extent of dominant organization experience once again emerged as a marginally signifi-cant predictor. As indicated in Appendix 5.3, those wi th greater years of prior experience in large law firms were particularly less likely to depart from the norm of governing their organizations as partnerships rather than as solo-owned practices or cost-sharing arrangements. A s indicated in Table 5.9, a founder s level of experience in fields other than law was also a marginally significant determinant of deviation along the structural aspects dimension but in the direction opposite to that expected from the unconstrained actor argument. Those who had spent more years working in busi-ness, government, or education were less, rather than more, likely to create firms exhibiting structural aspects that deviated from the legal profession s dominant tem-plate. A s indicated in Table 5.9, both of the subjective contextual interpretation vari-ables emerged as significant predictors of deviation in the structural aspects dimension, and in the direction anticipated by the disenchanted actor argument. Those who more strongly questioned the pragmatic legitimacy of the legal profession s prevailing organ-izational arrangements were more likely to enact structural aspects that departed from the norm, as were those who had stronger doubts about the moral legitimacy of existing practices. More specifically, Appendix 5.3 reveals that those who more strongly ques-tioned the pragmatic legitimacy of existing administrative procedures were more likely to deviate from the norm of divisionalizing their organizations by area of legal practice, instead using such criteria as geographic region or client type as the basis for differen-3 5 Comment made by a male partner of a nine-person general practice who had only one year of prior experience in a large law firm. 119 tiation. In contrast, the correlations presented in Appendix 5.3 reveal that those who more strongly questioned the moral legitimacy of existing administrative procedures were more likely to depart from the normative personnel configuration. This latter finding is not surprising, given that the dominant pyramid structure of law firm or-ganization derives from the leverage model, which is fundamentally based on the principle of exploiting the work of others (Galanter & Palay, 1991; Hagan & Kay, 1995). As indicated in Table 5.9, all of the objective socialization experience variables emerged as at least marginally significant predictors of deviation in the new entrants decision systems. Consistent with the unconstrained actor argument, founders wi th less experience in the legal profession s dominant organizations were more likely to create firms that deviated on this dimension. Inconsistent with the unconstrained actor argu-ment, however, founders with greater prior experience i n either the legal profession s peripheral organizations or those of other industries were less likely to create decision systems that departed from the norm. Wi th respect to the subjective contextual interpre-tation variables, only a founder s pragmatic legitimacy perceptions emerged as a significant predictor of deviation in the decision systems dimension. Consistent wi th the disenchanted actor argument, those who more strongly questioned the pragmatic legitimacy of the legal profession s existing organizational arrangements were margin-ally more likely to enact decision systems that deviated from the norm. A s indicated in Appendix 5.3, this was particularly so for the centralization aspect of this dimension: firms headed by founders with stronger dubious pragmatic legitimacy perceptions were more likely to have divisions supervised by non-professionals or partnership meetings attended by non-partners. This entire set of findings for the decision systems dimension remained significant after controlling for the effect of firm age, which itself was a highly significant predictor. Contrary to the expectation derived from applying structural contingency theory in the context of the legal profession, however, larger new entrants were more likely to implement non-compliant decision systems, differing from the industry norm on both the centralization and interaction aspects of this dimension. Finally, as indicated in Table 5.9, two variables emerged as significant predictors of deviation in the new entrants human resource practices. Consistent wi th the uncon-strained actor perspective, founders with less experience in the legal profession s dominant organizations were significantly more likely to create policies that differed from the industry s dominant template for this dimension. Consistent wi th the disen-chanted actor argument, founders who more strongly questioned the moral legitimacy of existing organizational arrangements in the legal profession were marginally more likely to enact human resource practices that deviated from the norm. This pattern of 120 findings, however, was the only set that d id not hold after controlling for the effect of firm size. Consistent with the implication derived from applying structural contingency theory in the context of the legal profession, larger new entrants were less likely to exhibit human resource practices that departed from the dominant template. 5.4.4 A Summary of the Effects of Founders Socialization Experiences and Contextual Interpretations In general, the results of the above dimension-by-dimension substantiate the principal findings of the analysis based on the new entrants overall extent of deviation. The dimension-by-dimension findings fully corroborated those reported earlier for the first hypothesis derived from the unconstrained actor argument that founders with less extensive experience in the dominant organizations of a focal industry w i l l tend to establish firms that exhibit greater deviation (Hypothesis 3). For all four dimensions of organizational form, a founder s level of prior experience in large law firms was nega-tively related to his or her firm s degree of deviation. As in the analysis based on the new entrants overall extent of deviation, H y -potheses 4 and 5 were not supported by the dimension-by-dimension analysis. Moreover, in this lower-level analysis, I found some evidence contradictory to the hypotheses derived from the unconstrained actor argument. A founder s level of pe-ripheral firm experience was negatively rather than positively related to deviation for the decision systems dimension; also, his or her level of other field experience was negatively rather than positively related to deviation for both the structural aspects and decision systems dimensions. The dimension-by-dimension findings provided some support for the disen-chanted actor argument that founders who more strongly question the pragmatic legitimacy of an industry s prevailing organizational arrangements w i l l tend to estab-lish firms that exhibit greater deviation (Hypothesis 6). The degree to which a founder doubted the pragmatic legitimacy of the legal profession s prevailing organizational arrangements was positively related to deviation from the dominant template on two of the four dimensions of form (i.e., structural aspects and decision systems). N o support-ing evidence had previously been found for this hypothesis based on a firm s overall extent of deviation. Finally, these dimension-by-dimension findings partially corroborated the disenchanted actor argument that founders who more strongly question the moral legitimacy of an industry s prevailing organizational arrangements w i l l tend to estab-121 lish firms that exhibit greater deviation (Hypothesis 7). For two of the four dimensions of organizational form (i.e., structural aspects and human resource practices), the degree to which a founder doubted the moral legitimacy of existing arrangements in the legal profession was positively related to the firm s degree of deviation. 5.5 W H A T A R E T H E M I C R O - L E V E L M E C H A N I S M S A S S O C I A T E D W I T H S O C I A L I Z A T I O N E X P E R I E N C E S A N D C O N T E X T U A L I N T E R P R E T A T I O N S ? 5.5.1 Mechanisms Postulated to Underlie the Unconstrained and Disenchanted Actor Perspectives In this final section of my analysis, I explore the mechanisms associated wi th a founder s socialization experiences and contextual interpretations. The argument underlying the unconstrained actor perspective, for example, is that an industry s dominant template w i l l possess different degrees of cognitive legitimacy across organ-izational founders, due to the variability in their prior socialization experiences. O n the one hand, the elements of the prevailing organizational configuration are expected to be less understood and taken-for-granted by those with less extensive prior experience in the industry s most prominent firms. On the other hand, founders with greater experi-ence in the focal industry s peripheral organizations or those of other fields likely have greater understanding of alternative templates for organizing. The essence of the un-constrained actor argument is that founders differ with respect to their knowledge of the dominant and alternative organizational configurations; as such, they possess varying degrees of latent ability to enact forms that deviate from the norm. In contrast, the essence of the disenchanted actor argument is that founders differ with respect to their attitudes towards an industry s prevailing organizational arrange-ments; as such, they possess varying levels of motivation to enact forms that depart from the norm. In particular, those who more strongly question the pragmatic or moral legitimacy of existing administrative procedures are expected to be more motivated to modify such practices when designing their own firms. To examine these underlying micro-level mechanisms, I examined the pattern of correlations between the explana-tory variables and indicators of both the founders knowledge of the dominant and alternative organizational arrangements as well as his or her motivation to depart from existing practices in the focal industry. 122 5.5.2 Measures of Knowledge and Motivat ion I obtained two measures of a founder s motivation to depart from an industry s existing organizational arrangements. During the interviews, I had asked the partici-pants to rate how motivated they were to create structures, systems, and practices in their own firms that differed both from what they had experienced in their prior posi-tions as wel l as from those found in most other law firms in the province. In each case, the founders rated their level of motivation on a ten-point scale. In addition to these two motivation indicators, I constructed four measures capturing a participant s knowledge of dominant and alternative organizational ar-rangements. The first is an indirect indicator of the founder s understanding of the legal profession s dominant template; in other words, an individual-level proxy for the comprehensible aspect of cognitive legitimacy (Aldrich, 1999; Ald r i ch & Fiol , 1994; Suchman, 1995). During the interviews, the founders were asked to rate how different they thought their firms were from the industry norm, on a scale from one to ten. Many were unable to provide such estimates for various features, citing their lack of aware-ness of the industry norm as an explanation. These items were coded as missing values. Thus, the percentage of the self-reported deviation items that were coded as missing represents the first indicator of a founder s knowledge of the dominant template. The remaining three indicators of the knowledge component were obtained through the previously-described content analysis of the founders rationales for de-signing their firms in a certain way 3 6 . Because I had to rely on a less direct line of enquiry for tapping the founders subjective contextual interpretations, many of the isolated interview excerpts could not easily be classified into any of the thematic catego-ries derived from the unconstrained and disenchanted actor perspectives. I thus developed an additional set to more adequately represent the full range of themes raised in the responses. Table 5.10 presents these thematic categories together wi th their respective classification criteria, illustrative interview excerpts, and descriptive statis-tics. The percentage of a founder s interview excerpts that were coded into the first three thematic categories represents the three additional indicators of his or her knowl-edge of dominant and alternative configurations. These thematic categories are described be low 3 7 . 3 6 Details on this content analysis procedure were presented in section 5.2.2. 3 7 As further indicated in Table 5.11, the second set of emergent thematic categories, simply labeled other rationales, included responses consistent with the: 1) sense-making perspective that organizational struc-123 T a b l e 5.10: Themat i c Categories , In t e rv iew Excerpts, and Desc r ip t ive Statistics for the Founder s A d d i t i o n a l Rat iona les for D e s i g n i n g T h e i r F i r m s i n a C e r t a i n W a y { Thematic Categories Representative Interview Excerpts D e s c r i p t i v e S t a t i s t i c s Replication of Existing Practices Copy dominant features Founder implemented selected practices in order to replicate the existing industry standard The large firms do it this way [i.e., set quantitative targets]. It makes sense. It s logical to do it that way. (ID #188) Every firm sets [quantitative targe ts]. They re necessary, like marks, or scores. (ID #208) Proportion of founders citing theme at least once in the interview: 23.33 Continue historical precedents Founder implemented selected practices based on historical precedent, copying those in place at a previous firm She was hired on this basis [i.e., working a co m-pressed week]. It was a deal made with her former employer (ID #150) It s similar to what we did in our previous firm. There, we had certain billing targets to achieve and we could potentially receive a bonus if we met them. (ID #226) Replicating what was done at prior firm. (ID #228) Proportion of founders citing theme at least once in the interview: 23.33 Integrate elements of other models Founder implemented selected practices based on models borrowed from other industries, other countries, or law firms of another era I got an M B A before I went to law school so I based the organization of my firm on the Taylor Production Model. It s a military style of running a business. There s a lot of structure and everyone knows their roles. (ID #219) The typical firm trajectory is associate to partner. Here we re looking at alternatives, more based on a business model. Perhaps associate, manager, partner, for example. (ID # 196) Proportion of founders citing theme at least once in the interview: 23.33 tures and practices are not so much proactively designed but rather reactively evolved out of emergent situations, with resultant actions made sense of only in retrospect; and the 2) structural contingency argument that the aspects of an organization s form are primarily a function of its size and strategy. The sense-making nature of some organizational design decisions is evident in the following description of one founder s motives behind his firm s job-sharing arrangements: It wasn t really a conscious decision. This arrangement just evolved out of a maternity leave situation . Although more than half of the participants (57%) made at least one comment consistent with a sense-making perspective on organiza-tional design, on average only 7% of the relevant interview excerpts were coded into this thematic category. The structurally-contingent nature of the organizational design decisions of other law firm founders is clear in the following succinct response of one participant: The type of community we re serving dictates the type of firm we are . Although 27% of participants made at least one statement consistent with this thematic category, on average only 4% of the relevant interview excerpts emphasized reasons consistent with the structural contingency perspective. 124 Thematic Categories 1 Representative Interview Excerpts Descriptive Statistics Other Rationales Practices enacted through sense-making Practices weren t so much purposely de-signed but rather evolved out of a need to react to situations as they arose T he associate approached the partners about it and Proportion of it made sense because she didn t have a full caseload founders citing and she had a home system, such as a fax. (ID #124) theme at least once in the interview: 56.67 Practices structurally-contingent Practices more a func-tion of other organizational aspects, such as the firm s practice area, size, or billing method [The job pooling arrangement] works for the real estate division because it s easier for someone to pick up the file and understand what to do. (ID #188) Perhaps [our practice of not setting quantitative targets] is possible because of the size we are. It may not work in a big firm. But that s why we re not a big firm (ID #111) Proportion of founders citing theme at least once in the interview: 26.67 A s indicated in Table 5.10, the first three emergent thematic categories are consis-tent with the higher-order theme of replicating existing practices. Almost one quarter of participants (23%) made at least one comment acknowledging that they had deliber-ately copied features of the legal profession's dominant template for organizing. A s one founder put it, I m doing things like big firms, such as file control and management and standardizing procedures so that things are done right 3 8 . Another commented that his firm s recruitment and promotion policies were based on standards in the profe s-sion 3 9 . The second thematic category consistent with the higher-order theme of copying existing practices was the continuation of historical precedents. Twenty-three percent of participants noted that they had implemented certain organizational arrangements simply because they had been in place at a firm in which either they or one of their employees had previously worked. For example, when asked whether his firm pro-vided any unusual work arrangements, one participant responded: We have one lady who ends up working four days a week instead of full time. This is based on historical 3 8 3 9 Comment made by a male founding partner of an eight-person litigation boutique. Comment made by a male founding partner of a sixteen-person general practice. 125 precedent. The arrangement exists because it is the arrangement she had at her prior firm 4 0 . The third thematic category consistent wi th the higher-order theme of copying existing practices was the integration of elements borrowed from alternative templates for organizing. Twenty-three percent of participants acknowledged that they had implemented certain arrangements based on models from other industries, other coun-tries, or law firms of another era. One founder, whose firm was located in a suburban shopping center, had integrated administrative practices from the retail industry: In part I was dissatisfied with the traditional form [of the legal profession] but in part the types and structures developed by trying to adapt to the special needs of this firm. In a mall, you are open long hours and you have to get part-time help. We learned from other retailers in the mall how they dealt with part-time staffing issues41. 5.5.3 L i n k i n g Experiences w i t h K n o w l e d g e a n d Interpretations w i t h M o t i v a t i o n I conducted a post-hoc correlational analysis to assess the associations between the explanatory variables and the underlying micro-mechanism indicators. Table 5.11 summarizes the results. The findings presented in Table 5.11 lend partial support for the micro-level mechanisms postulated to underlie the unconstrained actor argument. A s expected, founders wi th less extensive prior experience in large law firms were more likely to state that they were either unaware of certain elements of the industry s dominant form or had integrated features borrowed from other organizational templates during the design process. Also as expected, founders wi th more years of prior experience in the marginal organizations of the legal profession were more likely to state that they had based certain aspects of their firms forms on alternative models. 4 2 For example, one participant who had four years of peripheral firm experience and only one year of dominant firm experience made the following comment when discussing his firm s compensation systems: I implemented a more structured bonus plan modeled after the Japanese a three-part bonus based on firm performance, system maintenance initiatives and 4 0 Comment made by a male founding partner of a thirty-two person general practice. 4 1 Comment made by a male founder of an eight-person solo-owned general practice. 4 2 As noted in section 5.4.2, however, the effect of marginal firm experience on overall deviation was not significant. 126 value-added, and attendance and responsibility, such as not taking time off at critical points so that the firm would not be adversely affected43. None of the correlations between the founders years of experience in other fields and the knowledge indicators were statistically significant. However, consistent with the argument that founders objective socialization experiences influence organizational deviation primarily through ability rather than motivation, none of the three prior experience variables were significantly correlated wi th either measure of a participant s desire to deviate from existing arrangements in the legal profession. The pattern of findings reported in Table 5.11 also partially supports the postu-lated underlying micro-mechanisms of the disenchanted actor perspective. Although not quite statistically significant, the anticipated positive relationship was found be-tween the strength with which founders questioned the pragmatic legitimacy of the legal profession s prevailing arrangements and their motivation to depart from those found in most other law firms in the province. Moreover, founders who held stronger dubious pragmatic legitimacy perceptions were less likely to state that they had inten-tionally copied features already in place at prior firms. Finally, the expected positive relationship was found between the strength of founders dubious moral legitimacy perceptions and their motivation to depart from the law firms in which they had previ-ously worked. Moreover, founders who more strongly doubted the moral legitimacy of the legal profession s prevailing organizational arrangements were less likely to state that they had deliberately attempted to replicate features of either the dominant or previously-experienced firms. In sum, it is clear that not all of the specific relationships suggested by the con-ceptual arguments behind the unconstrained and disenchanted actor perspectives were supported in this post-hoc correlational analysis. However, when viewed together, the pattern of findings offers some substantiation for the micro-level mechanisms postu-lated to underlie these two founder-driven theoretical perspectives on new entrant conformity versus deviation. 4 3 Comment made by a male founder of a twelve-person solo-owned general practice. 127 4* , LN LO CO CS • 8 * * cu J" 3 ' ft fftis ON LO CU C J c V • -H SH OJ OH X Q J a *H CU C J C Q J • H SH Q J OH X CU C cu 6 .& o SH OH Q J PH IN o HH _ T3 SH Q J A o LO 0 0 o 0 0 o o Q J C J C Q J • H SH Q J O H X cu CO C SH Q J C J CH O CJ CJ cC 0 0 Q J SH Q J x i Q J CTJ CC A O H 0 0 cC SH PH O 0 0 o CO CH SH Q J C J c o cj cj cC g 00 Q J CC SH o NO o LN CN e SH O HH c CC o 73 CO CO o o NO o LO o Q J 6 0 7 3 Q J o _ o ^H cj cC CH Q J O HH c CC c o 7 3 7 3 cu HH CC CJ • -H Q J 0 0 o o CO LN NO o 0 0 o ON CO CM LO o O O 'JH OH 4H O CO HH Q J 7 3 Q J C J Q J SH O H C J CO CM CO s Q J > HH cC c SH Q J O CO HH c Q J s 1 ni w CO o -t-» C/l • f-H 43 7 3 Q J O H O U A 0 0 ON 7 3 Q J 6 0 Q J LO ON LO NO NO o * CO CO 0 0 CM NO o LO o CM P LN O Q J cj C 0) ••H SH Q J O H X Q J SH o OH 6 o SH 7 3 o 7 3 Q J HH cC > CN LO o CO o 0 0 o c cC CO 7 3 c 6 o SH 7 3 7 3 CU HH CC > 7 3 SH CC 7 3 128 5.6 D I S C U S S I O N Despite neo-institutionalism s numerous and influential contributions to organ-izational analyses, many scholars have been quick to criticize this theoretical paradigm for its exclusionary focus: a focus that overlooks organizational heterogeneity in favour of homogeneity, under-emphasizes the roles of organizational actors and active agency in favour of contextually-prescribed scripts and passive responses, and inadequately explores micro-level mechanisms in favour of macro-level relationships (e.g., Donald-son, 1995; Hirsh, 1997; Hirsch & Lounsbury, 1997; Perrow, 1985). Through the research reported in this chapter, which examined the extent of deviation exhibited by new entrants to the legal profession and investigated the effects of individual-level determi-nants, I have attempted to extend the work of others who are also dedicated to addressing these criticisms of new institutional theory (e.g., Greenwood & Hinings, 1996; Oliver, 1991, 1992; Kraatz & Moore, 1998). The empirical findings are interesting and, I believe, offer important contributions not only for the neo-institutional literature but also for other micro and macro theoretical perspectives. 5.6.1 Variabi l i ty in Founders Interpretations of the Dominant Template The first major empirical finding from this phase of my research is the support that I found for the disenchanted actor perspective s underlying premise that founders exhibit variability in their interpretations of an industry s dominant template for orga-nizing even in such highly-institutionalized settings as the legal profession. The proportion of each participant s interview excerpts emphasizing reactions to the ques-tionable pragmatic legitimacy of this industry s existing organizational arrangements exhibited considerable variation, ranging from a low of 0% to a high of 75%. Moreover, almost all of the founders (98%) made at least one comment revealing their doubt about the economic soundness, efficiency, and/or effectiveness of prevailing law firm struc-tures, systems, and practices. Given the results from the first phase of my investigation which attested to the commonly-understood nature of the legal profession s dominant template these second-phase descriptive findings serve to underscore the distinction between institutionalized practices that are widely understood (i.e., cognitively legiti-mate) and those that are perceived to be of functional utility (i.e., pragmatically legitimate). Moreover, they lend support for Oliver s (1991, 1992) argument that the functional value of institutional prescriptions is not immune to reinterpretation. 129 The proportion of each participant s interview excerpts revealing reactions to the dubious moral illegitimacy of the legal profession s prevailing organizational arrange-ments exhibited even greater variation, ranging from a minimum of 0% to a maximum of 88% percent. These descriptive results provide clear support for Mart in s (1993) compelling argument that although dominant administrative practices may be com-monly-understood or even widely-perceived to be of functional utility, this does not necessarily imply that they are also commonly-accepted as appropriate or right in an ethical sense. In particular, Mart in emphasized that some individuals w i l l likely har-bour strong feelings about the distributive injustice of institutionalized organizational arrangements a theme echoed in the recent work of several researchers interested in processes of institutional change and deinstiutionalization (e.g., Greenwood & Hinings, 1996; Oliver, 1991, 1992; Tolbert & Zucker, 1996). Perceptions of distributive injustice were certainly prevalent amongst the founders in my sample: 77% made at least one comment revealing their belief that prevailing organizational arrangements in the legal profession result in an unfair distribution of rewards. Moreover, in support of arguments derived from micro-level research on person-organization fit (e.g., Dutton & Dukerich, 1991; Meyerson & Scully, 1995), 70% percent of participants made at least one statement revealing that they considered existing administrative practices to be incongruous with their own personal ethics and morals. One theme emerged above and beyond perceptions of distributive injustice or value incompatibility: 83% of participants made at least one comment referring to the per-ceived procedural injustice of prevailing organizational arrangements. Although certainly subsumable within the dimension of moral legitimacy (Aldrich, 1999; Aldr ich & Fiol , 1994; Suchman, 1995), this finding nevertheless provides greater detail on the criteria used by organizational actors in interpreting institutional prescriptions. Overall , these descriptive results paint a rather disturbing portrait of consider-able disenchantment with the prevailing organizational arrangements of the legal profession - findings that corroborate other recent investigations of this industry. In their study of gender differences in the career progression of lawyers, for example, Hagan & Kay emphasized that a general feeling of discontent wi th some of the basic premises of the profession (1995: 64) was the strongest picture to emerge from their research. In a follow-up study, Kay and her colleagues further noted that: Numerous lawyers in the study made concerted efforts to explain the sources of their dissatisfaction in the practice of law. Often the criticisms were not of the substance of law practice, but rather the conditions of work, dise nchantment 130 with the law, the organizational structure of their work environment, and the emphasis on billable hours and profit (Kay, Dautovich & Marlor, 1997:153). Similarly, Brockman (1990) concluded her research on lawyers that have exited the British Columbia Law Society with the warning that practitioner dissatisfaction is a growing problem within this industry. More specifically, her results revealed dise n-chantment with the nature of practice (1990: 23) as the primary reason why many lawyers are leaving the legal profession. 5.6.2 The Predominance of New Entrant Conformity to Institutional Prescriptions Given the prevalence with which the founders in my study expressed concerns about the pragmatic and moral legitimacy of the legal profession s existing organiza-tional arrangements, their subsequent tendency to create firms that conformed to, rather than departed from, the dominant template is particularly intriguing. Approximately 85% of the new entrants exhibited only a small or very small degree of difference from the industry norm. This result corroborates Greenwood & Hinings conclusion from their empirical investigation of municipal government agencies; namely, that organiza-tions tend to operate with structures and systems that approximate [ contextually-prescribed] archetypes (1993: 1073). Yet it contradicts Oliver s (1988) finding that the voluntary social service providers she had investigated tended to exhibit diversity rather than similarity. However, by focusing on new entrants rather than established firms, my results offer additional empirical data based on a very different set of organizations for resolving the rhetorical debate over whether organizations tend to exhibit startling homogeneity (DiMaggio & Powell , 1983: 148), vers us remarkable heterogeneity (Donaldson, 1995: 126). In the case of such highly-institutionalized settings as the legal profession, it appears that organizational similarity rather than difference is the more common occurrence. A s a result of this focus on newly-established firms, my findings also provide empirical evidence that can help disentangle the more specific theoretical tension between those who view new entrants as a promising source of institutional entrepre-neurship (e.g., Kraatz & Moore, 1998; Kraatz & Zajac, 1996; Leblebici et al., 1991; Powell , 1991) versus institutional perpetuation (e.g., Dacin, 1997; Stinchcombe, 1965). Although my results clearly corroborate Dacin s (1997) finding that new entrants tend to adopt institutionally-prescribed characteristics during the founding period, some d id not: approximately fifteen percent of the newly-established law firms in this study exhibited a moderate degree of departure from the legal profession s dominant template. These results thus provide support for L o w & Abrahamson s (1997: 454) proposition, recently 131 articulated i n the entrepreneurship literature, that n e w entrants to a mature indus t ry tend to compete either b y repl ica t ing features of exis t ing forms or b y in t roduc ing inno-va t ive structures, systems, a n d practices; they also offer empi r i ca l data regard ing the p ropo r t i on of n e w entrants l i k e l y to be founded as clones versus movements respectively. In the case of such h igh ly - ins t i tu t iona l i zed settings as the legal profession, it appears that the vast majori ty of n e w entrants w i l l act p r i m a r i l y as ins t i tu t ional perpetuators rather than ins t i tu t ional entrepreneurs even i f the vast majority of foun-ders have expressed at least some disenchantment w i t h the dominan t fo rm of o rgan iz ing . 5.6.3 T h e P o w e r of P r o m i n e n t F i r m Exper ience i n Perpe tua t ing Ins t i tu t iona l Prescr ip t ions The th i rd major empi r i ca l f i nd ing of this phase of m y research pertains to the strong and robust suppor t that I found for the effect of a founder s p r io r dominan t f i rm experience o n the amount of dev ia t ion exhibi ted b y his or her f i rm . A s hypothes ized , l a w f i rm founders w h o h a d more extensive experience i n the legal profession s larger and more p rominen t organizat ions tended to create organiza t ional forms that more c lose ly approx imated the indus t ry n o r m . It appears as t hough greater socia l iza t ion i n the dominan t organizat ions of a h igh ly- ins t i tu t iona l ized setting does tend to constra in i n d i v i d u a l s into t h ink ing w i t h i n the confines of exis t ing taken-for-granteds. Th i s result thus p rov ides emp i r i ca l suppor t for the p o w e r of normat ive i somorph ic pressures; that is, the tendency of organizat ions to adopt ins t i tu t iona l ized prescr ipt ions as a result of the profess ional iza t ion of their members ( D i M a g g i o & P o w e l l , 1983). A l t h o u g h the effect of dominan t f i rm experience was suppor ted th rough m y research, I d i d not f ind robust suppor t for the other t w o hypotheses de r ived f rom the unconstra ined actor argument. M o r e specifical ly, I d i d not f ind that the more deviant f irms tended to be created b y founders w i t h greater experience i n either the marg ina l organizat ions of a focal indus t ry or those of other industr ies . A s such, m y research does not offer substantiat ion for Kraa tz & M o o r e s (1998) related f indings that executives mig ra t ing f rom per iphera l organizat ions or those of other fields were more l i k e l y to in t roduce ins t i tu t ional change i n exis t ing organizat ions . The lack of effect for other indus t ry experience m a y be attributable to inadequate var ia t ion i n this hypo thes ized explanatory var iable: o n l y twenty-f ive percent of par t ic i -pants had any p r io r experience i n fields other than the legal profession. S imi l a r ly , the lack of effect for per iphera l f i r m experience m a y be attributable to col l inear i ty between 132 this variable and a founder s extent of prominent firm experience: although peripheral firm experience had the hypothesized positive effect on deviation when entered as the sole predictor, this effect was not robust after controlling for the other hypothesized determinants. Another plausible explanation for the lack of results derives from neo-institutional theory. Perhaps in such highly-institutionalized settings as the legal pro-fession, founders from lower-status organizations or other industries believe that they w i l l be perceived as personally lacking in credibility due to their background experi-ences; as such, they may purposely replicate features of the dominant template in their firms as visible symbols that they are, in fact, legitimate players in the field. Future researchers may want to explore the validity of this interpretation. In sum, these findings suggest that a founder s experience with alternative templates for organizing is insufficient to trigger deviation in his or her newly-created firm; instead, it is a lack of experience with an industry s dominant template that mat-ters. The possession of less tightly-developed scripts regarding the institutionally-prescribed means for accomplishing business activity rather than the knowledge of different scripts for organizing appears to be more influential in provoking the im-plementation of non-conformant organizational arrangements. 5.6.4 T h e R o l e of M o r a l Leg i t imacy Conce rns i n C rea t i ng Depar tu res f r o m Ins t i tu t iona l Prescr ip t ions With respect to the disenchanted actor perspective, a surprising lack of evidence was found for the hypothesis that founders who more strongly question the pragmatic legitimacy of existing organizational arrangements w i l l establish firms exhibiting greater deviation from the dominant template. This finding is particularly interesting given the frequency with which the participants made comments revealing doubts about the economic soundness, efficiency, and effectiveness of prevailing administra-tive practices in the legal profession. Thus, my research fails to support Oliver s (1991, 1992) more general argument that institutionalized practices tend to be eroded or displaced when doubts about their functional utility prevail. Nevertheless, the insignifi-cant effect of founders pragmatic legitimacy perceptions on organizational deviation is intriguing in and of itself, and, I believe, has important implications for other organiza-tional literatures particularly the field of entrepreneurship. Entrepreneurship research tends to be dominated by the view that founders enact organizational structures and strategies to maximize competitive advantage, efficiency, profitability, or the entrepre-neur s own economic gain. This emphasis is clear, for example, in Low & Abrahamson s discussion of innovative versus imitative organizational forms, which contains many 133 statements similar to the following: In an effort to achieve efficiencies, develop sources of competitive advantage, and preempt the competition more emphasis is placed on following the example of other firms (1997: 436). The results of my research shed some doubt on the validity of this assumption that non-compliant forms are created primarily for such economic reasons. The results of my research did, however, confirm the second hypothesis derived from the disenchanted actor argument: that firms exhibiting greater deviation will tend to be established by founders who more strongly question the dominant template s moral legitimacy (i.e., its procedural justice, distributive justice, and personal value-compatibility). This finding thus lends preliminary empirical support for recent theo-retical assertions that perceptions of distributive injustice can act as a catalyst for non-conformity, institutional change, and deinstitutionalization (e.g., Greenwood & Hin-ings, 1996; Oliver, 1991, 1992; Tolbert & Zucker, 1996). Similarly, this finding supports theoretical claims (e.g., Dutton & Dukerich, 1991; Meyerson & Scully, 1995) and sup-plements single case-study evidence (e.g., Dutton & Dukerich, 1991) for the effect of personal value-incongruity on organizational innovation. Moreover, the prevalence with which participants referred to perceived procedural injustice suggests that future theoretical and empirical research on the processes of institutional stability and change should incorporate this individual-level perceptual variable. The significant effect of founders moral legitimacy perceptions also has interesting implications for the litera-ture on organizational justice and person-organization fit, suggesting that research on these micro-level topics could be extended by considering consequences beyond those for the individual and the particular organization that was the source of the perceived injustice or value-incongruity. Combined, these results suggest that founders pragmatic legitimacy concerns about an industry s dominant template for organizing are insufficient to trigger the implementation of non-conformant organizational arrangements in their own firms. Strong moral legitimacy concerns, however, appear to be capable of fostering new entrant deviation. Doubts about the ethicality of contextual prescriptions, rather than their functionality, appear to act as catalysts for institutional entrepreneurship in such highly-institutionalized settings as the legal profession. 5.6.5 The Independent Effect of Subjective Contextual Interpretations Another noteworthy finding of this phase of my research pertains to the com-parative effects of the statistically-significant predictors. Contrary to my expectations, a 134 founder s dominant firm experience, rather than his or her moral legitimacy percep-tions, emerged as the strongest determinant of new entrant deviation. Although my comparative hypothesis was not supported, my findings d id reveal that this contextual interpretation variable exerted a significant independent effect above and beyond that of the objective socialization variables. This result suggests that an individual s com-mitment to an institution s prevailing values is not necessarily related to the nature of his or her background experience an argument that appears to depart from that of other neo-institutional researchers (e.g., DiMaggio & Powell , 1991; Kraatz & Moore, 1998). Deviations from the dominant template are likely to be enacted by founders who question the moral legitimacy of prevailing values, structures, systems, and practices regardless of whether these founders had extensive experience in either the central or peripheral organizations of the focal industry or in another industry altogether. In sum, the unconstrained and disenchanted actor arguments appear to be complementary rather than competing explanations for organizational conformity and deviation; as such, variables derived from both perspectives should be included in future theoretical accounts and empirical investigations of institutional maintenance, erosion, and entrepreneurship. 5.6.5 Respective Micro-Mechanisms Associated with Socialization Experiences and Contextual Interpretations The preliminary support that was found for the micro-mechanisms postulated to underlie the unconstrained and disenchanted actor arguments represents the final major empirical finding of this phase of my research. Consistent with the former per-spective, it appears that founders wi th more extensive prior experience in an industry s prominent organizations tend to possess greater knowledge of the dominant template; consistent with the latter conceptual framework, those who possess stronger doubts about the moral legitimacy of prevailing organizational arrangements tend to be more motivated to create deviant structures, systems, and practices in their own firms. The association of objective experiences with ability rather than motivation and the paral-lel but reverse association of subjective interpretations with motivation rather than ability lends indirect support for Greenwood & Hinings (1996) more general distinc-tion between enabling dynamics of institutional change (i.e., capacities for action) and precipitating dynamics of institutional change (i.e., pressures for change). Unfortu-nately, post-hoc measures and a lack of statistical power prevented me from adequately examining whether these ability and motivation indicators mediated the relationships between both a founder s dominant firm experience and moral legitimacy perceptions and the extent of deviation exhibited by his or her firm. Testing the effect of more 135 sophisticated operationalizations through structural equation modeling thus represents a possible future research direction. 5.6.7 Conclusion The primary objective of this phase of my empirical investigation was to examine whether and why organizational deviation can develop within the parameters of existing institutions (Hirsch & Lounsbury, 1997: 86). M y findings attest to the powe r of normative isomorphic processes in highly-institutionalized industries particularly to the conforming influence of prior socialization experience in the prominent organiza-tions of such settings. Although the overwhelming majority of the founders in my study expressed at least some degree of doubt regarding the pragmatic and moral legitimacy of the legal profession s dominant template for organizing, only fifteen percent had in turn created organizations exhibiting at least a moderate degree of deviation from the norm. Thus, in such highly-institutionalized settings as the legal profession, it appears that new organizational entrants act primarily as agents of institutional perpetuation rather than as agents of institutional entrepreneurship despite their founders con-cerns about the functionality or ethicality of prevailing organizational arrangements. The more entrepreneurial firms tend to be founded by individuals wi th less extensive prior socialization experience in the industry s most prominent organizations and those who expressed stronger doubts about the moral legitimacy of prevailing organizational arrangements. Pragmatic legitimacy concerns, as wel l as prior experience in either peripheral organizations or other industries, do not appear to be sufficient provokers of organizational deviation. Instead, it is those founders who have less understanding of the rules for organizing, and those who more strongly question their ethicality, who are more likely to create firms that break with precedent. Thus, the extent of conformity or deviation exhibited by newly-established firms appears to be at least partially shaped both by what founders know and how they feel about an industry s institutional prescriptions. 136 C H A P T E R 6: I N V E S T I G A T I N G N E W E N T R A N T C O N F O R M I T Y A N D D E V I A T I O N I N T H E L E G A L P R O F E S S I O N : S O M E C O N C L U D I N G R E M A R K S 6.1 OVERVIEW Motivated by the persuasive criticism that new institutional theory tends to paint an overly passive and conforming portrait of organizations (e.g., Donaldson, 1995; Hirsch, 1997; Hirsch & Lounsbury, 1997; Oliver, 1991, 1992), my dissertation research examined an issue fundamental to this theoretical paradigm: whether and why vari-ability ' in organizational forms can develop within the confines of prevailing institutions. I limited my exploration of this topic to new entrants for two reasons. First, previous studies that have explicitly investigated the extent of structural isomor-phism versus heterogeneity, although few in number, have tended to examine established organizations (e.g., Greenwood & Hinings, 1993; Oliver, 1988). Second, and more importantly, I felt that a focus on new entrants could shed some empirical light on the seemingly contradictory arguments that newly-established organizations represent likely agents of institutional transformation, on the one hand (e.g., Kraatz & Moore, 1998; Kraatz & Zajac, 1995; Lebebici et al., 1991, Powell , 1991) versus likely agents of institutional maintenance, on the other (e.g., Dacin, 1997; Stinchcombe, 1965). I investi-gated this issue in a particularly intriguing context the legal profession. Al though highly-institutionalized, this industry is currently undergoing a period of profound change; as such, it is especially appropriate for a study of new entrant conformity and deviation. Moreover, although law firms are clearly representative of organizations that are highly infused with value (Selznick, 1957), the legal profession has been rather surprisingly neglected as a milieu for bui lding and testing neo-institutional theory. 6.2 THE CONCEPTUAL FRAMEWORK A N D ITS CONTRIBUTIONS I began my study by proposing definitions for two rather complex constructs fundamental to an investigation of structural isomorphism versus diversity: organiza-tional form and deviation. Drawing on Greenwood & Hinings (1993) definition of form as the configuration of an organization s interpretive scheme, structural aspects, deci-sion systems, and human resource practices, I defined deviation as the multivariate 137 extent to which these four component dimensions differ from those of an industry s dominant template for organizing. A dominant template is the configuration that is commonly perceived by both observers of, and actors within, an industry to character-ize its most prominent organizations. This definition thus extends Greenwood & Hinings (1993) by emphasizing practitioner-perceived dominant templates rather than observer-derived idealized archetypes as the referent institutional prescription; and, as recommended by Westphal et al. (1997), by emphasizing the continuous nature of deviations from these institutionalized configurations. I then developed my conceptual arguments regarding the existence of dominant templates, the extent to which new entrants w i l l exhibit isomorphism with these tem-plates, and the reasons why some conform and others deviate. I started by articulating one of neo-institutionalism s basic premises as a foundational hypothesis to be exam-ined empirically in my investigation rather than as an underlying and untested assumption of my arguments. This hypothesis is the premise that highly-institutionalized industries contain dominant templates for organizing that are com-monly understood by observers of and actors within such settings. I then drew on L o w & Abrahamson s (1997) essay in the entrepreneurship literature to help resolve the seemingly discrepant findings regarding the tendency of new organizational entrants to act primarily as agents of institutional perpetuation (e.g., Dacin, 1997) versus institu-tional entrepreneurship (e.g., Leblebici et al, 1991). Based on L o w & Abrahamson s work, I proposed that most but not all newly-established firms w i l l exhibit little deviation from a highly-institutionalized industry s dominant template. Finally, I formulated two complementary individual-level arguments to account for the existence of both conformity and deviation amongst new entrants. I termed these the unco n-strained actor and disenchanted actor perspectives. The essence of the unconstrained actor perspective is that variability in the extent of deviation exhibited by new organizational entrants is partially attributable to vari-ability in the objective socialization experiences of their founders. I reasoned that both individuals who have less understanding of an industry s dominant template for orga-nizing, and individuals who have greater knowledge of alternative models, w i l l possess greater latent ability to depart from standard practice. More specifically, I hypothesized that founders wi th less experience in an industry s prominent organizations, greater experience in its peripheral organizations, or greater experience in other industries w i l l all establish organizations exhibiting greater deviation. Adopt ing a pluralistic stance towards my research topic, I then formulated the complementary disenchanted actor perspective. 138 Drawing on the legitimacy typologies of Aldr ich (1999), Aldr ich & Fiol (1994) and Suchman (1995), I suggested that departures from an industry s dominant template for organizing are also likely to be enacted by founders who question the pragmatic and/or moral legitimacy of prevailing organizational arrangements regardless of whether these founders had extensive experience in either the prominent or peripheral organizations of a focal industry, or in another industry altogether. The essence of the disenchanted actor argument is that how founders feel about institutional prescriptions is an equally-powerful determinant of new entrant deviation that acts independently of what these founders know about the features of the dominant template. Although this emphasis appears to depart somewhat from that of some neo-institutionalists (e.g., Kraatz & Moore, 1998), it joins others in addressing the plea for greater theoretical understanding of how contextual pressures are interpreted and acted upon by organ-izational actors (Greenwood & Hinings, 1996:1024). Moreover, the inclusion of founders subjective contextual interpretations ex-tends previous work on the role of leaders in shaping organizational-level attributes, by considering individual-level factors beyond personality characteristics (e.g., Mil ler & Droge, 1986; Mi l le r & Toulouse, 1986; Mil le r , Toulouse & Belanger, 1985) and back-ground experiences (e.g., Boeker, 1988, 1997; Kraatz & Moore, 1998). Despite calls for greater attention to the micro-mechanisms that maintain and erode macro-structures (e.g., Donaldson, 1995; Hirsch, 1997; Hirsch & Lounsbury, 1997; Perrow, 1985), neo-institutionalists have been slow to incorporate the roles or organizational actors and active human agency in their research notable exceptions being the conceptual frameworks offered by Greenwood & Hinings (1996) and Oliver (1991, 1992), and the empirical investigation by Kraatz & Moore (1997). In sum, by focusing on new entrants as a source of both institutional perpetuation and institutional entrepreneurship, and by postulating a founder s socialization experiences and contextual interpretations as determinants of an organization s extent of conformity to dominant templates, I believe that the conceptual framework of my dissertation offers interesting theoretical exten-sions to the neo-institutional literature. 6.3 C O N T R I B U T I O N S O F T H E F I R S T P H A S E O F M Y E M P I R I C A L R E S E A R C H 6.3.1 M e t h o d o l o g i c a l C o n t r i b u t i o n s In the first phase of my empirical research, I tested the foundational hypothesis that highly-institutionalized industries contain dominant templates for organizing that are commonly-perceived by both observers of and actors within such settings. A n 139 important methodological contribution of this component of my dissertation pertains to the two-step procedure that I implemented for identifying and then validating the nature of such institutionally-prescribed organizational configurations. The identifica-tion step involved a blend of theory-based deduction and empirically-grounded induction. Guided conceptually by Greenwood & Hinings (1993) four-dimensional definition of organizational form, I selected relevant lower-order features (and their corresponding measures) by the consistency wi th which they appeared both within and between my multiple sources of qualitative data rather than by the prevalence wi th which they appeared in existing academic research on organizational form. This ap-proach resulted in an operationalization of form grounded in dimensions that apply across industries, yet wi th component features and measures highly-meaningful in the focal context of my investigation. The subsequent verification procedure involved administering a survey to a panel of practitioners. Through this procedure I obtained quantitative data for system-atically assessing the extent to which the dominant template commonly perceived by observers of an industry was also consensually understood by actors within the focal setting. A d d i n g this step to Greenwood & Hinings (1993) recommended protocol thus provides a more robust methodology for neo-institutionalists interested in identifying and subsequently validating institutionally-prescribed frameworks for organizing. It also blends the respective merits of qualitative and quantitative data collection meth-ods. Moreover, this two-step procedure has implications for researchers requiring measures of legitimacy. In essence, the method represents a potential protocol for operationalizing the construct of cognitive legitimacy; more specifically, the extent to which an organizational form is familiar, wel l known, and comprehensible 4 4 (Aldrich, 1999; Aldr ich & Fiol , 1994; Suchman, 1995). In particular, the procedure employed in this research calls attention to the importance of assessing the consistency between the perceptions of different constituents such as outside observers of and practitioners within a focal industry. In sum, protocols of this type certainly provide more direct measures of legitimacy than the proxies that researchers have tended to rely on to date in the organizational literature (cf. Suchman, 1995: 602). 4 4 Admittedly, this protocol does not address the taken-for-granted aspect of cognitive legitimacy (Aldrich, 1999; Aldrich & Fiol, 1994; Suchman, 1995). 140 6.3.2 Theore t i ca l C o n t r i b u t i o n s The results of the first phase of my empirical investigation lend some support for the foundational hypothesis that highly institutionalized environments such as the legal profession contain dominant templates for organizing that are commonly perceived and understood by both observers of, and actors within, the focal setting. They thus join the findings of Greenwood & Hinings (1993) in offering empirical substantiation for one of new institutional theory s oft-asserted, yet relatively under-investigated, basic premises. The characteristic nature of the dominant template identified through my research also lends empirical support for more recently-proposed, yet less fundamental, neo-institutional concepts. Combined, my qualitative and quantitative findings indicate that the legal profession s currently-dominant organizational configuration can best be described as a hybrid of the two idealized archetypes proposed by Greenwood & Hinings and their colleagues (Cooper et al., 1996): the historical Professional Partnership archetype and the emerging Managerial Professional Business archetype. M y independently-derived results not only substantiate the context-specific constructs of these scholars but also lend support for their more abstract concept of sedimented structures; that is, forms in which features of more than one archetype are simul taneously present on the surface of organizational life (Cooper et al., 1996: 635). Moreover, given that the legal profe s-sion is currently in the midst of a profound transitional period (Altman Weil Pensa, 1998; Ellis, 1993; Galanter & Palay, 1991; Hagan & Kay, 1995), my findings also provide preliminary evidence for their proposition that in tightly-coupled fields such as the legal profession, institutional change is likely to be convergent rather than radical (Greenwood & Hinings, 1996). 6.4 C O N T R I B U T I O N S O F T H E S E C O N D P H A S E O F M Y E M P I R I C A L R E S E A R C H 6.4.1 M e t h o d o l o g i c a l C o n t r i b u t i o n s The second phase of my empirical research was dedicated to testing my proposi-tions regarding the extent and prediction of new entrant conformity versus deviation. As with the first phase, this component also offers both methodological and theoretical contributions to the neo-institutional literature. The former derive from how I measured organizational form, calculated deviation, obtained subjective contextual interpreta-tions, and analyzed both the extent of new entrant conformity and the relationships between founder-level characteristics and organizational-level deviation. 141 Measuring organizational form. Three noteworthy aspects of my methodology for operationalizing organizational form warrant discussion. First, motivated by the argument that organizational configurations incorporating multiple dimensions are apt to prove most valuable in both theoretical and empirical applications (Meyer et al., 1993: 1182; see also Pinder & Moore, 1979), I collected data on a large number of fea-tures (i.e., fifteen), the majority of which were measured by multiple indicators. Moreover, rather than limiting these indicators to those that are commonly-reported in the extant literature, I selected measures that were empirically-grounded through my first-phase immersion in the focal context. Second, I obtained data on these indicators primarily through open-ended interview questions a format that resulted in rich descriptions for my subsequent data analysis and provided opportunities to collect subtle variations in organizational arrangements that would not have been possible through a primarily closed-ended design. Third, I collected data on a dimension of organizational form that as of yet has been relatively under-investigated in the neo-institutional literature: the new entrants interpretive schemes. By presenting the details of the multi-step content analysis procedure that I employed for systematically obtaining qualitative data on this dimension of organizational form and then converting the interview excerpts into quantitative measures, my methodological protocol thus complements the work of others who have tended to investigate interpretive schemes through case study research designs (e.g., Bartunek, 1984; Cooper et al., 1996). Com-bined, I believe that these aspects of my methodology for operationalizing organizational form result in a multi-dimensional measure with greater content validity than the uni-dimensional measures that are prevalent in neo-institutional research. This procedure for operationalizing the construct of organizational form may also be useful for configurational approaches to organizational analyses in general, in which organizations are viewed holistically as constellations of multiple, distinct char-acteristics that align in identifiable patterns (e.g., Meyer et al., 1993; Ketchen et al., 1997). Historically, this literature appears to have been dominated by a typological approach to organizational classification, which is characterized by a concern for generic, theo-retially-derived ideal types . This typological perspective, however, has not gone uncriticized (e.g., Greenwood & Hinings, 1993; McKelvey & Aldr ich , 1983; Pinder & Moore, 1979). The method that I implemented for operationalizing organizational form, while grounded in higher-order dimensions that apply across industries (i.e., a firm s interpretive scheme, structural aspects, decision systems, and human resource prac-tices), acknowledges the potential for contextual specificity through its inductive selection of the lower-order features and measures tapping these dimensions. A s noted 1 4 2 by the above critics of the typological approach to organizational classification, this type of procedure should result in more meaningful and valid categorization schemes. Measuring organizational deviation. M y protocol for measuring organizational deviation also represents a methodological contribution to the new institutional and broader organizational literature. To recap, this procedure involved: obtaining inde-pendent, quantitative deviation weights from multiple credible evaluators through a modified version of Amabile s (1982) consensual assessment technique; incorporating these weights into an aggregated difference score for each feature of form; calculating global deviation measures through Cronbach & Glesers (1953) profile analysis tech-nique; and validating these global deviation measures against the interviewer s overall impression of the firm s degree of departure from the industry norm. This protocol resulted in continuous, construct-validated measures of deviation derived from a multivariate conceptualization of organizational form. A s such, it provides at least a preliminary roadmap for neo-institutional researchers interested in addressing West-phal et al. s criticism that the tendency to treat the adoption (or non-adoption) of administrative practices as a discrete phenomenon is somewhat arbitrary (1997: 307). Other scholars in the broader organizational literature have voiced similar pleas for continuous measures of organizational similarity and difference (e.g., Doty et al., 1993; Pinder & Moore, 1979). Measuring contextual interpretations. The third methodological contribution of the second phase of my empirical research pertains to the measures of founders subjec-tive contextual interpretations. I obtained these by asking participants to describe their rationale for designing various aspects of their firms in a certain way and then content-analyzing their responses for attitudes toward the industry s prevailing organizational arrangements. Although indirect, this protocol nevertheless resulted in an inventory of subjective contextual interpretations consistent with previously-articulated theoretical explications; namely, the legitimacy typologies of Aldr ich (1999), Aldr ich & Fiol (1994) and Suchman (1995). Moreover, it provided additional emergent themes that could be used to assess the micro-mechanisms postulated to underlie my proposed relationships between the founder-level variables and the amount of deviation exhibited by their firms. Empirical investigations of new institutional theory have been criticized for their lack of attention to interpretations of contextual pressures (e.g., Greenwood & Hinings, 1996) and for their inadequate measures of micro-level processes (e.g., Donaldson, 1995). 143 Analyzing conformity and deviation. The final methodological contribution is one of data analysis rather than construct measurement. In testing my hypotheses regarding the extent of new entrant conformity, I developed two analytical techniques, both of which examined the spread of deviation scores rather than simply the mean amount of departure from an industry s dominant template. A focus on the entire spectrum of outcomes for the phenomenon under investigation has been called for in the broader organizational literature in general (e.g., Pinder & Moore, 1979) and in the neo-institutional literature in particular (e.g., Hirsch & Lounsbury, 1997). Further, in presenting the findings from my investigation of the founder-level determinants of deviation, I supplemented my statistical results wi th directly-interpreted interview excerpts woven throughout the text. A s Jick has emphasized, the analysis of data through multiple methods provides a more complete, holistic, and contextual por-trayal (1979: 603) of organizational phenomena. 6.4.2 Theoretical Contributions In addition to these methodological contributions, the second phase of my empirical investigation also offers a number of theoretical contributions to the new institutional literature. The first pertains to the strong and robust support that was found for the hypothesis that the majority of new entrants to a highly-institutionalized industry would exhibit little deviation from the dominant template for organizing. This finding corroborates that from Greenwood & Hinings (1993) investigation of municipal government agencies, providing further empirical support for neo-institutionalism s fundamental premise that organizations tend to conform to contextual prescriptions and in so doing exhibit remarkable homogeneity (e.g., DiMaggio & Powell , 1983). This result also substantiates Dacin s (1997) finding that new entrants tend to adopt institu-tionally-prescribed characteristics at the time of founding yet wi th a measure of isomorphism much broader in scope than that of Dacin s analysis. The prevalence of conformity found in my investigation thus suggests that most new entrants are agents of institutional perpetuation rather than institutional entrepreneurship. The second major theoretical contribution from this phase of my research was the partial yet robust substantiation found for both of the founder-driven perspectives on new entrant deviation. In support of the unconstrained actor argument, founders wi th less extensive experience in an industry s prominent organizations appear to establish firms exhibiting greater deviation from the dominant template. This finding thus pro-vides empirical evidence for DiMaggio & Powell s (1983) principle of normative isomorphism; that is, that the professionalization of organizational members contributes 144 to the structural similarity of their firms to institutional prescriptions. N o support was found, however, for the hypotheses that founders wi th greater experience in an indus-try s peripheral organizations or those of other industries would tend to establish more deviant firms. As such, my research does not offer corroboratory evidence for Kraatz & Moore s (1998) related finding that leaders migrating from organizations on the margins of a focal field tend to provoke institutional change in existing organizations. With respect to the disenchanted actor argument, my results d id not support the prediction that founders who more strongly doubt the pragmatic legitimacy of an industry s existing organizational arrangements would tend to establish firms exhibit-ing greater deviation. This finding thus casts some doubt on theoretical assertions that institutional prescriptions tend to be eroded or displaced when their functional utility is called into question (e.g., Oliver, 1991, 1992), and that innovative organizational forms are enacted so as to maximize competitive advantage, efficiency, profitability, or the entrepreneur s own economic gain (e.g., Low & Abrahamson, 1997) at least for such highly-institutionalized settings as the legal profession. M y research did, however, confirm the hypothesis that founders who more strongly doubt the moral legitimacy of an industry s existing organizational arrange-ments w i l l tend to establish firms exhibiting greater deviation. More specifically, my findings offer preliminary empirical support for theoretical assertions that perceived distributive injustice and personal value-incongruity can act as catalysts for non-conformity and innovation at the organizational level of analysis (e.g., Dutton & Dukerich, 1991; Greenwood & Hinings, 1996; Meyerson & Scully, 1995; Oliver, 1991) and trigger processes of deinstitutionalization at the field level of analysis (e.g., Oliver, 1992; Tolbert & Zucker, 1996). Moreover, the prevalence with which founders expressed reactions to procedural injustice suggests that this previously under-emphasized vari-able be granted more prominence in explications of organizational deviation and institutional change. Finally, the fact that the effect of moral legitimacy perceptions remained robust after controlling for all of the other hypothesized individual-level determinants indicates that the unconstrained and disenchanted actor arguments are complementary perspectives. In contrast to the arguments of others (e.g., DiMaggio & Powell , 1991; Kraatz & Moore, 1998), an actor s subjective interpretations of institutional prescriptions appear to operate independently of his or her socialization experience. One important caution should be raised at this point. Although the effects of a founder s dominant firm experience and moral legitimacy perceptions were significant, and in the direction implied by the unconstrained and disenchanted actor arguments, 145 the amount of variance in new entrant deviation explained by these factors is modest (i.e., an adjusted R 2 of .19 for the full model). Thus, although my findings suggest that certain aspects of founders socialization experiences and contextual interpretations can partially account for the deviation exhibited by their firms, there is certainly room for other contributing factors such as chance or bl ind variation (e.g., A ld r i ch & Kenwor-thy, 1998) and natural entropy (e.g., Zucker, 1987). The final theoretical contribution of my dissertation research pertains to the evidence supporting the micro-mechanisms and fundamental assumptions underlying the unconstrained and disenchanted actor arguments. First, it appears as though the extent of a founder s prominent firm experience influences organizational deviation primarily through his or her comprehension of the industry s dominant template for organizing. In contrast, it appears that the strength of a founder s moral legitimacy perceptions affects organizational deviation primarily through his or her motivation to depart from prevailing organizational arrangements. These findings thus lend prelimi-nary indirect support for Greenwood & Hinings (1996) more general distinction between enabling and precipitating dynamics of institutional change, respectively. Second, although the results of my first phase attested to the widespread cognitive legitimacy of the legal profession s dominant template for organizing, the results of my second phase revealed considerable variation in the extent to which founders of newly-established law firms perceived these institutionalized organizational arrangements to be of pragmatic and moral legitimacy. This finding thus supports the typologies of Aldr ich (1999), Aldr ich & Fiol (1994) and Suchman (1995), as wel l as the arguments that institutional prescriptions are neither invulnerable to scrutiny in terms of their func-tional utility (e.g., Oliver, 1991, 1992) nor invariably considered legitimate in terms of their ethicality (e.g., Martin, 1993). 6.5 L I M I T A T I O N S The theoretical and methodological contributions that I have just summarized need to be interpreted in light of the limitations of my dissertation research. A s is often the case, these weaknesses illuminate interesting paths for future research. The first set of limitations pertains to the identification and validation of the legal profession s dominant template. 146 6.5.1 Limitations of M y Measure of the Dominant Template Two important limitations of my measure of the legal profession s dominant template for organizing warrant elaboration. The first is that the dominant template that I have identified is clearly limited to that which is commonly perceived and understood by observers of and actors within this institutional setting. I d id not obtain measures of the extent to which my informants perceived the prevailing form as taken-for-granted, of functional utility, or as appropriate in light of broadly-based societal values and ethical principles. A s such, it would be apropos to conclude that I have unearthed a template that possesses a high degree of comprehensible cognitive legitimacy (Suchman, 1995), and not necessarily one that also possesses a high degree of taken-for-granted cognitive legitimacy, pragmatic legitimacy, or moral legitimacy (Aldrich, 1999; Aldr ich & Fiol , 1994; Suchman, 1995). Measures of these other aspects of legitimacy could be obtained through a variant of the practitioner panelist technique employed in this phase of my research. M y more limited measure, however, is consistent with the conceptual focus of my investigation; that is, the extent to which new entrants conform to or deviate from commonly-held perceptions of the form exhibited by an industry s prominent organiza-tions. The second limitation is the relatively small sample size from which I derived my generalizations regarding the legal profession s dominant template for organizing. Although the published material that I reviewed represents a fairly comprehensive set of recent academic research on law firm organization and management, the seventeen lawyers who provided either qualitative or quantitative data obviously represent a small fraction of the total number of practitioners in the British Columbia legal profes-sion. This group of participants, however, was actually comprised of two very distinct subsets a characteristic that has important implications for the robustness of my findings. The first eleven practitioners, wi th whom I had conducted personal inter-views, were all lawyers wi th extensive provincial experience, averaging somewhere between fifteen and twenty years of call. Moreover, this subset consisted of lawyers who were partners of well-established firms, founders of their own firms, or high-ranking representatives of the provincial law society. In contrast, the six panelists who completed the validation survey while not neophyte lawyers were definitely less experienced than those who were interviewed, averaging approximately five years of call. Most were also associates rather than partners of law firms. Combined, the seven-teen practitioners came from a range of organizations: solo-owned practices, small and medium-sized boutiques, and large downtown firms. 147 Thus, although the sample size was small, given that the interviewed lawyers and survey panelists were selected from such distinct groups in the legal profession, I was reasonably reassured that the perceptions I had collected were fairly representative of the spectrum of practitioners in British Columbia rather than those of an elite set. In light of these differences in their demographic backgrounds, the consistency wi th which they described the legal profession s dominant template for organizing appears even more notable. That being said, I would advise researchers interested in applying the protocol developed for this investigation to obtain larger sample sizes for the quantita-tive validation component, so as to allay possible concerns regarding the reliability and validity of their findings. 6.5.2 Limitations of M y Measures of Organizational Form, Deviation, and Contextual Interpretations Weaknesses inherent in my measures of organizational form, deviation, and subjective contextual interpretations represent the second set of important limitations. Given the multiple parameters of organizational form used in my investigation, re-source and practicality considerations prevented me from construct-validating all fifteen features. Although not an overwhelming concern for the vast majority of indica-tors, for which I had obtained objective measures (such as personnel counts), this is an issue for the perceptual measures of the firms interpretive schemes. The value orienta-tions of a firm s interpretive scheme were derived solely from a content analysis of the open-ended interview responses. Al though I was able to establish the reliability and content validity of these measures, I lacked parallel data with which to assess their construct validity. Future researchers could obtain measures of organizations interpre-tive schemes in a more systematic manner through the development of Likert-item scales; after, of course, determining the relevant dimensions of these belief systems through the prior immersion in a focal setting, as was the case in this investigation. The use of such scales may also allay concerns regarding whether the percentage of a foun-der s interview excerpts coded into a particular category accurately reflects the extent of emphasis placed upon a particular value orientation of the firm s interpretive scheme 4 5. 4 5 Although this is a valid concern for both the interpretive scheme measures (i.e., the extent of emphasis on each of the value orientations) and the contextual interpretation measures (i.e., the strength of a founder s pragmatic and moral legitimacy concerns), it does not seem to me that the percentages would be systematically biased in either direction; moreover, these percentages do seem to be adequate meas-ures of a participant s emphasis on a certain value orientation (or contextual interpretation) relative to the other founders in the sample. 148 The most obvious weakness of my operationalization of organizational deviation pertains to the fact that the deviation weights (i.e., the perceived difference of each indicator of form from that of the dominant template) were calculated from the results of a survey administered to only six industry panelists. Al though this small sample size is consistent wi th related procedures involving multiple, independent, credible judges such as Amabile s (1982) consensual assessment technique I recommend that future researchers interested in applying my protocol for measuring deviation assemble a larger-sized panel. Doing so should minimize potential concerns about the validity of the deviation weights obtained through these independent evaluators. Nevertheless, in spite of the small sample size, the TWG statistics I had calculated indicated that these measures possessed sufficient interrater agreement to deem them common perceptions of the degree to which alternative organizational arrangements differ from those of an industry s dominant template. M y measures of the founders subjective contextual interpretations also suffer from an important limitation. Rather than asking founders directly about their attitudes towards the pragmatic and moral legitimacy of the legal profession s dominant tem-plate, the results of my pilot-testing had indicated that a less direct line of enquiry would have to be adopted. As such, these measures were derived from questions pertaining to the founders rationales for designing their firms in a certain way. A l -though the findings revealed that reactions to perceived pragmatic and moral legitimacy were prevalent, it is possible that some participants d id not fully express their interpretations of the dominant template along these dimensions in the absence of more direct prompting. Future researchers should thus consider supplementing an open-ended interview design with Likert-type items administered through a follow-up survey. A s suggested above, this may also attenuate concerns regarding whether or not the percentage of interview excerpts coded into a particular category accurately reflects the strength of a founder s pragmatic and moral legitimacy concerns (see my previous footnote, however). 6.5.3 Limitations of M y Sample The third set of limitations pertains to the nature of my sample. Because I limited my investigation to a geographically-restricted segment of a single industry the British Columbia legal profession the generalizability of my findings is certainly debatable. This is particularly so for the specific characteristics of the commonly-perceived domi-nant template identified through my research. Given my research design, it is not possible for me to claim that the dominant template uncovered for the province of 149 British Columbia corresponds completely wi th that for North American law firms in general. The fact that my sampling frame had to be extended to firms established as early as 1990 in order to meet min imum sample size requirements raises further issues. For one, the problem of left-censoring has likely over-inflated my findings regarding the extent of new entrant conformity, as it is plausible that firms established early in this time period, which had ceased to exist prior to my investigation, were amongst the more deviant. Extending the sampling frame back to 1990 may have also exacerbated possible problems associated wi th the data collected through retrospective self-reports. Future research based on real-time, in-depth field studies could correct for both of these limitations of my sampling frame. The final sampling issue pertains to the relatively small sample size of new entrants. Although I had obtained a fairly high response rate of fifty-seven percent, this nevertheless resulted in only sixty firms upon which to conduct my investigation. This small sample size may have contributed to the modest effect sizes that I obtained for the impact of founder characteristics on new entrant deviation. 6.5.4 L i m i t a t i o n s of M y C o n c e p t u a l F r a m e w o r k A more likely explanation for these modest effect sizes, however, stems from the simplicity of my conceptual framework. For example, I neither developed nor pos-sessed sufficient statistical power to test arguments pertaining to the interaction of founders objective socialization experiences and subjective contextual interpretations. These more complex effects are likely able to account for additional variation in the extent of deviation exhibited by new entrants. Greenwood & Hinings (1996) presented a similar argument in their discussion of the antecedents of change in existing organiza-tions. Moreover, I d id not explore the effects of other individual-level variables, such as demographic characteristics or personality traits, that may drive new entrant deviation either in isolation or mediated by the variables that were the focus of my investiga-tion. Nor d id I examine how characteristics of the founding team moderated the relationships between a single founder and the form of the organization, as Boeker (1997) has recently done in his investigation of strategic change in semiconductor firms. Particularly intriguing questions directly related to my study revolve around how the diversity in a founding team s objective socialization experiences and subjective contex-tual interpretations affects the negotiation and enactment of a new entrant s form. A l l of these issues represent fascinating theoretical and empirical directions for future re-150 search on the evolution of organizational forms, organizational homogeneity versus heterogeneity, and institutional perpetuation versus institutional entrepreneurship. 6.6 I M P L I C A T I O N S A N D E X T E N S I O N S Despite the above-noted limitations, the results of this study do offer some interesting theoretical implications for both neo-institutional and entrepreneurship research. For instance, although the findings clearly indicate that dominant templates exist in such highly-institutionalized settings as the legal profession, the prevalence wi th which founders voiced their disenchantment wi th these prevailing organizational arrangements does raise the question of whether neo-institutionalists have over-emphasized the extent to which these contextually-prescribed frameworks are widely considered to be legitimate means of accomplishing business activity. M y research suggests that these dominant templates are not impersonal prescriptions (DiMaggio & Powell , 1991: 15) perceived by individuals in an indifferent, dispassionate, and emotionless manner but are instead value-laden typifications capable of provoking affectively-charged attitudes and reactions. In light of this widespread disenchantment, the low amount of overall deviation exhibited by the vast majority of the law firms in my study certainly attests to the power of isomorphic pressures in such highly-institutionalized settings as the legal profession; more specifically, in this case, to the homogenizing influence of extensive socialization experience in a field s prominent organizations. Although this finding provides empirical support for DiMaggio & Powell s (1983) principle of normative isomorphism, the fact that organizational founders conformed to the dominant tem-plate in spite of their doubts about its legitimacy points to the potential for considerable incongruity between the values of powerful actors within an organization and those embedded in the structural arrangements of their firms. Thus, an interesting extension suggested by this dissertation research would be to explore the individual- and organ-izational-level consequences of alignment and misalignment between the values of individuals within an organization, the values embedded in its structures and practices, and the values underlying an industry s institutionally-prescribed framework. The findings pertaining to the new entrants that did exhibit deviation from the dominant template offer implications for the current discourse on the processes of de-institutionalization. The determinants of deviation found to be significant in my disser-tation research suggest that the erosion of institutionalized practices is not solely due to natural entropy (e.g., Zucker, 1987), lack of knowledge of the prevailing framework or 151 knowledge of alternative frameworks (e.g., Kraatz & Moore, 1998), or doubts about the functionality of prescribed arrangements (e.g., Oliver, 1991, 1992). Rather, accounts of de-institutionalization need to acknowledge the role of individual actors who are knowledgeable about institutional prescriptions and yet have strong affective reactions regarding whether these arrangements are appropriate and right in an ethical sense. The results of this dissertation research also offer some interesting implications for entrepreneurship theory. The predominance of conformity clearly lends empirical support for the argument that the majority of new organizational entrants to an existing industry are reproducers rather than innovators (Aldrich & Kenworthy, 1988) particu-larly in such mature settings as the legal profession (cf. L o w & Abrahamson, 1997). The finding that most of the recently-established law firms investigated in my study were not entrepreneurial in the Schumpeterian sense that is, they did not develop new combinations with the potential of revolutionizing the pattern of production in an industry (Schumpeter, 1936) also adds weight to Shane & Venkataraman s (1999) argument that the creation of a new venture is not equivalent to an act of entrepreneur-ship. M y findings pertaining to those founders that did enact more innovative firms, however, call into the question the dominant view of entrepreneurs as future-oriented individuals (as noted by Baron, 1999) motivated primarily by economic gain. Instead, the results of this dissertation research suggest that these individuals are also strongly influenced by their past experiences and are motivated by moral considerations at least when it comes to the creation of novel organizing methods. A t present, such themes appear to be under-emphasized in entrepreneurship theory and research. 6.7 C O N C L U S I O N In summary, a number of conclusions can be drawn from this study of new entrant conformity versus deviation in the British Columbia legal profession. It appears that highly-institutionalized industries do contain commonly-understood templates for organizing contextually-derived prescriptions to which most, but not all, new entrants tend to conform. Prevailing organizational arrangements do not, however, possess invariant levels of cognitive, pragmatic, or moral legitimacy across organizational actors. Understanding the extent of an organization s conformity or deviation thus requires attention to individual-level factors, such as objective socialization experiences and subjective contextual interpretations. 152 Consistent with the new institutionalism, it appears that founders with more extensive socialization experience in the prominent organizations comprising the core of a focal industry tend to act in a more passive, scripted, and impartial manner, repli-cating many features of the dominant template in their own firms. Consistent with the old institutionalism, other founders act in a manner that is more intentional, idiosyn-cratic, and value-driven, deliberately enacting organizational arrangements in their own firms that depart from the industry norm. However, this interest-seeking behaviour appears to be driven more by ethical rather than instrumental motivations; more spe-cifically, by a desire to resolve the perceived procedural and distributive injustice of existing administrative practices and to create organizations more compatible wi th personal value systems. Combined, these findings reveal pluralism in the underlying causes of organizational heterogeneity, thereby offering support for Hirsch & Louns-bury s (1997) vision for a more inclusive and integrated institutional perspective. In contrast, they shed some doubt on arguments that organizational variation and the erosion of institutions are purely driven by processes of random emergence and natural entropy. In sum, institutionally-prescribed templates for organizing do exist as common understandings in an organization s broader environment but they are subjectively perceived by individual actors. 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STEP 2: For each dimension of organizational form listed below, please rank order the alterna-tives presented in column 2 in terms of how closely they resemble the industry standard. For example, for the dimension labeled Governance , you would rank partnership as #1 if you believe this is the normative form of governance for the BC legal profession; solo practice as #2 if you believe this is the next most common form of governance; and office-sharing arrangement as #3 if you believe this is the least dominant form of governance. " "Dimension - f Alternatives» * 2-Rank (l=most typical, - . =next'most typical; < etc) Structure Governance a) Solo practice a) b) Office-sharing arrangement b) c) Partnership c) Decision-making Collegiality of decision-making a) Very directive majority of major decisions made by only one partner a) processes b) Moderately directive some major decisions made by individual partners, others made jointly b) c) Moderately collegial majority of major decisions made by committees of partners c) d) Very collegial majority of major decisions made by all partners d) 163 D i m e n s i o n Alternatives Rank ( l=mos t typical, 2=next m o s t typical, etc) Recruitment Preferred level of prior work experi-ence for newly-hired associates a) Articling experience only b) Prior associate experience c) N o preference wi l l hire associates with either articling or prior associate experience, depending on needs of firm a) b) c) Primary hiring criteria for associates a) Legal ability b) Business ability c) Personality compatibility a) b) c) Promotion Preferred method of admitting partners a) Promoting from within admitting those who have previously been associates with firm b) Cherry -picking from outside admitting those who have not worked for firm c) N o preference wi l l either promote from within or cherry-pick from outside, depend-ing on needs of firms a) b) c) Primary admission criteria for partners a) Legal ability b) Business ability c) Personality compatibility a) b) c) Compensation Partner compensation a) Equal system all partners remunerated the same amount regardless of seniority or per-formance b) Lockstep system based on seniority c) Point system based primarily on criteria other than business performance d) Point system based primarily on business performance e) Eat-what-you-kill system a) b) c) d) e) Associate compensation a) Salary b) Hourly wage c) Salary plus percentage of revenue generated d) Percentage of revenue generated only a) b) c) 164 D i m e n s i o n \ l t e r n a t i v e s R a n k (1=most t y p i c a l , 2=next m o s t t y p i c a l , ek> M o n i t o r i n g Frequency of moni-toring progress towards quantitative targets such as billings a) Quarterly b) Monthly c) Weekly d) More than once a week a) b) c) d) Tolerance of failure to achieve quantitative targets a) Very low failure to meet targets is grounds for dismissal b) Low underachiever is penalized monetarily c) Moderate actions taken to determine cause & correct problem d) High brought to underachiever s attention but no corrective action taken a) b ) ' c) d) S T E P 3: Please indicate whether any of the following arrangements are the norm for the B C legal profession. For example, if you believe that the dominant firms in the industry tend to have different categories of partnership, you would place a check mark in the first cell in column 2; if not, you would leave the cell blank. ^ " Arrangement •* Characteristic o f n o r m Positions f o r lawyers Different categories of partners (eg, equity versus non-equity) Different types of associates (eg, partner-track versus non-partner track) Articling positions Associate counsel positions Contract positions Managerial positions f o r non-lawyers Office manager Accountant/bookkeeper Divisional supervisors T y p e o f quantitative targets o r quotas Billable hours 165 Arrangemenl Cha racteristic of norm Billings Number of new clients Collections Level at which quantitative targets set Partners Other lawyers Practice groups or divisions Firm Support for family obligations Extended maternity leave Paternity leave Family leave Childcare benefits Alternative work arrangements for lawyers Part-time positions for partners Part-time positions for other lawyers Sabbaticals Telecommuting Job-sharing Alternative work arrangements for support staff Reduced work week Flexible hours Telecommuting Job-sharing S T E P 4: Please indicate your perception of the industry norm for the following numerical aspects of organizational form. For example, if you believe that the dominant firms in the industry tend to have approximately 1.5 associates per partner, you would enter 1.5 in the first cell in column 2. 166 Dimension of organizational hum Noun Number of associates per partner Number of support staff per lawyer Typical weekly hours (including weekends) worked by partners Typical weekly hours (including weekends) worked by associates S T E P 5: Please indicate your perception of the industry norm for the following aspects of a firm s belief system. For example, if you believe that the dominant firms in the industry tend to place a very high emphasis on business values, you would circle the number 5 in the first row. ' ' Aspect of firm s belief-system Very low • Low * Moderate High Very high Extent to which firm emphasizes business values (eg, efficiency, effectiveness, and competitiveness) 1 2 3 4 5 Extent to which firm emphasizes professional values (eg, autonomy, democracy, and the provision of justice) 1 2 3 4 5 Extent to which firm views lawyers as businesspeo-ple (ie, providers of profitable, value-added client service) 1 2 3 4 5 Extent to which firm views lawyers as professionals (ie, possessors of esoteric knowledge, representatives of public interests, and providers of justice) 1 2 3 4 5 S T E P 6: Thank you very much for taking the time to complete this first expert panelist form. Please fax the completed form to Jennifer Cliff at 8 2 2 - 8 5 1 7 by Friday Apri l 9 t h . We wi l l fax you the second expert panelist form as soon as we have summarized the information from this first phase of data collection, and wil l mail you the gift certificate once we have received your completed second form. We greatly appreciate your involvement as one of our expert panelists! 167 A P P E N D I X 3.2: Semi-St ruc tured In te rv iew G u i d e Do you think that there is an industry norm for: 1. The types and structure of positions in most firms? Yes No Don t know If yes: A. What are the typical types & structure of positions? 2. The recruitment & promotion practises of most firms? Yes No Don t know If yes: A. What are the typical recruitment & promotion practises? 168 3. The compensation policies in most firms? Yes No Don t know If yes: A . What are the typical compensation policies? 4. The performance evaluation procedures in most law firms? Yes No Don t know If yes: A. What are the typical performance evaluation procedures? 5. The work arrangements in most law firms? Yes No Don t know If yes: A . What are the typical work arrangements? 169 6. The guiding philosophy or values of most law firms? Yes N o . Don t know If yes: A. What are the typical philosophies or values? Are you aware of any innovative structures or management practices emerging in the profession? Y / N If yes: A. What are the emerging structures or practices? B. Why do you think that these changes are taking place? 170 A P P E N D I X 4.1: Introductory Letter To Founders Date Founder Name Firm Name Firm Address Dear Founder Name: I am a Ph.D. candidate in the Faculty of Commerce at the University of British Columbia researching the emergence of novel organizational structures and management practices. I believe law firms represent a particularly fascinating set of organizations for my study, given the recent changes that are occurring in the legal profession. I am interviewing founders of law firms established in British Columbia in the nineties to learn more about how the people within the firm are organized and managed. I would like to request your participation in my study. The interview takes about an hour to complete, and wil l be scheduled at the time and place of your convenience. A l l responses wil l remain confidential and very personal questions (such as profit, revenue, or salary levels) wil l not be asked. To help expedite the interview, a brief background questionnaire can be faxed to you in advance. Upon completing my analysis, I would be happy to provide you with a sum-mary of my results. If you are one of the founders of this firm and are interested in participating - or have any questions about my research - you can reach me or my assistant, Jennifer Shecter, at 822-6100. (You may also contact my research supervisor, Professor Nancy Langton, at 822-8393.) If you are not a founder of this firm, I would be most grateful if you could pass this letter on to the appropriate person. If we have not heard from you within ten days, we wi l l follow-up by phone. I would greatly appreciate the opportunity to learn about your firm s internal structure and management practices. Your participation in my study wil l be an important contribution in identifying new organizational designs that are relevant not only to the legal community in particular, but also to professional service firms in general. I look forward to meeting you. Yours truly, Jennifer E. Cliff Ph.D. Candidate 171 A P P E N D I X 4.2: Telephone Script A s k to speak to person to whom introductory letter addressed: Hello, my name is Jennifer Shecter from the Faculty of Commerce at U B C . I m calling to follow up on the letter Jennifer Cliff sent you last week regarding our study of the management structure of law firms. The study consists of complet-ing a brief faxed questionnaire and then a personal interview with Jennifer, which would be scheduled at the time and place of your convenience and would last about an hour. Would you be interested in participating? Responses to possible objections: No time: offer a breakfast or lunch meeting (on us), early evening, weekend Not interested: ask for the name of another founding partner who may be interested speaking with us. We are particularly interested in hearing from female partners If agrees to be interviewed: Determine whether firm and partner meets the eligibility requirements by asking: Before we proceed, I need to ask you a few preliminary questions to determine whether you meet the study s eligibility criteria. 1. Was the firm established prior to 1990? 2. Was it established as a branch office of an existing firm? 3. D i d the firm result from a merger or acquisition? 4. Including yourself, are there fewer than 5 people currently working for your organization (include ft/pt/contract partners, other lawyers, support staff & others)? 5. Wou ld you say you ve been highly involved in decisions about the organiza-tion and management of the firm, particularly in human resource issues like recruitment, compensation, motivation and goal setting? 172 Not highly involved in organization & management issues: Would you mind passing me on to a partner who has assumed a key role in these matters? A s soon as a yes given to any of the above (firm is not eligible, exc. #5): Thank you so much for expressing interest in our study. Unfortunately, your firm does not meet the eligibility criteria at this time. We appreciate the time you have given us. If no to al l of the above (firm is eligible): 1. Set date, time, place (confirm address) and name of interviewer 2. State background survey w i l l be faxed If request further information: Approximate time: one hour Types of questions: 1) firm s size, structure, & human resource practices (e.g., recruit-ment, motivation, and compensation); factors affecting the chosen internal design; founder s background (e.g., work experience, education); 2) questions about revenue, profit, and salary levels w i l l not be asked Benefit to participant: 1) w i l l receive summary report describing emerging trends in the organization and management of law firms; 2) w i l l be contributing to increased under-standing of the changes taking place in the legal profession, why they are occurring, and which changes w i l l ultimately lead to better performance Importance of research: professional service firms in general, and law firms in particular, are undergoing a transformation it is important that we better understand the nature of the changes that are taking place, why they are occurring, and which changes w i l l ultimately lead to better performance How findings will be used: 1) w i l l form empirical chapter of JC s doctoral dissertation on the emergence of novel organizational forms; 2) w i l l disseminate descriptive summary of emerging trends to research participants, the BC Continuing Legal Education society, and possibly the Canadian Bar Association and other provincial law societies; 3) w i l l present findings at business & legal academic conferences and publish results in aca-demic business & legal journals 173 A P P E N D I X 4.3: P r e l i m i n a r y B a c k g r o u n d Ques t ionna i re Fo r N e w Entrants Questions 1-10 pertain to your firm s services. 1. Would you characterize the firm as a: General practice Boutique Other (please describe) 2. What type of work is the firm primarily involved in (check all that apply): Litigation Solicitor s work Arbitration/administrative board Other (please specify) 3. What are the firm s primary areas of practice (check all that apply): Administrative Corporate/Commercial Criminal Family Labour Personal Injury. Real Estate Securities Taxation Wills/Estates Other (please specify) 175 4. Does your firm offer any professional services other than legal advice? Yes / No If yes: What type (check al l that apply)? Accounting IT consulting General management consulting Other (please specify) 5. Approximately what percentage of the firm s time is spent representing: Organizational clients % Individual clients % 6. Approximately what percentage of the firm s revenue comes from: Organizational clients % Individual clients % 7. Have you opened any branch offices? Yes / No If yes: H o w many have you opened: In BC In other provinces In the United States Outside North America 8. Are you formally affiliated with any other law firms (i.e., those with whom you have reciprocal referral obligations)? Yes / No If yes: With how many firms? 176 9. Are you formally affiliated with any non-law professional service firms? Yes / No If yes: With what type of firms? With how many firms? _ 10. Approximately what percentage of the firm s time, if any, is spent on pro bono work? 0/ /o I Questions 11-15 pertain to your firm s employees. | 11. How many partners have left the firm since it was founded? partners 12. Excluding partners, how many lawyers have left the firm since it was founded? lawyers 13. How many non-lawyer employees have left the firm since it was founded? non-lawyer employees 14. What do you consider to be an ideal lawyer-to-partner ratio? lawyers per partner 15. What do you consider to be an ideal support-to-lawyer ratio? support staff per lawyer | Questions 16-19 pertain to the firm s targets. | 16. Does your firm set any of the following types of targets or quotas for partners? Billable hours Yes / No Value of billings Yes / No Number of new clients Yes / No Other targets Yes / No 177 If other targets, please specify: 17. Does your firm set any of the following types of targets or quotas for other lawyers? Billable hours Yes / No / NA Value of billings Yes / No / N A Number of new clients Yes / No / NA Other targets Yes / No / NA If other targets, please specify: 18. Does your firm set any of the following types of targets or quotas for practice teams? Billable hours Yes / No / NA Value of billings Yes / No / NA Number of new clients Yes / No / NA Other targets Yes / No / NA If other targets, please specify: 19. Does your firm set any of the following types of targets or quotas at the firm level? Billable hours Yes / No Value of billings Yes / No Number of new clients Yes / No Other targets Yes / No If other targets, please specify: 178 Questions 20-25 pertain to your hours of work. 20. Approximately how many billable hours did you record in the last fiscal year? hours 21. Compared to the industry average, would you say that you billed: More hours Fewer hours About the same # of hours Don t know 22. Compared to yourself, did most of the other partners in your firm bill: More hours Fewer hours About the same # of hours Don t know N/A Don t have other partners 23. Compared to yourself, did most of the other lawyers in your firm bill: More hours Fewer hours About the same # of hours Don t know N/A Don t have other lawyers 24. On average, how many hours do you work for the firm regardless of location: During the week (Mon-Fri): hours On the weekend: hours 25. Compared to the industry average, would you say that you tend to work: More hours Fewer hours About the same # of hours Don t know 179 26. Compared to yourself, do most of the other partners in your firm tend to work? More hours Fewer hours About the same # of hours Don t know N/A Don t have other partners 27. Compared to yourself, do most of the other lawyers in your firm tend to work? More hours Fewer hours About the same # of hours Don t know N/A Don t have other lawyers Question 28 pertains to the firm s work ar-rangements and benefits. 28. Does your firm offer any of the following work arrangements or benefits? Compressed work week Yes / No Telecommuting/home office Yes / No Job sharing/pooling Yes / No Sabbaticals Yes / No Extended maternity leave Yes / No Paternity leave Yes / No Paid family leave days Yes / No Child care benefits Yes / No Day care facilities Yes / No 180 Questions 29-31 pertain to management train-ing, seminars, and consulting. 29. Have any of the following received formal management training since joining the firm? Partners Yes / No / NA Lawyers Yes / No / NA Other employees Yes / No / N A If other employees, please specify titles: 30. Have you attended any seminars on the organization or management of law firms, either prior to since founding this firm? Yes / No 31. Have you retained any consultants to assist with the firm s organization or management? Yes / No Questions 32 - 40 pertain to your own back-ground. 32. What degrees do you possess? LLB L L M BComm M B A Other (please specify) 33. What year were you called to the Bar in BC? 34. Are you called in any other provinces? Yes / No If yes: Where and when were you called? Province: Year: Province: Year: 181 A P P E N D I X 4.4: Interview Guide Thanks so much for agreeing to participate in our study of law firms in BC. . j If questionnaire faxed back: Thanks also for faxing us the background questionnaire in ad- ! vance. I hope it didh t take too long to complete. I d just like to quickly confirm x responses \ with you before we begin the interview (INTERVIEWER: Ask questions with missing/unclear ( responses). , ' ' If questionnaire not faxed back: Have you had a chance to'complete the background question-naire that we had faxed to you"'earlier? If yes: Great I hope it didn t take too long tO'i complete. Do you mind handing it to me so that-I can refer to some of your responses during ' the interview? If no: Would you mind filling it but after our interview and faxing it back to j ineilSllfllR^ SECTION A: START-UP \ ,{ Let s get started. As Jennifer mentioned over the phone, I d like to talk with you today to learn' more about how your firm is organized and managed. I l l be asking some fairly specific questions in a bit, but I d like to begin with some more general questions about how the firm^ came to be. Please rest assured that your responses wil l be kept completely confidential neither your name nor that of your organization appears anywhere:on this mterview guide, 1. In what month and year was your organization founded? Month Year 2. Is it structured as a: Sole proprietorship Partnership Corporation Office-sharing arrangement Other (please describe) 183 If office-sharing or other arrangements: \ INTERVIEWER: -Mention that in the remainder of the interview, the term firm should be interpreted as the entire office, and the term partners should be interpreted "as the individuals with whom the participant entered into an'office-sharing or other arrangement. ' Including yourself, how many partners founded the firm? Of these, how many were women?. Why did you decide to start this firm? If mention prior experience: Was there anything in particular about your prior experience that motivated you to start your own firm? 184 7. What sort of firm are you trying to create what is its guiding philosophy or mission? 8. When the firm was founded, do you recall having an overarching vision for how the people within the firm would be organized and managed? Y / N If had initial vision: A. Can you describe this vision? B. Was this vision influenced at all by your prior experience? Y / N C. If yes: In what sense? (If discontent mentioned, probe for source e.g., injustice, image-incompatibility, inefficiency)? 185 D. If no: How did you come up with this vision? If didn't have initial vision: E. In general, what motivated you to develop the internal structure and management practices that you have? For example, were you motivated to do things differently from the previous firm you worked for or from other firms in general? 186 SECTION B: INTERNAL STRUCTURE > ^ I d like to turn now to some more specific questions about the number of people in your firm and how they are organized. 9. Including yourself, how many partners does the firm have now? 10. Of these, how many are women? 11. Do any of the partners work part-time? Y / N A . If yes: How many? 12. If firm has more than one partner: Do you have different levels or types of partner-ship, such as junior & senior or equity & non-equity partners? Y / N / N A If yes: A. What are the different levels of partnership? Position 1: # partners: # women: Position 2: # partners: # women: Position 3: # partners: # women: B. What is the main distinction between partners at different levels? 187 13. Are decisions about the firm s organization and management, such as compensation and hiring & firing, primarily made by: A l l partners Managing partner Management committees Other (please describe) . 14. Are these sort of decisions typically made in: formal partnership meetings or in a more informal, ad hoc basis ? 15. If firm has different levels of partnership: Are there any type of decisions that the lower-level partners are not involved in? Y / N / N A If yes: A . What type of decisions? 16. Excluding partners, how many lawyers currently work for the firm? 17. Of these, how many are women? 18. Do any of the lawyers work part-time? Y / N A . If yes: How many? 188 19. Of the total # of non-partner lawyers, how many are: Associates Articling students Associate counsel Other lawyers (specify titles) 20. If firm has associates: Other than by year of call, do you distinguish between different levels or types of associates, such as partner-track & permanent? Y / N / N A If yes: A. What are the different types of associates? Position 1: # associates: Position 2: # associates: Position 3: # associates: 21. How many non-lawyer employees currently work for the firm? 22. Of these, how many are: Clerical support staff (e.g., receptionists, secretaries) Paralegals/legal assistants Managerial/administrative (specify titles) 189 23. Are the people in your firm organized into different practice groups or divisions? Y / N If yes: A. What are the names of these groups or divisions? B. On average, how many levels are there within each division? 24. In designing the types and structure of positions in this firm, were you purposely trying to do things differently from your prior experience at all? Y / N If yes: A. In what sense? (If discontent mentioned, probe for source e.g., injustice, image-incompatibility, inefficiency)? If no: B. How did you come up with the type and structure of positions that you have? 190 25. O n a scale of 1 to 10, where 10 is very different, how different do you think the types and structure of positions are in this firm compared to the industry norm? ; S E C T I O N C: H U M A N R E S O U R C E P R A C T I C E S , -Recruitment & Promotion Policies My next set of questions has to do with the firm s recruitment and promotion policies. 26. Have you hired, or are do you plan on hiring, associates? Y / N If yes: A . Do you prefer to hire associates who: have just finished their articling period or those who already have associate experience ? B. What are the primary criteria by which you would evaluate potential associates (PROBE for definition of fit if mentioned)? If no: C. Why don t you want to hire any associates? 191 27. Have you admitted anyone to partnership since founding the firm, or do you plan on admitting anyone to partnership in the future? Y / N If yes: A. Do you prefer to admit individuals who have previously been associates with your firm? Y / N B. What are the primary factors that are taken into account when considering someone for partnership (PROBES: How important are rainmakrng skills? If have part -time asso-ciates, would they be considered? Ask for definitions of fit or commitment, if mentioned)? C. What percentage of the associates do you anticipate admitting to partnership? °/ /o If no: D. Why don t you want to admit anyone else to partnership? 192 28. In designing the recruitment and promotion practices of this firm, were you pur-posely trying to do things differently from your prior experience at all? Y / N If yes: A. In what sense? (If discontent mentioned, probe for source e.g., injustice, image-incompatibility, inefficiency)? If no: B. How did you come up with the recruitment and promotion practices that you have? 29. O n a scale of 1 to 10, where 10 is very different, how different do you think the recruitment and promotion practices of this firm are compared to the industry norm? 193 Compensation Policies , ' , . .s v — ... . , ...... - • - -..vA- .v„ -...... j c . . . . ^ . . . . . . A-...VS?J;., ... . ... ^  x M y next set of questions has to do with the firm s compensation policies. ~ Let s start with the j partners.., „. \ ~'x '.: 30. If firm has more than one partner (see Q9 on page 3): How are the partners compensated? Lockstep system: A l l partners within same level compensated equally Formula system: Each partner compensated according to elements of performance Equal system: A l l partners receive equal remuneration Democratic system: Each partner votes on what other partners should receive _ Eat what you kil l system: Each partner gets revenue from own work less expenses Other: If lockstep: A. What are the levels based on (e.g., year of call, billings)? B. How closely are these guidelines followed: Are they strictly applied or negotiated? Are any exceptions made? On what grounds? 194 If formula: C. What are the elements of the formula (PROBES: Billable hours, rainmaking, senior-ity? Are any subjective criterion taken into account, such as associate training? Are there any team- or firm-based aspects to the compensation formula?) D. How closely are these guidelines followed: Are they strictly applied or negotiated? Are any exceptions made? On what grounds? If other: E. Can you please describe how the partners are compensated? F. If applicable: How closely are these guidelines followed: Are they strictly applied or negotiated? Are any exceptions made? On what grounds? 195 31. If firm has other lawyers (see Q19 on page 4): A. How are the various types of lawyers in your firm compensated (circle all that apply)? Position 1 : wage salary % of billings other Position 2 : wage salary % of billings other Position 3 : wage salary % of billings other B. If salary: What are the salary levels of different lawyers based on (e.g., equal, year of call)? C. Do any lawyers receive profit-sharing or bonuses (circle all that apply)? Position 1 :profit-sharing bonus Position 2 rprofit-sharing bonus Position 3 :profit-sharing bonus D. If profit-sharing or bonuses: What is an individual s amount based on (e.g., equal, achieving targets)? 1 9 6 32. If firm has non-lawyer employees (see Q22 on page 4): A . How are the various types of non-lawyer employees compensated (circle all that apply)? Position 1 :wage salary % of billings other Position 2 :wage salary % of billings other Position 3 :wage salary % of billings other B. Do any of them receive profit-sharing or bonuses (circle all that apply)? Position 1 _____ :profit-sharing bonus Position 2 -.profit-sharing bonus Position 3 -.profit-sharing bonus C. If profit-sharing or bonuses: What is an individual s amount based on (e.g., equal, tenure, performance)? 33. Is anyone formally compensated with any non-monetary rewards, such as time off?Y / N A . If yes: Type of monetary reward: position available to: Type of monetary reward: position available to: Type of monetary reward: position available to: 34. In designing the compensation policies of this firm, were you purposely trying to do things differently from your prior experience at all? Y / N 197 If yes: A. In what sense? (If discontent mentioned, probe for source e.g., injustice, image-incompatibility, inefficiency)? If no: B. How did you come up with the compensation policies that you have? 35. O n a scale of 1 to 10, where 10 is very different, how different do you think your firm s compensation policies are from the industry norm? 198 Performance Evaluation Procedures > , „," .,. ..... . . ,., L^^AZZ^... , i ; ; e x t ' s e t ; o f : ^ 36. Does the firm set any quantitative targets, such as billable hours or billings ouoatas? Y / N (INTERVIEWER: please describe in margin) If yes: A. How often is progress towards these targets monitored? B. What actions would be taken if someone failed to achieve the target? If yes: C. Was your decision to set quantitative targets influenced by your prior experience in any way? Y / N 199 D. If yes: In what sense? E. If no: Why did you decide to establish quantitative targets? If no: F. Was your decision to not set quantitative targets influenced by your prior experience in any way? Y / N G. If yes: In what sense? H . If no: Why did you decide not to set quantitative targets? 200 37. Is the performance of any employees formally evaluated in any other ways, such as by a formal performance appraisal? Y / N If yes: A. What are these other formal evaluation methods & who receives them? 38. O n a scale of 1 to 10, where 10 is very different, how different do you think your firm s evaluation procedures are from the industry norm? i Work Arrangements " . ^ ', -' • -My next set of questions has to do with the firm s work arrangements. 39. Does the firm offer any unusual work arrangements, such as job-sharing, reduced work weeks, or telecommuting INTERVIEWER: Note details in margin)? Y / N If yes: A. Was your decision to introduce these work arrangements influenced by your prior experience in any way? Y / N 201 B. If yes: In what sense? C. If no: What motivated you to offer the work arrangements that you have? If no: D. Was your decision not to offer these type of unusual work arrangements influenced by your prior experience in any way? Y / N E. If yes: In what sense? 202 F. If no: Why did you decide not to offer these work arrangements? 40. O n a scale of 1 to 10, where 10 is very different, how different do you think your firm s work arrangements are from the industry norm? 41. Besides those that we ve already discussed, are there any other elements of your firm s internal design that are quite different from other law firms? Y / N If yes: A. What are these unique or innovative elements? 203 B. In developing these elements of your firm s internal design, were you purposely trying to do things differently from your prior experience at all? Y / N C. If yes: In what sense? (If discontent mentioned, probe for source e.g., injustice, image-incompatibility, inefficiency)? D. If no: How did you come up with these innovative elements? 204 SECTION D: EVOLUTION OF FIRM S INFRASTRUCTURE ^ -• Now I d like to ask you some more general questions about the evolutionof'mefirm sMternab 42. When you were deciding upon the firm s structure and human resource practices, did you consider any alternatives to what you have now? Y / N If yes: A . What alternatives did you consider? B. Why did you decide not to implement these alternative structures or practices? 43. On a scale of 1 to 10, where 10 is very highly motivated, how motivated were you to create structures and human resource practices that differed from what you experienced in your prior positions? 44. On a scale of 1 to 10, where 10 is very highly motivated, how motivated were you to create structures and human resource practices that differed from those found in most other law firms in BC? 205 45. Have there been any major changes to the way your firm is organized or managed since it was founded? Y/N If yes: A. What changes have taken place? B. Why did these changes take place? (PROBES: For example, did you face any objections from other partners or lawyers? Any pressure to structure your firm in a more tradi-tional manner? Any concerns about inefficiency or ineffectiveness?) 206 46. Are you considering any major changes to the way your firm is organized or managed? Y / N If yes: A. What changes are you considering? B. Why are you considering these changes? (PROBES: For example, are you facing any objections from other partners or lawyers? Any pressure to structure your firm in a more traditional manner? Any concerns about inefficiency or ineffectiveness?) 46C. In terms of the way this firm is run, is there anything that you re doing now that you know is either inefficient or unprofitable but that you are unwilling to change? Y / N If yes: D. What aspects are these? 207 E. Why don t you want to change them? 47. How large would you like the firm to become, in terms of the # of partners & lawyers? 48. Why don t you want to get any larger? 49. Did the firm make a profit in the last fiscal year? Y / N 208 SECTION E: FOUNDER'S WORK EXPERIENCE , -I d like to switch gears somewhat and ask you a little bit about your prior experience. 50. Prior to founding this firm, have you held any other positions, either law-related or not? Y / N If yes: A. What are the three most recent positions that you ve held? Position (e.g., article, Type of organization (associate, partner) # of years (eg-, law, govt, corp) Same firm Y / N Size of org (# of ee s) Y / N Y / N 51. Would you mind taking a few moments to answer some written questions about your current and prior work experience? (INTERVIEWER: Hand attached page to participant and have him/her circle appropriate responses, explaining that 1=SD & 5=SA. If participant has no prior experience, ask him/her to complete section I only) completed 51A. Thanks so much for completing those for me. I have one last question about yourself: Do you consider yourself to be more of a lawyer than an businessperson, or the other way around more of a businessperson than a lawyer? 209 S E C T I O N F: A R C H E T Y P A L A N D E M E R G E N T I N l ^ S T O U C T U R E S : (INTERVIEWER:* Ask this section only if have time remaining in the"interview). M y final set of questions has to do with the legal profession, in general in BC. asked questions-_j no time to ask " - • 1 -52. Do you think that there is an industry norm for: 1. The types and structure of positions in most firms? Yes No Don t know If yes: A. What are the typical types & structure of positions? 2. The recruitment & promotion practises of most firms? Yes No Don t know If yes: A. What are the typical recruitment & promotion practises? 210 3. The compensation policies in most firms? Yes No Don t know If yes: A. What are the typical compensation policies? 4. The performance evaluation procedures in most law firms? Yes No Don t know If yes: A. What are the typical performance evaluation procedures? 5. The work arrangements in most law firms? Yes No Don t know If yes: A. What are the typical work arrangements? 211 6. The guiding philosophy or values of most law firms? Yes No Don t know If yes: A. What are the typical philosophies or values? SECTION G: CONCLUSION & REQUEST FOR INFORMATION 53. Are you aware of any innovative structures or management practices emerging in the profession? Y / N If yes: C. What are the emerging structures or practices? D. Why do you think that these changes are taking place? 212 54. Are you aware of any innovative law firms in BC that I should approach about participating in my research? Y / N If yes: A . What are the names of these firms? 55. Do you have a business card that I could take with me? attached 56. Are there any other materials, such as a recruiting brochure, that I could take with me? (specify below): attached attached S E C T I O N G : I N T E R V I E W E R O B S E R V A T I O N S 57. Gender of participant: Male / Female 58. Location of office: A . City Province B. Downtown Midtown Suburbs 213 59. Observations of physical premises: A . Who greeted you prior to meeting with participant (e.g., receptionist, personal secre-tary)? B. Where did the interview take place (e.g, boardroom, personal office)? C. What type of office does the participant have relative to the others (e.g, private/group, corner/other, window/windowless)? D. What sort of workspace arrangement is there in general (e.g., private/cubicles/open-concept)? E. How would you describe the firm s d0cor and type of image that is being projected? (INTERVIEWER: If appropriate, make a casual comment to participant about d0cor upon leaving & note response) 60. Interesting highlights of interview for personalizing thank you letter: 214 61. Gut reaction regarding story behind evolution of firm s infrastructure: 62. Gut reaction regarding type of deviation (1 replication, 2=dilution, 3=translation, 4=synthesis, 5-rebellion): 63. Date of interview: 64. Start time: end time: total minutes: 65. Interviewer name: 215 A P P E N D I X 4.5: Panel i s t Q u e s t i o n n a i r e ( F o r m B) BC L e g a l P r o f e s s i o n O r g a n i z a t i o n a l F o r m D e v i a t i o n A s s e s s m e n t S T E P 1: Based on the first phase of data collection from our industry experts, we have identi-fied the commonly-held perception of the dominant organizational form for the B C legal profession (see column 1). In this second phase, we w o u l d like to obtain your assessment of the extent to which alternative arrangements differ from the norm. For each alternative listed i n column 2, please indicate the extent to which y o u believe it differs from the n o r m presented i n column 1. For example, for the dimension labeled Governance structure , y o u are to evaluate h o w different both solo practice and office-sharing arrangement are from partnership. For instance, you w o u l d circle the number 5 if y o u believe that the difference between a solo prac-tice and a partnership is very large; and y o u w o u l d circle the number 1 if you believe that the difference between an office-sharing arrangement and a partnership is very small. It is very important that y o u rate the alternatives relative to the commonly agreed-upon norm presented i n column 1 rather than what you personally believe the norm is for that dimension. A completed form should have one of the numbers circled i n each row of numbers that is pre-sented. 1. . , ,< Degree of difference Jbetween alternative ami norm Industry norm Alternatives Very Small Moderates Laige .,. .Very for dimension small " larger Governance structure Partnership Solo practice 1 2 3 4 5 Office-sharing arrangement 1 2 3 4 5 Positions for lawy ers Only one cate- Different categories of 1 2 3 4 5 gory of partner partners (eg, equity vs non-and one category equity) of associate Different categories of associates (eg, partner-track 1 2 3 4 5 vs non-partner track) 216 Degrei > of difference between alternative and not in Industry norm for dimension Alternatives Very small .-Small - Moderate Large1 Veiy _ large No positions other than partners, associ-ates, & articles for lawyers Associate counsel positions Contract positions No associate positions No articling positions 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 Managerial positions for non-lawyers Office manager Divisional supervisor 1 2 3 4 5 Account-ant/bookkeeper No office manager No accountant/bookkeeper 1 1 2 2 3 3 4 4 5 5 Decision-making processes Moderately collegial majority of major decisions made by committees of partners Very directive majority of major decisions made by only one partner Moderately directive some major decisions made by individual partners, others made jointly 1 1 2 2 3 3 4 4 5 5 Very collegial majority of major decisions made by all partners 1 2 3 4 5 Recruitment of associates Prefer to hire associates with prior associate experience Prefer to hire associates with articling experience only N o preference wi l l hire associates with either arti-cling or prior associate experience, depending on needs 1 1 2 2 3 3 4 4 5 5 Hir ing decisions based primarily on: Legal ability Business ability Personality compatibility 1 1 2 2 3 3 4 4 5 5 217 Degret ' of difference between alternative ami mum Industry norm for dimension • Alternatives , Very small Small Moderate Large Veiv large Promotion to partnership Prefer to promote from within, admitting partners who have previously been associates with firm Prefer to admit partners by cherry -picking from other firms N o preference wi l l either promote from within or cherry-pick from outside, depending on needs 1 1 2 2 3 3 4 4 5 5 Partnership admission decision based primarily on: Business ability Legal ability Personality compatibility 1 1 2 2 3 3 4 4 5 5 Compensation Partners compen-sated by a: Point system based primarily on business performance Equal system partners receive same amount regard-less of seniority or performance Lockstep system based on seniority 1 1 2 2 3 3 4 4 5 5 Point system based primar-ily on criteria other than business performance 1 2 3 4 5 Eat-ivhat-you-kill system partners receive own billings less expenses 1 2 3 4 5 Associates compensated by: Salary Hourly wage Salary plus percentage of revenue 1 1 2 2 3 3 4 4 5 5 Percentage of revenue generated only 1 2 3 4 5 Monitoring Types of quanti-tative targets: Billable hours & billings Number of new clients Collections No billable hours targets 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5 No billings targets 1 2 3 4 5 218 ^Degree of'difference between' alternative and norm Industry norm for dimension Alternatives Ve i \ small Small Moderate Large Very' large Targets set at levels of: Practice group or division N o targets for partners 1 1 2 2 3 3 4 4 5 5 Partners, other lawyers, & firm No targets for other lawyers No targets for firm 1 1 2 2 3 3 4 4 5 5 Progress towards Quarterly 1 2 3 4 5 quantitative targets moni-tored: Monthly Weekly More than once a week 1 1 2 2 3 3 4 4 5 5 Tolerance of Very low failure to meet 1 2 3 4 5 failure to achieve targets is grounds for quantitative dismissal targets: Low underachiever is 1 1 9 n. 4 Moderate actions taken to deter-mine cause & correct problem penalized monetarily High brought to under-achiever s attention but no corrective action taken 2 3 4 5 Support for family obligations Type of support: Extended maternity leave 1 2 3 4 5 None Paternity leave 1 2 3 4 5 Family leave 1 2 3 4 5 Childcare benefits 1 2 3 4 5 Alternative work arrangements Alternative work Part-time positions for 1 2 3 4 5 arrangements for partners lawyers: None Part-time positions for other lawyers 1 2 3 4 5 Sabbaticals 1 2 3 4 5 Telecommuting 1 2 3 4 5 Job-sharing 1 2 3 4 5 Alternative work Reduced work week 1 2 3 4 5 arrangements for support staff: None Flexible hours Telecommuting 1 1 2 2 3 3 4 4 5 5 Job-sharing 1 2 3 4 5 219 STEP 2: Based on data we had previously collected, we have identified a number of other alternative practices that are being implemented by some newly-established law firms in the province. For each, please indicate how unusual it would be for a firm to engage in such a practice. For example, if you believe that it is highly unusual for a firm to be organized into divisions according to geographic region or client, rather than by area of practice, you would circle the number 4 in the first row. Practice Not that unusual Slightly unusual Moder-ately unusual Highly unusual Extremely unusual Structure Divisions /practice groups determined by criteria other than area of practice (e.g, by geographic region, client) 1 2 3 4 5 Firm contracts out overhead expenses (e.g., office equipment, lease, support staff) to an affiliated company 1 2 3 4 5 Law firm and an affiliated non-law professional service firm share office space, staff, and /or clients 1 2 3 4 5 Firm has network of satellite offices that are either staffed only by support personnel (with lawyers on-call) or staffed only on an as-needed basis 1 2 3 4 5 Firm is either the hub or a node in a hierarchical, nationwide network of 150 law firms that process legal work in a highly-standardized manner 1 2 3 4 5 Decision-making processes Certain associates and/or support staff attend partnership meetings or are responsible for key strategic decisions 1 2 3 4 5 Recruitment and promotion N o intention of ever hiring associates 1 2 3 4 5 N o intention of expanding partnership beyond founding partners 1 2 3 4 5 New partners initially admitted only as cost-sharers 1 2 3 4 5 Compensation Support staff compensated by salary plus percentage of revenue generated 1 2 3 4 5 220 Profit-sharing system for lawyers other than partners 1 2 3 4 5 Profit-sharing system for support staff 1 2 3 4 5 Monitoring and evaluation Client satisfaction surveys used to evaluate performance of lawyers 1 2 3 4 5 Belief system Firm emphasizes lifestyle values (e.g., being flexible & accommodating, having a more integrative approach to work & personal lives) 1 2 3 4 5 Firm emphasizes equality values (e.g., minimizing status differences between professionals and support staff) 1 2 3 4 5 Firm emphasizes crusader values (e.g., changing the profession and/or society) 1 2 3 4 5 Firm views lawyers as complete individuals (i.e., as people with lives & commitments beyond the firm or profession) 1 2 3 4 5 Firm views lawyers as not superior to others (i.e., as individuals who do not have greater status than other workers) 1 2 3 4 5 Other aspects Firm has corporate name (i.e., not a list of partners last names) 1 2 3 4 5 S T E P 3: Please fill out the following questions so that we have some background information on our expert panelists. 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