What Bandwagons Bring: Effects of Popular Management Techniques on Corporate Performance, Reputation, and CEO Pay

Abstract

This paper examines some of the important organizational consequences of popular management techniques. Using informational reports on quality, empowerment, and teams, as well as a measure of the implementation of total quality management programs, we found that companies associated with popular management techniques did not have higher economic performance. Nevertheless, these same companies were more admired, perceived to be more innovative, and rated higher in management quality. Higher pay was also given to chief executives when their companies were associated with these management trends. These results provide strong support for institutional theory, demonstrating how both internal and external legitimacy can be gained by using popular management techniques. They also extend institutional theory from its usual emphasis on organization-environment relations to new within-firm dynamics.