Corporate Governance & Organization Life Cycle: The Changing Role ...

operating in the same environment. For instance, the board of a listed organization might enhance its legitimacy by having a dual leadership structure in which the CEO of the firm is not also the chairman of the board. This has been regarded as a best practice in the United States for over a decade.

DiMaggio and Powell (1983) argued that the causes of bureaucratization and rationalization, so well described by Weber in 1947, have changed over time. For Weber, bureaucratization resulted from three related causes: competition among capitalist firms in the marketplace, competition between states, and citizens’ requests for equal protection under the law. However, for DiMaggio and Powell, changes occur as the result of processes that make organizations more similar without necessarily making them more efficient. The homogenization process comes out of the structuring of the organizational field.⁵In each major industry or industrial segment, the authors saw the emergence and structuring of an organizational field as a result of the activities of those organizations that compose the field on theoretical research at the expense of teaching and case study…this has an impact on the selection criteria of professors who, once recruited, will emphasize a certain type of research and the same selection criteria for new professors. The end results of this self-reinforcing process are that the business education field has been increasingly disconnected from the corporate field. Once it is established, the homogenization of these organizational fields and of new entrants takes place through isomorphism.⁶Institutional isomorphic changes are triggered, in their view, by three mechanisms: coercive isomorphism (state regulation), mimetic processes (organizations modeling themselves on other organizations), and normative pressures (professionalization of members).

While mimetic behavior among organizations has been well documented (Lieberman & Asaba, 2006), isomorphism is also evident with respect to both board role and composition. The Sarbanes-Oxley Act was and remains a coercive mechanism with an ongoing normative pressure for minimum financial knowledge qualifications for members of the audit committee of a board; it was designed to strengthen the board’s