The Adoption of Corporate Governance Mechanisms: A Test of Competing Diffusion Models

Abstract

We develop alternative diffusion models of two corporate governance mechanisms—joint venture and M-form organizational structure—using relevant concepts from the resource-based theory. Using data on joint venture adoption from one homogeneous industry (information technology) sector and employing both linear and nonlinear estimations, we test the explanatory power of the internal-influence model in comparison with a competing model of external-influence. Our empirical results support the internal-influence model in this sector with additional evidence for generalizability provided through a multisector sample of joint venture formation. In contrast, empirical results on the diffusion of M-form structure are more consistent with the external-influence model.

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