How Organizations Respond to Information Disclosure: Testing Alternative Longitudinal Performance Trajectories

Abstract

Information disclosure programs (IDPs) are an increasingly common aspect of organizational existence as stakeholders seek to shape organizations’ actions by measuring and revealing information regarding performance in various domains. In this manuscript, we extend research on how organizations respond to IDPs in three ways. First, we extend theorizing regarding institutional waves to explain why organizations’ rate of change on disclosed metrics are likely to follow a tapering pattern such that improvement occurs most rapidly immediately following the start of an IDP, and then slows with time. Second, we explain why organizations that exhibit the worst initial performance are also likely to exhibit more pronounced tapering in their rates of change. Third, we begin to reconcile competing predictions regarding how organizational size affects organizations’ responses to IDPs by theorizing and testing temporal moderation effects between size and (1) rates of initial improvement and (2) extent of tapering. We test our theory using panel data on motor carrier safety obtained from governmental databases following the implementation of a new IDP in 2010. Our results from fitting mixed-effects models offer new insights regarding the effectiveness of information disclosure programs and, moreover, contribute to our understanding of how institutional pressures affect organizations.

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