EXPLORING THE EFFECT OF FEDERAL AND STATE-LEVEL SOCIOPOLITICAL PRESSURES ON ORGANIZATIONS

Abstract

While recent research has devoted much attention to the effect of local sociopolitical contexts on organizations, how society-wide institutional pressures—such as federal policies—affect the relationship between the two has rarely been discussed by organizational scholars. This is an important question because local and society-wide institutional environments concurrently shape organizational behavior. Building on the theory of political mediation and an institutional perspective, we argue that state-level sociopolitical influences on organizations will depend on the broader regulatory context at the federal level. We use data on coal-fired facilities’ sulfur dioxide (SO2) emissions to address the question of when formal and informal local (state-level) sociopolitical contexts directly influence organizations’ environmental performance. Our results show that when the national-level Acid Rain Program (ARP) was regarded as an effective regulation for controlling SO2 emissions (2003–2009), coal-fired facilities, as well as local government officials, key stakeholders, and social movement organizations (SMOs), attended to the implementation of the federal law. As a consequence, local sociopolitical contexts had a negligible effect on SO2 emissions by individual facilities. However, when stakeholders questioned the effectiveness of the ARP (2010–2011), the direct impact of SMOs and other sociopolitical contexts at the state level on facilities’ emissions increased. From an institutional perspective, our results imply that local sociopolitical contexts are themselves embedded within the larger, society-wide, institutional environment, and that evaluating the direct influence of local sociopolitical pressures on organizations thus requires a more dynamic approach that includes consideration of institutional contexts at different levels in society.