Symbolic Management Revisited

In contrast to the literature of symbolic management, which argues that decoupling in organizational change is facilitated by the sociopolitical dimension of existing mechanisms against newly adopted ones, this paper sheds light on the performance contribution of the existing ones in corporate governance reform. Using panel data of 100 large listed firms of Korea from 1998 to 2005, we find that existing mechanisms such as family control and business group are positively related to firm performance measured by accounting indicators and innovation activities. We thus argue that decoupling in organizational change should be analyzed in functional terms of existing mechanisms in addition to their sociopolitical aspects, while newly adopted mechanisms such as outside directors could also contribute to shareholders’ wealth with disciplining roles.