The breakdown of norms as institutional change: A longitudinal analysis of the decline of the 'no-lateral-hiring' norm among large corporate law firms, 1974--1990

In recent years, there has been growing interest among scholars in understanding the sources and processes of change in institutions. Much of the emerging scholarly literature has been concerned with investigating how change in broader, field-level institutions such as cultural logics and belief systems can influence change in organizational practices. Less understood are norms that exist among organizations and how they begin to break down. Interorganizational norms are often linked to institutions existing in the broader context. The breakdown of such norms represents the micro-level processes through which broader institutional change is taking place. In this dissertation, I investigate the breakdown of such norms as a type of institutional change process. More specifically, I examine the 'no-lateral-hiring' norm in the corporate law field and its subsequent breakdown. I am particularly concerned with understanding the endogenous sources and dynamics of its breakdown. I document the emergence and the subsequent breakdown of the no-lateral-hiring norm. I then propose a theoretical framework, drawing on different institutional perspectives, for understanding such interorganizational norms and their breakdown. I generally argue that purposive action on the part of actors and changing values can contribute to our understanding of the decline of interorganizational norms such as no-lateral-hiring. I use panel data on 88 large Chicago law firms and all the lawyers in these firms for the period 1974--1990 to test hypotheses about the breakdown of the no-lateral-hiring norm. The results suggest that higher status firms were more likely to engage in lateral hiring, but the most elite firms were less likely to engage in the practice. They also suggest that firms that were growing rapidly were more likely to engage in the lateral hiring of partners. Further, firms that had previously engaged in lateral hiring were more likely to subsequently engage in the practice. Finally, firms that have lost personnel to other law firms were more likely to abandon the no-lateral-hiring norm.