Symbolic Management

This book presents the symbolic management perspective as a comprehensive, behavioral theory of corporate governance. It describes a pervasive pattern of symbolic decoupling, or separation between appearances and reality, at each level of the governance system. The processes of governance are less efficient or effective than they appear, at every level: from interpersonal relations within organizations, such as relations between chief executive officers and directors and between top managers and lower-level employees, between firm leaders and external stakeholders, and between communities of leaders and groups of constituents. There is even a separation between appearances and reality at the level of the governance system. Symbolic management comprises the agentic practices by which decoupling is maintained at different levels of the system, including internal and external communications by firm leaders that conform to prevailing cultural values. The symbolic management perspective not only provides an integrative, behavioral alternative to economic theories of governance such as agency theory, but it subsumes economic theory. Agency theory is reconceived as a historically contingent, institutional logic, or a set of cultural values, assumptions, and prescriptions that became taken for granted among key stakeholders for a period of time. We reveal a gradual shift in institutional logics of governance, away from the traditional agency logic, and toward an alternative “neo-corporate” logic that reinterprets agency prescriptions and drops fundamental economic assumptions of agency theory. Our theory and research ultimately demonstrate how the symbolic management activities of firm leaders have contributed to this historical shift in prevailing logics of governance.