Asbestos victims versus corporate power: the case of James Hardie industries

Abstract

Oliver (1991) argues that institutional theory has not devoted sufficient attention to the strategic behaviors that organizations employ in direct response to institutional processes that affect them. Product safety scandals provide a rich tapestry to apply institutional theory given that these situations intensify stakeholder demands. This case study examines a former asbestos manufacturer, James Hardie Group Ltd (“JH”), following revelations that a trust created to quarantine the Group from future asbestos obligations was inadequately funded. Our study utilizes an archival approach consisting of JH policy statements, media releases and financial disclosures to obtain insights into the effectiveness of JH’s management of the crisis. Using Oliver’s hypotheses relating to environmental uncertainty, constituent multiplicity and degrees of discretionary constraints, we conclude that the Group failed to successfully navigate its institutional environment.