Strategy and legitimacy: Pharmaceutical companies' reaction to the HIV crisis

This study shows that firms respond in strategic ways to institutional pressures that stem from social scandals. Through the formal analysis of the historical narrative of events, the authors studied how seven pharmaceutical companies reacted over the years to accusations of being socially irresponsible in dealing with the HIV virus in Africa. The analysis shows that institutional and task environmental factors interact to precipitate pharmaceutical companies' reactions. Although firms' behaviors were indeed affected by institutional pressures exerted by activist groups and the media, they did not passively adapt to these pressures. Instead, they decoupled their core technical activities from their policy announcements (by delaying the implementation of promised concessions) and used institutional pressure in the organizational field as a way of pursuing their own economic interests.