Institutional Complexity and Corporate Governance

• Elena M. Rossi

  Author

The increasing complexity of the institutional environment poses significant challenges to traditional corporate governance frameworks, which are largely grounded in assumptions of institutional stability and coherence. This study develops a multi-level theoretical model of corporate governance under institutional complexity, integrating insights from corporate governance and institutional theory to explain how firms design and adapt governance mechanisms in the presence of multiple, diverse, and conflicting institutional logics. The paper conceptualizes institutional complexity along three key dimensions—multiplicity, diversity, and conflict—and identifies major drivers, including globalization, environmental, social, and governance (ESG) pressures, and digital transformation. Building on this foundation, the study proposes a multi-level framework encompassing macro-level institutional environments, meso-level organizational and field structures, and micro-level managerial cognition and power dynamics. The model highlights how governance outcomes emerge from the interaction of these levels, emphasizing the role of cross-level dynamics and actor interpretation A set of testable propositions is developed to link institutional complexity to governance structures and practices, including the emergence of hybrid governance mechanisms, increased reliance on informal governance, and the prevalence of strategic ambiguity. The study contributes to the literature by extending corporate governance theory beyond single-logic assumptions, offering an integrated multi-level perspective, and bridging macro institutional analysis with micro-level decision-making processes. The framework provides a foundation for future empirical research and offers practical implications for firms and regulators seeking to navigate increasingly complex institutional environments.

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