Cultural Adaptation and Institutional Change: The Evolution of Vocabularies of Corporate Governance, 1972-2003

We develop a grounded theory to explain the evolution of vocabularies of corporate governance. We combine historical analysis of events and language use with interpretation of texts and quantitative content analysis of word co-occurrences. We find that the term corporate governance emerged in the 1970s as frame to explain contemporary corporate scandals. While the word has increased in usage and became institutionalized, its meaning has evolved, as other words that co-occur in the vocabulary have shifted both in response to subsequent environmental events and to framing processes. We propose an evolutionary theory of cultural adaptation as meanings evolve through (1) path-dependent conceptual blending (variation), differential adoption shaped by the cultural resonance of words (selection), and a more likely to persist due to institutionalized theorization (retention). Our evolutionary theory of cultural adaptation posits a recursive relationship between culture and the economy, where why cultures adopt to economic change, the stickiness of culture and path dependence results in its relative autonomy as an explanatory force in economic change.