Mimetic+pressure+in+OFC

An introduction to Mimetic Pressure in OFC firms
Mimetic Pressure in Offshore Financial Centre (OFC) firms can be seen in the companies Code of Conduct. The Code of Conduct is a manual where companies list up important topics as conflicts of interest, corporate opportunities, fair dealing, rules and regulations and encouraging the reporting of illegal or unethical behavior for their stakeholders to give them the view of how they follow the code of ethics. The mimetic pressure is a part of this Code. The mimetic pressure can also be called the mimetic isomorphism.  The Mimetic Pressure can be seen in OFC firms in the Code of Conduct in the way that many of the firms use almost identical codes in their manuals. This shows that the OFC firms have mimetic pressure to write wrong or unethical about some topic is high and by making almost identical with other firms their pressure to give a bad influence to the public are smaller. A good question is that, is this CSR tool Code of Conduct considered or is it just used to give a good public view about the firms.

What is Mimetic Pressure
The mimetic pressure or isomorphism is one of the three mechanisms of institutional isomorphic change. According to March and Olsen (1976) used by DiMaggio and Powell (1983) the mimetic pressure or as they call it isomorphism is uncertainty that is encouraging to imitation of others. March and Olsen (1976) states that, “When goals are ambigious, or when the environment creates symbolic uncertainty, organizations may model themselves on other organizations". Mimetic pressure is the consequence of the uncertainty that firms have about how the Code of Conduct should be modelled. It often ends up that similar industries firms are using models or at least the same points from others.

Why does the Mimetic Pressure occur and its consequences
The mimetic pressure is believed to be the result of the different legal codifications that are made for the firms. It is very common to occur in companies who operate in tax havens. A very big influential for these terms are the New York Stock Exchange (NYSE) who requires all public firms to bring out that have the firms adopted a code of ethics for its senior financial officers. NYSE also requires that listed companies should adopt and disclose a code not just for directors but for all officers and employees. The manuals of NYSE have clearly left a mark in the sample company documents, as we can see in the following picture, the mimetic pressure comes out in a way of copy others. This example is on what different companies in Bermuda and Cayman Islands write about “fair competition”. What can easily be seen is that everyone is writing about the same things as NYSE, just in order to play it safe.

 Comparing to NYSE´s statement these look a lot the same: “Each employee, officer and director should endeavor to deal fairly with the company´s customers, suppliers and employees. None should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice.”

 These examples are statements from OFC firms on fair competition, what can be seen is that in the following examples the firms statements are looking alike with NYSE´s. Here is a few examples:  “We must endeavor to deal fairly with all of our policyholders, producers, prospects, suppliers, competitors and employees. No one should take unfair advantage of anyone through manipulation, concealment, abuse of privileged or confidential information, misrepresentation of material facts, fraud or any other unfair practice.”

 Another firms goes states that: “Employees, officers and directors should not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair-dealing practice”.  Here it can be clearly seen that firms in OFC´s are using the NYSE´s statements as their ground for their own. 

  OFC-based companies attempt, through communication, to become identified with symbols, values and institutions which have a strong base of social legitimacy.  The CSR commitments can be seen in the firms codes of conduct. However the erfforts are overlaid with mimetic pressures.  The advantages for companies using mimetic behavior is that when the firm faces a problem and have unclear solutions, this solution by modeling from others may have smaller expenses and this could be one of the reason why firms imitate each other.

 Shortly, mimetic pressures up comes especially when organizations are in uncertain circumstances and its seen as imitating of more successfully operating organizations. What then can result into uncertainty is ambiguous goals and poor understanding of the organization´s processes. In the financial firms operating in OFC´s there are not many ways of expressing their code of conducts, this way the firms also secure their possibilities for success.