Adoption of Nontraditional Labor Market Approaches: A Neo‐Institutional Theory Approach

ABSTRACT Despite firms' increasing experimentation with nontraditional human capital sourcing and selection approaches, our understanding of how and why these are adopted and diffuse among competitors is limited. Drawing on neo‐institutional theory, we examine how mimetic, coercive, and normative pressures influence firms' adoption of nontraditional labor market approaches. We conceptualize labor markets as “traditional” and “nontraditional” based on firms' observable human capital selection activities and investigate how competitors' prior use of nontraditional sourcing approaches (mimetic pressures), coercive pressures stemming from customer‐based demand conditions, and top manager institutional agency (the capacity of top managers to interpret and act against prevailing normative pressures) influence adoption. We further examine how field‐level performance feedback from nontraditional‐sourced human capital influences the impact of these institutional pressures and aspects of adopting these alternative sourcing approaches. Using a longitudinal dataset of Major League Baseball franchises from 1977 to 2002 and event‐history models of first adoption of non–South/Central American international player sourcing, we assess how organizational and contextual conditions affect the timing of adoption. Results indicate mimetic and coercive institutional pressures, top manager institutional agency, and field‐level performance feedback systematically influence adoption decisions. The findings contribute to our understanding of institutional drivers in firms' human capital sourcing and selection behavior and offer insights into the broader dynamics that drive the adoption of nontraditional labor market approaches across firms.