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Drawing on DiMaggio and Powell's (1983) perspective of institutional theory, this study examines the influence of institutional pressures on the adoption of management innovation and the subsequent impact of management innovation on competitive advantage.

Data were obtained from 156 middle-level managers in Australia using a survey questionnaire, with data analysed using structural equation modelling.

The results show that internal coercive pressures and normative pressures are positively associated with both dimensions of management innovation (i.e. practices and techniques). However, external coercive pressures were found to negatively influence management innovation techniques, and no association was found between mimetic pressures with either dimension of management innovation. Finally, both dimensions of management innovation were found to exhibit a positive influence on competitive advantage.

The findings provide organisations with an insight into the institutional factors that affect their ability to introduce new management practices and techniques (i.e. management innovation) and the role of management innovation in enhancing competitive advantage.