New Institutional Sociology Research Articles

Public spending efficiency in the countries of the gulf cooperation council

PurposeThe Gulf Cooperation Council (GCC) countries have been increasingly investing in their economic and social development in recent years, yet the effectiveness of their spending remains unknown although they have been taking reforms to advance their spending efficiency practices.Design/methodology/approachThe study applies a quantitative approach to analyze panel data using a multiple regression model based on the World Economic Forum (WEF) reports of the global competitiveness index (GCI) from 2009 until 2018.FindingsThe results show that policies' strength has a positive and significant influence, while national infrastructure and workforce empowerment have a negative and significant influence over the extent of spending efficiency implementation in the GCC countries.Research limitations/implicationsGCI disclosure assessment criteria changed in 2019 and then stopped in 2020 due to COVID-19. A different version of GCI was published in 2020, which focuses on recovering from the COVID-19 pandemic, and no other issues have been published since then. This represented a barrier to recent data collection.Practical implicationsPractical contribution is the value added by this study to a minimal literature on spending efficiency in the GCC countries. This study’s theoretical contribution to knowledge is the integration of the new institutional sociology (NIS) perspective of institutional theory and the resource slack theory to investigate a set of factors rarely explored in relation to their impact on governmental spending efficiency.Social implicationsThis study provides the following recommendations for policymakers: The GCC government should direct government training bodies and universities (in business majors) to include mandatory spending efficiency subjects to enhance current knowledge. Also, the governmental-related bodies of spending efficiency should make agreements with universities and research centers to improve the diverse R&D aspects of government spending efficiency. Another important recommendation is to enforce the adoption of the GRC concept regarding spending efficiency practices for governmental employees to guide them towards implementing spending efficiency practices.Originality/valueThis study's theoretical contribution to knowledge is the integration of the new institutional sociology (NIS) perspective of institutional theory and the resource slack theory to investigate a set of factors rarely explored in relation to their impact on governmental spending efficiency. Also, the practical contribution is the value added by this study to a minimal literature on spending efficiency in the GCC countries. The research has established empirical evidence to support the findings above.

The isomorphism of educational providers in the New Zealand tertiary market

PurposeThe purpose of this paper is to explain how aspects of institutional theory can be used to explain how tertiary educational providers must necessarily adopt the same features while competing in the market for students. Using new institutional sociology (NIS), the authors seek to explain this phenomena and how such diverse private providers have borrowed from the polytechnics and universities to share the same institutional features.Design/methodology/approachThis paper employs NIS to explain how tertiary educational providers must necessarily adopt the same features while competing in the market for students. In the last few decades, the Auckland tertiary market for overseas students has enjoyed strong growth before Covid-19.FindingsDecoupling provides a link between NIS and legitimacy theory in that it explains how symbolic strategies are aimed at some kind of legitimization rather than directed at technical efficiencies. It is argued that the public tertiary providers are more prone to decoupling than PTEPs because they are less attentive to costs due to their more monopolistic position in the market.Originality/valueOriginally, the market was dominated by the local universities and polytechnics with few private providers. Currently, private providers cater for a large share of the certificate and diploma market and have a growing stake in the degree market. As these changes came about so, more diverse private providers entered the market. This paper explains how these diverse entrants came to share the same organizational features.

Strategic outcome of competitive advantage from corporate sustainability practices: Institutional theory perspective from an emerging economy

AbstractThis study examined the use and effectiveness of corporate sustainability practices (CSP) and the subsequent effect on a strategic outcome, competitive advantage. The new institutional sociology (NIS) theoretical framework was applied, informed by three different dimensions of institutional pressures (coercive, mimetic and normative). The study used a survey method and developed a seven‐dimensional model utilising the 52 principles provided by the OECD. It used a structural equation modelling in order to test the hypothesised associations between institutional pressures, CSP and competitive advantage to provide an institutional and contextualised perspectives from an emerging economy setting. The study found significant associations between the three types of institutional pressure with specific dimensions of CSP. The findings further revealed that specific CSP dimensions are diversely (positively and negatively) associated with competitive advantage. In line with the tenets of greenwashing, it highlighted the important role of institutional pressures from stakeholders (government, policy and customers) in implementing specific CSP. The findings inform managers, governments, foreign investors and other stakeholders in emerging economies about the influence of the institutional pressure in promoting the use of CSP and the effect of such practices on competitive advantage. From the context of an emerging economy, the study provides a unique empirical insight into the NIS perspective in promoting CSP and the subsequent impact on the strategic outcome, competitive advantage.

Institutional perspective of change in management accounting system: A case study approach

The objective of this study is to examine the drivers of change in the management accounting system in a large manufacturing Libyan-Italian joint-venture public company (LIJV). To achieve this objective, a qualitative case study research is adopted. The research data were gathered by conducting 17 semi-structured interviews with the managers and senior staff of the case company. The data collected from the interviews were supported by documentary reviews and observations. The findings of this study indicate that changes in management accounting systems in the company are attributable to institutional factors, competitive pressures, and market forces. Specifically, isomorphic institutional pressures (i.e., coercive, mimetic, and normative isomorphism forces) appeared to be the main drivers of management accounting system change. These findings are consistent with Zoubi’s (2011) findings. Additionally, our findings reveal that the primary sources of the barriers to management accounting change include: 1) the nation’s regulations and laws, 2) management misconduct and corruption in management and financial activities, and 3) company managers’ resistance. Drawing on the new institutional sociology (NIS) theory, our case findings provide a comprehensive understanding of the change process in management accounting systems by focusing on the role of market pressures, institutional pressures, and intra-organizational power. The contribution of this research is the improved utilization of NIS in explaining the change in management accounting.

Roles at crossroads: complexities and conflicts surrounding management accountants' roles based on evidence from the Sri Lankan context

PurposeDrawing insights from finance and non-finance managers in Sri Lanka, this study unveils complexities and conflicts surrounding the roles of management accountants and the nature of role construction stemming from differing expectations of non-finance managers and external influences.Design/methodology/approachThis paper adopts the qualitative methodology and leans on role theory and new institutional sociology (NIS), as these dual theories complement each other and enable a holistic understanding of management accountants' roles, complexities and conflicts.FindingsThe findings reveal that in fulfilling their roles on par with divisional goals, amid expectations of non-finance managers and external influences, management accountants face various complexities and conflicts. Furthermore, in navigating through their roles, understanding the operational realities of work organizations and business sectors and negotiating with non-finance managers is vital.Research limitations/implicationsThis research draws evidence from a selection of finance and non-finance managers. Thus the findings are not expected to be generalized to business firms in Sri Lanka.Practical implicationsThis paper offers practitioner insights into how management accountants could construct their roles in different organizational settings, balancing the expectations of non-finance managers and external influences.Originality/valueDespite its importance, complexities and conflicts surrounding management accountants' roles amid multiple influences have attracted scant research attention. Hence this paper is a noteworthy addition to the literature. Besides, using role theory and NIS in tandem although apt, has not been the focus of prior researchers in delving into this phenomenon.

Institutionalization of results-based budgeting in the public sector: political and economic pressures

PurposeThis paper aims to explain the interaction of external and internal influences in the imposition of results-based budgeting (RBB) in a public sector organization, subsequent to public sector reforms.Design/methodology/approachThe paper uses an explanatory case study of a state-imposed RBB system, drawing evidence from in-depth interviews, document analysis, and direct observation. The paper draws on Alsharari's (2013) contextual framework which synthesizes three approaches to analyzing institutional change: Dillard et al.'s (2004) New Institutional Sociology (NIS) framework for analyzing externalities; Burns and Scapens' (2000) framework inspired by old institutional economics (OIE) for internal processes of change and Hardy (1996) power and politics mobilization model. In addition, Pettigrew's (1987) contextual framework is used for its holistic incorporation of different perspectives and to integrate theoretical perspectives.FindingsThe findings show that Jordan's National Reform Agenda represented a turning towards the New Public Management (NPM) model, following entrenched poor state budget performance. The findings also show that NPM ideas, such as results orientation and performance-based accountability, are invoked in response to common economic and social pressures, such as budget insufficiency and public antipathy to government service provision, as well as the pressures of globalization. Institutional analysis confirms the “path-dependent” and evolutionary nature of accounting change implemented in Jordan's customs agency. The study also concludes, from observation of the organization's work routines and practices, that the implementation of accounting change was not merely a symbolic innovation.Research limitations/implicationsThis study has significant implications for politicians, economists, academics and government leaders as it provides fieldwork evidence about the role of RBB in the economy and public policy. Changes at the political and economic level, particularly with respect to the introduction of the fiscal reforms and customs modernization projects, have resulted in changes to structures and systems at the organizational level, particularly the implementation of RBB. This study is subject to normal limitations. The role of legitimate power in the organizational change process can be subject to further examination, especially in the public sectors of developing countries. A longitudinal study could also affirm the institutional analysis of the present case study.Originality/valueThe study contributes to accounting literature by providing further understanding and a thick explanation of the dynamics of accounting change in the Jordanian public sector. It utilizes a contextual framework for studying accounting change that attempts to overcome the limitations of single-dimension theories, such as NIS and OIE, by integrating levels of analysis. The case study provides insight into how internal dynamics interact with external pressures and recognizes the organizational field as a link between political, economic and organizational levels. It more directly addresses the dynamics of emergence, diffusion and implementation of new accounting criteria and practices.

The perceived impact of the KAM reforms on audit reports, audit quality and auditor work practices: stakeholders’ perspectives

PurposeThe purpose of this study is to understand how the new reforms related to key audit matters (KAM) disclosures in Australia may have impacted audit quality by eliciting the perceptions of key stakeholders in the audit and assurance services market.Design/methodology/approachThe study uses a qualitative approach and New Institutional Sociology (NIS) to explain how auditors have responded to the KAM reforms. Interviews were conducted with 20 individuals representing identified groups of stakeholders in the market for audit and assurance services in Australia.FindingsThe study finds there is little consensus between some stakeholder groups on whether the KAM reforms may have improved audit quality, based on the perceptions shared. The findings conveyed that the auditors and regulators, standard setters acknowledge that KAM disclosures are either costly and/or time-consuming to implement. The Big Four auditors indicate these reforms led to changes mainly around internal consultations and independent reviews, whereas the non-Big Four auditors highlighted increased interactions with audit clients.Originality/valueThis is one of the first studies to examine the perceived post-implementation impacts on audit quality of the KAM reforms (ISA 701) after the initial two years of implementation and how auditors have responded, explored through the lens of institutional logic.

Components of Countries’ Regulative Dimensions and Voluntary Carbon Disclosures

The previous literature has demonstrated that countries’ regulative contexts positively influence voluntary corporate carbon disclosures. However, little research has been conducted into the relationship between the different components of the regulative dimension of institutions and voluntary carbon disclosure. Drawing on the theoretical framework of New Institutional Sociology (NIS), this study examines the influence of the different components of the regulative context (rules; monitoring mechanisms and punishments; rewards) both on firms’ propensity to disclose carbon information and on the quality of disclosures. Based on a global sample of 2176 companies that participated in the 2015 Carbon Disclosure Project (CDP) climate report, this paper uses the Heckman two-stage approach in an attempt to model firms’ decisions as to whether to disclose carbon information, as well as the quality of said disclosures. The results show that the regulative components positively influence firms’ decisions to voluntarily disclose carbon data. They also show that the quality of disclosures is positively affected by climate-related rules and rewards, but that it is not influenced by monitoring mechanisms and punishments related to climate change. This paper is the first to take the step of addressing the components of the climate-related regulative pillar of institutions in the same regression setting.

Environmental management accounting in the Middle East and North Africa region: Significance of resource slack and coercive isomorphism

The Middle East and North Africa (MENA) region is suffering from serious environmental issues, which are caused mainly by industrial and non-financial business activities. Implementing environmental management accounting (EMA) will help businesses manage environmental issues better and improve how they treat the environment. The key motivation for undertaking this study is that earlier research reported a poor level of environmental accounting practices by firms in the MENA region. These studies documented the necessity to develop a better understanding of EMA practices and the factors that influence their employment. Based on the new institutional sociology (NIS) perspective of institutional theory and resource slack theory, this study examines the influence of technological capabilities, environment-focused human resources management (EFHRM) and institutional isomorphism, specifically on the extent to which EMA practices are implemented in non-financial listed firms from eight MENA countries. These countries are Saudi Arabia, United Arab Emirates, Kuwait, Oman, Qatar, Bahrain, Jordan and Egypt. A web-based survey approach was utilised; and the data was analysed through structural equation modelling (SEM). The findings indicated an overall poor widespread of the use of EMA practices in the selected firms as perceived by the participants. Also, the findings suggest that technological capabilities, EFHRM and coercive isomorphism positively and significantly influence how EMA practices are implemented. Coercive pressures, technological and human resources are affecting the extent of EMA use in this study’s sample, but not to a great extent. Hence, coercive pressures should be maximised by regulatory bodies in the selected MENA countries in order for EMA practices to be widely accepted. Furthermore, governments should facilitate the outsourcing of experts who can help with implementing EMA practices. It means collaborating with non-government partners, such as accounting associations, industry associations, research & consulting firms and educational institutions. These kinds of collaborations can lead to better support for environmental management and EMA, thus instituting the required educational programs and training to enhance employees’ awareness of EMA practices that include the role of technology.

An examination of the Vietnamese emerging market economy: understanding how and why auditors have responded to the audit law reforms

AbstractUsing New Institutional Sociology (NIS), we seek to explain the variation between what was intended with the Vietnamese reforms to audit in 2011 and the actual practice, and why there is variation. This paper reports findings from interviews with 70 individuals representing identified groups of stakeholders in the market for audit and assurance services in Vietnam. Overall, the findings indicate that there still exist business risks for foreign companies that pursue trade and commerce in communist Vietnam, particularly where non‐Big 4 audit firms are involved in the external audit function, as in some cases auditor independence is most likely compromised.

The Relationship between Egyptian Economic Reform, Corporate Governance, Firm Ownership and Firm's Value: An Empirical Study

This paper aims at filling prior literature gaps by empirically investigating the relationship between firm’s political-economic context, corporate ownership and corporate governance; and firm’s value and its affairs in Egypt as one of developing countries that has been faced rapid political and economic reform. The paper adopts interpretive approach and interviews fourth participants including: company executives; financial analysts; and stock exchange regulators to inform our understanding of the influence of the Egyptian economic reform on firm’s value and affairs. The results show that the economic reform resulted in increased institutional ownership that is capable of better monitoring and governing managerial behaviour and decisions and hence it has become one of the important mechanisms in Egyptian corporate governance. This, in turn results in improvements in company’s operational performance, long-term profitability, management reputation, competitive position, market share, financial position, growth rate, and quality of financial reports. All, in turn, have positive impact not only on firm’s value and its survival, but also succeeding economic transition and flourishing the entire economy. This paper contributes to literature by: highlighting the mutual interaction between economic enterprises and their context in where they operate; providing insights into how the quality of financial reports can vary according to ownership structure; documenting there is no “one-size-fits-all” corporate governance approach which can be generalised worldwide; concluding the positive role of institutional shareholders in Egyptian firms and Egyptian economy; revealing that exercising corporate governance by institutional shareholding matters in emerging markets because of lack of other governance practices; and initiative in the use of interpretive methodology and drawing on new institutional sociology (NIS) theory.

Management accounting change in developing countries: evidence from Libya

PurposeThe purpose of this paper is to investigate the change in management accounting and control systems (MACSs) within two large public manufacturing companies in Libya so-called Trucks and Buses Company (TBC) and National Trailers Company (NTC).Design/methodology/approachThe paper is based on semi-structured interviews, an analysis of documents and observations. It draws on New Institutional Sociology (NIS) perspective (DiMaggio and Powell’s 1983) as theoretical framework to provide explanations regarding how the MACS in the two companies were shaped by various factors.FindingsThe main factors identified in shaping the operations of the MACS were the need to comply with the political pressures, the Libyan Government’s laws and regulations, the instructions imposed by the management committee in both companies, leading organizations’ pressures (ISO), customer satisfaction (coercive isomorphism), the influence of professional associations (normative isomorphism) and the need to imitate efficient organizations in order to be more legitimate and successful (mimetic isomorphism).Research limitations/implicationsThe findings of the study have implications for understanding the operations of MACS in developing countries. Future research could focus on alternative theoretical perspectives for the investigation of the process of change in MACS such as structuration theory, agency theory and actor-network theory.Originality/valueThe proposed theoretical framework provides insights into the process of change by focusing on the interplay between the institutional forces, market forces and intra – organizational power relationships to overcome the criticism of NIS that it downplays the role of market forces and intra – organizational power relations.

Institutions, Situated Rationality and Agency in Management Accounting: Extending the Burns and Scapens Framework

Purpose Drawing on recent research, which recognises the situated nature of accounting practices, the aim of the paper is to extend the Burns and Scapens (B&S) framework and illustrate its potential for studying the situated nature of management accounting practices. The extended framework distinguishes field-level institutions (broader institutions) and institutions within the organisation (local institutions). In extending the B&S framework the paper draws on recent debates in institutional theory, both new institutional sociology (NIS), where the focus has been on the institutional logics perspective, and old institutional economics (OIE), where there has been debate about the relationship between institutions and actions. Design/Methodology/Approach While the B&S framework focussed on institutions within the organisation, our extended framework explicitly recognises institutions which extend beyond the boundaries of the organisation. It also recognises the way in which rationality and deliberation are related to human agency, as well as the power of specific individuals and/or groups to impose new rules. To illustrate the usefulness of the extended framework the paper draws on a recent study of performance measurement in the Accounting and Finance Groups of the Universities of Groningen and Manchester. Findings It is argued that local institutions (within the organisation) combine with the broader institutions to shape the forms of (situated) rationality which are applied by individuals and groups within the organisation. As different groups within an organisation (e.g., engineers versus accountants) can have different forms of (situated) rationality, and contradictions in these forms of rationality can be a source of institutional change or resistance to change within the organisation. Originality/Value The extended framework will be useful for studying: (1) how situated rationalities evolve within an organisation, more specifically how they are shaped by both local and broader institutions; and (2) how prevailing situated rationalities shape the responses to accounting change.

Microfinance accountability in Cameroon: a cure or a curse for poverty alleviation?

PurposeThe purpose of this study is to use empirical findings to identify the different forms of accountability practices existing in Cameroon microfinance institutions (MFIs) and explore how such practices have evolved and institutionalised within the microfinance sector in Cameroon through time.Design/methodology/approachThis study is designed to investigate if the institutionalised accountability practices within the microfinance sector in Cameroon are a cure or a curse for poverty alleviation. This study is based on the new institutional sociology (NIS) and on a case study approach and combines in-depth interviews and secondary data sources.FindingsThis study identifies three principal forms of accountability practices common with MFIs in Cameroon: dysfunctional, manipulative and dribbling accountabilities.Originality/valueThis paper is novel because it extends the NIS into the microfinance sector and explains how conflicting institutional pressures resulting from differences of accountability practices can be resolved and also exposes the unintended consequences of both resistance and passive actions of local actors on microfinance, the poor and poverty alleviation.

In the name of others: an investigation of earnings management motives in Egypt

PurposePrevious literature on earnings management (EM) indicates that managers are motivated to adjust reported income to serve their own self-interests, and to try and influence capital markets. However, previous research has failed to provide an appropriate theoretical underpinning for EM and has ignored the effect of cultural and environmental factors on shaping managers’ motivations. Therefore the purpose of this paper is to draw on interpretive methodology and new institutional sociology (NIS) theory to identify the external factors that motivate managers of Egyptian companies to use EM to modify financial statements.Design/methodology/approachThe research adopted an interpretative methodology and interview methods. Interviewees were conducted with 34 participants, who were divided into four different categories; executives, financial analysts, auditors and stock exchanges’ authorities.FindingsThis paper provides empirical evidence on the range of external factors that motivate Egyptian corporate executives to adjust the earnings number in financial statements. These external factors include the expectations of investors, lenders and employees, the impact of stock exchange listing rules, beating an earnings target, and the privatisation of key state-owned companies.Research limitations/implicationsThe authors recognise that the paper has a number of limitations. The research is concerned solely with EM in Egypt and, therefore, it would not be safe to generalise the results to other contexts, even in the Middle East. Further research on the behaviour of managers towards EM in other countries would be useful to test validity of the results reported in this paper.Originality/valueThe principal contribution of this paper is to build on the previous EM literature to include external factors within the Egyptian context which motivate Egyptian managers to manage the earnings of companies in an upward direction. It adds additional EM motives to available literature including: employees, stock exchange’s rules, privatisation and meeting industrial norms. Also, the paper provides evidence of the effect of concentrated share ownership on managers’ likelihood to engage in EM behaviour. The paper also extends NIS theory to recognise the importance of the interplay between institutional and economic environment by including economic reform, and non-financial providers as factors that can explain the EM behaviour.

Framing Performance Management of Acute‐Care Hospitals by Interlacing NPM and Institutional Perspectives: A New Theoretical Framework

AbstractThis paper develops a theoretical framework which combines ideas underlying new public management (NPM) with new institutional sociology (NIS) to explore the development of performance management during a period of healthcare reform. The framework distinguishes three categories of explanatory variables; NPM antecedents, the institutional environment and institutional elements within a three tier level of analysis; economic/political, organisational field and organisational unit level. Evidence to support the relevance and appropriateness of this framework is gathered within the Irish health service using in‐depth interviews, a questionnaire and documentary data. The application of the framework highlights that all antecedents of NPM can be influential and that all institutional elements can play a role at the three different levels of analysis.

Determinants and recent development of sustainability reporting of banks in developing countries: The case of Bangladesh

The paper reports recent initiatives and development of sustainability reporting from the banking sectors of a developing country (specifically from Bangladesh). It also identifies potential factors that could influence sustainability reporting in the context of banks in Bangladesh. A theoretical framework has been developed through the lens of new institutional sociology (NIS), strategic response and legitimacy theory. The framework could be useful to understand factors that stimulate commercial banks of Bangladesh in respect of sustainability reporting practices. Moreover, the framework would encourage academics to test empirically in future

A Chaotic Field of Practice: Financial Reporting of the Library Collections of Australia's Public Universities, 2007–2011

The accounting practices adopted by Australia's 36 public universities in accounting for their library collections – including heritage and special collections – are identified and analysed. The data is collected from a survey of these institutions' annual reports over the period 2007 to 2011 and the analysis is guided by theoretical perspectives drawn from new institutional sociology (NIS). Consistent with prior research by West and Carnegie (2010), accounting for university library collections is depicted as a chaotic field of practice. Inconsistent and idiosyncratic policies that compromise the overall reliability, comparability and usefulness of university financial reports are observed, along with instances of dramatic valuation adjustments. However, the beginnings of some amelioration of the chaos are also detected, as regulatory activity and a voluntary homogenisation of accounting policies begin to take effect. In particular, a general trend towards more conservative accounting practices is eviden...

Different scenarios for accounting reform in non-Anglophone contexts: The case of Japanese local governments since the 1990s

On the basis of an analytical framework of New Institutional Sociology (NIS), this study examines the transformation from cash-based to accrual-based accounting systems among Japanese local governments since the 1990s. The analysis indicates that their accounting reforms stem from socio-political interactions among related actors. These actors were Japan’s local governments and the national government as represented by ministries involved in the administration of local governments, such as the Ministry of Internal Affairs and Communications (MIC) and the Ministry of Finance. This analysis shows that NIS in general, and the concept of coercive isomorphism in particular, provide capable explanations for local governments’ widespread adoption of a modified model recommended by the MIC. In addition, the concept of decoupling explains well the lower perceived utility of accrual accounting information in managing the finances of local governments.

Path‐dependencies, constrained transformations and dynamic agency

PurposeThe purpose of this paper is to discuss the compatibility of actor network theory (ANT) and new institutional sociology (NIS) in analysing a case study of accounting change.Design/methodology/approachThis is an interpretive case study.FindingsThe Finnish case city experienced several path‐dependent changes concerning performance measurement (PM), financial reporting and the adoption of enterprise resource planning system (ERP). New tools such as the ERP have a potential to transform the actors and to change the agency of the actors. Furthermore, the concepts drawing on both ANT and NIS can together enrich analyses of accounting changes.Research limitations/implicationsThe case analysis suggests guidelines for using ANT and/or NIS in accounting studies.Practical implicationsUnderstanding accounting developments as an intentional and path‐dependent process affected and constrained bycomplexnetworks, pressures and actors should contribute to better management of accounting changes.Originality/valueBeing informed by both ANT and NIS improves our understanding of accounting change and stability, serendipity, practice variations, changes beyond the minimum required to satisfy external requirements, and of the continued use of some accounting tools despite their limited functionality. Furthermore, we introduce the concepts dynamic agency and constrained transformation for studies of accounting change.