New Institutional Sociology Research Articles

Institutional Theory and Management Accounting Research

This article discusses the use of institutional theory in management accounting research. Three different types of institutional theory are described and their use in studying management accounting change is explained: new institutional economics (NIE), new institutional sociology (NIS) and old institutional economics (OIE). Whereas NIE and NIS study how external economic and institutional (i.e., social and political) pressures influence the way organisations are structured and the nature of their management accounting and control practices, OIE focuses on the institutions (ways of thinking) within organisations and the internal pressures and constraints that shape management accounting practices. It is recognised that management accounting change is a complex and multi-dimensional process, and it is shown that institutional theory can highlight the different aspects of the ‘mish-mash’ of inter-related influences. Furthermore, it is explained how taken-for-granted ways of thinking within an organisation can have a direct and important impact on the success (or failure) of a programme of management accounting change.

A New Institutional Approach to Entrepreneurship and Inequality in Rural Russian Villages: Survey Findings from 1991 to 2006,

New Institutional Economics (NIE) and New Institutional Sociology (NIS) provide complementary paradigms with which to understand the relationship between formal institutional changes in a reform period and informal institutional structures with which household economies adapt to reform policies. Survey data gathered from rural Russian households from 1991 to 2006 provide an empirical test of hypotheses drawn from NIE and NIS. The most important finding is that in the absence of secure formal property rights informal institutional elements played the dominant role in entrepreneurship and inequality between households in the Russian countryside, but that as formal institutions became legitimized, and the overall economy stabilized, households that made use of these new institutional arrangements had significant advantages vis-à-vis other households. At the same time, regions which have provided opportunities for households to develop a “mixed economy” that combines household enterprise production, which relies to a significant degree on informal institutional elements, and wages and salaries (i.e., working for others), which is based on the legitimization of formal institutional arrangements, have produced substantially higher mean household incomes than have other regions.

25 Years of Giddens in accounting research: Achievements, limitations and the future

Twenty five years ago, Giddens’ structuration theory (ST) was introduced into accounting research as a reaction to the history-less, apolitical and technical-efficiency focus of traditional functionalist research. A quarter of a century later, this growing stream of research consists of some 65 published papers and has become one of the dominant alternative approaches used to explore accounting as an organizational and social practice. We review this literature based on the following two research questions; (i) what are the major achievements of this literature, and in what respects has it contributed to our understanding of accounting in relation to other alternative streams of accounting research, such as those grounded in critical theory, actor-network theory (ANT), new-institutional sociology (NIS) and practice theory? and; (ii) what are the limitations of the ST strand and, considering these (and its relative strengths), how should it be advanced in the future? Overall, we find that the mobilization of ST as a general ontological framework has generated three major and largely unique contributions, namely; (i) the introduction of a duality perspective; (ii) the conceptualization of accounting as an interwoven totality comprised of structures of signification, domination and legitimation, and; (iii) an ontological basis for theorizing how, when and why socially embedded agents may produce both continuity and change in accounting practices. However, we also conclude that it is difficult to identify a particular and distinctive empirical imprint of the ST literature, and that some of the theory’s ‘competitive advantages’ are far from fully exploited. Based on these identified strengths and weaknesses of the ST perspective, we consider an array of directions for future scholarly effort.

Understanding the changing role of public sector performance measurement in less developed countries

AbstractThis article develops a framework for understanding changes in the demand for and supply of performance information in public sector organizations in less developed countries (LDCs). New Institutional Sociology (NIS) is used to argue that pressures from specific stakeholders stimulate organizations to produce particular performance information. The article distinguishes three groups of stakeholders (i.e. funding bodies, statutory boards and purchasers), and elaborates on the performance dimensions these stakeholders are interested in. The group of funding bodies, with their interest in financial performance information, used to be the most important group of stakeholders. However, statutory boards and purchasers are gaining importance as a result of recent public sector reforms, which include decentralization, marketization and the implementation of anti‐corruption programs. As a consequence of pressures coming from these stakeholders, new performance dimensions, such as the quality and quantity of services and the political governance structure, will be added to organizations' performance measurement (PM) systems. Whether these and other—often more traditional financial—performance dimensions will be balanced and integrated throughout organizations depends on the power positions of the various stakeholders. The arguments presented in this article intend to stimulate public sector organizations in LDCs to design and redesign PM systems as a response to changing stakeholder interests. Copyright © 2010 John Wiley & Sons, Ltd.

Accounting's chaotic margins

Purpose – The purpose of this paper is to explore the circumstances and implications of an episode of accounting change arising from the extended use of accrual accounting within the Australian public sector. The matter under scrutiny is the reporting of the library collections of Australia's public universities as assets in general purpose financial reports.Design/methodology/approach – A survey is undertaken of the annual reports of Australia's 36 public universities for the period 2002 to 2006. The analysis of the findings is informed by new institutional sociology (NIS), with a focus on mimetic processes, and the concept of “accounting's margins”.Findings – The survey reveals considerable diversity and subjectivity in the accounting practices adopted, as well as instances of sudden and dramatic changes in carrying values. The financial reporting of library collections is depicted as a “chaotic margin” of accounting, and the technical propriety of attempting to express and account for these non‐financi...

The interrelations of decision‐making rationales around BSC adoptions in Finnish municipalities

PurposeThe purpose of this paper is to analyze the interrelations of the decision‐making rationales around accounting performance measurement (PM) adoptions in Finnish municipalities. Previous studies informed by new institutional sociology (NIS), have tended to assume that accounting PM adoptions occur because of either “rational” or “institutional” reasons. The accuracy of this “polar” view is empirically analyzed in this paper (as called for by Ribeiro and Scapens).Design/methodology/approachSurvey data (199 responses, 48 per cent response rate) were analyzed with factor analyses using, for example, SPSS and LISREL programs.FindingsThe decision‐making rationales (factors) around Balanced Scorecard (BSC) adoption were labeled “mimetic”, “rational” and “normative‐experimental”. Mimetic rationale correlated negatively with the other factors.Research limitations/implicationsThe data was small. Further, as case studies and LISREL diagnostics often suggest, there may be other forces involved in PM adoption related decision‐making.Practical implicationsUnderstanding the interplay of the various pressures may facilitate the management of PM development projects.Originality/valueRational and institutional rationales are opposed also in the Finnish public sector (corroborating DiMaggio and Powell), but this “polar” view needs to be amended with individual or “experimental” aspects (corroborating Granlund). Acknowledging all three rationales refines public sector PM adoption literature (Lapsley and Wright). Finally, the rationales were interrelated, i.e. able to interact or counteract in PM adoption related decision‐making.

Rationality, institutionalism and accounting change

PurposeThe primary purpose of this paper is to put forward a framework grounded in new institutional sociology (NIS) theory that examines the impact of national competition policy on the design and implementation of a balanced scorecard (BSC) in a government‐owned electricity corporation in Australia. It examines the importance of the rational analytical deliberation of legitimacy as a fundamental accompaniment to isomorphism in the continuing development of the new performance management system.Design/methodology/approachA single exploratory/descriptive case study with embedded multiple unit analysis is used in order to examine the adoption of a BSC as an example of the process of evolution of a new initiative. It uses DiMaggio and Powell's concept of isomorphism to explain the initial adoption of the BSC.FindingsThe paper highlights the importance of the deliberation of both rational analytical approaches and legitimacy as a fundamental accompaniment to isomorphism in the continuing development of accounting systems in the public sector.Originality/valueThese results provide useful insights into the criticism of NIS theory, that is, that it does not provide scope for organisations to adopt rationally technical practices as well as isomorphic behaviour for legitimacy.

Pressures and resistance to the introduction of skills in business administration and accounting education in Spain: a new institutional theory analysis

Teachers, students and professionals have confirmed the need to introduce skills into business administration and accounting education in Spain. However, this change has not taken place at any desirable level. This paper uses the New Institutional Sociology (NIS) to analyse the pressures to introduce the policy that consists of the incorporation of skills in business administration and accounting education in Spain, the strategic response adopted by Spanish universities and the institutional characteristics which have determined that response. To achieve that objective, the study uses multiple sources including interviews, questionnaires, observation, informal discussions and documents. The paper evidences that the strategy developed by Spanish universities has been the ‘avoidance’ of pressures to change. Nevertheless, due to the evolution of some institutional characteristics, the strategy has become a ‘compromise’ strategy in the second part of the decade. The NIS is also suitable to develop future research about the changes caused by the implementation of the European Higher Education Area in most countries of the EU.

Accounting change in central government

PurposeThe purpose of this paper is to look at the adoption of double entry bookkeeping at the Royal Treasury, Portugal, on its establishment in 1761 and the factors contributing to this development. The Royal Treasury was the first central government organization in Portugal to adopt double entry bookkeeping and was a crucial first step in the institutionalisation of the technique in Portuguese public administration.Design/methodology/approachSet firmly in the archive, this paper adopts new institutional sociology (NIS) to inform the findings of the local, time‐specific accounting policy and practice at the Portuguese Royal Treasury.FindingsEmbedded within the broader European context, this study identifies the key pressures exerted upon the Royal Treasury on its formation in 1761, which resulted in major accounting change within Portuguese central government from that date. The study provides further evidence of the importance of the state in the institutionalization of accounting practices by means of coercive pressures and highlights for Portugal the importance of individual actors who, as powerful change agents, made key decisions that influenced accounting change.Originality/valueThis study examines a major instance of accounting change in European central government and broadens the application of NIS in accounting history research to a different country – Portugal – and to a different time – the eighteenth century. It also serves to illuminate the difficulties of collecting pertinent evidence pertaining to this long‐dated time period in identifying certain forms of institutional pressures.

ERP customization failure

PurposeThe paper aims to examine a detailed case study of enterprise resource planning (ERP) customization failure in an Egyptian state‐owned company (AML) by drawing on new institutional sociology (NIS) and its extensions. It explains how ERP customization failure is shaped by the interplay between institutionalised accounting practices, conflicting institutions, power relations and market forces.Design/methodology/approachThe research methodology is based on using an intensive case study informed by NIS, especially the interplay between conflicting institutions, power relations and market forces. Data were collected from multiple sources, including interviews, observations, discussions and documentary analysis.FindingsThe findings revealed that the inability of the ERP system to meet the core accounting requirements of the control authorities (the central agency for accountability) was the explicit reason cited for the ERP failure. The externally imposed requirements of the uniform accounting system and planning budgets were used to resist both other institutional pressures (from the holding company for engineering industries) and market and competitive pressures.Research limitations/implicationsThere are some limitations associated with the use of the case study method, including the inability to generalize from the findings of a single case study, some selectivity in the individuals interviewed, and the subjective interpretation by the researchers of the empirical data.Practical implicationsThe paper identifies that the interplay between institutional pressures, institutionalised accounting practices, intra‐organizational power relations, and market forces contributed to the failure to embed ERP in a major company. Understanding such relationships can help other organisations to become more aware of the factors affecting successful implementation of new ERP systems and provide a better basis for planning the introduction of new technologies.Originality/valueThis paper draws on recent research and thinking in sociology, especially the development and application of NIS. In addition, the paper is concerned with ERP implementation and use and management accounting in a transitional economy, Egypt, and hence contributes to debate about exporting Western accounting practices and other technologies to countries with different cultures and different stages of economic and political development.

Extending Institutional Analysis through Theoretical Triangulation: Regulation and Activity-Based Costing in Portuguese Telecommunications

This paper examines why a Portuguese telecommunications company – Marconi – adopted activity-based costing (ABC). The focus lies in new institutional sociology (NIS), particularly the institutional change model of Dillard et al. (Accounting, Auditing and Accountability Journal, 17(4), pp. 506–542, 2004), supplemented by theoretical triangulation involving economic, labour process and actor network theories to enrich observations and extend theory. Why Marconi adopted ABC lay in a complex, interrelated chain of institutions, including the parent company, management consultants, national and European Union regulators, financial markets and consumer associations during market liberalization. ABC was a means and symbol of improved competitiveness and efficiency but its diffusion and adoption also involved mimetic, coercive and normative factors. In regulated environments external legitimacy and efficiency were intertwined and demonstrating efficiency using accounting symbols is problematic. The results confirm criticisms of early NIS research for dichotomizing economic and institutional pressures, assuming private organizations are exempt from institutional pressures and neglecting internal organizational dynamics. The Dillard et al. model accommodated many features of institutionalization but needed extension to incorporate the public interest, the role of boundary spanners across social levels and how intra-organizational factors and properties of the technology derived following translation and praxis play a part.

Changes in accounting and financial information system in a Spanish electricity company: A new institutional theory analysis

This paper reports on the results of an intensive case study that investigated changes in the accounting and financial information system of a large Spanish electricity company (Sevillana). Sevillana was acquired by the Endesa Group upon the deregulation of the Spanish electricity sector (SES). Drawing on data from multiple sources including interviews, observations, discussions and documents, the paper aims to theorize the change in the accounting and financial information system. An integrated accounting and financial information system was imposed by the Endesa head office on Sevillana and other Endesa subsidiaries to support organizational changes designed in response to regulatory requirements. The institutional senvironment also interacted with market forces and intra-organizational power relations to either directly or indirectly influence the changes in the accounting and financial information system. Given the interplay between these forces, the paper draws on and extends the New Institutional Sociology (NIS) theory [DiMaggio, P.J., Powell, W.W., 1983. The iron cage revisited: institutional isomorphism and collective rationality in organizational fields. Am. Sociol. Rev. 48, 147–160; Powell, W.W., DiMaggio, P.J., 1991. The New Institutionalism in Organizational Analysis. The University of Chicago Press, pp. 183-203] to understand the dynamics of the change.

Stability and change: an institutionalist study of management accounting change

PurposeThis paper explores the relationship between “stability and change” within with the process of accounting change It focuses on the ceremonial way in which a new system of value‐based management (VBM) was implemented and how the key performance indicators (KPIs) became decoupled from the day‐to‐day activities of the business, thereby creating a level of stability which ultimately contributed to accounting change.Design/methodology/approachIt uses a longitudinal study of a company in which value‐based management was imposed by its parent. It is informed by an institutionalist framework which draws on concepts from both old institutional economics (OIE) and new institutional sociology (NIS).FindingsIt shows that stability and change are not necessarily contradictory or opposing forces, but can be intertwined in an evolutionary process of change.Research limitations/implicationsAlthough there is accounting change within the case study, it is problematic to characterise it as either successful or unsuccessful change – this has important implications for the way in which “success” is defined in studies of accounting change.Originality/valueIt is argued that in contrast to the normal assumption that decoupling is an “organisational” response to external pressures, it is shown how decoupling can occur through the working out of a complex and dynamic process of resistance to accounting change: a process which simultaneously involves both stability and change.