Proposition of an Enhanced Model on the Institutionalization of Management Accounting Practices

Abstract

The new institutional sociology (NIS) theory that is popularly and increasingly being used for conducting research in the accounting discipline by scholars spells out that three institutional isomorphic macro-environmental pressures positively influence the institutionalization of rules, norms, practices, etc. in organizations. Yet, puzzlement is that, despite invaluable benefits provided by management accounting (MA), empirical evidence proves that there is a gap between the theory and the practice of MA in public institutions (PIs) in developing country context, resulting in a host of negative consequences at organizational, national and international levels. Thus, based on literature findings, this theoretical paper postulates that the presumed relationship between three isomorphic pressures and institutionalization of management accounting practices (MAPs) is moderated by four conformity methods which are proved to be dependent on the economic advancement of the country concerned. Accordingly, the very purpose of this paper is to showcase an enhanced model by extending the NIS theory as a means of addressing the unexplained as noted above by this theory. While this study provides a useful framework for further studies as; testing the model empirically at different sites, levels, and scales that would lead to seeing new vistas both, in theoretical and empirical domains, it will help expand the existing body of knowledge of the NIS theory by providing an expanded perspective regarding the application of institutional isomorphism mechanism with moderating effects exerted by four conformity methods. Moreover, findings of this endeavor showing the level of the adoption of MAPs in PIs will be of paramount importance to diverse of key stakeholders in the developing country context.

Keywords: management accounting, public institutions, institutional theory, isomorphism, conformity methods

JEL Classification: M