The journal was selected because it enables explanation of Institutional Theory and how it can be used to clarify why an entity chooses to make certain voluntary disclosure. In addition, it provides opportunity to explain how relevant information and power demands of different stakeholders can affect institutional disclosure policies. In the end, the paper discusses how an organization can be successful by managing or balancing demands of various stakeholder groups. Therefore, a journal was chosen that could help to explain Institutional Theory and its application to a certain field, especially accounting. The keywords that were used in the search process include accounting research, institutional theory, stakeholder, information, institutional isomorphism, isomorphic processes, mimetic, normative, coercive and journal. The main objective of the assignment is to look for a scholarly journal article about Institutional Theory and review it appropriately. The article that was found is helpful and had all the necessary information to complete assignment successfully. By the end of the assignment, perceptions of a community or stakeholders were stated and explained, as well as ways how they can affect the disclosure policies of an organization, which was the main objective of this module.
Evaluation of Documents
Interpretation of the basics
“ACCOUNTING HORIZONS” was written by Jesse Dillard and Brad Turtle.
This article provides information and background to look into the reasons of diversity in accounting research topics and why it has dramatically gone down, especially during the last decade. Brad is affiliated to University of South Carolina while Jesse Dillard is affiliated to PortlandState University.
The article in the journal suggests remedies to institutional influences that can be identified.
Authors also acknowledge other standpoints, which enrich the whole article.
They state facts according to the research they carried out and also research from other scholars.
It is clear that both scholars have a vast knowledge in the sphere of accounting
The article is from BLD (British Library Direct). It was also published by the American Accounting Association; therefore, the information presented in the article is relevant.
This information is usable because it contains deep insight on the topic of interest.
Information is written in a form that can be easily used. The reading and technical levels is comprehensible. Paper contains a lot of supplementary materials, including numerous tables.
The facts in the article expand the knowledge about positive theories, especially about institutional theory.
The information received from this project was exceptionally useful
The article uses a lot of substantive research and tables to convey information; therefore, it is relevant at all angles.
With respect to the perspective of the article, the information is not biased at all since it also incorporated findings from other researches.
Most of the information provided is objective by nature.
It is also full of facts and not opinions. It has incorporated a lot of research. All the recommendations given are from research that was conducted; therefore, paper is not based on opinion or bias.
The article meets its objective in identifying the causes of diversity in accounting research topics and why it has dramatically gone down, especially during the last decade. It goes ahead to give recommendations that would help rectify the situation.
Its main objective has been achieved because the article manages to explain why there is diversity in accounting research topics.
The article is efficient in covering the whole topic. It starts with the introduction of how the situation is on the ground. Then it discusses institutional theory before applying it to Academic Accounting Research (AAR).
All the information in the article is presented carefully. Ideas of other authors are cited properly.
Its coverage of the material is satisfactory because it provides all relevant information that was needed without looking for information from other sources.
There are a number of illustrations used in the journal article. They are clear, professional and relevant to this study. The article uses mostly figures and tables, and an excerpt from a mail.
There are nine tables and figures that are presented in the paper, which make the illustration of the subject matter substantive.
According to institutional theorists, the institutional setting can sturdily influence growth of structures in any organization, often more intensely than pressures in the market. As DiMaggio and Powell (1983) formulate, the theory offers a different sociology-based point of view to the economic-based practical actor-interest approaches, which dominate research in accounting. In addition, it is different from the way researchers frame, understand, and communicate the concept. Institutional theory is centred on the assumptions that are usually ignored, and how the assumptions control personal choices. As anticipated by DiMaggio and Powell (1983, 35), they theory should be able to offer an essential corrective measure to the existing analytic strategies and domain assumptions.
Institutional theory is concerned with the deeper and more flexible aspects that are characteristic of social structure. It looks into how the processes through which structures like routines, norms, rules, and schemes end up being recognized as reliable guidelines that depict social behaviour. DiMaggio and Powell (1983, 36) explain an emerging perspective in sociology and organization theory, which they believe rejects the models of classical economics. Instead, institutional theory seeks for cultural and cognitive answers to organization and social phenomena by looking into the properties of supra-individual analysis units, which cannot be shrunk to aggregations of individual motives or attributes. According to Bricker (1989), for organizations to survive, they have to obey the rules and adapt to the belief systems present in the environment since institutional isomorphism, both procedural and structural, will bring in authenticity to the organization.
Isomorphism, as described by Hawley (1968), refers to a constraining procedure that forces a single population unit to be like other units that face the same environmental challenges or conditions. The two types of isomorphism, according to DiMaggio and Powell (1983, 37), are institutional and competitive isomorphism. More often competitive isomorphism suits situations characterized by open and free competition. Furthermore, it majorly describes the emerging fields. Isomorphic forces are usually linked to markets where buyers and sellers struggle for scarce resources and the main criteria for performance is economic fitness. In general, social behaviour, including ceremony and politics, become critical evaluation and motivating criteria for making decisions within an institution.
Naturally, institutional isomorphism can outgrow all competitive forces. Market forces no longer dominate the arena as the competition level reduces. The procedures and processes used by those who are already in the field become routine, thereby promoting stability and predictability. Consequently, the routine processes are susceptible to both political and ceremonial influences. Those, that are not in the fore face pressure to copy similar processes like successful units until they reach the point where institutional legitimacy ends up as the main evaluation criterion. This is the current state of accounting research. Notably, at this point, institutional theory proposes that conformity to procedures and norms in institutionalised environments comes from rational procedures by rational individuals. Under this, institutionalisation will be the materialization of efforts from rational individuals to exert some form of influence in their relevant fields. The outline and accomplishment of their procedures come as a result of the political or relative power as inhibited by those trying to manipulate the consequences.
Additionally, institutional theory is about rational individuals acting at lower power levels. They make rational resolutions, while competing for authenticity within their institutions. Therefore, one should not anticipate rational actors to change their behaviour in case they come across different forces through institutional changes that will influence them. Efficient recommendations for change, therefore, depend on a complete and thorough comprehension of institutional isomorphism and its implication for the institution.
As DiMaggio (1988) suggests that highly institutionalised spheres aid conformity to norms through various means, including propinquity to influence centres, supposed indecision faced by actors and progress and influence of professionals or other networks. It is crucial to note the distinction between two conceptualizations/dimensions of institutionalism, in particular, outcome and process. As an outcome, institutionalisation predicts the ending of the institutionalisation procedure. On its part, the institutionalisation process connotes activities and steps where a field transforms. DiMaggio also acknowledges that the process of institutionalisation is naturally political, where interested entities sort out and drum up their power to influence the sphere in ways that will benefit the whole interests of the field. Nonetheless, the ending of the process is to establish institutionalised practices and structures that both facilitate and restrain behaviour that should be out of politics’ reach.
The process of institutionalisation commences with inner and exterior pressure for a change in institutionalised entities. Environmental changes start to destabilize the extant institutional forms. Such pressures are usually followed by a scuffle amongst interested parties for control over the configuration of the novel institutional forms or preservation of the existing ones. After establishing an institutional structure, it is constantly instantiated and duplicated by individuals who use these institutions to legitimize and advance their personal behaviour. These processes avail the means and context to socialize new members and principles for personnel decisions, control systems, controlling communications and institutional rewards. Consequently, institutional processes that are already established will be hard to change. To change, catalytic players should have enough resources while staying out of the normal collective to the point where they can institute different organizational collectives.
As discussed, institutional theory avails a broad framework to represent the wide sphere of field development. The author had also used it to describe Academic Accounting Research (AAR). As discussed earlier, competitive isomorphism is connected to the first states in the field development that is characterized by open and free competition, economic efficiency, and diversity in approach. The process of making decision becomes more complicated as the field enters maturity since innovations related to it and which are efficient will be put in place; the outcome of competitive isomorphism. As a result, practices and criteria that distinguish successful entities appear more ceremonial and symbolic. Consequently, personal actions aimed at maintaining and differentiating the unit will end in higher levels of homogenisation within the field. Forces that motivate the action of homogenising within the field apart from competitive forces are referred to as isomorphism.
According to DiMaggio and Powell (1983, 64), there are three different types of institutional isomorphism: normative, coercive, and mimetic. Each type stands for a distinct process. Nonetheless, they have to act in a simultaneous manner and bring results where an effect of other types cannot be identified.
The seeds of this type are planted when a field materialises in its formative phase. Here, elevated levels of uncertainty are present, while established dimensions to distinguish a good performance from a poor one are not yet put in place. Mimetic isomorphism takes place when the procedures embraced by these pressures become established within the organization’s sphere so that copying occurs due to institutional reception and not because of the inevitability. Within Academic Accounting Research, faculties endure uncertainty in regards to what research should be forwarded and how to assess the end research. Mimetic isomorphism can constitute decision making with respect to school ranking and in published journals.
This type of isomorphism comes from asymmetric power connections. Changes are brought about by external sources, for instance, government regulation, powerful constituent, powerful stakeholder, powerful political groups, or a certification body. The main motivation is to adapt to the demands made by powerful entities. Such influences could be either formal or informal and could incorporate invitations and persuasion. Should the powerful group possess enough power, change will be guaranteed. An excellent example of coercive isomorphic pressure in the sphere of accounting research is the authority and power possessed by accrediting organizations, which may force accounting programs to be more harmonised than diverse.
Normative isomorphism deals with conforming to a wide view honoured by the institutional field. Change takes place through communication and development of such a wide view by usual socialization processes. Expectations can be instituted and realised via ties in social networks or normal background experiences, like attending higher learning institutions with the same goals, ideals and programs. A distinctive feature of normative isomorphism is the formal knowledge and knowledge base legitimization needed in the field. Normative isomorphism also occurs after employing individuals from a few educational institutions before exposing them to a thorough socialisation procedure. Overall, normative, mimetic, and coercive isomorphism can simultaneously take place within a sole field.
Institutional Theory in Application to Academic Accounting Research
According to DiMaggio and Powell’s (1983, 76) definition, an organizational field is a group that, in the collective, comprises a known area of the life of an institution. In regards to this definition, Academic Accounting Research (AAR) can be embodied as a distinct activity field within the wide field of higher education in the U.S., for example. Within this field, there are several organizational factors that affect research in the field of accounting, which distinguishes it from other spheres of academic quest. For example, the AAA endorses accounting research over other fields. Devoted accounting journals exist that strive to separate research from that in other disciplines and domains. Since it is established that AAR can be interpreted as a sphere of venture, the query then becomes at what developmental phase is the sphere and what implications will follow there from?
According to the journal, AAR was typified by the multiplicity in form and approach during its formative stages (Tuttle & Dillard, 2007, 389). It also used various forms and methods in its sphere. As DiMaggio and Powell (1983) describe, once a sphere is instituted, diversity paves a way to homogenization, a procedure explained mainly by the organizational isomorphism. Analysis in the journal implies that the AAR field is in a position where normative organizational isomorphic forces are at the forefront. One hint that AAR rapidly became a momentous influence within the academic accounting sphere was the formation of Competitive Manuscript Award by the institution in the year 1966.
Notably, whatever commences as mimetic isomorphism, nonetheless, can grow into coercive and normative isomorphism, as illustrated in the journal. On account of organisational isomorphic influences that are related to editorial publications and decisions, AAR tends to stress financial accounting to the segregation of other spheres of accounting. Should dissertation, journals, databases, and awards reflect the organizational isomorphic forces aiding financial accounting it follows that decisions dealing with tenure and promotion will also fell the aftermath. Getting a hold of outside reviews introduces an entity into the capabilities of normative isomorphism. Herein, social networks are busy as part of the socialisation strategy to implement the accepted values and norms of the sphere.
Some institutions try to quantify the scholarship of an applicant by using formulae based on citations, journal rankings, or download activity, which then ushers the possibility of normative isomorphism. Several other institutions come up with their tenure and criteria of promotion by mimicking applicant organizations. Business deans exercise coercive pressure upon hiring and promoting decision accounting persons who tutor managerial accounting, auditing, systems, tax, international accounting, as well as, governmental and non-profit accounting.
Studies by Caplan (1966, 1968) and Steady (1960) signify early forays into theory and statistically analyzed empirical research in the field of accounting. The studies tackled issues dealing with management accounting and social psychology. A publication by Beaver (1968) and Ball and Brown (1968, 160) initiated a genre of accounting research based on financial economics, which appeared to lend to the topics dealing with financial accounting. The 1960s, as it appears, represented a time of change. Nonetheless, the forces affecting the academy nowadays are naturally institutional and not competitive. Actions taken by members can now be described by the values and norms that arise from the professionalization of the sphere. As Ph. D. programs streamline their focal point, students have no other choice but to practice the prevailing research agenda. Gatekeepers, who include members of the editorial boards and editors among others, share similar backgrounds, norms, and values in regards to what legitimizes accounting research. Consequently, they carry on with their thinking by legitimizing editorial decisions via the criteria of the system which produced the tenets. As it appears, the academy is entirely ingrained on its current course. There are several indications that the isomorphism is affecting the academy and is not beneficial to the accounting profession or the society.