Contending institutional logics, illegitimacy risk and management accounting

Abstract

PurposeThis article explores the influence of duality in institutional logics on internal accounting, with a focus on a Polish public university. More particularly, we answer the research question: how does illegitimacy risk arising from the divergent pressures of the institutional environment impact management accountings in this institution?Design/methodology/approachThis paper seeks to uncover intricacies of notions of internal legitimacy façade, decoupling and counter-coupling in practice. It explores details of organizational responses involving management accounting aimed at reducing illegitimacy risk. Achieving good organizational access, the authors adopt a qualitative case study approach involving contextual appreciation/document analysis/participant observation/discussion with key actors: facilitating building upon theoretical argumentation through finding things out from the field.FindingsThe authors uncover and discuss organizational solutions and legitimizing manoeuvres applied, identifying four adaptation tactics in the struggle to support legitimacy that they term ‘ceremonial calculations’, ‘legitimacy labelling’, ‘blackboxing’ and ‘shadow management accounting’. These can be seen in relation to decoupling and counter-coupling. Ceremonial calculations supported the internal façade. Shadow management accounting supported pro-effectiveness. Legitimacy labelling and blackboxing helped bind these two organizational layers, further supporting legitimacy. In interaction the four tactics engendered what can be seen as a ‘counter-coupling’ of management accounting. The authors clarify impacts for management accounting.Research limits/implicationsThe usual limitations of case research apply for generalizability. Theorizing of management accounting in relation to contradictory logics is advanced.Practical implicationsThe article illuminates how management accounting can be understood vis-à-vis contradictory logics.Originality valueElaboration of the tactics and their interaction is a theoretical and empirical contribution. Focus on a Polish university constitutes an empirical contribution.

Does the MTEF shape annual budgets in a developing country?

“…It is argued that in organized hypocrisy, two layers may be created: symbolic and pro-effective. Lada et al (2020) consistent with Brunsson (1986) argued that the symbolic layer is created through formal application of ceremonial methods, while the pro-effective layer is formed by informal informing. As Lassou (2017) did not employ the organized hypocrisy concept, he demonstrated accounting reforms as façades, thus presenting only one layer in organized hypocrisythe symbolic layer.…”

“…Through the compensation of inconsistent actions by talks and decisions, and through compensation of inconsistent talks and decisions by actions (counter-coupling), the organized hypocrisy expands the possibilities open to organizations to create façades (Cho et al, 2015). Organizations can create maneuvers, especially at the level of talk, where decision makers want to act as they see fit, while meeting strong contradictory external pressures (Lada et al, 2020). It is also argued that new procedures, projects, agencies and initiatives are likely to be facades (Harrison, 2005).…”

“…For example, Garc ıa-S anchez et al (2020) argue that entrenched managers are involved not only in manipulating earnings numbers but also in creating another type of organizational façade, that is, the corporate social responsibility gap. This study uses an organizational façade, specifically an internal façade, which was introduced by Lada et al (2020). According to Lada et al (2020), an internal façade is constructed by ceremonial calculations tied to formal and official accounting practices that are mainly ceremonial.…”

“…A key strategy in an organized hypocrisy is for managers to orchestrate their talk and actions in a way that forms a legitimate solution and does not reveal damaging discrepancies (Cho et al, 2015;Michelon et al, 2016). Therefore, in an organized hypocrisy, a symbolic layer and a pro-effective layer may be created (Lada et al, 2020;Brunsson, 1986).…”

Reporting and Disclosure of Investments in Sustainable Development

“…In this context, both financial and managerial accounting failed to adhere to business reality. Haslam et al [12] point out that there is even contradiction in understanding management accounting by different types of stakeholders. Thus, the tendency to catch up with the growing gap is addressed through risk management and risk disclosure.…”