Institutions, situated rationality and agency in management accounting

Abstract

Purpose Drawing on recent research, which recognises the situated nature of accounting practices, the purpose of this paper is to extend the Burns and Scapens (B&S) framework and to illustrate its potential for studying the situated nature of management accounting practices. The extended framework distinguishes field-level institutions (which the authors term broader institutions) and institutions within the organisation (which the authors term local institutions). To extend the B&S framework the authors draw on recent debates in institutional theory, both new institutional sociology, where the focus is now on the institutional logics perspective, and old institutional economics, 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, the 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 research note 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. Different groups within an organisation (e.g. engineers and 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, and can explain why accounting changes can by implemented in different ways in different organisations and also in different parts of the same 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.

How combinations of control elements create tensions and how these can be managed: An embedded case study

“…Further, this indicates that MC elements can interact with other MC elements including ones that originate in other (hierarchical) parts of the organization or at different times (cf. Malmi and Brown, 2008;Van der Kolk and Schokker, 2016;ter Bogt and Scapens, 2019). This potential of MC elements to be in a competing or complementing relationship with other MC elements, or to be in a tension relationship that involves both simultaneously, should be taken into account when assessing their effectiveness.…”

“…This suggests that to a certain extent the organization should allow managers to make their own choice as to how they manage tensions and find the balance that fits their specific context and employees (cf. Gibson and Birkinshaw, 2004;Mom et al, 2007;ter Bogt and Scapens, 2019).…”

The institutionalization of management control systems in a family firm

“…Recently, ter Bogt and Scapens (2019) have put forward a model that extends the framework of Burns and Scapens (2000) with the inclusion of both internal (local) and external (field-level) institutions. The authors (2019) argue that the interaction between internal and external institutions shapes the situational logic, which is used by the organizational actors to help them make rational choices and define actions, such as the choice of a particular management control practice.…”

Estimation of the Imperative of Rural Area Development on Panel Data in the Process of Managing Agricultural Holdings in Poland

“…This efficacy was assessed by verifying the potentially submitted number of applications and the amount of financial aid, including from EU funds [60][61][62] requested in the applications. The authors equated this efficacy with rationality [63][64][65][66] of expectations of those managing agricultural holdings. Thus, the level of this efficacy shows the effectiveness of the process of managing micro-enterprises [67][68][69].…”