306 ACCOUNTING FOR MANAGERS
an important part of a network of political and power relations which are built into
the fabric of social life, a process of transforming the moral into the merely factual.
Covaleski and Dirsmith (1988a, 1988b) adopted an institutional perspective
to examine the manner in which societal expectations of acceptable budgetary
practices are articulated, enforced and modified during a period of organizational
decline. They examined a large university system’s budgeting process both through
extensive archival documents and through in-depth interview with budgetary
actors (see also Covaleski and Dirsmith 1983, 1986 for work pertaining to health
care settings). Covaleski and Dirsmith (1988a, 1988b) followed a university budget
category through periods of ascent, transformation and decline, describing the
process of how a university challenged and rejected a traditional institutionalized
budgetary framework for allocating statefunding when this framework became
inconsistent with the university’s goalsand interests. Self-interest is foremost in
the minds of the various parties who propose, oppose, co-opt and contest the
budget category. Covaleski and Dirsmith (1988a, 1988b) show how conflicting
interests get couched in the common and legitimate language of budgeting, thus
concluding that the budgetary process is an important manner in which societal
expectations are reproduced.
Ansari and Euske (1987) also drew from institutional theory to examine the
role of accounting information in the public sector, identifying this role in terms
of documenting institutional compliance, i.e., seeking external legitimation or
masking underlying sociopolitical reality. Ansari and Euske (1987) examined
the manner in which cost information is used in the Department of Defense,
finding disparity between the formally stated objective of the system to improve
organization efficiency, and the lack of accounting system use for this purpose. The
authors drew from an institutional perspective to explain the use of accounting
information in the Department of Defense, in the light of this agency having
ambiguous missions that foster rationalizing uses of accounting information.
Mezias (1990) examined the financial reporting practices of the Fortune 200
and concluded that the institutional model adds significant explanatory power
over and above the models that currently dominate the applied economics lit-
erature. Recognizing the institutional work that has been done pertaining to the
accounting practices of not-for-profit organizations, Mezias (1990) studied rela-
tionships between institutional variables and the financial reporting practices used
by for-profit organizations. Mezias and Scarselletta (1994) extended this work by
examining the decision process of a public policy task force that plays a role in
establishing financial reporting standards to determine the affects of the kinds of
decisions made. Drawing upon institutional theory, this study modeled the deci-
sion process as an organized anarchy embedded in a larger institutional context
of accounting.
In summary, Carruthers (1995) argued that institutionalism views accounting
practices as one of a larger set of features that can legitimize organizations through
the construction of an appearance of rationality and efficiency. As Carruthers (1995,
326) stated, ‘‘Accounts are the quintessential rationalized myth, and it is surprising
that new institutionalists have not devoted more time to studying them.’’ Perhaps
the single most important contribution of institutional theorists to the study of