MANAGERIAL ACCOUNTING RESEARCH 305
Interpretive perspectives, and their underlying concerns pertaining to the cog-
nitive decision-making issues of the organizational decision-making model, the
Weberian concern for the politics of rationality, and the ethnomethodological
concerns for the construction of social reality, have perhaps been most forcefully
developed within institutional theory. Following Selznick’s (1957, 17) definition
‘‘...to institutionalize is to infuse with value beyond the technical requirements
of the task at hand,’’ the general theme of the institutional perspective is that an
organization’s survival requires it to conform to social norms of acceptable behav-
ior as much as to achieve levels of production efficiency. Among the sociologists
whose work reflected the Weberian tradition, Selznick (1957) viewed organiza-
tional structure as an adaptive vehicle shaped in reaction to the characteristics
and commitments of participants as well as to influences and constraints from
the external environment. Institutionalization refers to this adaptive process: the
processes by which societal expectations of appropriate organizational form and
behavior come to take on rule-like status in social thought and action. In particular,
institutional theory extends beyond the focus of contingency theory on an orga-
nization’s task environment, which has received much attention in managerial
accounting research, to instead focus on its institutional environment. According
to Scott (1987, 507):
Until the introduction of institutional conceptualizations, organizations were
viewed as being shaped largely by their technologies, their transactions, or
the power-dependency relations growingout of such interdependencies.
Environments were conceived of as task environments...While such views
are not wrong, they are clearly incomplete. Institutional theorists have
directed attention to the importance of symbolic aspects of organizations and
their environments. They reflect and advance a growing awareness that no
organization is just a technical system and that many organizations are not
primarily technical systems. All social systems, hence all organizations, exist
in an institutional environment that defines and delimits social reality.The general theme of the institutional perspective is that an organization’s
survival requires it to conform to social norms of acceptable behavior as much
as to achieve high levels of production efficiency. Thus, many aspects of an
organization’s formal structure, policies and procedures serve to demonstrate a
conformity with institutionalized rules, thereby legitimizing it, to assist in gaining
society’s continued support (Meyer and Rowan 1977; Scott 1987; DiMaggio and
Powell 1983, 1991). Meyer and Rowan (1977) proposed that such externally
legitimated, formal assessment criteria as managerial accounting information play
a heightened though ritualistic role in a variety of settings as organizations grope
to find, conform to, and demonstrate for their internal and external constituents
some form of rationality in order to gain legitimacy. Thus, rather than merely
representing some notion of an objective reality, managerial accounting may
serve as a ceremonial means for symbolically demonstrating an organization’s
commitment to a rational course of action. Here accountants gain their power by
the responsible development and application of generally legitimated categories.
Similarly, Zucker (1977) argued that the rationalization in formal control systems is