Adoption of Management Accounting Practices By Public institutions: The Sri Lankan Experience.

Abstract

Scholars use new institutional sociology (NIS) theory discourse to clarify how three macro environmental institutional pressures exert pressure as to institutionalization of particular rules, norms and practices etc. mainly to gain legitimacy. Meanwhile, empirical evidence shows that, the use of advanced management accounting practices (MAPs) and in most of the cases, traditional MAPs especially by public organizations in developing countries is rather slow and low. Based on literature findings, this theoretical paper postulates that the presumed relationship between three isomorphic pressures and institutionalization of MAPs is moderated by four conformity factors which are proved to be dependent on the economic advancement of the country concerned. Thus, this research, using the mixed method, investigates this organizational phenomenon in PIs in the developing country context focussing, Sri Lanka. While this study provides a useful framework for further studies, it will also produce new knowledge concerning NIS theory by providing an alternative perspective pertaining to the application of the institutional isomorphism mechanism with moderating effects by four conformity methods. Further, this study generates novel empirical evidence regarding the level of adoption of MAPs and highlights determinants of the application of MAPs by PIs in the referred context. Also, the study may assist stakeholders of such PIs in understanding of the foregoing revelations that could be leveraged especially, in the best interest of those institutions and the countries concerned in overall sense.