Institutional Theory Part One

Introduction of Institutional Theory What are institutions? The general understanding of institutions can be defined as a set of formal and informal rules of conduct, made by humans that facilitate coordination or govern relationships between individuals, organizations or

government. Examples of institutions include laws, regulations, customs, social and professional norms, culture, and ethics. Selznick (1949) notes that "the most important thing about organizations is that, though they are tools, each nevertheless has a life of its own". While he acknowledges rational view that organizations are designed to attain goals, he notes that the formal structures can never conquer the non-rational dimensions of organizational behaviour. Individuals do not act purely based on their formal roles. Organizations do not act purely based on formal structures. Selznick notes that individuals bring other commitments to the organization that can restrict rational decision-making.

Institutions

exert

a

constraining

influence

over

organizations,

called

isomorphism that forces organizations in the same population to resemble other organizations that face the same set of environmental conditions (Hawley, 1968). Then, the isomorphism was further discussed by DiMaggio and Powell (1983) where the analysis of institutions exert three types of isomorphic pressure on organizations: coercive, normative, and mimetic. Coercive isomorphism refers to pressure from entities who have resources on which an organization depends. Mimetic isomorphism refers to the imitation or copying of other successful organizations when an organization is uncertain about what to do. Normative isomorphism refers to following professional standards and practices established by education and training methods, professional networks, and movement of employees among firms.

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Sociological research on organizations arose through the mid-1970s. This overview is intended the links between institutional theory and previous traditions of sociological work on organizational structure, and to provide some contextual understanding of the receptivity of theorizing and both to clarify organizational researchers in the late 1970s to institutional theory as an explanatory framework. Institutional theory research underwent a significant change in the late 1970s and early 1980s. Much of modern institutional theory arose from the work of Berger and Luckman (1967), who argue that social reality is a human construction created through interaction (from Scott,1995).

Scott (1995) belief that the organizational procedures become valued as ends in themselves. Organization strikes bargains with the environment that can restrict the current goals or limit future possibilities. Organizational structures adapt based on individual actions and environmental pressures. He states that the overriding need for systems "is the maintenance of the integrity and continuity of the system itself". The process by which actions are repeated and given similar meaning by self and others is defined as “institutionalization". Institutional theory addresses the central question of why all organizations in a field tend to look and act the same (DiMaggio & Powell, 1983). The core concept of institutional theory is that organizational structures and processes tend to acquire meaning and achieve stability in their own right, rather than on the basis of their effectiveness and efficiency in achieving desired ends, such as the mission and goals of the organization (Lincoln, 1995). In the initial stages of the organizational life cycle, there is considerable variety in organizational forms. Over time, however, there is startling homogeneity in organizational structures and practices. Scott (1995 and 2004) has given posits definition of institutional theory as institutions are a critical component in the environment. Therefore, institutional theory focuses on the deeper and more resilient aspects of social structure. It considers the processes by which structures, including schemes, rules, norms, and routines, become established as authoritative guidelines for social behaviour.

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Institutional theory posits that institutionalized activities occur due to influences on three levels: individual, organizational, and inter organizational (Oliver, 1997). On the individual level, managers follow norms, habits, customs, and traditions, both consciously and unconsciously (Berger and Luckmann, 1967). On the organizational level, shared political, social, cultural, and belief systems all support following traditions of institutionalized activities. On the inter organizational level, pressures from government, industry alliances, and expectations from society define what is socially acceptable and expected organizational behaviour, which pressures organizations to look and act the same (DiMaggio and Powell, 1983).

Findings from Institutional Theory Based Research

Institutional

theorists

are

especially

interested

in

examining

those

organizational structures and practices that have no obvious economic or technical purpose. For example, an organization might retain an unreliable supplier merely out of habit, or because it “has always done it that way.” An action has become “institutionalized” when the reason for its existence is merely that “everybody else is doing it too.” Institutional theorists argue that many organizational actions are so taken for granted that managers no longer question why a specific action was started or why a specific action should continue (Oliver, 1997).

Institutional theorists have gone astray, such as in the misinterpretation of DiMaggio and Powell’s classic “iron cage” paper (1983). DiMaggio and Powell argued that organizations become isomorphic within their institutional environments. Institutional researchers erroneously took this work to mean that (1) organizations become isomorphic with each other, so over time, all become identical to each other; and (2) organizations are only passive to the elements and forces in their environments (Suddaby, 2010).

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In response, DiMaggio (1988) attempted to get institutional theorists back on track. He argued that organizations are not prisoners of their environmental forces. He stressed that organizations often act in creative ways to change their institutional environments, in a process that he labelled “institutional entrepreneurship.”

As a result of this change in theoretical focus, institutional theorists investigated how organizations can act as change agents. For example, Oliver (1991) examined the range of ways in which organizations can conform or resist. More specifically, in response to institutional pressures and expectations to conform, organizations can adopt the following strategies (in ascending order of active organizational resistance): acquiescence, compromise, avoidance, defiance, or manipulation. Hence, managerial accounting research has utilized adapted versions of sociological and organizational theories such as agency, contingency as well as institutional theory. Scapens (1994) mentioned that, although institutions cannot be uniquely defined, for the purpose to attempt a research in managerial accounting practices, the definition of institutional theory could be: ‘a way of thought or action of some prevalence and permanence, which is embedded in the habits of a group or the customs of a people’. Over period, there are increasing number of research that applied institutional theory: i. Institutional Theory in Studying Inter-organisational Relationships - Dynamics of collaborations: Such as Philips et al. (2000) argued that institutional rules and resources can be critical elements in the negotiations that constitute collaboration and Lawrence et al. (2002) explored how the characteristics of a collaboration can transform existing institutional fields (from Scapens, 2010).

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- Trust and power: Social mechanisms, including trust, are generally regarded as important elements in business relationships (Sako 1992; Zucker 1986) from Scapens (2010). - Legitimacy: Such research recognises that the legitimacy of the relationship is critical to its success and can be a source of competitive advantage. Human and Provan (2000) explored how legitimacy is created through the evolution of inter-organisational relationships and argued that it is crucial to their success (from Scapens, 2010). ii. Institutional Theory and Accounting in Inter-organisational Relationships - The researchers look at the flows of information, as well as processes of accounting control. - Seal et al. (2004) reflected on the influence of government initiatives on the development of inter-organisational relationships, and the way in which accounting, as a set of institutionalised practices, can come to be viewed as a trusted expert system – i.e., as an institutionalised set of practices that can be drawn on by the participants in inter-organisational relationships. If accounting practices are viewed as an expert system, there is likely to be overlap between their use within the individual organisations and their use within the inter-organisational relationships in which those organisations are involved (from Scapens, 2010). - Coad and Cullen (2006) observed, there can be a blurring of intra- and inter-organisational phenomena. However, as we know relatively little of the relationship between the accounting practices used within the organisations which are participants in inter-organisational

relationships, and their use of inter-organisational accounting (from Scapens, 2010).

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Assumptions of Institutional Perspective in Accounting Research

When applied to accounting research, institutional theory is introduced to explain management accounting practices, particularly changes occurring in contemporary practices. Therefore, Covaleski et al (1996), identified the general assumptions derive from institutional perspective on management accounting research as below:

No. 1

Assumptions Purpose of Management Accounting

Institutional Perspective 1. Serves as a ceremonial means for symbolically demonstrating an organizational commitment to a rational course of action. 2. Develops legitimized categories.

2

How Management Accounting is Used

1.

A

set

of

legitimizing

organizations

though

the

construction of an appearance of rationality and efficiency. 2. Socially constructed phenomenon with the full

implication of the power and politics of social construction.

Variants

Institutional theory has become a popular choice for accounting studies that seek to understand why and how accounting become what it is or is not. There are three particular strands of institutionalism that have exerted the most influence on accounting research which are:

i. ii. iii.

Old Institutional Economics (OIE), New Institutional Economics (NIE) and New Institutional Sociology (NIS).

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This range of views on institutionalism is bound to give rise to questions regarding the differences between them. What are the properties of the different views? How do they differ? How can they best be applied? And how do they relate to each other?

Furthermore, Molls, Burns and Major (2006), stated, in applying whichever variants of institutionalism, three caveat ought to be stated, namely that:

i.

The three institutional theory approaches comprise either economics or sociological theory, not accounting theory as such

ii.

All three approaches share a concern that institutions matters although there are differences in respective definition of an institutions; and

iii.

There are no implicit signals in the ordering by which the three approaches are presented.

Old Institutional Economics (OIE)

OIE grew out of dissatisfaction with neo-classical economics and challenged the assumption relating to the presumed rationality and the concept of equilibrium conditions. Hodgson (2000) view the essence of Old Institutionalism as the idea that “the individual is socially and institutionally constituted” and downwards causation is important in economic life. Therefore, fundamental ideas of OIE that separates from mainstream, neoclassical economics are noted as follows:

i.

Economics must draw on other disciplines such as psychology, history, sociology and anthropology to study both human behaviour and social structures (such as institutions) relevant in economic life;

ii.

Institutions must be seen as key elements in any economy, and the economist must analyse institutions and the process of

institutionalisation conversation, innovation and change;

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iii.

Any economy is an evolving system that is open ended, with very complex relations between its elements such as human beings, social life, culture, technology, resources, and politics.

iv.

The neoclassical idea of basing economics on the individual utilitymaximising agent is regarded as inadequate and erroneous. Individuals and their action can be shaped by social and cultural factors and institutions. “Reconstructive downward causation” from the social world and institutions can significantly alter and shape human behaviour.

These ideas suggest to us that what we need is not bad theory about markets, but a proper, empirically-grounded and true theory of real world markets. Although obviously human beings are agents of economic life, there is a two-way process involved: the dependence of institutions on individuals, but also the institutional moulding of individuals. As an example, individual consumers are said to be the ultimate driver of capitalism, and the individual’s tastes and preferences are the ultimate driving force of production; “Consumer sovereignty” is the idea usually invoked to describe this idea.

In OIE, institution can be either formal or informal. Formal institution are grounded in existing procedures, manuals and formal rules. In other hand, informal institution don’t have formalised basis but rule-like status due to the perception that practising of “have always been that way”.

Barley & Tolbert (1997) argue that institutional change can occur through alteration in behavioural regularities over time. Regularities thus constitute and are constitute by institutions. Therefore changes in regularities can cause changes in institution. While Barley & Tolbert (1997) conceptualized behavioural regularities by notion of scripts, Burns & Scapens (2000) argue that institution are encoded in rules (formal rules and procedures) and routines (actual behavioural patterns). In their framework, interdependence between actions (enact and reproduce) and structure may lead to institutional change. This institutional arrangement comprise the taken-

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for-granted assumptions that a certain pattern of behaviour is the norm for the social group. Rules can affect routines or new rules can adapt the existing routines or vice versa.

Scapens (2000) found the three dichotomies in OIE research writings, which offer insights and useful heuristics into the processes of management accounting change. The three dichotomies, respectively, are:

i. ii. iii.

formal versus informal change; revolutionary versus evolutionary change; and regressive versus progressive change.

Furthermore, Scapens (2006) has highlighted motivation factors that management accounting research can adopt an OIE perspective as the rules and routines which shape organizational activity; and by studying how rules and routines evolve we can better understand management accounting change.

In studies of accounting change, Scapens (2000) argue that the traditional functional rationalist approach does not sufficiently capture the complexities involved in the process of organizational change. Studies on management accounting change motivate the need for the change by referring to external pressure or demand by senior management. Although OIE rejects the notion of rational optimising rational, but the need for management accounting change is presented as self-evident and independent from organisational context.

Seo & Creed (2002) argued that one of the primary causes of change is “institutional contradiction”; the ruptures and inconsistencies that emerge within established social arrangements. Institutional contradiction create tension and potential conflict which shaped consciousness and lead to actions to change. Seo & Creed later argued that institutional change can arise from “praxis” – agency embedded in incompatible institutional arrangements. This happen when (1) self-

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awareness and critical understanding of existing arrangements; (2) mobilization with regards to new/collective understanding and (3) multilateral or collective action to reconstruct existing arrangements.

New Institutional Economics (NIE)

In order to answer such question as what is NIE, there are few points that can help, including:

i. ii.

no commonly agreed upon definition basic premise: Institutions matter for optimisation of economic performance

iii.

purpose is to explain the determinants of institutions and their evolution over time, and to evaluate their impact on economic performance, efficiency and distribution

iv.

NIE operates within the framework of neo-classical economics, but it relaxes some of its assumptions and incorporates institutions as an additional constraint.

NIE regard institutions as the external rules or constraints that shape economic behaviour whereas OIE treats institutions as ―taken-for-granted assumptions which exist as the cognitive level (Varoutsa and Scapens, 2010).

Within NIE there are various strands and work has been conducted in such areas as property rights and common law, public choice processes, as well as organisations; and a number of different theoretical approaches have been developed, including agency theory, game theory and transaction cost economics (TCE). Further explanation of NIE lies under TCE which is a particular branch of NIE and has had a significant influence on accounting research, and more specifically on accounting research in an inter-organisational context. Transaction costs consist of costs incurred in searching for the best supplier/ partner/ customer, the cost of

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establishing a supposedly "tamper-proof" contract, and the costs of monitoring and enforcing the implementation of the contract whenever the institutions moving towards management accounting changes.

In TCE, there are three critical dimension that describe transaction and influence the choice of governance structure: (1) frequency of transaction; (2) uncertainty (disturbance) of transaction and (3) condition of asset specificity. TCE uses two behavioural assumption in selection of governance structure: opportunism and bounded rationality.

New Institutional Sociology (NIS) Most social analysis has been built upon two model: (1) rational actor model – assumes the individual to be a rational decision maker; constantly in the calculation of costs and benefits from alternatives to make optimal decision and (2) institutional model – assumes an “over-socialised” individual whose decision mainly influenced by social norms. NIS emerged from the field of sociology rather than economics. In general, NIS asks how organisations are influenced by the institutions in their environments. NIS also addressed the behaviour of organisation as motivated by forces in wider society.

Institutional theorists assert that the institutional environment can strongly influence the development of formal structures in an organization, often more profoundly than market pressures. Meyer and Rowan (1977) argue that legitimacy by adhering to rules and norms in the institutional environment helps ensure organizational survival. DiMaggio and Powell (1983) conclude that the net effect of institutional pressures is to increase the homogeneity of organizational structures in an institutional environment.

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Meyer and Rowan (1977) and DiMaggio and Powell (1983) "propose that isomorphism is the master bridging process in institutional environments: by incorporating institutional rules within their own structures, organizations become more homogeneous, more similar in structure, over time" (primarily within a particular institutional environment and context) (from Scott, 1995). Isomorphism is a constraining process that forces one unit in a population to resemble other units in the same set of environmental conditions.

Dimaggio and Powell (1983) identify three general mechanisms of isomorphism:

i.

Coercive isomorphism (when organization is compelled to adopt structures or rules).

-

Categorical Conformity: This occurs when institutional rules serve as guidelines through which organizations can pattern their structures. These conventions often increase homogeneity among structures (e.g, university departments). These conventions become "vocabularies of structure" (Meyer and Rowan, 1977). "Organizations incorporate these cognitive belief systems because doing so enhances their legitimacy and hence increases their resources and survival capacities." (Scott, 2010).

-

Structural Conformity: Due to government regulation, environmental uncertainty, or desire for legitimacy, firms will adopt specific organizational structures (often by hiring personnel from successful firms or hiring consultants). Governments often impose new roles within organizations, such as safety officers or affirmative action groups. Professional groups also impose certain guidelines through

accreditation programs.

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ii.

Mimetic isomorphism (when one organization copies another, often because of uncertainty)

-

Procedural Conformity: Besides structures, organizations are often influenced to do things in certain ways too. Sometimes compliance or adoption is the result of uncertainty or of coercive or normative means. Many of the "rational myths" outlined by Meyer and Rowan (1977) are procedural in nature - total quality programs often become standard operating procedures. The two main groups generating these procedural requirements are governments and professional groups (Dimaggio and Powell, 1983). Lawyers straddle both arenas and are particularly powerful in shaping organizational procedures (Scott,1995). One issue is that these procedures quickly become separated from outcomes, and end up as "red tape".

iii.

Normative isomorphism (when the organization adopts forms because professionals in the organization claim they are superior).

-

Personnel Conformity: Modern organizations have many specialized roles filled by certified professionals (especially in Western

organizations). "Conformity to institutional rules often entails the hiring of specific types of personnel". Licensing or accreditation requirements often specify a certain % of "qualified" personnel in key positions. Certification is an important source of legitimization. Educational requirements are also increasingly part of job positions, even though there isn't a clear relationship between educational attainment and job productivity. It seems more of an institutional artifact than a technical one based on effectiveness. "Hiring certified or educated employees signals to the environment that the employer is a modern, responsible firm employing rational criteria of personnel selection and promotion" (Scott, 1995).

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DiMaggio and Powell (1983) add that rate of institutional isomorphism is increased when firms:

i. ii. iii.

are highly dependent on the institutional environment exist under high uncertainty or ambiguous goals rely extensively on professionals

In organizations, de-coupling refers to a separation of causal connection between two organizational elements. It implies a weakening of interdependence and control between groups (Weick, 1976). De-coupled elements share fewer activities. One de-coupled element can be eliminated or replaced without severely affecting the other element.

De-coupling has been used extensively in open systems theory, gaining prominence through Weick and extended by institutional theorists like Meyer and Rowan. They maintain that organizations in institutional environments often decouple formal structures from their technical core to maintain external legitimacy and still retain organizational effectiveness (Meyer and Rowan, 1977).

For example, in the 1980's many companies created "quality departments" to maintain external legitimacy as quality management techniques gained popularity. Top management often de-coupled these programs from the formal hierarchy to minimize their potential disruption to effective "status quo" behaviour. As a result, quality departments often built extensive quality programs that helped external relations but were only marginally implemented by the rest of the corporation.

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Criticisms and Critiques of the Institutional Theory

i.

Legitimacy: Exceptions on necessity and benefits.

For example, Kraatz and Zajac (1996) found little evidence supporting the constraints of legitimacy. Phillips and Zuckerman (2001) argued that it is the middle-status players who feel the need to act legitimately. High-status players have the reputational capital to deviate from the norm, and low-status players have to do whatever it takes to survive, whether legitimate or not.

ii.

Classical towards New Institutional Theory

Some researchers have questioned the reasoning behind moving from classic institutional theory and solely toward new institutional theory (Koelble, 1995; Selznick, 1996). The old and new approaches both have their advantages and disadvantages, and should be integrated into modern institutional theory.

iii.

Measuring Institutions

Another criticism of institutional theory has had to do with the way that institutions have been measured. Peters (2000) argued that researchers have overlooked the problem of appropriately measuring institutions. Suddaby (2010) argued that institutional research moved from treating organizations as “passive dopes” to “hyper muscular supermen”. Any change, no matter how slight, is treated as “institutional,” and any change agent is regarded as an “institutional entrepreneur.” Dacin, Goodstein, and Scott (2002) warned that institutional research should only value instances of significant, profound, fieldlevel change, and not merely incremental changes.

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iv.

View of Organisations

Critics have argued that the processes underlying institutionalization have not been examined (Phillips, Lawrence, & Hardy, 2004). Institutional theory has tended to focus on the effects of institutionalization rather than on the process through which organizations become institutionalized. This has resulted in a view of organizations merely as “black boxes” with nothing of value inside.

v.

Area of research

Suddaby (2010) proposed four areas of research that appear to be the promising avenues for future institutional theory: categories, language, work, and aesthetics.

vi.

Disputes

Heugens and Lander (2009) examined three ongoing disputes among institutional theorists. First is the quarrel regarding the supremacy of structure over agency? This debate examines whether organizational structures and processes emerge due to macro societal forces or due to organizations’ taking action to create them. Second is the continuing debate over the influence of conformity on organizational performance. Third is the examination of the influence of within-field variability on the extent to which organizations adopt structures and practices that are similar to their peers, and the rate at which they do so.

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Institutional Theory Part Two Empirical Study

Institutional contradiction and management control innovation: A field study of total quality management practices (TQM) in a privatized telecommunication company

By: Umesh Sharma, Stewart Lawrence and Alan Lowe Management Accounting Research 21 (2010) 251-264

Abstract: The purpose of study is to theorise the changes surrounding the introduction of a management control innovation, TQM techniques, within Telecom Fiji Limited. Using institutional theory and drawing on empirical evidence from multiple sources including interviews, discussions and documents, the paper explicates the institutionalization of these TQM practices. The focus of the paper is the micro-processes and practices changes around TQM implementation, rather than the influence of the macro-level structures that often linked with institutional theory. The changes agents used Quality Action Teams and National Quality Council to introduce the new TQM routines. The present study extends the scope of institutional analysis by explaining how institutional contradiction impact to create and make space for institutional entrepreneurs, who in turn, modify existing routines or introduce new routines in fluid organizational environments which also exhibit evidence of resistance.

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Introduction

The advent and implementation of TQM practices have attracted the attention of institutional theory researcher since their introduction in mid-20th century (Westphal et. al., 1997; Zbaracki, 1998; Hoque and Alam, 1999; Sharma and Hoque, 2002; Modell et. al., 2007; Modell, 2009). Some writer argued that, the higher technical efficiency that TQM practices may provide, organizations implement TQM practice become isomorphic with other organization in their environment. Introduction of TQM routines within organization become part of a broader process to enact and add legitimacy to management control system (MCS) changes within organizations (Chenhall, 2003). This study focus on analyzing the changes surrounding the TQM practices implementation which currently are part of control practices within Telecom Fiji Limited (TFL). Thus, in this paper, institutional theory is used to explicate the process of introducing TQM practices within TFL. Two question raised in this study: (1) how were agents able to introduce a new MCS (such as TQM routines) within TFL? And (2) how were TQM practices institutionalized at TFL? These two general questions led to more specific questions: (3) what was the institutional context in which agents acted? (4) were external agents or embedded agents active in the change process? (5) what were the micro-process at work and (6) what were the mechanisms used to effect and institutionalize change?

Literature Review TQM practices emerged as an increasingly fashionable management innovation in response to the lack of competitiveness in US manufacturing industries during 1980s and perceived superiority of Japanese firms in delivering high quality products and services in accordance with customer demands and achieving operational efficiency (Giroux, 2006; Modell, 2009). The need for management

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practices fostering customer orientation and satisfaction led to meeting customer needs as primary motivation for TQM practices. Traditional accounting support cost and production analysis, but not quality analysis. Therefore quality practices become important in management accounting (Shank and Govindarajan, 1994). Chenhall (1997) notes that TQM enhances the profitability of companies when managers are evaluated by using performance evaluation systems that employ measures of the manufacturing process. The thrust of TQM is that quality and its management have to be built in from the beginning and that the accomplishment of quality standards and improvement is the responsibility of everyone (Morgan and Murgatryod, 1994; Lord and Lawrence, 2001; Hoque, 2003) Fig.1 visualizes the theoretical process of the model used in this research to explore the routinisation of TQM practices at TFL.

As seen from the above figure, it is the institutional contradictions that allow institutional entrepreneurs to destroy prior institutions and set up new rules and routines within the organization thru the process of enactment, reproduction and routinisation of new practices. Some modification has been made to include external forces which may create institutional contradiction providing an opportunity for

19

entrepreneurs/managers to act. The model has incorporated rules and routines as part of institution. TQM rules can be in the form of TQM manuals which organizational participant use, while TQM routines provide a frame of conduct which act to solve work-related problems and promote customer consciousness.

Research Method

TFL was the first public sector enterprise in Fiji to be fully privatized and listed on the South Pacific Stock Exchange. Accounting and organizational changes provide the focus and researcher’s interest of the study. Fiji government began dismantle state-owned enterprise and corporatized many public enterprises including Fiji Post and Telecommunication Limited (FPTL) which later split into TFL and Post Fiji Limited. The company owns the only public switched telephones network in Fiji.

The case study was conducted over a 6-year period from 2002 to 2007. The research study made use of multiple sources to collect evidence. Data gathered from publicly available information, media and government reports, internal proprietary documentation and semi-structured interviews. 42 semi-structured interviews were carried out between 2002 and 2007 regarding past events surrounding the corporatization and privatization of TFL and the current implementation of new management control practices such as TQM.

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Case findings:

1. Institutional contradiction: Early corporatization  new businesslike approach was introduced  civil culture being common at TFL which led to lack of customer focus  Introduction to TQM received strong resistance from management and workers – contradict between civil service notions of service and capitalist notion of customers as sources of profit.  Institutional entrepreneurs within Telecom saw TQM as innovation tool to  Implementatio n of TQM thru Quality Action Teams  Set the informal  CEO and managers – regard as people with authority.  Employees not show disagreement with superior – believe that behavior is  TQM implementation was assisted by Fijian culture – appreciates social interaction once formal structure are Action taken  Board attempt to remove manager who resisted to change. After action result  Strong resistance and industrial action by the union – sabotage of cables and disrupting telecommunication service. Notes  Militant trade union and closely aligned to the opposition Labor Party of Chaudhry

21

deinstitutionaliz e public sector routines and routinize the importance of customer service as the focus of new commercial routines.

meetings to solve disagreement

inappropriate.  Large power distance which is supposed to be reduce with TQM implementation was still pervasive – not much impact as cultural belief play instrumental role at workplace.

institutionalized.  Fiji has large power distance society – accepts hierarchical order.  Conformity to social norms is essential.

2. Institutional entrepreneurs in the TQM implementation process: Early corporatization  Managing director who initially resisted the commercialized was threatened with redundancy and sent abroad to learn managerial practices from developed countries such as Australia and New Zealand. Action taken  Introduce TQM routines and distribute TQM manual and procedures to all employee by the management team.  Include Quality Action Team and National Quality Council as institutional entrepreneurs. After action result  Some employees questioned the need for TQM practice as the company had a monopoly in telecom service and make adequate profit Notes  Important concern in the implementation of TQM practice and its relevance to MCS – development of TQM together with management performance evaluation system.  TQM may become institutionalized once managers and employees are evaluated on the basis of non-financial measures – customer satisfaction.

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3. The enactment of TQM routines: Early corporatization  Began the process by defining the broad structure of TQM program.  Establishment of NQC to oversee implementation of TQM process – debt management, billing and customer value management. Action taken  Set up QAT  Monthly meeting with NQC – report on key business process and specific quality projects.  Implementation of changes recommended by QAT after approval by NQC – follow through and report back After action result  Resolved complaints in provisioning and restoring, reduced costs on small and medium customers, developed customer focus attitude and reduced waitlist management.  Improvement in service provided – thru customer satisfaction survey. Notes  Evidence of reproduction and routinisation.

4. Evidence on the institutionalization of TQM practices: During reproduction  TQM training and participation in QAT by members – give clear outcome.  Implementation of PMS – establish inhouse and Action taken  Set up QAT  Monthly meeting with NQC – report on key business process and specific quality projects. After action result  Organizational member used their experiences to update their “reservoir of belief” about TQM.  Improved perception of being customer-oriented. Notes  TQM practices were institutionalized by management and employees.  Saving could be mooted as evidence of routinisation.  Routinisation can also be viewed in the conduction of meetings and implementation of 11 steps for TQM problem saving

 Implementation  Improvement in of changes efficiency thru cost

23

external training programmes.

recommended by QAT after approval by NQC – follow through and report back

reduction – saving year” as a result of quality project  TQM improved the flow communication and instrumental to employee empowerment – work environment between management and employees.  Managers and employees become result oriented – achieved desired outcomes and receive bonus reward as motivational instrument.

approach.

were made “year on  MCS as key performance indicators to embody customer satisfaction indicators for organizational members – managers use MCS such as performance indicators to track employees’ performance against targets.  Thru PMS, TQM practices become routinized – TQM and PMS practice regimes create and demand systems of surveillance and trigger discipline amongst employees.

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Conclusion

The enactment and reproduction of TQM practices illustrate TQM routinisation. Thus the routines be part of process to enact and add legitimacy to broader MCS change within TFL. TQM routines introduced and promoted by consultants and managers globally exhibiting mimetic isomorphism (Tolbert and Zucker, 1983). Consultants’ services can be considered as normative institutional pressure (Irvine, 2007). Consultants are change agents valued not only for knowledge and technical advice but also for the legitimacy they bestow. TQM practices also can be seen as evolving process of deinstitutionalizing public sector templates and institutionalizing private sector templates. TQM practices gain institutional value over time as it become the accepted way of doing things. TQM practices also were enacted and reproduced. The process and associated practices of QAT such as meetings became taken-for-granted.

Institutional contradiction play an instrumental role in the change process. The Fiji government’s public sector reform policy produced a source of inconsistency in TFL. Such contradiction can produce institutional crisis. At the organizational level, the problem of “embedded agency” can be overcome by institutional entrepreneurs as they are able to envision alternative arrangements and develop them.

In this study, the introduction of TQM routines have been conceptualized as institutional change. The explicit focus on the role of agency enables the analysis of relationship between different agents. The study also demonstrate how embedded agents influenced by institutional contradictions take collective action to achieve institutional change via implementation of TQM practices.

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Reference: Barley, S. R. and Tolbert, P. S. (1997), Institutionalization and structuration: Studying the links between action and institution, Organization Studies, Vol. 18(1), pp. 93-117. Berger, P. L. and T. Luckmann (1966), The Social Construction of Reality: A Treatise in the Sociology of Knowledge, Garden City, NY: Anchor Books. Burns, John and Scapens, R.W. (2000), Conceptualising Management Accounting Change: An Institutional Framework, Management Accounting Research, Vol 11(1).

Covaleski, M. A., Dirsmith, M. W. and Samuel, S. (1996), Managerial accounting research: The contributions of organizational and sociological theories. Journal of Management Accounting Research, Vol. 8, pp. 1-35.

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