Financial Accounting Theory - Institutional Theory

Financial accounting
theory

Table of Contents
Topic – Institutional Theory.........................................................................................................................3
Introduction ................................................................................................................................................3
Main Body ...................................................................................................................................................3
Purpose .......................................................................................................................................................3
Role & Responsibilities ................................................................................................................................4
References ..................................................................................................................................................7

Topic – Institutional Theory
Introduction
Institutional theory mainly focus on the specific role which are related with the social,
economical and also political system in which most of the companies can effectively operate
their business & obtain their legitimacy. It is analyzed that pressure & expectations can be easy
expected by the effective institutional constituents like state, interest, public , family & also
interest group. Institutional theory is considered as the specific approach which can help to
maintain the clear understanding about the organization & also management practices related
with the product of social and state of economic pressure. It determines specific popular
prospective related Management Theory because this theory is helpful to maintain the
organizational behavior which defies the economic rationality. This report will discuss about the
significance of institutional theory along with its purpose, roles & responsibilities (Chu and et.
al., 2018).
Main Body
Purpose
Institutional theory is a study of deep and resilient features of the organizational structure. It
takes into account the process through which various rules, norms, schemes and routines can be
embraced in the behavior of firm. Basically Institutional Theory was recognized by the John
Meyer & Brian Rowan in the late year 1970. This theory is helpful to explore the effectiveness of
the organization and also helpful to identify that how organization is fit in context of the societal,
national , state & also global environment. This theory is useful to maintain the adoption &
spread related to the formal company structure which associated with the written policies, new
forms and standard practices. Institutional theory determined that institutional environment can
affect strongly & also influence the growth of the formal organizational structure (Dubey and et.,
al., 2019). On the basis of this, they decides whether the business should be started or not and the
extent of its success rate. Through this it can also be said that , the entrepreneurs tries to tap the
opportunities prevailing in the market. It further supports the mindset that the upcoming of