Understanding Institutional Theory in the Context of Financial Accounting

FINANCIAL
ACCOUNTING THEORY

Table of Contents
 What is Institutional Theory
 Institutional Isomorphism
 Significance of institutional theory in context of
Accounting
 Scope of Institutional Theory
 Support for Institutional Theory: Rowan, Tolbert,
and Zucker

What is Institutional Theory
In general, institutional theory is a means of understanding about the
relationship between formal management systems and the interpersonal
processes that influence their evolution. This pushes businesses to
standardise their organisational structures and procedures. Organizations
are viewed as working inside a conceptual structure of conventions,
values, and implicit expectations about what constitutes suitable or
acceptable economic action, according to institutional theory.