ACCT6007: Critical Analysis of Accounting Technology Article

This paper presents a critical analysis of the article "How Technology is Changing Accounting Processes: Institutional Theory and Legitimacy Theory Perspectives" by Agyekum and Singh. The analysis explores the impact of information technology adoption on accounting functions and organizational performance, focusing on institutional and legitimacy theories. The paper discusses how institutional theory explains the influence of social expectations and the external environment on organizations, while legitimacy theory examines how organizations gain societal acceptance. The analysis evaluates the authors' propositions regarding the role of technology in changing accounting practices, enhancing accountant roles, increasing organizational legitimacy, and improving performance. The paper agrees with the propositions and highlights the strengths and weaknesses of the article, concluding that technology has a crucial role in changing accounting practices and impacting legitimacy and institutional processes, while acknowledging certain limitations. The paper also references the work of several other authors who have researched and written on similar topics.

Running head: CRITICAL ANALYSIS
Critical analysis
Name of the Student
Name of the University
Author Note

CRITICAL ANALYSIS
Introduction:
The paper conducts a critical analysis of the article titled” How technology is
changing accounting processes: Institutional theory and legitimacy theory perspectives”
written by Agyekum and Singh. The paper presents a discussion on the impact on the
organizations due to improvement in the functions of accounting due to the information
technology adoption. Article presents an argument based on the literature and the
propositions are developed for determining the impact of legitimacy and institutional process
due to the adoption of information technology.
Briefly explaining the institutional and legitimacy theory of accounting:
Institutional theory is a framework that helps in the analysis of social phenomenon
where the social aspects of the organization comprise of practice, rules and structures and the
homogeneity of processes and forms of organization is explained using such theory. The
main concern of the theory is the interaction between the effects of social expectations and
external institutional environment and the organization and the manner in which such
expectations are incorporated and reflected in the practices and characteristics of organization
(De Luca & Prather, 2018). One of the main dimension of institutional theory is isomorphism
which refers to the adoption of institutional practice. One institutional practice of
organization is voluntary disclosure by which the reporting process is adopted and changed in
the organization. In the reporting of company, accountants are required to comply with the
accounting standards for maintaining the professional ethics (Modell et al., 2017).
Legitimacy theory assists in gaining an understanding of the behaviour of
organization in the development, implementation and communication of the policies of social
responsibility. It is concerned about how the structure of organization helps in gaining
acceptance from society. Fulfilling the social contract of organization is the main assumption

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of the legitimacy theory. Accounting is one of the system and structure which is considered
as legitimacy symbol and legitimacy of the organization is also dependent upon accounting as
it helps in projecting the organization as rational and appropriate. From the perspective of
accounting theory, accounting system is adopted by the organizations for functional reasons
and legitimacy is offered to the organization by the accounting system adoption as such
system is used to avoid claim of negligence and signifying responsibility (AlKalbani et al.,
2017).
Evaluating the adoption of information technology in accounting from the perspectives
of accounting theories:
With the technological development, there exist the need for change in accounting for
the effective decision making by achieving the goals. Implementation of information
technology in accounting is done with the objective of improving the organizational and
functional performance and task efficiency improvement. The need for accounting in the
organization has increased because of technology and assist in enhancing the efficiency of the
business. Development of technology and its adopting in the accounting system of the
organization helps in facilitating the increased availability of timely and relevant information
and thereby enhancing the decision making quality. Accountants can play an important role
in the division making process of the management and the technology has contributed to the
role of accountant by advancing their role in the form of their participating in the decision
making process. The development of real time reporting by the organization aided by the
adoption of computer system institutionalize the organization to disclosure relevant
information for the users of such reporting. Framework of technology should incorporate the
environmental context as per the institutional theory due to the pressure from the competitors
and trading partners. Both the institutional environment and technology impacts the

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organizations as stated by the institutional theory. It has been argued that the adoption of
technology has taken over the basic routine of accounting and making the technology
institutionalized in the accounting field.
The manner in which the accounting system are institutionalized in the organization
can be explained using one example. In one of the British bank, a new electronic
infrastructure called intranet was embedded and it was ascertained from the examination of
the life of information technology system that the adoption of such system brought significant
and political changes (Chariri, 2017).
Any changes in the intra organizational legitimacy fluctuates with the adoption of
technology because the successful adoption of technology requires the existence of sufficient
legitimacy in the organization. Use of accounting in the organization is enhanced due to the
adoption of technology and use of accounting helps in providing legitimacy. Joint functioning
of technology powers the accounting that helps in diffusing norms for the best practice and
helps in representing and revealing economic reality on the other hand. Accounting practices
in an organization are institutionalized and also helps in providing legitimacy using the
medium of technology (Gooneratne & Hoque, 2016).
It is demonstrated by the data analysis that how the adoption of technology mutually
constructed and influenced legitimacy in the changing environment. Adoption of technology
is impacted by the legitimacy of technology. When evaluating the impact of adoption of
technology in the organization from the view point of legitimacy, it is important to account
for the performance legitimacy. Technological adoption is dependent upon the external
performance legitimacy. This can be explained with the help of an example where the
integrated management software industry was new to the market of China when ERP was
adopted and for the organization to decide upon the adoption of technology, they had to

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depend upon their external performance legitimacy (Jeong & Kim, 2019). If using of
technology is to legitimate, then the members instead of slacking off would tend towards the
adoption of new technology.
Critical evaluations of the propositions made by the author:
The first proposition put forward by the author is that the adoption of new
technologies brings change in the accounting practices by enhancing the accountant role as an
institutionalization mechanism. Organization can use the technological platform to change
the traditional accounting system as such accounting evolution introduced by the technology
becomes deemed acceptable in the society and deemed legitimate to the organization and
thereby providing competitive advantage. The modification in the accountant’s role is
considered to be important as the pattern of relationship such as accountability and power
within the society and organizations at large (Agyekum & Singh, 2018). The proposition put
forwards is very well agreed as the changes in the organization can be done by the accounting
information.
Another proposition that the legitimacy of the organization increase over time due to
accounting policies change brought by the technology adoption. Any changes in the
technology of any organization determines changes in their accounting functions and helps in
improving the functions and overall performances of the firms. Enhanced legitimacy is
identified from the relevant and timely disclosure of the information due to the efficiency in
the accounting function resulting from technological adoption. The proposition cannot be
doubt on as the technological development can be experienced when the adopted technology
results in driving the change by altering the functions of management and organization
(Agyekum & Singh, 2018). The reason why the proposition has to be agreed with is that the
adoption of technology transform the whole accounting system which further facilitates real

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time reporting by depicting real, relevant and timely information and assist in the decision
making process and making the organization more legitimate.
Third proposition says that firms experience improved performance due to the
changes in the accounting policies resulting from technology adoption. The role of
accounting units within an organization has been changed due to the information technology
and all the functions of human, accountants and clerk have been taken over by technology
(Agyekum & Singh, 2018). In addition to this, routine accounting tasks have been driven by
the technology adoption. Some of the studies have found positive relationship between the
performance of the firm and technology and innovation. This is so because adoption of
technology contribute to the dynamic capabilities of accounting system and the accountants
and this in turn contributes to the competitive environment of the firm. Therefore, the third
proposition has been agreed with because of the real changes noticed in the accounting
system due to technology (Dubey et al., 2019).
The last proposition is about the constant institutionalization of the accounting
practices change due to new technologies adoption and requiring changes in the accounting
field itself. It has been cited that the accounting unit and the accounting system are changing
due to the technology advancement. Adoption of technology is changing the accounting
system as a whole and this calls for bringing modification in the accounting system so that it
aligns with the technological advancement (Agyekum & Singh, 2018).
Commenting on the strength and weakness of article:
The conceptual paper presented has some weakness as it does not indicate the changes
required for sparking the changes in the accounting system. In addition to this, the discussion
does not incorporate the size of organization as it is likely that the legitimacy and
institutionalization of the organization is impacted by the size. On other hand, strength of

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article lies contributing to the literature on technology and accounting as some of the
functions of accounting have been taken over by technology.
Conclusion:
The paper has addressed the concept of institutionalization and legitimacy in the
organization due to the adoption of technology. It has been ascertained that the adoption of
technology has played a crucial role in changing the accounting practices which in turn has
impacted the legitimacy and institutional process of the organization. The article contributes
to the literature on technology and accounting. On other hand, there are some limitations as it
did not account for some factors impacting the changes due to technology adoption.

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References list:
Agyekum, A. A., & Singh, R. P. (2018). How Technology is Changing Accounting
Processes: Institutional Theory and Legitimacy Theory Perspective. Journal of
Accounting & Finance (2158-3625), 18(7).
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organizations: an institutional perspective. Data and Information Management, 1(2),
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threatened legitimacy to integrated reporting. Journal of Business Ethics, 141(1), 191-
205.
Chariri, A. (2017). Financial reporting practice as a ritual: Understanding accounting within
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De Luca, F., & Prather-Kinsey, J. (2018). Legitimacy theory may explain the failure of global
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Dubey, R., Gunasekaran, A., Childe, S. J., Blome, C., & Papadopoulos, T. (2019). Big data
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of employee training: impact on organizational legitimacy and organizational
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Gooneratne, T. N., & Hoque, Z. (2016). Institutions, agency and the institutionalization of
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