The Contextual Framework for Understanding MAC

The main aim of this framework is to explain how MAC can be conceptualized from different perspectives. Dawson (1994) affirms that “Although there is a growing body of literature in

Theoretical Synthesis

Structuration theory

OIE theory (I) NIS theory (II)

Power theory and institutional logics

(III)

Developed Contextual Framework influenced

by (I, II, and III)

Dillard et al. Model Burns & Scapens

Framework

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the area of strategic change, a gap remains for the development of a new theoretical framework for understanding major organizational transition at the operational level” (1994:12). Similarly, Pettigrew (1987:655) describes the relevant framework to study organizational change as well as MAC as “historical, processual and contextual in character”. He also argues that “An approach that offers both multilevel or vertical analysis and processual, or horizontal, analysis is said to be contextualist in character” (1987:94). Contextualists thus believe that change as phenomena can happen through the interaction between institutional pressures (or power), and rules and routines (see Tsamenyi et al. 2006).

In this regard, Scott (1995) describes the multilevel analysis of institutional change ranging from the broadest, worldwide perspective to the level of a subunit of an organization. Consequently, the contextual framework of the study (as set out in the figure 3-14) adopts Dillard et al‟s (2004) model, which recognizes that these multiple levels of the

institutionalization process move in a recursively cascading manner by hierarchically linking the wider institutional influences of the political and economic factors level (PE) with the organizational level, through the organizational field level (OF). Moreover, this framework examines the impact of external, as well as internal, factors on MA processes within a specific organization.

Dillard et al. (2004) explain these wider institutional influences on organizational change by recognizing three levels of institutions. At societal level (PE), the most general norms and values (CPE), such as laws, principles and practices, are established and influenced by the existing distribution of power in the society. This macro set of norms and principles shapes the organizational field level criteria (COF), which is a function of the societal level criteria (CPE). As a result, the organizational field practices (POF) are influenced by the organizational

field criteria (i.e. isomorphism pressures) which were previously formed by the PE principles. The contextual framework adopts isomorphism drivers in equivalence with organizational field criteria (COF). The COF consist of professional groups, industry groups, government, etc, that might be inhabited by individual organizations; the final level is the organization itself (Hopper and Major 2007).

Whereas Dillard et al. consider multilevel institutions necessary for explaining organizational change, as these “macro institutions” occupy a prominent place in the NIS (Hopper and Major 2007). The process of institutionalization as indicated by Dillard et al‟s model is deemed

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recursive throughout all levels. However, this model is still studying the processes of change at organizational level as a „black box‟, without going into their details. Consequently, at the organizational level, the contextual framework (see Figure 3-14) adopts Burns and Scapens‟ (2000) framework, which supposes that the institutional realm and the realm of action are linked by rules and routines. Hence, it focuses on “micro institutions” inside the organization. Thus, the institutional realm represents the ways of thinking and the underlying assumptions that are taken for granted by the organizational actors before the process of change takes place, while the realm of action comprises the actions that are carried out by the organizational actors (Wanderley et al. 2011). It is important to emphasize that the processual approach, as suggested by Dawson (1994), is parallel to the process of institutionalization within the Burns and Scapens framework; and both approaches seek to interpret MAC as processes.

Burns and Scapens‟ framework has its roots in the OIE (Scapens 2006), rather than the more comprehensive institutional theory framework that underpins the contextual framework. However, Burns and Scapens‟ formulations are generally not inconsistent with this formulation at the organizational level (Dillard et al. 2004), although the ability to understand and induce change is largely limited to impact factors at the organizational level. The actual process of change at organizational level starts with the accumulation of institutional contradictions resulting from external environment (PE and OF) pressures, as well as organizational practices and their underlying assumptions, such as institutional resistance or conflict among organizational actors. Thereafter in this framework (as indicated in figure 3- 14), organizational factors are represented by power and politics dimensions mobilized by organizational actors after the process of change or resistance (or any human action) takes place. These above factors show that within this framework, organizational factors can play a vital role in the process of MAC, in either triggering or constraining institutional resistance or contradictory institutions.

In this regard, the framework has adopted Hardy‟s (1996) model, which comprises four dimensions of institutional power: power over resources, processes, meanings, and systems. The first three dimensions are represented partially by organizational actors, while the latter is more comprehensive, encompassing all organizational actors in the web. These power dimensions may trigger and enable human praxis (e.g. collective action, actor mobilization, and potential change agents) to create the conditions for institutional change to take place,

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because the resistance (as misaligned interests or mental allegiance to the old work) will retard institutional change (Seo and Creed 2002). This change will be implemented within the organization through a new set of rules and routines, which will be institutionalized (stability). In other words, they will be taken for granted by the majority of the organizational actors (Wanderley et al. 2011), in consistent with the process of institutionalization.

Following the process of institutionalization, the new institutionalized rules or practices influence the set of normative practices (POF) and criteria (COF) at the organizational field level by reinforcing, revising or eliminating existing practices (Dillard et al. 2004). Changes in organizational field practices (P‟OF) and criteria (C‟OF) usually influence the political and economic system criteria (C‟PE). This means that new political and economic criteria defy the present coalition of power at the economic and political levels. Consequently, the social processes of institutionalization, de-institutionalization, or re-institutionalization could be generated by choosing significant norms, values and institutions. In this manner, such new accounting practices become institutionalized through the induction of these social and political processes, and cannot be justified merely through economic rationalities (Dillard et al. 2004; Wickramasinghe and Alawattage 2007). Nevertheless, such process of institutionalization takes place only if the „axes of power‟ are manifested.

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This recursive contextual framework is synonymous to that one developed by Dillard et al. (2004), which is influenced by the notion of duality of structure from the ST. This notion assumes that structures (institutions) provide recursive rules and resources that shape and inform human interaction (action) in terms of its signification, legitimization and domination. All the same, human agency may change these structures. Such changes might produce either conscious choices to act differently or the unintended outcomes of behavior (Stinchcombe 2002). As a result, this framework is supported by the notion of duality of structure and agency, which is a general framework of social action (Anthony 1965; 1979; 1984). Thus, institutions are the background for action but, conversely, may be recursively modified through the action of human agents (Seal et al. 1992). The process of institutionalization is thus inverted again and flows downwards through the three levels as described above, unfolding as acceptable and legitimate practices for organizations over time and space.

Although multilevel theories are necessarily complex, their complexity may yield important practical insights. Multilevel theories illuminate the context surrounding individual-level

a d

Institutional Realm

Realm of action

Rules

Routines

Key: Process of Institutionalization

a = encoding, b = enacting, c = reproduction, d = institutionalization

b C b C b b C Rules Routines C Power and politics Mobilization Institutional Resistance and conflict logics a d

Economic & Political Level (PE)

Organizational Field Level (OF) Power Distribution

C

P‟

C‟

C‟

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processes, clarifying precisely when and where such processes are likely to occur within organizations. Also, multilevel theories identify the multi-level characteristics, behaviors, attitudes and perceptions that underlie and shape organizational-level systems and practices (Klein et al. 1999). In the same way, the present contextual framework represents a convergence around multiple themes suggested by both old and new institutionalism. Particularly, it offers an outstanding basis for an account of organizational change as it pays special attention to the link between organizational contexts and organizational actions and offers a more detailed account of the different interests and powers of human actors (see Ma and Tayles 2009). This framework particularly serves the purpose of explaining MAC as interpretive case-study. By developing a contextual framework, the study seeks to achieve further progress in institutional theory to tackle the above issues, and to provide a more holistic understanding of MAC.