Institutional Theory in Accounting

Institutional Theory in Accounting

Institutional theory

Institutional theory is an accounting system whereby the functional and regulatory objectives and tools or mechanism stands from a functional economic structure to a contemporary economic reform. It discusses or it involves the engineering dynamics of accounting, classification, the various phrases of accounting, inner activities, problem solving, decision making and active prevention methodologies from accounting imperialism. Institutional Theory in Accounting is the actual practice of information technology into accounting practice that determines the core allocation of data and records of numerology that undermines the whole functionality of accounting regulatory process.

The main problem that lies with the theory of accounting and the practice is of irrationality, misquotation and missing information in the reports, analysis and research provided by accountants’. There is an issue of inconsistency that disrupts the process of accounting theory into practice. Due to the recent analogy there is accounting development science that gained momentum into recent times. This has built an economic stance into global business. The accounting of economic has capitalized into the market system and management decision making process.

The dependents and interdependent of accounting institutional accounting theory is the process of development of accounting that dependent on the social, political and economic variation and proposes a institutional  accounting science  related with and formed with interactive accounting standards and accounting international framework of reporting system.

The accounting engineering is the actual practice of information technology into accounting practice that determines the core allocation of data and records of numerology that undermines the whole functionality of accounting regulatory process. This is formed into economic and social barrier of interpersonal studies of behavior that determines the political and techniques sides of accounting bridge that provides sustains to the institutional theory of professional accountants into practice.

Accounting imperialism starts with social economic space created by accountants that divided with the standards of accounting and framework that the auditors are in collide with professional accountants in matters of rule setup by authority or admin of institutional accounting theory of practice.

So, the institutional theory in accounting is the study of accounting policies and methods.

Adoption of Information Technology through  Institutional theory in Accounting

Accounting has been significantly influenced by information technology. It has facilitated the development and implementation of electrical components for the storage and recording of payment information. Accounting Information Technology is becoming a tremendous professional profession due to technological developments and the increased need for accountants. Data innovation accounting combines traditional financial statements with programming and digital structures to provide a unified area for storing a material’s financial statements (Souza, Silva, et al., 2017). This digitalization also simplifies analyzing so any data, allowing one to spot and correct errors or inefficient elements of their monetary institutions.

In the accounting field, technology and communication technologies play an essential role and represent the industry’s progress. Accounting records and company activity management are more agile when accounting and ICT are integrated. Information technology is currently one of the most important instruments for improving accounting data analysis.

According to institutional theories, several corporate activities are driven by cultural values, myths, ideologies, and traditions rather than technology or practical necessities. Financial performance strategies are one of the most important ways for management to affect public opinions of their company.

It’s more of a “cultural emblem,” a type of created speech that assists in transmitting and implementing ideas both within and outside the organization. Accounting may project an air of objectivity and neutrality by transforming fundamental theoretical principles into concrete forms and rendering them “accessible in money perspective”.

Institutional Theory in Accounting

For example– Quite an environment may arise as a consequence of multiple legislation, such as the one between the United States and Canada, or the necessity for a revolutionary costing system following the First World War. It is the topic of paying attention to all of the statistics under consideration. In a nutshell, the objective of this project is to improve public accounting in a company.

Evaluation of Proposition regarding the Adoption of Information Technology through  Institutional theory in Accounting

Proposition 1: Throughout the presence of fast technology advances, the article has called for accounting processes to incorporate new digital techniques to enhance their efficacy and efficiency.

Proposition 2: Accounting procedures and methods are thought of as processes that depict technological and financial actuality.

Proposition 3: In most cases, information technology advances are adopted with the goal of increasing work efficiency and cross – organizational effectiveness.

Proposition 4: Accounting departments’ roles have shifted from just documenting and creating financial accounts to the relatively severe problem-solving skills resulting from information technology, including e-business strategies, research shows, and deliberate process management.

Technology has taken over activities previously done by experts, accountants, and employees associated with the information memory subsystem. It serves as a vehicle for the organization’s accounting procedures to be institutionalized and for the company to gain credibility. These processes, therefore, have ramifications that go beyond private enterprises; they have an impact on accounting as a whole.

Strengths and Weakness regarding the Adoption of Information Technology through  Institutional theory in Accounting

The study discusses how information technology has influenced accounting practices. In the last several decades, a massive technology transformation has influenced numerous elements of corporate activities. This transformation has impacted accounting, which has seen a continuous change in attitudes of efficiency. Technology’s influence on accounting has become so significant that it has broadened an accountant’s work scope. Because key time-consuming activities can now be completed with the flick of a switch, auditors can now examine and evaluate the research to inform their customers to improve operational efficiency and strategic goals. Because everyone can now access and analyze data virtually, market research is now a simple procedure. Accounting design and software advancements have specialized accountants’ jobs. The strength and weaknesses of the articles are given below:


  • It alluded to the mythical concept of reason as a way of explaining, reasoning, and legitimizing choices that benefit other people and the greater good.
  • It claims that the institutional theory can assist describe why a company chooses specific accounting methods and systems for its activities.
  • It consists of an accounting platform that is constructed to be fully precise down to the smallest detail. Even if people’s arithmetic abilities are perfect, it’s always better to let a machine handle the computations for them.


  • The authors of the article did not indicate the expense. When utilizing accounting software, customers should purchase the program and any extra permits required for administrator access or computers. For new functionality, some software needs them to pay revisions or upgrades.
  • They did not refer to network security. Accounting software information needs additional degrees of protection. Users may modify data more efficiently with software, which makes it much simpler to cheat the system.

Written by

Md. Shadequr Rahaman

Email: [email protected]

Institutional Theory in Accounting

Leave a Reply

Scroll to top
%d bloggers like this: