A matched cross-national field study of ten Brazilian and ten German large listed manufacturers (Brandau, Endenich, Trapp and Hoffjan, 2013) found that coercive, mimetic and normative institutional pressures — notably IFRS adoption, benchmarking and consultancy-driven diffusion of tools, standardized ERP systems, and university-based professional socialization — explain conforming configurations of management accounting better than contingency factors, yet it could not establish whether such conformity is actually efficient. The open problem is the conformity–performance trade-off at the heart of institutional convergence in management accounting: determine whether legitimacy-driven adoption of management accounting practices improves organizational efficiency and performance or instead installs inefficient structures that persist under institutional pressure, including the long-term consequences of the IFRS-driven integration of financial and management accounting.

Background

Management accounting (MA) is the internal information system of a firm — budgeting, costing, performance measurement and the control practices built on them — as distinct from financial accounting, which serves external reporting. From the 1980s, comparative research asked whether national MA systems converge toward a common international pattern, but empirical evidence was limited and dominated by contingency theory, which explains accounting design as adaptation to local conditions such as uncertainty and culture. New institutional sociology offers a competing explanation: DiMaggio and Powell (1983) described institutional isomorphism — organizations in the same field growing similar under three pressures: coercive (rules and mandates, such as legally required accounting standards), mimetic (imitation of perceived successful peers under uncertainty), and normative (professional socialization via education and training). On this view firms adopt practices to gain legitimacy, not necessarily efficiency. Brandau, Endenich, Trapp and Hoffjan (2013) studied matched samples of ten Brazilian and ten German large listed manufacturing firms through 20 semi-structured on-site interviews, and concluded that the three isomorphic pressures — coercion via the International Financial Reporting Standards (IFRS, the internationally mandated external accounting standards whose figures increasingly feed internal reporting), mimesis via benchmarking, international consultancies and standardized enterprise resource planning (ERP) software that carried German practice into Brazilian firms, and normative pressure via elite university education — explain the observed cross-country conformity in MA better than contingency factors. The finding parallels other evidence that standards adoption is often symbolic: Jamali (2010) reports that most multinational managers cite reputation and legitimacy, not short-term economic gain, as the motive for adopting International Accountability Standards, with responses matching symbolic conformity or decoupling (formal adoption without substantive use). Related case evidence shows management accounting innovations such as the balanced scorecard (a multi-perspective performance measurement framework) being adopted and later partially abandoned in patterns consistent with management fashion rather than retained efficiency. What no study established — including the source study, which was cross-sectional and did not measure performance or efficiency outcomes — is whether institutional conformity in MA pays off: whether legitimacy-signaling adoption of converging practices genuinely improves efficiency, or whether it creates inefficient structures that persist because abandoning them would forfeit legitimacy, and whether the IFRS-driven integration of external and internal accounting produces durable improvements or durable costs.

Problem Statement

Determine whether institutionally driven conformity in management accounting pays off: establish (i) whether the adoption of converging management accounting practices that firms take on under coercive, mimetic and normative pressures (including IFRS-driven integration of external and internal accounting, ERP-standardized processes, and consultancy- and education-driven diffusion) genuinely improves organizational efficiency and performance, or instead primarily confers legitimacy while creating inefficient structures; (ii) whether such structures, once installed, persist under institutional pressure even when inefficient — in particular the long-term consequences of IFRS-driven management accounting change, which may be durable improvements or durable costs; and (iii) whether the cross-country convergence processes documented in matched Brazilian–German settings, and their efficiency and performance consequences, hold over time. Facets (i)–(iii) are posed jointly, with the cited literature as the evidence base; any facet on which that literature is silent remains open.

References

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