Bringing power, interests and rules to OIE: a model of rule-based action

Abstract

Old-Institutional Economics (OIE) has inspired a significant stream of management accounting research, although some limitations can be pointed out. First, extant models do not adequately address power and interests, which are both key components underpinning an OIE perspective of organization. Second, extant research has emphasized the role of routines but has neglected rules, which tend to be conceptualized in a narrow perspective of formal rules. This paper addresses both limitations in an integrated way, by proposing an OIE model of rule-based action. The proposed model draws on Burns and Scapens' (2000) macro structure and concepts, but it proposes additional structures and substantially different perspectives, mechanisms and even concepts. The model depicts intra-organisational diversity in institutions and interests and proposes how diversified organisational actors may attempt to relationally gain power within the organisational network. Actors' strategic attempts may involve the introduction, within the organisational network, of rules and material conditions which promote their interests. The model adopts a wide conceptualisation of rules, including rules as internal structures orienting actors (rather than merely formal rules) and pays close attention to the processes of introduction, interpretation, acceptance and enactment of rules. In addition, it relates rules with material conditions, in particular since rules may be technologically and organisationally embedded. Finally, the model highlights that rules may be enacted by both human actors (individual and collective) and nonhuman actors - in line with insights from Actor-Network Theory. The proposed model provides a novel way to conceptualise how actors' interests may be achieved through the various intersections between rules and material conditions. Rules and material conditions may become embedded within the organisational actor, promoting the ultimate enactment of rules by both human and non-human actors. The proposed reconceptualisation of rules and analytical mechanisms bring the topic of power to the core of OIE and therefore contribute towards current efforts of refining and expanding the explanatory potential of institutional theory.