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Institutional perspectives on cost allocations: integration and extension

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  • Sven Modell

Abstract

The debate on cost allocations in the management accounting literature has been dominated by a largely rationalistic perspective primarily informed by economic theories. However, there is growing evidence of institutional factors influencing cost allocation practices in organizations. This paper draws on neo-institutional sociology (NIS) and attempts to integrate prior research evidence of the institutional influence on cost allocation practices into an analytical framework. The core of our argument hinges on the observation that most cost allocations generate some degree of ambiguity. We argue that the implementation of various cost allocation techniques (in terms of their coupling to operating control) reflects differences in management of such ambiguity, but that this is conditioned by the patterns in which cost allocation techniques diffuse across organizations. We also address some pertinent criticisms of the NIS literature by discussing how certain intra-organizational factors and aspects of the organization's technical environment might interact with external institutional pressures in the implementation of cost allocation techniques. We advance six research propositions reflecting how such external institutional pressures and interaction effects influence the coupling of cost allocation practices to operating control.

Suggested Citation

  • Sven Modell, 2002. "Institutional perspectives on cost allocations: integration and extension," European Accounting Review, Taylor & Francis Journals, vol. 11(4), pages 653-679.
    • Handle: RePEc:taf:euract:v:11:y:2002:i:4:p:653-679
    DOI: 10.1080/0963818022000000993
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    2. Vincenzo Sforza & Riccardo Cimini, 2017. "Running the Obstacle Race towards Public Accounting Harmonization in EU-28: A Temporal Study," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(3), pages 1-49, February.
    3. Collin, Sven-Olof Yrjö & Tagesson, Torbjörn & Andersson, Anette & Cato, Joosefin & Hansson, Karin, 2009. "Explaining the choice of accounting standards in municipal corporations: Positive accounting theory and institutional theory as competitive or concurrent theories," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 20(2), pages 141-174.
    4. Sven Modell & Fredrika Wiesel, 2008. "Marketization and Performance Measurement in Swedish Central Government: A Comparative Institutionalist Study," Abacus, Accounting Foundation, University of Sydney, vol. 44(3), pages 251-283, September.
    5. Marco Morelli & Francesca Lecci, 2014. "Management control systems (MCS) change and the impact of top management characteristics: the case of healthcare organisations," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 24(3), pages 267-298, January.
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    8. Stamatiadis, Filippos & Eriotis, Nikolaos, 2011. "Evolution of the Governmental Accounting Reform implementation in Greek Public Hospitals: Testing the institutional framework," MPRA Paper 28816, University Library of Munich, Germany.
    9. Samuel Sponem, 2010. "Diversité des pratiques de contrôle budgétaire:approches contingentes et néo-institutionnelles," Revue Finance Contrôle Stratégie, revues.org, vol. 13(3), pages 115-153., September.

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