Institutional and negotiated order perspectives on cost allocations: The case of the Swedish university sector

Abstract

A growing number of studies of the issue of cost allocations based on different institutional theories have recently emerged in the management accounting literature. These provide an alternative to efficiency-centred explanations of the evolution of cost allocation practices and have increasingly drawn attention to the roles of competing interests, power, agency and politics in the more or less continuous (re-)construction of cost allocation rules. This paper extends this literature by combining an institutional perspective with insights gleaned from the negotiated order (NO) literature, using recent developments in the Swedish university sector as an empirical illustration. This draws attention to the role of negotiations in the political regulation of costing in a highly institutionalised environment. Adopting a comparative, embedded case study design we contrast three recent attempts to re-negotiate cost allocation rules with varying outcomes. It is concluded that the role of institutional factors as well as socio-political negotiations in framing the ambiguity associated with cost allocations is important in explaining why and how change in cost allocation rules is mobilised or diverted. Especially, the NO perspective enriches institutional explanations of the stabilising role of power in this respect by drawing attention to how power relationships and coalitions of interests are formed around the specific issues at stake. This leads to a more dynamic and less atomistic conceptualisation of power and agency than in much prior research on the institutionalisation of accounting.

Acknowledgements

Valuable comments on earlier versions of this paper have been received at the International Conference on Accounting, Auditing and Accountability in Public Sector Reforms in Oslo (2004), and seminars held at Stockholm University, Curtin University of Technology, the University of Manchester and Örebro University.

Notes

1. As an analytical category, ambiguity is distinct from accuracy as it does not require any objectively verifiable benchmark, but is more concerned with the range of interpretations and choices available to various actors in conjunction with cost allocations (Modell, 2002; see also Thomas, 1971).

2. This tendency to treat power as a static, atomistic concept has been noted by a number of commentators, especially in relation to NIS (e.g. Czarniawska and Sevón, 1996; Phillips et al., 2000; Hensmans, 2003). Whilst power constitutes an increasingly important analytical category in NIS-inspired accounting research (e.g. Covaleski and Dirsmith, 1988a; Covaleski et al., 1993; Carruthers, 1995; Abernethy and Chua, 1996; Brignall and Modell, 2000; Modell, 2002) its more dynamic properties are arguably under-explored (Burns, 2000; Collier, 2001).

3. In a few instances these interviewees overlapped with those providing richer historical accounts as the same interviewee had occupied different positions at different times. However, we carefully controlled for this by thematically dividing the interviews into sections dealing with their past and current roles.

4. See Modell (2003) for a more detailed analysis of the subsequent development of quality controls in the Swedish university sector.

5. These percentages include all (both private and public sector) funding of university-based research other than government grants directly allocated to universities and colleges.

6. 1 SEK = approximately 0.11 Euro.

7. This view of the Government, or the State, as the primary source of coercive pressures is consistent with DiMaggio and Powell (1983).