Description
In this paper, I highlight how popular understandings of neoinstitutionalism as a theory of isomorphism need to be
revised as institutionalists have shifted attention towards the study of organizational heterogeneity. As part of this shift,
old emphases on arational mimicry and stability have been replaced with new emphases on institutional rationality and
ongoing struggle and change
Institutional rationality and practice variation:
New directions in the institutional analysis of practice
Michael Lounsbury
*
University of Alberta School of Business and National Institute for Nanotechnology, 4-30E Business Building, Edmonton,
Alberta, Canada T6G 2E7
Abstract
In this paper, I highlight how popular understandings of neoinstitutionalism as a theory of isomorphism need to be
revised as institutionalists have shifted attention towards the study of organizational heterogeneity. As part of this shift,
old emphases on arational mimicry and stability have been replaced with new emphases on institutional rationality and
ongoing struggle and change. I discuss these new directions and the implications for the study of accounting practice. I
argue that given recent e?orts by institutionalists to account for actors and practice diversity, there is an important
opportunity for dialogue with practice theorists, such as those drawing on Actor Network Theory, and the creation
of a more comprehensive approach to the study of practice that attends to both institutional and micro-processual
dynamics.
Ó 2007 Elsevier Ltd. All rights reserved.
Neoinstitutional theory is one of the most dom-
inant perspectives in organizational analysis (e.g.,
Davis & Marquis, 2005). The uniqueness of this
perspective is rooted in its emphasis on the pri-
macy of culture, highlighting how social structures
of resources and meanings are created and have
important consequences (Lounsbury & Ventresca,
2002). This perspective conceptualizes institutions
as generative of interests, identities and appropri-
ate practice models that take shape in wider
socio-cultural contexts (Dobbin, 1994). In turn,
these broader contexts facilitate cognitive, norma-
tive and regulative pressures that fundamentally
shape organizational behavior (Scott, 2001).
This conceptual approach to organizations and
organizing has provided an important focal point
for behavioral studies of accounting over the past
couple of decades (e.g., Carruthers, 1995; Cooper,
Greenwood, Hinings, & Brown, 1998; Covaleski &
Dirsmith, 1988; Dirsmith, Heian, & Covaleski,
1997; Fogarty, 1996; Fogarty & Rogers, 2005;
Mezias, 1994; Robson et al., 2007). Concentrat-
ing on the institutional dynamics that a?ect the
0361-3682/$ - see front matter Ó 2007 Elsevier Ltd. All rights reserved.
doi:10.1016/j.aos.2007.04.001
*
Tel.: +1 780 492 1684.
E-mail address: [email protected]
www.elsevier.com/locate/aos
Available online at www.sciencedirect.com
Accounting, Organizations and Society 33 (2008) 349–361
practice of accounting, this research has high-
lighted the importance of situating professional
activities (e.g., Cooper & Robson, 2006; Fogarty
& Rogers, 2005), conducting comparative studies
of coordination and control systems (Whitley,
1999), examining the global expansion of ?rms
(Cooper et al., 1998), tracking the historical devel-
opment of markets and associations (e.g., Chua &
Poullaos, 1998), and more deeply probing the
activities of regulatory bodies such as the SEC
(Bealing, Dirsmith, & Fogarty, 1996). While this
research has contributed a good deal to our under-
standing of institutional dynamics, a somewhat
anachronistic understanding of neoinstitutional
analysis as the study of institutionalization via iso-
morphism (e.g., DiMaggio & Powell, 1983)
remains pervasive, limiting the range of its explan-
atory potential. Even though some accounting
scholars have been more astute in their use of insti-
tutional theory (e.g., Cooper & Robson, 2006;
Cooper et al., 1998), other researchers have
employed relatively dated and caricatured versions
(e.g., Ahmed & Scapens, 2003; Brignall & Modell,
2000; Broadbent, Jacobs, & Laughlin, 2001; Burns
& Scapens, 2000; Collier, 2001; Gosselin, 1997).
This problem is certainly not limited to the world
of accounting research, but similarly plagues the
general management literature.
Even though early neoinstitutional formulations
and empirical research almost exclusively empha-
sized isomorphismby showing howpractices spread
throughout various ?elds (see Strang & Soule,
1998), this narrowconceptualization of institutional
dynamics was fundamentally ?awed in that it main-
tained a distinction between technical forces and
rational decision-making on the one hand, and
institutional forces and ‘‘irrationality’’ on the other.
This has been especially apparent in empirical
research that emphasizes a two-stage di?usion pro-
cess whereby early adopters are motivated by tech-
nical considerations and later adopters engage in
mindless imitation fueled by anxiety-driven pres-
sures to conform (e.g. Tolbert & Zucker, 1983).
Focusing on the inability of suchinstitutional conta-
gion models to explain downturns in di?usion cycles
related to fads, Strang and Macy (2001) argue that
what looks like a-rational mimicry on the surface
often masks organizational adoption decisions that
are made by intelligent, performance-oriented man-
agers. In addition, this over reliance on mimesis as
the core mechanism used to explain di?usion led
to the relative neglect of power dynamics (Mizruchi
& Fein, 1999).
This basic point has been echoed by a variety of
scholars (e.g., Palmer, Jennings, & Zhou, 1993;
Palmer, Barber, Zhou, & Soysal, 1995; Van den
Bulte & Lilien, 2001) who have suggested that
the depiction of later adopters as passive and irra-
tional provides an overly-narrow conceptualiza-
tion for institutional theory (e.g., Hirsch &
Lounsbury, 1997). Re?ecting on early neoinsti-
tutional developments, Scott (forthcoming) com-
mented that:
A focus on the explanation of non-rational
features of organizations threatened to con-
demn institutional theorists to play the role
of subordinate hand-maiden to rational ana-
lysts (in their numerous guises), who would
themselves attend to the adult concerns of
constructing accounts of e?cient organiza-
tions, leaving to institutionalists the scraps,
accounting for the error-term in their
equations.
More recent neoinstitutional scholarship, how-
ever, has begun to shift away from older imageries
that featured institutional dopiness by revisiting
ideas about rational action. The kind of rationality
that institutionalists are embracing is not the nar-
row, utility maximizing sort that economists and
rational choice theorists in sociology and political
science employ as a deus ex machina, but a broader
Weberian understanding of rationality as institu-
tionally contingent. Fligstein (1990) provided a
nice example of this when he showed how the goals
and performance-drivers of corporations changed
over the course of the 20th century as dominant
leadership backgrounds and related conceptions
of control shifted from operations to sales and
marketing to ?nance.
This kind of institutional approach to rational-
ity has more recently become manifest in the use of
the concept of logic that refers to broader cultural
beliefs and rules that structure cognition and guide
decision-making in a ?eld (e.g., Friedland, 2002;
Lounsbury, 2002; Scott, Martin, Peter, & Carol,
350 M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361
2000; Thornton, 2004), bridging institutional anal-
ysis and the old Carnegie School (see Ocasio,
1997). In turn, this has enabled contemporary
scholars to challenge established wisdom such as
the two-stage model’s conceptualization of institu-
tional and technical forces as separate and distinct
by showing how technical considerations are insti-
tutionally embedded (e.g., Lounsbury, 2007). This
is actually consistent with early neoinstitutional
formulations. For instance, Meyer and Rowan
(1977, p. 354) argue that ‘‘technical properties of
outputs are socially de?ned and do not exist in
some concrete sense that allows them to be empir-
ically discovered’’. While it may be a slight over-
statement to say that the initial insights of Meyer
and Rowan were hijacked by the careerist ambi-
tions of management researchers eager to build a
cottage industry out of the study of di?usion,
recovery of those insights has been long overdue.
This shift is signi?cant because it opens up new
possibilities for expanding the scope of institu-
tional analysis. While not eschewing the structural
insights of institutional analysis, this new emphasis
on rationality and organizational decision-making
entails a much more penetrating examination of
actors and practices. Given a more intent focus
on actors, one important new direction for institu-
tional analysis is the study of organizational heter-
ogeneity and practice variation (e.g., Lounsbury,
2001). While some management researchers have
taken a more strategic approach to this issue,
focusing on how the instrumental rationality of
actors leads to divergences in motive and behavior
(e.g., Oliver, 1991; Westphal & Zajac, 1994), other
scholars have aimed to remain consistent with a
focus on the institutional sources of actor behavior
(e.g., DiMaggio & Powell, 1983; Meyer & Rowan,
1977) by emphasizing how institutional rationality
can provide a foundation for the explanation of
variation. To do this, a conceptualization of orga-
nizational ?elds as comprising multiple, competing
logics has come to the forefront (e.g., Friedland &
Alford, 1991). Multiple logics provide institutional
foundations for competing claims and diverse
courses of action by enabling actors to segregate
and distinguish themselves from others (Louns-
bury, 2007; Marquis & Lounsbury, forthcoming).
This imagery re?ects an engagement with practice
theorists such as Bourdieu that emphasize hetero-
geneous struggle in multidimensional space (see
Lounsbury & Ventresca, 2003).
In this paper, I discuss these new directions in
institutional analysis and suggest how they provide
fruitful paths for the development of new insights
about accounting, organizations and society. In
addition to creating new vistas for the application
of neoinstitutionalism by broadening the scope of
this theory beyond isomorphism and symbolic
conformity, there are possibilities for bridging to
other prominent theoretical perspectives. In partic-
ular, by focusing more on actors and organiza-
tional heterogeneity, institutionally-oriented
theorists may seek fruitful connections to currently
fashionable domains such as practice theory that
have been in?uential in contemporary studies of
accounting and related contexts (e.g., Ahrens &
Chapman, 2007; Gendron, Cooper, & Townley,
2007; Hopwood & Miller, 1994). While practice
theorists have natural sympathies with neoinstitu-
tionalism given their interest in substantively
meaningful activity patterns, attention to institu-
tional dynamics by practice theorists has been as
limited as attention to micro-processes by institu-
tionalists (Lounsbury & Crumley, 2007). This
gap between actor micro-processes and institutions
provides an important opportunity for theoretical
development and empirical insight, and the new
directions of institutional analysis being developed
can help to open up this multi-level, meso range of
research. After a brief review of these shifts in con-
temporary institutional analysis, I discuss how
such redirections may be fruitfully used to expand
knowledge in behavioral studies of accounting.
Institutional theory and rationality
While neoinstitutionalism established itself as a
theoretical approach emphasizing the importance
of broader meaning systems, the power of this per-
spective has been hindered by formative studies
that emphasized how institutional processes were
antithetical to more rationalistic accounts. In the
study of di?usion, which became the beachhead
empirical avenue for the development of institu-
tional analysis, researchers of various stripes
M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361 351
detailed how institutional pressures were distinct
from technical pressures and rational decision
making, leading to mindless imitation (e.g., Tol-
bert & Zucker, 1983). In addition, a number of
statements through the 1980s emphasized how
such imitation and isomorphism are more likely
to be found in highly institutionalized contexts –
that is, in the domain of nonpro?ts and govern-
ment bureaucracies as opposed to in the world of
for-pro?t competition (e.g., Meyer & Scott,
1983). This led institutionalists to shy away from
the study of corporations through much of the
1980s and 1990s. In general, the early development
of neoinstitutional theory was extremely self-limit-
ing (see Scott, forthcoming).
Even though many behavioral researchers often
seek distinction in their approaches by expressing
discontent with narrow conceptualizations of
rationality found in neoclassical economics and
cognate economic or rational choice approaches
in sociology and political science, most scholars
are careful not to abandon the notion of rationality
completely. Hence, the numerous critiques (e.g.,
DiMaggio, 1988; Greenwood & Hinings, 1996;
Hirsch & Lounsbury, 1997; Stinchcombe, 1997)
of the dominant institutional emphasis on mimicry
were justly deserved. For instance, DiMaggio
(1988) argued that there is a need to study power
and the entrepreneurs who actually create institu-
tions. Friedland and Alford (1991, p. 244): added
that the dichotomy between technical and institu-
tional forces ‘‘assumes an institution-free concep-
tion of interest and power, and maintains the
materialist-idealist dualism in which actors have
objective interests, which can be understood inde-
pendently of the actors’ understandings’’.
In response, Greenwood and Hinings (1996)
called for renewed attention to how broader insti-
tutional dynamics relate to intraorganizational
processes. Lounsbury and Hirsch (1997) argued
for a renewed attention to the old institutional tra-
dition of Selznick, Gouldner, and Stinchcombe
that emphasized broader systems of social strati?-
cation and the active struggle, negotiations and
infrastructure that underlie institutions – what
Stinchcombe (1997) referred to as the guts of insti-
tutions. This rising chorus of institutional scholars
sought to reintroduce actors and rationality into
institutional arguments in order to reverse what
many viewed as a structurally-deterministic and
a-rational paradigm. In turn, this opened up a
new space for the study of agency and institutions,
leading to two quite distinct approaches to
rationality.
Some researchers have drawn on a conceptual-
ization of agency that has embraced a more instru-
mental, strategic approach to rationality. This line
of thinking was advocated by Oliver (1991) who
suggested that attention be paid to the various
ways in which organizations strategically respond
to institutional pressures. She suggested that orga-
nizations do not always blindly mimic or acquiesce
in the face of institutional pressure, but they can
also seek compromise with multiple constituents,
engage in avoidance tactics, try to manipulate
sources of pressure, or merely defy or ignore insti-
tutional demands. Empirically, the deployment of
an instrumental approach to rationality in the face
of institutional pressures has been nicely demon-
strated by Zajac and colleagues (e.g., Kraatz &
Zajac, 1996; Westphal & Zajac, 1994). For exam-
ple, Westphal and Zajac (1994) showed how many
corporations announced the adoption of incentive
plans to tie executive compensation to company
performance, but failed to implement them, show-
ing how actors can engage in manipulative sym-
bolic action in order to ruse key stakeholders.
In contradistinction to instrumental approaches
to rationality, other scholars have stuck closer to
the initial impetus of the institutional perspective
(e.g., DiMaggio & Powell, 1983; Meyer & Rowan,
1977), emphasizing a more collective or institutional
notion of rationality (e.g., Lounsbury, 2007; Mar-
quis & Lounsbury, forthcoming; Scott et al., 2000;
Thornton, 2004). To understand how such ‘‘institu-
tional’’ rationality is di?erent from ‘‘instrumental’’
rationality, it is helpful to revisit the classic state-
ment by Meyer and Rowan (1977). In that pioneer-
ing seed of neoinstitutional theory, Meyer and
Rowan (1977) sought to provide an alternative
explanation for the origins of formal organizations
that had been typically theorized as a functional
response of coordination and control to the growing
complexity and di?erentiation of society.
Their alternative approach emphasized the
‘‘Weberian’’ sources of formal organizational
352 M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361
structure – that is, how the rationalized meanings
(or myths) attached to organizational structures
gained legitimacy. For Meyer and Rowan, ratio-
nalized myths are a kind of institutional rationality
that guides individual behavior. They argue (pp.
343–344) that rationalized myths ‘‘are rationalized
and impersonal prescriptions that identify various
social purposes as technical ones and specify in a
rulelike way the appropriate means to pursue these
technical purposes rationally. Second, they are
highly institutionalized and thus in some measure
beyond the discretion of any individual participant
or organization’’. Hence, their approach to ratio-
nality is quite opposed to more instrumental
approaches that valorize the autonomy of individ-
uals to make decisions in ways that strategically
serve their narrow material interests. In fact, the
sources of narrow material interests are an object
of inquiry in their own right given that they are
socially constructed.
It is also important to note that even though
their approach to institutional rationality empha-
sizes the role of broader structures of meaning, it
is not a deterministic one. They suggest that there
is a great deal of institutional work, often under-
taken by powerful organizations, that is necessary
to create new institutions (p. 348). In addition, the
ability to incorporate institutional elements into an
organization is not given and often depends on an
organization’s leadership capacity (p. 352; see also
Selznick, 1957). In sum, isomorphism for Meyer
and Rowan is not a mindless, structurally deter-
mined process, but an e?ortful accomplishment.
Most importantly, they suggest that ‘‘institutional
environments are often pluralistic, and societies
promulgate sharply inconsistent myths’’ (p. 356).
This often overlooked statement is important
because it highlights how multiple forms of ratio-
nality may exist, providing a foundation for the
explanation of organizational variety rooted in
institutional as opposed to instrumental rational-
ity. This imagery ?ies in the face of the popular,
‘‘reader’s digest’’ understanding of institutional
theory as a theory of imitative dopiness and sug-
gests that institutional approaches should be able
to provide robust explanations of the sources
and consequences of heterogeneous, not just
homogeneous, behaviors and forms.
Institutional sources of practice variation
While the early statement by Meyer and Rowan
(1977) signaled the study of both homogeneity and
heterogeneity, research on the institutional sources
of practice variation has only begun to be devel-
oped. This is mainly because isomorphic homoge-
neity was emphasized in subsequent writings such
as in the seminal article by DiMaggio and Powell
(1983) that focused scholarly attention on the con-
vergence of practices and organizational symbolic
structures across organizational ?elds. Even
though the study of isomorphic di?usion became
dominant through the 1980s and 1990s, there were
some notable exceptions. Meyer and Scott (1983)
suggested that some ?elds were fragmented and
contained competing requirements and prescrip-
tions, leading to ambiguity and the creation of
more variegated structures. This spawned other
work that examined how institutional ambiguity
led to organizational variety (e.g., Abzug & Mez-
ias, 1993; D’Aunno, Sutton, & Price, 1991; Meyer,
Scott, & Strang, 1987), but practice variation did
not become a major empirical focal point in the lit-
erature. To the extent that practice variation was
examined, such variation was typically conceptual-
ized as stemming from actors acting strategically
to resist institutional pressures (e.g., Oliver, 1991)
or otherwise pretending to act in accordance
with institutional demands while instrumentally
pursuing their own agendas (Westphal & Zajac,
1994).
The emergence of the concept of logic has been
a key turning point in redirecting attention back to
the kind of institutional rationality suggested by
Meyer and Rowan (1977) as well as the study of
institutional sources of practice variation. Thorn-
ton (2004, p. 69) de?nes institutional logics as
‘‘the socially constructed, historical pattern of
material practices, assumptions, values, beliefs,
and rules by which individuals produce and repro-
duce their material subsistence, organize time and
space, and provide meaning to their social reality’’.
Lounsbury (2007) emphasizes that to demonstrate
the power of logics, it is necessary to show how a
multiplicity of broader cultural beliefs and rules
structure cognition and guide decision-making of
actors in a ?eld.
M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361 353
At the societal level, the capitalist market,
bureaucratic state and the nuclear family can be
conceptualized as logics that constitute the inter-
ests of actors and thereby shape cognition and
action (Friedland & Alford, 1991). At the level
of industries, logics consist of common producer
‘‘identities and valuation orders that structure
the decision making and the practices of the play-
ers in a product market’’ (Thornton & Ocasio,
1999, p. 805). That is, they focus the attention of
key decision-makers on a delimited set of issues
and solutions, and fundamentally shape decision
processes and outcomes (Ocasio, 1997).
A fair amount of research on logics has focused
on shifts in logics over time. Haveman and Rao
(1997) showed how the rise of Progressive thought
enabled a shift in savings and loan organizational
forms in the US in the early 20th century. Scott
et al. (2000) detailed how logic shifts in healthcare
led to the valorization of di?erent actors, behav-
iors and governance structures. Lounsbury (2002)
showed how a shift in logics in the US ?eld of
?nance enabled the professionalization of a wide
variety of ?nance occupations. Thornton and Oca-
sio (1999) catalogued how a change from profes-
sional to market logics in US higher education
publishing led to corollary changes in how execu-
tive succession was carried out.
One of the limitations of this work is that insti-
tutional shifts are often treated as period e?ects
that segregate one relatively stable period of beliefs
and activities from another, reinforcing notions of
stability and institutionalization that harkens back
to early neoinstitutional formulations (Reay &
Hinings, 2005). A more complete revival of the
more pluralistic approach to institutional rational-
ity signaled by Meyer and Rowan (1977) requires
an approach to logics that conceptualizes institu-
tional environments as more fragmented and con-
tested (Schneiberg, 2007; Schneiberg & Soule,
2005; Townley, 2002; Washington, 2004).
For example, Fiss and Zajac (2004) examined
how di?erent orientations towards corporate gov-
ernance – corporatist and shareholder value – have
led to dramatic shifts in the practices of German
corporations towards Western style governance,
but variation in the extent to which the share-
holder value approach is implemented. Moving
more in the direction of institutional rationality,
Stryker showed how formal-legal and scienti?c-
technical rationalizations o?er alternative sources
of legitimacy for actors’ behavior within the legal
system. Lounsbury (2007) extends this approach
by demonstrating how contending logics funda-
mentally shape variation in the practices and
behavior of distinct groups of actors. He showed
that in the context of the US mutual fund industry,
funds in Boston tended to focus on conserva-
tive long-term investing and relied on passive
money management strategies, while funds in
New York concentrated more on active money
management strategies aimed at rapid apprecia-
tion of principle.
These two distinct logics, rooted in di?erent
geographic locations, led to di?erent forms of
rationality. Lounsbury showed that consistent
with their focus on passive investing, Boston based
funds tended to make core strategic decisions
about money management based on their relative
e?ciency to peer funds; in contradistinction,
New York funds made decisions based on their
relative performance to peer funds. Thus, perfor-
mance and e?ciency are not universal triggers
for decision-makers, but are institutionally contin-
gent – in this case, based on the relationship of log-
ics to di?erent groups of actors located in di?erent
geographic locations.
By focusing on how ?elds are comprised of mul-
tiple logics, and thus, multiple forms of institution-
ally-based rationality, institutional analysts can
provide new insight into practice variation and
the dynamics of practice. Multiple logics can cre-
ate diversity in practice by enabling variety in cog-
nitive orientation and contestation over which
practices are appropriate. As a result, such multi-
plicity can create enormous ambiguity, leading to
logic blending, the creation of new logics, and
the continued emergence of new practice variants.
Recent e?orts to combine social movement analy-
sis and institutional theoretic approaches has high-
lighted how collective action often underlies these
processes (e.g., Clemens, 1997; Davis & McAdam,
2000; Fligstein, 1996; Lounsbury, 2001).
For instance, collective action can facilitate the
creation of new logics, and therefore, new forms
of rationality and possibilities for new kinds of
354 M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361
variety. For example, Schneiberg and Soule (2005)
showed that the passage of rate regulation by
American states in the early 20th century was
fundamentally in?uenced by anti-corporate move-
ments, including the Grange and Farmers Alliance,
who worked to contest corporate consolidation
and assert alternative logics of economic order. This
mobilization was a response to the rise of trusts in a
variety of sectors, and helped to produce anti-trust
laws, create new cooperative organizational forms,
and generally fomented a good deal of con?ict and
contestation over appropriate forms of economic
organization (see also Schneiberg, 1999, 2002;
Schneiberg & Bartley, 2001).
In a similar vein, Lounsbury (2001) showed
how spin-o? groups from the ecological movement
helped to create a recycling industry and played a
key role in the di?usion of recycling programs
across US colleges and universities (see also Lou-
nsbury, Ventresca, & Hirsch, 2003). However,
the spread of recycling programs was informed
by competing logics (Lounsbury, 2005), techno-
cratic and holistic/ecological, leading to variation
in the kinds of recycling programs created at uni-
versities. Some programs were merely symbolic,
often sta?ed by part-time custodial sta? who were
ecologically ambivalent. Others were more sub-
stantively developed and sta?ed with full-time
recycling coordinators who were committed to
the ecology movement and sought to extend their
recycling programs in ways that made campus
operations more sustainable. This bifurcation
re?ected competing logics, but was instantiated
by social movement activity that crucially enabled
more holistic/ecological forms to emerge through
processes of mobilization around and theorization
of this alternative.
Hence, a focus on institutional rationality does
not imply an absence of actors and agency – the
main critique of earlier neoinstitutional work
(e.g., DiMaggio, 1988). However, it is important
to emphasize the ontological approach to actors.
Institutional theorists do not assume that actors
have any real essence since they are constituted
by broader scale arrangements and beliefs. The
concept of ?eld, forwarded by DiMaggio and
Powell (1983) via the work of Bourdieu helps to
provide a systematic approach to the development
of these theoretical commitments. Bourdieu claims
that. . .
the notion of ?eld reminds us that the true
object of social science is not the individual,
even though one cannot construct a ?eld if
not through individuals, since the information
necessary for statistical analysis is generally
attached to individuals or institutions. It is
the ?eld which is primary and must be the
focus of the research operations. This does
not imply that individuals are mere ‘‘illu-
sions’’, that they do not exist: they exist as
agents – and not as biological individuals,
actors, or subjects – who are socially consti-
tuted as active and acting in the ?eld under
consideration by the fact that they possess
the necessary properties to be e?ective, to pro-
duce e?ects, in this ?eld. And it is knowledge
of the ?eld itself in which they evolve that
allows us best to grasp the roots of their singu-
larity, their point of view or position (in a ?eld)
from which their particular vision of the
world (and of the ?eld itself) is constructed
(Bourdieu & Wacquant, 1992, p. 107).
By moving towards an analysis of how ?elds are
comprised of multiple logics, institutional analysis
can move closer to Bourdieu’s approach to the
study of practice that emphasizes constant struggle
at the boundaries that demarcate social space
(Lounsbury & Ventresca, 2003). A focus on actors
is crucial to understanding how these struggles
play out and result in the creation of new logics
or practices. While this work is still in its early
moments, it has important implications for the
study of practice more generally, a topic of con-
temporary importance to behavioral accounting
researchers.
Implications for the study of accounting practice
Given the popular understanding of institu-
tional theory as a theory of isomorphism, research-
ers interested in the dynamics and ?ow of activity
patterns have tended to eschew institutional
approaches in favor of more grounded forms of
intraorganizational research – much of which is
M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361 355
drawing on emergent theories of practice (e.g.,
Chia & Holt, 2006; Gherardi & Nicolini, 2000; Jar-
zabkowski, 2005; Lave & Wenger, 1991; Nicolini,
Yanow, & Gherarddi, 2003; Orlikowski, 2000;
Schatzki, Knorr-Cetina, & von Savigny, 2001; Tso-
ukas, 1996). While there are a multitude of practice
theories and approaches, attention to practice as an
empirical commitment has become a key direction
in behavioral approaches to the study of account-
ing – arguably one of the most important given that
over 200 Accounting, Organizations and Society
articles are ?agged when searching for the word
‘‘practice’’ in titles, abstracts and keywords (e.g.,
Ahrens & Chapman, 2007; Ahrens & Mollona,
2007; Chenhall & Euske, in press; Gendron et al.,
2007; McKernan, 2007). However, even though
this growing body of research has been extremely
fruitful, it has tended to ignore broader institu-
tional dynamics in favor of more micro-processual
studies of how accounting systems shape and are
shaped by intra-organizational dynamics (see
Whittington, 2006, for similar observation).
This presents a major opportunity in the litera-
ture for an approach to practice that takes institu-
tions more seriously. In fact, from an
institutionalist lens, this is imperative since, pace
Bourdieu, most institutionalists conceptualize
practice as a kind of institution – sets of material
activities that are fundamentally shaped by
broader cultural frameworks such as categories,
classi?cations, frames, and other kinds of ordered
belief systems. Institutional theorists believe that
practices are fundamentally embedded in cultural
systems that are ‘‘structured as an embodiment
of the range of activities, social con?icts, and
moral dilemmas that individuals are compelled to
engage with as they go about negotiating the sorts
of everyday events that confront them in their
lives’’ (Mohr, 1998, p. 353). Even though an insti-
tutionalist approach to practice argues that action
must be understood as fundamentally constituted
by institutional rules and beliefs, to be relevant
to practice scholars, institutionalists must go
beyond their structuralist treatment of practice as
a cloud level observation of di?usion processes. I
argue that by focusing on understanding organiza-
tional variety, the new emphasis on multiple logics
and forms of institutional rationality is sympa-
thetic to more recent organizational and intra-
organizational research on practice, and can
enable deeper connections to be made between
institutionalists and scholars interested on the
micro-dynamics of practice.
A more complete approach to practice that
accounts for institutional processes requires atten-
tion to the broader cultural frameworks that are
created and changed by ?eld-level actors, as well
as the lower-level activities of organizations and
other actors that articulate with those frameworks.
While many anthropologists and sociologists have
demonstrated how practice is fundamentally
shaped by culture, the power of a more compre-
hensive approach becomes evident when probing
the question of where new practices come from –
an important, yet relatively unexplored question
(Lounsbury & Crumley, 2007). Since extant prac-
tices are conceptualized as kinds of institutions
connected to broader institutional beliefs such as
logics, however, there is a problem of embedded
agency (Seo & Creed, 2002). That is, if institutions
are de?ned by their stability, how is it possible to
explain change?
This problem requires institutionalists to draw
more openly from the broader community of prac-
tice researchers. This bridging has already been
occurring in accounting research via the applica-
tion of actor network theory (ANT) via the work
of Latour, Callon and others (e.g., Gendron
et al., 2007). The connections between ANT and
institutional approaches are evident in Latour’s
work (e.g., 1988) given his emphasis on how pro-
cesses of enrollment, theatres of persuasion, and
the intercalating of science or technology into ever
expanding networks facilitates institutionalization
(see Shapin, 1995, p. 308). Building on this sensi-
bility, some scholars have developed the notion
of performativity to highlight how there is always
a good deal of natural practice variety that results
from the idiosyncratic performances of actors as
they enact a particular practice (e.g., Feldman,
2003; Feldman & Pentland, 2003; Latour, 1987;
Orlikowski, 2000; Orlikowski, Yates, Okamura,
& Fujimoto, 1995). This is an ontological position
that understands the world as always in ?ux and
that the seeds of new practice creation lie in the
everyday activities of actors.
356 M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361
While seemingly at odds with an institutionalist
perspective, this position is easily incorporated. In
fact, within the neoinstitutional canon, we need
look no further than Meyer and Rowan (1977)
who provided a conceptualization of conformity
to institutional pressures that was decoupled from
the buzzing confusion of everyday life. That is,
there is always change occurring – stability is often
a tenuous social accomplishment that often
requires ongoing negotiation and institutional
work. This position is consistent with a good deal
of sociological theory that understands explana-
tion via social forms or ideal typical relations as
a theoretical abstraction (e.g., Simmel, 1990;
Stinchcombe, 1983; Weber, 1978). While much of
this more abstract, structural research has not
focused so much on more grounded dynamics, it
is not antithetical to such approaches.
However, given performativity, the challenge
from an institutionalist perspective is to under-
stand how variation in extant practice makes
possible the creation of something distinctly di?er-
ent – for example, a new practice. This requires
social recognition that variation in the enactment
of practice is substantively di?erent enough to
warrant attention as a deviation from established
practice. This often entails some sort of collective
action by actors who see a potential to bene?t
from such deviation in the form of a new socially
legitimated practice. Such collective action needs
to mobilize resources and meaning in support of
the new activity and then theorize this activity in
a way that will be acceptable to incumbents in
an established ?eld (Strang & Meyer, 1993).
Alternatively, social movement activists can
draw on such activity variation to establish a
new practice ?eld. These processes are often
infused with con?ict and struggle, but the success-
ful creation of a new practice in an established or
nascent ?eld may require the creation of new sup-
porting logics that infuse a novel activity with deep
meaning – thus, making it a practice (Bourdieu,
1977). For instance, in Lounsbury’s (e.g., 2007)
research on the US mutual fund industry referred
to earlier, he showed how the professionalization
project of money managers helped to create the
novel practice of active money management by
establishing a new performance logic that rational-
ized such money management strategies. The value
of this approach is to probe the relation of prac-
tices to logics and to track the dynamics that result
in the creation of new practices and logics.
How would such an approach extend current
work on accounting practice? Since the perspective
advanced requires that attention be paid to both
broader meaning systems (e.g., logics) and the
activities of people and organizations that are
informed by and bound up in logics, a key chal-
lenge lies in the design of research. To accomplish
this, it is typically helpful to study several organi-
zations within a ?eld, or even better, an entire pop-
ulation – certainly more than a single organization
since practices are often de?ned at the ?eld level
(Scott, 2001). If one aims to capture full popula-
tion data, it is important that enough detail is cap-
tured inside organizations to be able to understand
how intraorganizational processes connect to the
?eld level. A mix of qualitative and quantitative
analytical strategies is helpful.
The challenge is to demonstrate the e?ect and
range of logics and how they inform practice and
activity. While this typically requires a systematic
evaluation of a population, it is di?cult to accom-
plish such an analysis while also probing the
details of intraorganizational life. Hence, it is often
useful to combine industry level census/archival
data with ?eld study or at least extensive inter-
views at multiple organizations within a popula-
tion (see Ventresca & Mohr, 2002). This
analytical strategy is exempli?ed in Lounsbury’s
(2001) study of recycling program variation at col-
leges and universities. The research began with
?eld observations and interviews at multiple sites
and then expanded to a population level survey
that enables event history quantitative analyses
to be used to provide empirical support for quali-
tative-driven distinctions between kinds of pro-
grams observed in the initial ?eldwork.
This same basic strategy could be usefully
employed to extend excellent organization level
practice research such as that by Ahrens and Chap-
man (2007). In their paper, they presented ?ndings
from extensive ?eldwork (interviews and observa-
tions) across a multi-organization restaurant chain.
They studied menu design as a management control
practice, highlighting how management controls
M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361 357
are a resource for action. While insightful on its
own merits, their research also provides a founda-
tion for then branching out to multiple restaurants
to assess the relation between menu design and
management control more broadly, paying special
attention to similarities and di?erences in manage-
ment control practices across organizations. Are
there di?erent logics that inform management con-
trol practices? How did menu design initially
emerge as a tactic linked to management control?
Did this require collective action and the creation
of a new logic?
An institutionalist would look for systematic
variation in management control practice and link
such variation to broader control logics (e.g., recall
Fligsteins, 1990 emphasis on shifting modes of
control linked to CEO backgrounds). These logics
are often located in ?eld-level discourse such as in
trade associations and industry media – Robson
et al. (2007) provide an exemplar of how to locate
such broader trends in ?eld discourse. In turn,
identi?ed logics could help to explain di?erent
practice con?gurations and emphases that di?er-
entially shape menu design. The implication for
more ethnographic approaches to behavioral
accounting, therefore, is to move up and out after
a signi?cant contextual understanding is achieved
– ideally across at least a handful of sites.
This sort of analytical strategy promises the
generation of new knowledge and insight as
researchers begin to explore the relationship
between institutional forces and more micro-pro-
cesses. This orientation also makes neoinstitu-
tional theory even more relevant to those
interested in the dynamics of practice since prac-
tice is inextricably bound up in a broader array
of institutional processes. Gendron et al. (2007)
demonstrate this nicely in their account of how
auditing expertise was constructed through a pro-
cess of local experimentation and fact building
that required validation through the consolidation
of a broader network of support and articulation
of localized claims with wider meaning systems
regarding performance measurement. While neo-
institutional theory was not foregrounded in their
study, their attentiveness to institutional processes
and the activities of actors is exemplary and signals
a useful opportunity for interchange between neo-
institutionalism and cognate theories of practice
such as ANT.
In sum, by highlighting some new directions in
neoinstitutional research away from the study of
isomorphism and towards an understanding of
organizational heterogeneity, my aim is to dispel
more restricted views of neoinstitutional theory
while helping to open new analytical avenues.
Institutions matter in fundamental ways and any
institutional approach worth its salt should be able
to assist in the understanding of questions related
to the dynamics of practice discussed here. In par-
ticular, I argued that a focus on institutional ratio-
nality in the form of multiple, competing logics
can be particularly fruitful. While there has been
some good work in this direction, much more
needs to be done to understand where logics and
new practices come from and how they relate to
each other. Accounting provides a crucial context
to explore these issues and since institutional and
practice theories are prevalent perspectives within
the community of behavioral accounting research-
ers, accounting scholars are in a prime position to
contribute valuable knowledge to our understand-
ing of the dynamics of institutions and practice.
Acknowledgements
This paper builds on and extends remarks and
arguments made as part of a 2006 Keynote Ad-
dress at the Interdisciplinary Perspectives on
Accounting Conference held in Cardi?, UK.
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doc_465746001.pdf
In this paper, I highlight how popular understandings of neoinstitutionalism as a theory of isomorphism need to be
revised as institutionalists have shifted attention towards the study of organizational heterogeneity. As part of this shift,
old emphases on arational mimicry and stability have been replaced with new emphases on institutional rationality and
ongoing struggle and change
Institutional rationality and practice variation:
New directions in the institutional analysis of practice
Michael Lounsbury
*
University of Alberta School of Business and National Institute for Nanotechnology, 4-30E Business Building, Edmonton,
Alberta, Canada T6G 2E7
Abstract
In this paper, I highlight how popular understandings of neoinstitutionalism as a theory of isomorphism need to be
revised as institutionalists have shifted attention towards the study of organizational heterogeneity. As part of this shift,
old emphases on arational mimicry and stability have been replaced with new emphases on institutional rationality and
ongoing struggle and change. I discuss these new directions and the implications for the study of accounting practice. I
argue that given recent e?orts by institutionalists to account for actors and practice diversity, there is an important
opportunity for dialogue with practice theorists, such as those drawing on Actor Network Theory, and the creation
of a more comprehensive approach to the study of practice that attends to both institutional and micro-processual
dynamics.
Ó 2007 Elsevier Ltd. All rights reserved.
Neoinstitutional theory is one of the most dom-
inant perspectives in organizational analysis (e.g.,
Davis & Marquis, 2005). The uniqueness of this
perspective is rooted in its emphasis on the pri-
macy of culture, highlighting how social structures
of resources and meanings are created and have
important consequences (Lounsbury & Ventresca,
2002). This perspective conceptualizes institutions
as generative of interests, identities and appropri-
ate practice models that take shape in wider
socio-cultural contexts (Dobbin, 1994). In turn,
these broader contexts facilitate cognitive, norma-
tive and regulative pressures that fundamentally
shape organizational behavior (Scott, 2001).
This conceptual approach to organizations and
organizing has provided an important focal point
for behavioral studies of accounting over the past
couple of decades (e.g., Carruthers, 1995; Cooper,
Greenwood, Hinings, & Brown, 1998; Covaleski &
Dirsmith, 1988; Dirsmith, Heian, & Covaleski,
1997; Fogarty, 1996; Fogarty & Rogers, 2005;
Mezias, 1994; Robson et al., 2007). Concentrat-
ing on the institutional dynamics that a?ect the
0361-3682/$ - see front matter Ó 2007 Elsevier Ltd. All rights reserved.
doi:10.1016/j.aos.2007.04.001
*
Tel.: +1 780 492 1684.
E-mail address: [email protected]
www.elsevier.com/locate/aos
Available online at www.sciencedirect.com
Accounting, Organizations and Society 33 (2008) 349–361
practice of accounting, this research has high-
lighted the importance of situating professional
activities (e.g., Cooper & Robson, 2006; Fogarty
& Rogers, 2005), conducting comparative studies
of coordination and control systems (Whitley,
1999), examining the global expansion of ?rms
(Cooper et al., 1998), tracking the historical devel-
opment of markets and associations (e.g., Chua &
Poullaos, 1998), and more deeply probing the
activities of regulatory bodies such as the SEC
(Bealing, Dirsmith, & Fogarty, 1996). While this
research has contributed a good deal to our under-
standing of institutional dynamics, a somewhat
anachronistic understanding of neoinstitutional
analysis as the study of institutionalization via iso-
morphism (e.g., DiMaggio & Powell, 1983)
remains pervasive, limiting the range of its explan-
atory potential. Even though some accounting
scholars have been more astute in their use of insti-
tutional theory (e.g., Cooper & Robson, 2006;
Cooper et al., 1998), other researchers have
employed relatively dated and caricatured versions
(e.g., Ahmed & Scapens, 2003; Brignall & Modell,
2000; Broadbent, Jacobs, & Laughlin, 2001; Burns
& Scapens, 2000; Collier, 2001; Gosselin, 1997).
This problem is certainly not limited to the world
of accounting research, but similarly plagues the
general management literature.
Even though early neoinstitutional formulations
and empirical research almost exclusively empha-
sized isomorphismby showing howpractices spread
throughout various ?elds (see Strang & Soule,
1998), this narrowconceptualization of institutional
dynamics was fundamentally ?awed in that it main-
tained a distinction between technical forces and
rational decision-making on the one hand, and
institutional forces and ‘‘irrationality’’ on the other.
This has been especially apparent in empirical
research that emphasizes a two-stage di?usion pro-
cess whereby early adopters are motivated by tech-
nical considerations and later adopters engage in
mindless imitation fueled by anxiety-driven pres-
sures to conform (e.g. Tolbert & Zucker, 1983).
Focusing on the inability of suchinstitutional conta-
gion models to explain downturns in di?usion cycles
related to fads, Strang and Macy (2001) argue that
what looks like a-rational mimicry on the surface
often masks organizational adoption decisions that
are made by intelligent, performance-oriented man-
agers. In addition, this over reliance on mimesis as
the core mechanism used to explain di?usion led
to the relative neglect of power dynamics (Mizruchi
& Fein, 1999).
This basic point has been echoed by a variety of
scholars (e.g., Palmer, Jennings, & Zhou, 1993;
Palmer, Barber, Zhou, & Soysal, 1995; Van den
Bulte & Lilien, 2001) who have suggested that
the depiction of later adopters as passive and irra-
tional provides an overly-narrow conceptualiza-
tion for institutional theory (e.g., Hirsch &
Lounsbury, 1997). Re?ecting on early neoinsti-
tutional developments, Scott (forthcoming) com-
mented that:
A focus on the explanation of non-rational
features of organizations threatened to con-
demn institutional theorists to play the role
of subordinate hand-maiden to rational ana-
lysts (in their numerous guises), who would
themselves attend to the adult concerns of
constructing accounts of e?cient organiza-
tions, leaving to institutionalists the scraps,
accounting for the error-term in their
equations.
More recent neoinstitutional scholarship, how-
ever, has begun to shift away from older imageries
that featured institutional dopiness by revisiting
ideas about rational action. The kind of rationality
that institutionalists are embracing is not the nar-
row, utility maximizing sort that economists and
rational choice theorists in sociology and political
science employ as a deus ex machina, but a broader
Weberian understanding of rationality as institu-
tionally contingent. Fligstein (1990) provided a
nice example of this when he showed how the goals
and performance-drivers of corporations changed
over the course of the 20th century as dominant
leadership backgrounds and related conceptions
of control shifted from operations to sales and
marketing to ?nance.
This kind of institutional approach to rational-
ity has more recently become manifest in the use of
the concept of logic that refers to broader cultural
beliefs and rules that structure cognition and guide
decision-making in a ?eld (e.g., Friedland, 2002;
Lounsbury, 2002; Scott, Martin, Peter, & Carol,
350 M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361
2000; Thornton, 2004), bridging institutional anal-
ysis and the old Carnegie School (see Ocasio,
1997). In turn, this has enabled contemporary
scholars to challenge established wisdom such as
the two-stage model’s conceptualization of institu-
tional and technical forces as separate and distinct
by showing how technical considerations are insti-
tutionally embedded (e.g., Lounsbury, 2007). This
is actually consistent with early neoinstitutional
formulations. For instance, Meyer and Rowan
(1977, p. 354) argue that ‘‘technical properties of
outputs are socially de?ned and do not exist in
some concrete sense that allows them to be empir-
ically discovered’’. While it may be a slight over-
statement to say that the initial insights of Meyer
and Rowan were hijacked by the careerist ambi-
tions of management researchers eager to build a
cottage industry out of the study of di?usion,
recovery of those insights has been long overdue.
This shift is signi?cant because it opens up new
possibilities for expanding the scope of institu-
tional analysis. While not eschewing the structural
insights of institutional analysis, this new emphasis
on rationality and organizational decision-making
entails a much more penetrating examination of
actors and practices. Given a more intent focus
on actors, one important new direction for institu-
tional analysis is the study of organizational heter-
ogeneity and practice variation (e.g., Lounsbury,
2001). While some management researchers have
taken a more strategic approach to this issue,
focusing on how the instrumental rationality of
actors leads to divergences in motive and behavior
(e.g., Oliver, 1991; Westphal & Zajac, 1994), other
scholars have aimed to remain consistent with a
focus on the institutional sources of actor behavior
(e.g., DiMaggio & Powell, 1983; Meyer & Rowan,
1977) by emphasizing how institutional rationality
can provide a foundation for the explanation of
variation. To do this, a conceptualization of orga-
nizational ?elds as comprising multiple, competing
logics has come to the forefront (e.g., Friedland &
Alford, 1991). Multiple logics provide institutional
foundations for competing claims and diverse
courses of action by enabling actors to segregate
and distinguish themselves from others (Louns-
bury, 2007; Marquis & Lounsbury, forthcoming).
This imagery re?ects an engagement with practice
theorists such as Bourdieu that emphasize hetero-
geneous struggle in multidimensional space (see
Lounsbury & Ventresca, 2003).
In this paper, I discuss these new directions in
institutional analysis and suggest how they provide
fruitful paths for the development of new insights
about accounting, organizations and society. In
addition to creating new vistas for the application
of neoinstitutionalism by broadening the scope of
this theory beyond isomorphism and symbolic
conformity, there are possibilities for bridging to
other prominent theoretical perspectives. In partic-
ular, by focusing more on actors and organiza-
tional heterogeneity, institutionally-oriented
theorists may seek fruitful connections to currently
fashionable domains such as practice theory that
have been in?uential in contemporary studies of
accounting and related contexts (e.g., Ahrens &
Chapman, 2007; Gendron, Cooper, & Townley,
2007; Hopwood & Miller, 1994). While practice
theorists have natural sympathies with neoinstitu-
tionalism given their interest in substantively
meaningful activity patterns, attention to institu-
tional dynamics by practice theorists has been as
limited as attention to micro-processes by institu-
tionalists (Lounsbury & Crumley, 2007). This
gap between actor micro-processes and institutions
provides an important opportunity for theoretical
development and empirical insight, and the new
directions of institutional analysis being developed
can help to open up this multi-level, meso range of
research. After a brief review of these shifts in con-
temporary institutional analysis, I discuss how
such redirections may be fruitfully used to expand
knowledge in behavioral studies of accounting.
Institutional theory and rationality
While neoinstitutionalism established itself as a
theoretical approach emphasizing the importance
of broader meaning systems, the power of this per-
spective has been hindered by formative studies
that emphasized how institutional processes were
antithetical to more rationalistic accounts. In the
study of di?usion, which became the beachhead
empirical avenue for the development of institu-
tional analysis, researchers of various stripes
M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361 351
detailed how institutional pressures were distinct
from technical pressures and rational decision
making, leading to mindless imitation (e.g., Tol-
bert & Zucker, 1983). In addition, a number of
statements through the 1980s emphasized how
such imitation and isomorphism are more likely
to be found in highly institutionalized contexts –
that is, in the domain of nonpro?ts and govern-
ment bureaucracies as opposed to in the world of
for-pro?t competition (e.g., Meyer & Scott,
1983). This led institutionalists to shy away from
the study of corporations through much of the
1980s and 1990s. In general, the early development
of neoinstitutional theory was extremely self-limit-
ing (see Scott, forthcoming).
Even though many behavioral researchers often
seek distinction in their approaches by expressing
discontent with narrow conceptualizations of
rationality found in neoclassical economics and
cognate economic or rational choice approaches
in sociology and political science, most scholars
are careful not to abandon the notion of rationality
completely. Hence, the numerous critiques (e.g.,
DiMaggio, 1988; Greenwood & Hinings, 1996;
Hirsch & Lounsbury, 1997; Stinchcombe, 1997)
of the dominant institutional emphasis on mimicry
were justly deserved. For instance, DiMaggio
(1988) argued that there is a need to study power
and the entrepreneurs who actually create institu-
tions. Friedland and Alford (1991, p. 244): added
that the dichotomy between technical and institu-
tional forces ‘‘assumes an institution-free concep-
tion of interest and power, and maintains the
materialist-idealist dualism in which actors have
objective interests, which can be understood inde-
pendently of the actors’ understandings’’.
In response, Greenwood and Hinings (1996)
called for renewed attention to how broader insti-
tutional dynamics relate to intraorganizational
processes. Lounsbury and Hirsch (1997) argued
for a renewed attention to the old institutional tra-
dition of Selznick, Gouldner, and Stinchcombe
that emphasized broader systems of social strati?-
cation and the active struggle, negotiations and
infrastructure that underlie institutions – what
Stinchcombe (1997) referred to as the guts of insti-
tutions. This rising chorus of institutional scholars
sought to reintroduce actors and rationality into
institutional arguments in order to reverse what
many viewed as a structurally-deterministic and
a-rational paradigm. In turn, this opened up a
new space for the study of agency and institutions,
leading to two quite distinct approaches to
rationality.
Some researchers have drawn on a conceptual-
ization of agency that has embraced a more instru-
mental, strategic approach to rationality. This line
of thinking was advocated by Oliver (1991) who
suggested that attention be paid to the various
ways in which organizations strategically respond
to institutional pressures. She suggested that orga-
nizations do not always blindly mimic or acquiesce
in the face of institutional pressure, but they can
also seek compromise with multiple constituents,
engage in avoidance tactics, try to manipulate
sources of pressure, or merely defy or ignore insti-
tutional demands. Empirically, the deployment of
an instrumental approach to rationality in the face
of institutional pressures has been nicely demon-
strated by Zajac and colleagues (e.g., Kraatz &
Zajac, 1996; Westphal & Zajac, 1994). For exam-
ple, Westphal and Zajac (1994) showed how many
corporations announced the adoption of incentive
plans to tie executive compensation to company
performance, but failed to implement them, show-
ing how actors can engage in manipulative sym-
bolic action in order to ruse key stakeholders.
In contradistinction to instrumental approaches
to rationality, other scholars have stuck closer to
the initial impetus of the institutional perspective
(e.g., DiMaggio & Powell, 1983; Meyer & Rowan,
1977), emphasizing a more collective or institutional
notion of rationality (e.g., Lounsbury, 2007; Mar-
quis & Lounsbury, forthcoming; Scott et al., 2000;
Thornton, 2004). To understand how such ‘‘institu-
tional’’ rationality is di?erent from ‘‘instrumental’’
rationality, it is helpful to revisit the classic state-
ment by Meyer and Rowan (1977). In that pioneer-
ing seed of neoinstitutional theory, Meyer and
Rowan (1977) sought to provide an alternative
explanation for the origins of formal organizations
that had been typically theorized as a functional
response of coordination and control to the growing
complexity and di?erentiation of society.
Their alternative approach emphasized the
‘‘Weberian’’ sources of formal organizational
352 M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361
structure – that is, how the rationalized meanings
(or myths) attached to organizational structures
gained legitimacy. For Meyer and Rowan, ratio-
nalized myths are a kind of institutional rationality
that guides individual behavior. They argue (pp.
343–344) that rationalized myths ‘‘are rationalized
and impersonal prescriptions that identify various
social purposes as technical ones and specify in a
rulelike way the appropriate means to pursue these
technical purposes rationally. Second, they are
highly institutionalized and thus in some measure
beyond the discretion of any individual participant
or organization’’. Hence, their approach to ratio-
nality is quite opposed to more instrumental
approaches that valorize the autonomy of individ-
uals to make decisions in ways that strategically
serve their narrow material interests. In fact, the
sources of narrow material interests are an object
of inquiry in their own right given that they are
socially constructed.
It is also important to note that even though
their approach to institutional rationality empha-
sizes the role of broader structures of meaning, it
is not a deterministic one. They suggest that there
is a great deal of institutional work, often under-
taken by powerful organizations, that is necessary
to create new institutions (p. 348). In addition, the
ability to incorporate institutional elements into an
organization is not given and often depends on an
organization’s leadership capacity (p. 352; see also
Selznick, 1957). In sum, isomorphism for Meyer
and Rowan is not a mindless, structurally deter-
mined process, but an e?ortful accomplishment.
Most importantly, they suggest that ‘‘institutional
environments are often pluralistic, and societies
promulgate sharply inconsistent myths’’ (p. 356).
This often overlooked statement is important
because it highlights how multiple forms of ratio-
nality may exist, providing a foundation for the
explanation of organizational variety rooted in
institutional as opposed to instrumental rational-
ity. This imagery ?ies in the face of the popular,
‘‘reader’s digest’’ understanding of institutional
theory as a theory of imitative dopiness and sug-
gests that institutional approaches should be able
to provide robust explanations of the sources
and consequences of heterogeneous, not just
homogeneous, behaviors and forms.
Institutional sources of practice variation
While the early statement by Meyer and Rowan
(1977) signaled the study of both homogeneity and
heterogeneity, research on the institutional sources
of practice variation has only begun to be devel-
oped. This is mainly because isomorphic homoge-
neity was emphasized in subsequent writings such
as in the seminal article by DiMaggio and Powell
(1983) that focused scholarly attention on the con-
vergence of practices and organizational symbolic
structures across organizational ?elds. Even
though the study of isomorphic di?usion became
dominant through the 1980s and 1990s, there were
some notable exceptions. Meyer and Scott (1983)
suggested that some ?elds were fragmented and
contained competing requirements and prescrip-
tions, leading to ambiguity and the creation of
more variegated structures. This spawned other
work that examined how institutional ambiguity
led to organizational variety (e.g., Abzug & Mez-
ias, 1993; D’Aunno, Sutton, & Price, 1991; Meyer,
Scott, & Strang, 1987), but practice variation did
not become a major empirical focal point in the lit-
erature. To the extent that practice variation was
examined, such variation was typically conceptual-
ized as stemming from actors acting strategically
to resist institutional pressures (e.g., Oliver, 1991)
or otherwise pretending to act in accordance
with institutional demands while instrumentally
pursuing their own agendas (Westphal & Zajac,
1994).
The emergence of the concept of logic has been
a key turning point in redirecting attention back to
the kind of institutional rationality suggested by
Meyer and Rowan (1977) as well as the study of
institutional sources of practice variation. Thorn-
ton (2004, p. 69) de?nes institutional logics as
‘‘the socially constructed, historical pattern of
material practices, assumptions, values, beliefs,
and rules by which individuals produce and repro-
duce their material subsistence, organize time and
space, and provide meaning to their social reality’’.
Lounsbury (2007) emphasizes that to demonstrate
the power of logics, it is necessary to show how a
multiplicity of broader cultural beliefs and rules
structure cognition and guide decision-making of
actors in a ?eld.
M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361 353
At the societal level, the capitalist market,
bureaucratic state and the nuclear family can be
conceptualized as logics that constitute the inter-
ests of actors and thereby shape cognition and
action (Friedland & Alford, 1991). At the level
of industries, logics consist of common producer
‘‘identities and valuation orders that structure
the decision making and the practices of the play-
ers in a product market’’ (Thornton & Ocasio,
1999, p. 805). That is, they focus the attention of
key decision-makers on a delimited set of issues
and solutions, and fundamentally shape decision
processes and outcomes (Ocasio, 1997).
A fair amount of research on logics has focused
on shifts in logics over time. Haveman and Rao
(1997) showed how the rise of Progressive thought
enabled a shift in savings and loan organizational
forms in the US in the early 20th century. Scott
et al. (2000) detailed how logic shifts in healthcare
led to the valorization of di?erent actors, behav-
iors and governance structures. Lounsbury (2002)
showed how a shift in logics in the US ?eld of
?nance enabled the professionalization of a wide
variety of ?nance occupations. Thornton and Oca-
sio (1999) catalogued how a change from profes-
sional to market logics in US higher education
publishing led to corollary changes in how execu-
tive succession was carried out.
One of the limitations of this work is that insti-
tutional shifts are often treated as period e?ects
that segregate one relatively stable period of beliefs
and activities from another, reinforcing notions of
stability and institutionalization that harkens back
to early neoinstitutional formulations (Reay &
Hinings, 2005). A more complete revival of the
more pluralistic approach to institutional rational-
ity signaled by Meyer and Rowan (1977) requires
an approach to logics that conceptualizes institu-
tional environments as more fragmented and con-
tested (Schneiberg, 2007; Schneiberg & Soule,
2005; Townley, 2002; Washington, 2004).
For example, Fiss and Zajac (2004) examined
how di?erent orientations towards corporate gov-
ernance – corporatist and shareholder value – have
led to dramatic shifts in the practices of German
corporations towards Western style governance,
but variation in the extent to which the share-
holder value approach is implemented. Moving
more in the direction of institutional rationality,
Stryker showed how formal-legal and scienti?c-
technical rationalizations o?er alternative sources
of legitimacy for actors’ behavior within the legal
system. Lounsbury (2007) extends this approach
by demonstrating how contending logics funda-
mentally shape variation in the practices and
behavior of distinct groups of actors. He showed
that in the context of the US mutual fund industry,
funds in Boston tended to focus on conserva-
tive long-term investing and relied on passive
money management strategies, while funds in
New York concentrated more on active money
management strategies aimed at rapid apprecia-
tion of principle.
These two distinct logics, rooted in di?erent
geographic locations, led to di?erent forms of
rationality. Lounsbury showed that consistent
with their focus on passive investing, Boston based
funds tended to make core strategic decisions
about money management based on their relative
e?ciency to peer funds; in contradistinction,
New York funds made decisions based on their
relative performance to peer funds. Thus, perfor-
mance and e?ciency are not universal triggers
for decision-makers, but are institutionally contin-
gent – in this case, based on the relationship of log-
ics to di?erent groups of actors located in di?erent
geographic locations.
By focusing on how ?elds are comprised of mul-
tiple logics, and thus, multiple forms of institution-
ally-based rationality, institutional analysts can
provide new insight into practice variation and
the dynamics of practice. Multiple logics can cre-
ate diversity in practice by enabling variety in cog-
nitive orientation and contestation over which
practices are appropriate. As a result, such multi-
plicity can create enormous ambiguity, leading to
logic blending, the creation of new logics, and
the continued emergence of new practice variants.
Recent e?orts to combine social movement analy-
sis and institutional theoretic approaches has high-
lighted how collective action often underlies these
processes (e.g., Clemens, 1997; Davis & McAdam,
2000; Fligstein, 1996; Lounsbury, 2001).
For instance, collective action can facilitate the
creation of new logics, and therefore, new forms
of rationality and possibilities for new kinds of
354 M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361
variety. For example, Schneiberg and Soule (2005)
showed that the passage of rate regulation by
American states in the early 20th century was
fundamentally in?uenced by anti-corporate move-
ments, including the Grange and Farmers Alliance,
who worked to contest corporate consolidation
and assert alternative logics of economic order. This
mobilization was a response to the rise of trusts in a
variety of sectors, and helped to produce anti-trust
laws, create new cooperative organizational forms,
and generally fomented a good deal of con?ict and
contestation over appropriate forms of economic
organization (see also Schneiberg, 1999, 2002;
Schneiberg & Bartley, 2001).
In a similar vein, Lounsbury (2001) showed
how spin-o? groups from the ecological movement
helped to create a recycling industry and played a
key role in the di?usion of recycling programs
across US colleges and universities (see also Lou-
nsbury, Ventresca, & Hirsch, 2003). However,
the spread of recycling programs was informed
by competing logics (Lounsbury, 2005), techno-
cratic and holistic/ecological, leading to variation
in the kinds of recycling programs created at uni-
versities. Some programs were merely symbolic,
often sta?ed by part-time custodial sta? who were
ecologically ambivalent. Others were more sub-
stantively developed and sta?ed with full-time
recycling coordinators who were committed to
the ecology movement and sought to extend their
recycling programs in ways that made campus
operations more sustainable. This bifurcation
re?ected competing logics, but was instantiated
by social movement activity that crucially enabled
more holistic/ecological forms to emerge through
processes of mobilization around and theorization
of this alternative.
Hence, a focus on institutional rationality does
not imply an absence of actors and agency – the
main critique of earlier neoinstitutional work
(e.g., DiMaggio, 1988). However, it is important
to emphasize the ontological approach to actors.
Institutional theorists do not assume that actors
have any real essence since they are constituted
by broader scale arrangements and beliefs. The
concept of ?eld, forwarded by DiMaggio and
Powell (1983) via the work of Bourdieu helps to
provide a systematic approach to the development
of these theoretical commitments. Bourdieu claims
that. . .
the notion of ?eld reminds us that the true
object of social science is not the individual,
even though one cannot construct a ?eld if
not through individuals, since the information
necessary for statistical analysis is generally
attached to individuals or institutions. It is
the ?eld which is primary and must be the
focus of the research operations. This does
not imply that individuals are mere ‘‘illu-
sions’’, that they do not exist: they exist as
agents – and not as biological individuals,
actors, or subjects – who are socially consti-
tuted as active and acting in the ?eld under
consideration by the fact that they possess
the necessary properties to be e?ective, to pro-
duce e?ects, in this ?eld. And it is knowledge
of the ?eld itself in which they evolve that
allows us best to grasp the roots of their singu-
larity, their point of view or position (in a ?eld)
from which their particular vision of the
world (and of the ?eld itself) is constructed
(Bourdieu & Wacquant, 1992, p. 107).
By moving towards an analysis of how ?elds are
comprised of multiple logics, institutional analysis
can move closer to Bourdieu’s approach to the
study of practice that emphasizes constant struggle
at the boundaries that demarcate social space
(Lounsbury & Ventresca, 2003). A focus on actors
is crucial to understanding how these struggles
play out and result in the creation of new logics
or practices. While this work is still in its early
moments, it has important implications for the
study of practice more generally, a topic of con-
temporary importance to behavioral accounting
researchers.
Implications for the study of accounting practice
Given the popular understanding of institu-
tional theory as a theory of isomorphism, research-
ers interested in the dynamics and ?ow of activity
patterns have tended to eschew institutional
approaches in favor of more grounded forms of
intraorganizational research – much of which is
M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361 355
drawing on emergent theories of practice (e.g.,
Chia & Holt, 2006; Gherardi & Nicolini, 2000; Jar-
zabkowski, 2005; Lave & Wenger, 1991; Nicolini,
Yanow, & Gherarddi, 2003; Orlikowski, 2000;
Schatzki, Knorr-Cetina, & von Savigny, 2001; Tso-
ukas, 1996). While there are a multitude of practice
theories and approaches, attention to practice as an
empirical commitment has become a key direction
in behavioral approaches to the study of account-
ing – arguably one of the most important given that
over 200 Accounting, Organizations and Society
articles are ?agged when searching for the word
‘‘practice’’ in titles, abstracts and keywords (e.g.,
Ahrens & Chapman, 2007; Ahrens & Mollona,
2007; Chenhall & Euske, in press; Gendron et al.,
2007; McKernan, 2007). However, even though
this growing body of research has been extremely
fruitful, it has tended to ignore broader institu-
tional dynamics in favor of more micro-processual
studies of how accounting systems shape and are
shaped by intra-organizational dynamics (see
Whittington, 2006, for similar observation).
This presents a major opportunity in the litera-
ture for an approach to practice that takes institu-
tions more seriously. In fact, from an
institutionalist lens, this is imperative since, pace
Bourdieu, most institutionalists conceptualize
practice as a kind of institution – sets of material
activities that are fundamentally shaped by
broader cultural frameworks such as categories,
classi?cations, frames, and other kinds of ordered
belief systems. Institutional theorists believe that
practices are fundamentally embedded in cultural
systems that are ‘‘structured as an embodiment
of the range of activities, social con?icts, and
moral dilemmas that individuals are compelled to
engage with as they go about negotiating the sorts
of everyday events that confront them in their
lives’’ (Mohr, 1998, p. 353). Even though an insti-
tutionalist approach to practice argues that action
must be understood as fundamentally constituted
by institutional rules and beliefs, to be relevant
to practice scholars, institutionalists must go
beyond their structuralist treatment of practice as
a cloud level observation of di?usion processes. I
argue that by focusing on understanding organiza-
tional variety, the new emphasis on multiple logics
and forms of institutional rationality is sympa-
thetic to more recent organizational and intra-
organizational research on practice, and can
enable deeper connections to be made between
institutionalists and scholars interested on the
micro-dynamics of practice.
A more complete approach to practice that
accounts for institutional processes requires atten-
tion to the broader cultural frameworks that are
created and changed by ?eld-level actors, as well
as the lower-level activities of organizations and
other actors that articulate with those frameworks.
While many anthropologists and sociologists have
demonstrated how practice is fundamentally
shaped by culture, the power of a more compre-
hensive approach becomes evident when probing
the question of where new practices come from –
an important, yet relatively unexplored question
(Lounsbury & Crumley, 2007). Since extant prac-
tices are conceptualized as kinds of institutions
connected to broader institutional beliefs such as
logics, however, there is a problem of embedded
agency (Seo & Creed, 2002). That is, if institutions
are de?ned by their stability, how is it possible to
explain change?
This problem requires institutionalists to draw
more openly from the broader community of prac-
tice researchers. This bridging has already been
occurring in accounting research via the applica-
tion of actor network theory (ANT) via the work
of Latour, Callon and others (e.g., Gendron
et al., 2007). The connections between ANT and
institutional approaches are evident in Latour’s
work (e.g., 1988) given his emphasis on how pro-
cesses of enrollment, theatres of persuasion, and
the intercalating of science or technology into ever
expanding networks facilitates institutionalization
(see Shapin, 1995, p. 308). Building on this sensi-
bility, some scholars have developed the notion
of performativity to highlight how there is always
a good deal of natural practice variety that results
from the idiosyncratic performances of actors as
they enact a particular practice (e.g., Feldman,
2003; Feldman & Pentland, 2003; Latour, 1987;
Orlikowski, 2000; Orlikowski, Yates, Okamura,
& Fujimoto, 1995). This is an ontological position
that understands the world as always in ?ux and
that the seeds of new practice creation lie in the
everyday activities of actors.
356 M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361
While seemingly at odds with an institutionalist
perspective, this position is easily incorporated. In
fact, within the neoinstitutional canon, we need
look no further than Meyer and Rowan (1977)
who provided a conceptualization of conformity
to institutional pressures that was decoupled from
the buzzing confusion of everyday life. That is,
there is always change occurring – stability is often
a tenuous social accomplishment that often
requires ongoing negotiation and institutional
work. This position is consistent with a good deal
of sociological theory that understands explana-
tion via social forms or ideal typical relations as
a theoretical abstraction (e.g., Simmel, 1990;
Stinchcombe, 1983; Weber, 1978). While much of
this more abstract, structural research has not
focused so much on more grounded dynamics, it
is not antithetical to such approaches.
However, given performativity, the challenge
from an institutionalist perspective is to under-
stand how variation in extant practice makes
possible the creation of something distinctly di?er-
ent – for example, a new practice. This requires
social recognition that variation in the enactment
of practice is substantively di?erent enough to
warrant attention as a deviation from established
practice. This often entails some sort of collective
action by actors who see a potential to bene?t
from such deviation in the form of a new socially
legitimated practice. Such collective action needs
to mobilize resources and meaning in support of
the new activity and then theorize this activity in
a way that will be acceptable to incumbents in
an established ?eld (Strang & Meyer, 1993).
Alternatively, social movement activists can
draw on such activity variation to establish a
new practice ?eld. These processes are often
infused with con?ict and struggle, but the success-
ful creation of a new practice in an established or
nascent ?eld may require the creation of new sup-
porting logics that infuse a novel activity with deep
meaning – thus, making it a practice (Bourdieu,
1977). For instance, in Lounsbury’s (e.g., 2007)
research on the US mutual fund industry referred
to earlier, he showed how the professionalization
project of money managers helped to create the
novel practice of active money management by
establishing a new performance logic that rational-
ized such money management strategies. The value
of this approach is to probe the relation of prac-
tices to logics and to track the dynamics that result
in the creation of new practices and logics.
How would such an approach extend current
work on accounting practice? Since the perspective
advanced requires that attention be paid to both
broader meaning systems (e.g., logics) and the
activities of people and organizations that are
informed by and bound up in logics, a key chal-
lenge lies in the design of research. To accomplish
this, it is typically helpful to study several organi-
zations within a ?eld, or even better, an entire pop-
ulation – certainly more than a single organization
since practices are often de?ned at the ?eld level
(Scott, 2001). If one aims to capture full popula-
tion data, it is important that enough detail is cap-
tured inside organizations to be able to understand
how intraorganizational processes connect to the
?eld level. A mix of qualitative and quantitative
analytical strategies is helpful.
The challenge is to demonstrate the e?ect and
range of logics and how they inform practice and
activity. While this typically requires a systematic
evaluation of a population, it is di?cult to accom-
plish such an analysis while also probing the
details of intraorganizational life. Hence, it is often
useful to combine industry level census/archival
data with ?eld study or at least extensive inter-
views at multiple organizations within a popula-
tion (see Ventresca & Mohr, 2002). This
analytical strategy is exempli?ed in Lounsbury’s
(2001) study of recycling program variation at col-
leges and universities. The research began with
?eld observations and interviews at multiple sites
and then expanded to a population level survey
that enables event history quantitative analyses
to be used to provide empirical support for quali-
tative-driven distinctions between kinds of pro-
grams observed in the initial ?eldwork.
This same basic strategy could be usefully
employed to extend excellent organization level
practice research such as that by Ahrens and Chap-
man (2007). In their paper, they presented ?ndings
from extensive ?eldwork (interviews and observa-
tions) across a multi-organization restaurant chain.
They studied menu design as a management control
practice, highlighting how management controls
M. Lounsbury / Accounting, Organizations and Society 33 (2008) 349–361 357
are a resource for action. While insightful on its
own merits, their research also provides a founda-
tion for then branching out to multiple restaurants
to assess the relation between menu design and
management control more broadly, paying special
attention to similarities and di?erences in manage-
ment control practices across organizations. Are
there di?erent logics that inform management con-
trol practices? How did menu design initially
emerge as a tactic linked to management control?
Did this require collective action and the creation
of a new logic?
An institutionalist would look for systematic
variation in management control practice and link
such variation to broader control logics (e.g., recall
Fligsteins, 1990 emphasis on shifting modes of
control linked to CEO backgrounds). These logics
are often located in ?eld-level discourse such as in
trade associations and industry media – Robson
et al. (2007) provide an exemplar of how to locate
such broader trends in ?eld discourse. In turn,
identi?ed logics could help to explain di?erent
practice con?gurations and emphases that di?er-
entially shape menu design. The implication for
more ethnographic approaches to behavioral
accounting, therefore, is to move up and out after
a signi?cant contextual understanding is achieved
– ideally across at least a handful of sites.
This sort of analytical strategy promises the
generation of new knowledge and insight as
researchers begin to explore the relationship
between institutional forces and more micro-pro-
cesses. This orientation also makes neoinstitu-
tional theory even more relevant to those
interested in the dynamics of practice since prac-
tice is inextricably bound up in a broader array
of institutional processes. Gendron et al. (2007)
demonstrate this nicely in their account of how
auditing expertise was constructed through a pro-
cess of local experimentation and fact building
that required validation through the consolidation
of a broader network of support and articulation
of localized claims with wider meaning systems
regarding performance measurement. While neo-
institutional theory was not foregrounded in their
study, their attentiveness to institutional processes
and the activities of actors is exemplary and signals
a useful opportunity for interchange between neo-
institutionalism and cognate theories of practice
such as ANT.
In sum, by highlighting some new directions in
neoinstitutional research away from the study of
isomorphism and towards an understanding of
organizational heterogeneity, my aim is to dispel
more restricted views of neoinstitutional theory
while helping to open new analytical avenues.
Institutions matter in fundamental ways and any
institutional approach worth its salt should be able
to assist in the understanding of questions related
to the dynamics of practice discussed here. In par-
ticular, I argued that a focus on institutional ratio-
nality in the form of multiple, competing logics
can be particularly fruitful. While there has been
some good work in this direction, much more
needs to be done to understand where logics and
new practices come from and how they relate to
each other. Accounting provides a crucial context
to explore these issues and since institutional and
practice theories are prevalent perspectives within
the community of behavioral accounting research-
ers, accounting scholars are in a prime position to
contribute valuable knowledge to our understand-
ing of the dynamics of institutions and practice.
Acknowledgements
This paper builds on and extends remarks and
arguments made as part of a 2006 Keynote Ad-
dress at the Interdisciplinary Perspectives on
Accounting Conference held in Cardi?, UK.
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