ACCTING2501-Financial Accounting

ii)

 
2.Isomorphism refers to the similarity between the structures of the different organisation operating in the same or different industry. The similarity may be the result of imitation or independent development by the company. Paul DiMaggio and Walter Powell developed the concepts of isomorphism (Martínez-Ferrero and García-Sánchez 2017). There are three types of isomorphism they are normative isomorphism, coercive isomorphism and mimetic isomorphism.

Coercive isomorphism

Coercive isomorphism is the developments that occur within the organisation due to the pressure that is exerted upon the organisation from other entities on which it is dependent upon. The development of Coercive isomorphism can also be the result of the pressure from the expectations the society has from the entity. some of the pressure felt by the entities can be attributed to the government regulations or mandates, some may be the result of the contract law and the various financial reporting requirements of the country it operates in. it is to be noted that coercive isomorphism is different from mimetic isomorphism wherein the inherent uncertainties of the environment encourages the adoption of imitation (Nagayoshi et al. 2015). It more similar to normative isomorphism in wherein the well-established professional standards and the networks are the main influencer of change. Some instances of coercive isomorphism include the influence the influence that is exercised by the large corporations over their respective subsidiaries and its adoption on a large scale by liberal political parties.

Normative isomorphism-

Normative isomorphism is the phenomenon wherein the entities adopt similarities among them due to the mandate presented before them by their respective professions. One of the modes of normative isomorphism can be found in the mandatory legitimisation that is inherent in the process of licensing and crediting of the achievement in the field of education. The other mode of normative isomorphism can be found in the presence of the inter organisational networks that often span across several organisations (Shields 2015). The similarity occurs because of the various norms that are instilled among the individuals during the time of the education. One of the most common enhancer of the process of normative isomorphism is the inter hiring among the industrial firms. The reason being that the employees carry along with them the culture and the mandates that have received from the present organisation. It is to be noted that normative isomorphism is quite different to mimetic isomorphism wherein the similarities are the result of the uncertainties and it is similar to coercive isomorphism wherein the organisations face pressure from the external forces to be similar (Kamusella 2017).

Use of this concepts for explaining voluntary reporting practices

The concepts can be vividly associated with the voluntary disclosures that are being made by the different organisations. Coercive isomorphism leads to similar voluntary disclosures because of the influence of the superior or other entities it is dependent upon due to the culture of disclosures that are prevalent in the financial statements of those entities (Krücken 2017). Whereas in case of normative isomorphism the individuals working in different organisations receive the same type education and hence carry the same norms with them wherever they work. The effect of which can also be noticed in the disclosures made by the entities.

Reference

Ahmad, N.A. and Mohamed, R., 2017. MANAGEMENT CONTROL SYSTEM AND NIGERIAN FIRMS PERFORMANCE FROM INSTITUTIONAL THEORY PERSPECTIVE. International Journal of Management Research and Reviews, 7(10), pp.941-949.

Jervis, E., Moxham, C. and Meehan, J., 2016. The power of the institution: overcoming barriers to the diffusion of low carbon innovation in the construction industry. In Proceedings of the 3rd International EurOMA Sustainable Operations and Supply Chains Forum, Lancaster.

Kamusella, T.D., 2016. Are Central Europe, and East and Southeast Asia alike? The normative isomorphism of language, nation and state. Standard Norms in Written Languages.

Kamusella, T.D., 2017. The rise and dynamics of the normative isomorphism of language, nation, and state in Central Europe. The Battle for Ukrainian.

Krücken, G., 2017. Paul J. DiMaggio und Walter W. Powell: The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. In Schlüsselwerke der Wirtschaftssoziologie (pp. 195-200). Springer VS, Wiesbaden.

Martínez-Ferrero, J. and García-Sánchez, I.M., 2017. Coercive, normative and mimetic isomorphism as determinants of the voluntary assurance of sustainability reports. International Business Review, 26(1), pp.102-118.

Nagayoshi, S., Kawabata, Y. and Nakamura, J., 2015. A study on core business shift from diagnosis service to systems integration service in major business consulting firms in Japan. Academy of Strategic Management Journal, 14(2), p.141.

Shields, R., 2015. Measurement and isomorphism in international education. The SAGE handbook of research in international education.