Dimaggio and powell 1983 also recognized the

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DiMaggio and Powell (1983) also recognized the potential for “decoupling”, which is defined as a discrepancy between a formal structure and actual practices within an “organization” (Meyer and Rowan, 1977; Tilcsik, 2009). Decoupling is also considered to be a process whereby formal structures are adopted by an organization in a ceremonial way but actual practices are determined by other factors (Fourcade, 2006). Organizational researchers have documented decoupling in a variety of settings, including schools (Meyer and Rowan, 1978; Delucchi, 2000), corporations (Westphal and Zajac, 2001), government agencies (Tilcsik, 2009) and non-governmental organizations (Elsbach and Sutton, 1992). Previous studies have advanced different explanations for the existence of decoupling. Some researchers have argued that decoupling enables organizations to establish legitimacy with powerful external forces while maintaining internal flexibility (Meyer and Rowan, 1977). It has also been suggested that decoupling may occur because it serves the interests of organizational leaders (Westphal and Zajac, 2001), or because it allows organizational decision-makers to avoid implementing policies that conflict with their established ways of acting (Tilcsik, 2009). Legislation was introduced to change the regulatory structures for statutory auditing in ways that give the appearance of institutional isomorphism Micheal Power (1997): The Audit Society How do you explain the audit boom? 83
- Audit firms are in the business of selling surety they vouch for the compliance by the auditee to familiar and accepted accounting principles, and thus allow investors to more reliably value the company objectivity of auditors is key to providing this surety, and many of the professional policies of accountants are designed to maintain objectivity - Increase of international trade, as well as the multinational operations of specific organizations - Increasing globalization, internalization of supply and production chains & international cross boarder chains increasing need of common framework with common standards - Deregulation and liberation of the finance sector stronger criticism of state regulation - Consequences in B2B relations transnationalism, offering same standard - B2C about the labels, not competitors - Social movement labels (like Fairtrade) require audits competition about standards - Technological development: interdependence between institutions and technology (sometimes, changing technology highlights significance of institutions because it exposes gaps in the institutional structure) - Audit has become a business model, “innovative technique” - Even working for NGOs Why is it (not) rational to do audits? - Question of an org: shall I audit or not? - Rational: makes urself comparable to others, marketing technique (Fair Trade Label, “Greenwashing”) - Powerful OIMs could demand audits/labels form their suppliers - Auditing: ceremonial practices, takes a lot of time and effort, would be better invested in the way you produce e.g. (legitimation, public funded org.) -

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