Do Institutional Pressures Matter in Development? A case of Introduction of Accrual Accounting Practices to the Public Sector in Sri Lanka

Abstract

The public sector in Sri Lanka, in the recent past, has taken steps to transform its accounting practices from cash to accrual. This paper tries to answer whether the institutional pressures: Coercive, normative and mimetic had any bearing on such developments in introducing the accrual accounting practices to the public sector in the island. As a result, authors, adopting Institutional Theory as theoretical lens and using semi-structured interviews, attempt to explain how and in what manner the institutional pressures count the development. The study found that the normative pressure was the fundamental and mimetic pressure became the descendant in initiating the accrual accounting practices to the public sector. Further the study found that the coercive pressure lacks in implementing the accrual accounting practices in the public entities.