Institutional pressures, monopolistic conditions and the implementation of early cost management practices : the case of the Royal Tobacco factory of Seville (1820–1887)

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In spite of our increasing understanding of the underpinnings of early cost management systems, little is still known about the reasons for the implementation of such systems in firms operating under monopolistic conditions. This article studies the enforcement by law of cost and budgeting systems in the Royal Tobacco Factory of Seville (Spain), a manufactory of the state-owned monopoly. By doing this, we seek both to enhance understanding of the state's motivation to enact institutional pressures aiming at the implementation of early cost management practices as well as to study different organizational responses to simultaneous pressures arising from a single institutional source. It is suggested that the state's motivation to legally enforce the implementation of early cost and budgeting systems may be attributed to (a) the seeking of legitimacy by the state regulatory body, (b) the active agency of senior employees of the state regulatory body to keep their jobs and compensation packages on the eve of the privatization of the industry, and (c) the interest of the regulatory agency to instil the basis of mimetic isomorphism within the monopoly. Different responses by the RTF to pressures for reporting cost and budgeting information were explained by (a) the expected diffusion of firm's non-conformity within the institutional area, (b) the expected impact of institutional rules and norms on organizational goals, and (c) the extent to which the institutional source is consistent in its demands.
Cost accounting, Institutional, Management accounting, Management budgeting, Monopoly, Tobacco, Theory
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Abacus, 2001, v. 37, n. 2, pp.139-165