Theoretical Background
Institutional theory suggests ways in which individuals organize themselves in arrangements that endure both over time and across particular organizational settings. Springing from the sociological literature, it holds that individuals act within webs of “values, norms, rules, beliefs, and taken-for-granted assumptions that are at least partially of their own making” (Barley and Tolbert 1997, 93). These webs represent ‘institutions’ and carry enduring organizing principles that guide action within and across particular settings. Institutions are seen as “consisting of established and enduring patterns of beliefs and practices that apply at both the micro-level within organizations and at the macro-level across organizations”(Lammers& Barbour 2006, 362). Institutions exercise constraints on how things can/should be done; however, these constraints are subject to change (Barley and Tolbert 1997, 94). Furthermore, institutions guide and/or constrain not only individual behaviors, but also the behavior of collectives - be they organizations, industries, or societies. Collectives organized around actions that are goal-directed represent communities of practice, and their actions are guided by institutional norms.
Within the organizational communication literature, institutions are seen as “constellations of established practices guided by formalized, rational beliefs that transcend particular organizations and situations (Lammers and Barbour 2006, 364). The enduring characteristics of institutions are expressed in institutional rhetoric, and this rhetoric is used in “externally directed corporate expression[s] of relatively formal collective entities” (Finet 2001, 274). Finet continues that this rhetoric is “intended to influence the larger social normative climate”, including that in which other organizations with regulatory powers work (p. 274). There exists, then, a larger arena in which actors employ institutional rhetoric in attempts to perpetuate existing norms across organizational settings
Developing a reporting framework for novel phenomena like environmental and CSR performance is significantly a process of sense-making in which participants negotiate norms that contribute to formation of a new institution. Individuals engaged in the effort should be influenced by the institutional norms prevalent in the communities of practice in which they hold membership. The phenomena under consideration transcend the traditional boundaries of any single community of practice and engage multiple communities including financial reporting, civil society, and business.
Development of institutional norms is invested with power processes and ideological relationships that are not obvious from a simple reading of texts included in any particular deliberation of focus (Boje et al 2004, 574). Organizations and communities struggle internally to define practices and then to define themselves consistent with these practices. These same organizations and communities also operate in institutional fields populated with other organizations and communities. Negotiating definitions of practice, including new practice, occurs within these fields that cross organizational/community boundaries. As a result, the two deliberation episodes of interest in this study are viewed as more than isolated conversations. They are viewed as instances of organizing meaning that are connected to other efforts to organize meaning, and they take place in a field that spans established institutional boundaries. The two sponsoring organizations that are involved — the AICPA and the GRI — each vie for recognition as legitimate authorities on environmental reporting, but the institutional domains in which the deliberations take place are markedly different.
Many of the participants who contribute to the deliberations speak as representatives of other conversational/cognitive domains of participants and interests. This feature of speaking on behalf of others creates another level to examine, wherein each of these conversations on environmental/sustainability reporting is also a conversation that exists with respect to other conversations. Sanders and Bonito (2010, 449) find that individual participants invoke arguments based on institutional perspective in order to lend the authority of that institution to the argument of the individual participant. This represents one way in which participants attempt to influence negotiations. ‘Accountancy-related’ participants and ‘preparers’ are roles that may be assumed by different individual actors in successive conversations about financial reporting and/or environmental/sustainability reporting. Through repeated conversations, ‘the preparer perspective’ and ‘the accountancy perspective’ are established as objects that may be used in other conversations, and they carry knowledge and influence about norms and/or irregularities associated with these objects. In this way local conversations that serve to organize and reinforce local understandings yield organizing power that may be used in conversations beyond their primary local communities (Robichaurd et al. 2004, 622). These broader conversations can be seen as meta-conversations that have the potential to carry the organizing understandings of one community of practice to another community of practice. The two deliberations of interest in this study form, then, a meta-conversation. The functions of meta-conversations are to ground particular texts as those of a collective of actors, and to instantiate the individual participants as speaking for other local-level deliberations. These two deliberations can then be seen as action sites where “structures of power, legitimation, and meaning are worked out over time” (Robichaurd et al 2004, 631).
A GRI framework on CSR reporting, lacking credibility within the stronger financial reporting/accounting discourse will have insufficient power, on its own, to challenge the established institutional legitimacy of financial reporting. The GRI version of environmental accounting attempts to redefine what is accepted as appropriate organizational behavior by preparers in the domain of economic, environmental and social performance. The power to sanction or challenge organizational legitimacy creates a space wherein the effectiveness of voluntary codes of conduct like the GRI framework rests, and this makes it similar to the power possessed by auditing financial reports. The participation of accountancy organizations is likely to be influential in GRI Guidelines development, and may be viewed (along with the embedded power relations therein) as a ready transplant to the deliberation on CSR reporting.