Umesh Sharma & Stewart Lawrence

Stability and Change at FPTL: An InstitutionalPerspective

I nstitutional theory, according to Lounsbury (2007),is one of the most dominant perspectives in organi-sational analysis. The use of institutional theory ap-

plied to management accounting has been popularisedby Barley and Tolbert (1997) and Burns and Scapens(2000). In this perspective, accounting is not simply atechnical device applied neutrally to assist managementwith decision-making but is the product of a particu-lar organisational culture which in turn is embedded inand influenced by a broader set of institutional arrange-ments.

Accounting practice is seen as being subject to the in-fluence of the particular organisational culture and thewider social and institutional context in which it func-tions (Hopwood 1983, 1999, Brignall and Modell 2000,Hoque and Alam 1999, Hoque and Hopper 1997, Pereraet al. 2003, Alam 1997, Hussain and Hoque 2002, Euskeand Riccaboni 1999). Management control practices areoften institutionalised to gain legitimacy from exter-nal constituents such as the government (Modell 2001,Collier 2001, Carpenter and Feroz 2001). Studies of le-gitimacy tend to focus on explaining isomorphism, thatis similarity, in accounting rules and routines which be-come accepted unquestioningly by organisational partic-ipants. Rules are formalised ways in which things oughtto be done while routines demonstrate the pattern ofthought and action habitually adopted by groups of in-dividuals (Burns and Scapens 2000). Once institution-alised, the routines are a force for stability and resistanceto change. This creates a problem for institutional the-orists in explaining changes in accounting practice. Ifinstitutions are defined by their stability, how is it possi-ble to explain change? The problem has been identifiedby Seo and Creed (2002) as the problem of ‘embeddedagency’. If actors’ behaviour is influenced by institution-alised rules and routines, how is it possible for actors tochange those rules and routines?

Explanations of change often involve the introduc-tion of some external ‘jolt’ or crisis that forces change,but the extraneous forces seem to be outside the the-ory. Barley and Tolbert (1997) and Burns and Scapens(2000) acknowledge that there needs to be an exoge-nous shock before actors can make collective choice tochange institutional arrangements. Seo and Creed (2002)

Once institutionalised, routines are a force for stabilityand resistance to change. This creates a problem forinstitutional theorists in explaining changes in accountingpractice. This paper attempts to illustrate thatinstitutional theory can encompass a processualexplanation of change, through a case study of Fiji Postsand Telecommunications Limited (FPTL). We illustratehow institutional contradictions or inconsistencies werean impetus to institutional change in the organisation.Institutional entrepreneurs were instrumental inabandoning the existing routines and introducing newcommercial ones. The commercial business norms werestabilised by the management team through the process ofenactment, reproduction and routinisation.

CorrespondenceStewart Lawrence, Department of Accounting, Waikato Man-agement School, University of Waikato, PB 3105, Hamilton,New Zealand. Tel: +64 7-8562889; fax: +64 7-838 4332; emailstewartl@waikato.ac.nz

doi: 10.1111/j.1835-2561.2008.0004.x

Australian Accounting Review Vol. 18 No. 44 2008 25

Stability and Change at FPTL U. Sharma & S. Lawrence

question these models, asking where the contextualchange comes from (e.g., from an idiosyncratic and ex-ogenous or endogenous force? When and how do em-bedded actors collectively come to a point where theyrecognise the need for collective action for changing ex-isting institutional arrangements?). Institutional theoryis therefore claimed to have severe limitations, as it can-not provide a complete understanding of change.

This paper examines two questions:

• If institutions are defined by their stability, how is itpossible to explain change?

• If actors’ behaviour is influenced by institutionalisedrules and routines, how is it possible for agents tochange those rules and routines?

In relation to the first question, this study aims to ex-tend the literature by examining the micro-processes ofchange and demonstrate how institutional theory, whichhas often been associated with institutional embedded-ness (stability), can be extended. We follow Seo andCreed’s (2002) theorisation which claims that institu-tional theory can encompass a dialectical and processualview of organisational change.

In relation to the second question, the paper exam-ines how changes are a function of change agents (in-stitutional entrepreneurs) drawn from within Fiji Postsand Telecommunications Limited (FPTL) and from itsinstitutional environment.

Further, the literature dealing with changes in ac-counting has tended to portray changes as occurringwithout much resistance (Busco et al. 2006, Soin et al.2002, Zilber 2002, Abernethy and Chua 1996). However,changes at FPTL took somewhat longer to be institu-tionalised, partly because of cultural and political factorsspecific to Fiji. The paper adds to the literature showingthat resistance to change could be attributed to a specificcultural and political context.

Theoretical Framework

Institutional theory draws on a definition from the socialscience literature which defines institutions as ‘a way ofthought or action of some prevalence and permanence,which is embedded in the habits of a group or the cus-toms of a people’ (Hamilton 1932, p. 84). Institutionsare settled ways of thinking common to members of anorganisation (Burns 2000). Institutional principles areencoded in rules and routines which in turn are enactedin specific situations (Johnson et al. 2000). The resultingbehaviour is reproduced by organisational members andbecomes objectified and institutionalised.

Institutional theory is the main interpretive lens usedin this study. The theory is concerned with understand-ing organisations within larger social and cultural sys-

tems (Oliver 1991, DiMaggio and Powell 1983). Moreparticularly it focuses attention on the importance ofsocial culture and environment on accounting practices.Burns (2000) notes that accounting practices and emerg-ing routines can be said to be institutionalised whenthey become widely accepted in the organisation andbecome the unquestionable form of management con-trol. In this perspective, accounting practices may bedecoupled from the actual technical and administrativeprocesses within the organisation and viewed as ratio-nalisations in order to achieve legitimacy (Dillard et al.2004).

DiMaggio and Powell (1983, 1991) point out that or-ganisations tend to model themselves on similar organ-isations which have been found to manifest significanthigher survival advantages. Three classification of iso-morphism are proposed: coercive, mimetic and norma-tive (DiMaggio and Powell 1983, 1991). Coercive iso-morphism results from both formal and informal pres-sure imposed on an organisation by another party onwhich it is dependent, and by expectations of the societywithin which it operates. Mimetic isomorphism occurswhen organisations model themselves on other organisa-tions they perceive to be more legitimate (Mizruchi andFein 1999). Normative isomorphism stems from profes-sionalisation, that is, the collective struggle of membersof an organisation to define the conditions and methodof work. DiMaggio and Powell (1991) argue that twoaspects of professionalisation are central sources of iso-morphism. One is the gaining of formal education andthe second is the growth and elaboration of professionalnetworks that span organisations.

However, earlier institutional theorists’ coverage of in-stitutional theory placed the emphasis on organisationalstability rather than change and tended to ignore humanagency (see Lounsbury 2007, Seo and Creed 2002, Field-man 2003). Oliver (1991) argued that explaining cul-tural change among actors was needed in institutionaltheory. She blended institutional theory, resource depen-dence and strategic choice theory to develop a conceptualframework to examine managerial responses to institu-tional processes. The role of actors was later echoed byBarley and Tolbert (1997) and Burns and Scapens (2000)in developing a model of institutionalisation.

Also, Seo and Creed (2002) question institutional em-beddedness: if institutions are, by definition, rooted intaken-for-granted rules, norms and routines requiringconformity of individuals, then how are new institu-tions created or existing ones changed over time (seeDiMaggio and Powell 1991)? This theoretical paradox isan issue of institutional arrangements. Seo and Creed(2002) put forward the idea of institutional contra-dictions/inconsistency as an impetus for institutionalchange. Such contradictions can be exploited by en-trepreneurs in their day-to-day interactions. As Giddens(1991) explains, in a crisis situation system reproduction

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can give way to abrupt change as agency comes to thefore. Existing power structures (structures of domina-tion) are challenged and replaced with new structures.This paper attempts to tackle the problem of embeddedagency by integrating notions of dialectics of agents andstructure from a structuration theoretical perspective(see Burns and Scapens 2000, Barley and Tolbert 1997,Lounsbury 2007, Hirsch and Lounsbury 1997, Beckert1999). These authors argued that organisational routinesand institutional actors influence the process of man-agement accounting change. In studying change, we arestudying changes in organisational behaviour and hownew patterns of behaviour are produced and reproduced(Soin et al. 2002). In their actions, the individual actorsmay challenge existing practices and produce and repro-duce new practices through new rules and routines.

Organisational life produces contradictions, generatesconflicts and tensions within social systems that mayshape consciousness and acts to change established or-der. Seo and Creed (2002) explain the four sources ofcontradiction as a basis for a dialectical understandingof the process of change.

First, it is claimed that the pursuit of organisationallegitimacy may contradict and undermine functional ef-ficiency. Organisational actors may gain legitimacy andnecessary resources by becoming isomorphic with theirinstitutional environments (see DiMaggio and Powell1983, 1991). But conformity with institutional arrange-ments may conflict with technical activities and effi-ciency demands. Institutional theorists have accommo-dated this contradiction between efficiency and legiti-macy with the concept of ‘decoupling’ of formal struc-ture activities from technical activities (see Meyer andRowan 1977). But the contradiction remains.

Second, institutional isomorphism that increases le-gitimacy may act against the need for adaptive movesfor survival. Powell (1991) points out that any effortsto change established routines are often resisted as theythreaten individuals’ sense of security. This unrespon-siveness creates a situation whereby contradictions be-tween institutions and their external environment de-velop and accumulate.

Third, conformity resulting from demands of certainexternal institutional forces may create incompatibilitiesand inconsistencies with other (changing) outside insti-tutional arrangements. This can lead to contradictionsat different levels in or in various sectors of the organisa-tion. Incompatibilities may lead to an institutional crisis.Sudden change in government regulations and deregu-lations, or technological innovations, can appear to bethe consequence of interinstitutional incompatibilitiesunfolding in different sectors of the larger institutionalfield.

Finally, there are contradictions when there are con-flicting and divergent interests and institutional arrange-ments are the product of a political struggle among var-

ious participants who have asymmetric power (Seo andCreed 2002). Organisation practices tend to often en-dure through the efforts of those who benefit from them(Benson 1977). This contradiction means that those ac-tors whose ideas and interests are not met by existingsocial arrangements take action to change the presentorder (Seo and Creed 2002, p. 229).

Institutional entrepreneurs are change agents withinan institutional setting who create change stemmingfrom institutional contradictions. DiMaggio (1988) andZilber (2002) define the notion of institutional en-trepreneurs as individuals or organisations that act indiscordance with the established institutional arrange-ments and may eventually change these institutionalarrangements. Beckert (1999) points out that the no-tion of institutional entrepreneur introduces strategicagency into institutional organisational theory. Schum-peter (1991) describes the ‘entrepreneur’ as the inno-vator who leaves behind routines. In our case, the en-trepreneur is sometimes brought in from outside to ef-fect the institutional change. The entrepreneur devoteshis/her attention to new options, takes over unusualtasks and realises new combinations in the productionprocess against the adaptive pressure of his/her socialsurrounding. While managers respond to changes byadaptation, entrepreneurs respond creatively (Schum-peter 1991). The other aspect of Schumpeter’s un-derstanding of entrepreneurs is the concept of cre-ative destruction. By this, Schumpeter refers to simul-taneous destructive and constructive consequences ofinnovations.

Garud et al. (2007) note that the concept of the in-stitutional entrepreneur is one that reintroduces agency,interests and power into institutional analysis of organi-sation. Institutional entrepreneurs encompass powerfulactors such as the state and professions that reshape or-ganisations and help re-establish a new dominant prac-tice (Lounsbury and Crumley 2007). Figure 1 visualisesthe process of institutionalisation as entrepreneurs de-stroy existing institutions. Through this, the institutionalentrepreneurs create the need for a re-embedding pro-cess by managers, which in turn, re-establishes institu-tional stability.

In our theoretical approach, institutionalisation is acontinuous process whose operations can be observedthrough time (see Barley and Tolbert 1997). Longitudi-nal methods best capture the essence of institutionalisa-tion.

In brief, the institutional framework can be utilisedas a theoretical framework to assist explanation of howand the extent to which environmental constituenciesshape the behaviour of individuals and to analyse howthe individuals themselves modify and transform theroutines and organisations. The institutional theoryframework provides a means of understanding organ-isational change.

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(Adapted from Beckert 1999:788).

Institutions (Rules and routines)

Entrepreneur

Uncertainty

Manager

Creation of embeddedness

Destruction of institutions

Creation of strategic opportunities/ Institutional contradictions

Creation of embeddedness

Necessity to create stability

Figure 1 A dynamic model of interests and institution.

Research Method

The approach is to undertake qualitative research whichfocuses on a case study (see Yin 1981, 1994, Scapens1990). We employ an explanatory case study method(Ryan et al. 1992). In attempting to explain the reasonsfor observed accounting practices, explanatory case stud-ies focus on a case and employ social theories to guideunderstanding (Rahaman and Lawrence 2001).

Various methods were used to gather field data for thisstudy. Semi-structured interviews were complementedby a review of publicly available documents and internalproprietary documents. This material included annualreports, memos, board papers, media articles and par-liamentary papers. Historical data on FPTL were alsoobtained from the National Archives of Fiji in Suva.

Semi-structured interviews were used to collect em-pirical evidence from FPTL. The interviewees were thoseconsidered to be most involved with the change process,such as the chief executive, strategic manager, qualitymanager, customer services manager, accountants andoperational staff such as engineers. Post Fiji Limitedmanagers and accountants were also interviewed to getadditional sources of information. Interviews were alsoconducted with past employees who had seen the trans-formation of FPTL from a government entity to a cor-porate organisation.

Data collection for the study took place between 2002to 2005. The interviews generally concentrated on ac-counting and control changes at FPTL after its corpo-ratisation, how the changes were carried out, the reactionof workers to the changes, some of the perceived advan-tages and disadvantages of changes and the problems en-countered in the change process. Issues frequently raisedwere public-sector reforms, resistance to change, com-mercial ethos, and political and communitarian values.

The interviewees were encouraged to express their viewsin their own words. Even if they raised issues outside theinterview questions, they were encouraged to elaborateon them. The 25 interviews each lasted between an hourand 90 minutes and took place in formal surroundings.All were taped and transcribed.

While the data-triangulation approach was useful, asit enabled the capture of a comprehensive, holistic andcontextual portrayal of the phenomenon under study, italso posed challenges in terms of analysing and makingsense of data collected from various sources. To over-come this problem, we started our analysis by preparingtables listing issues frequently raised in our interviews(see also Tsamenyi et al. 2006 for data analysis of quali-tative research). Several themes such as public-sector re-form, commercial ethos, efficiency, resistance to changeand political influence were drawn from those responses.The data representing the themes were clustered togetherand supplemented with documentary evidence collectedwithin the themes.

The Case Organisation

FPTL was the first government institution to be corpo-ratised in Fiji. The government enacted the Posts andTelecommunications Decree of 1989 and transferred thePosts and Telecommunications Department (P&T) intoa corporate company, FPTL, with 100% of the sharesowned by the government. Shareholding ministers wereto assume the policy-setting role but were to withdrawfrom management activities (FPTL annual report 1990).

The government issued an exclusive 25-year licence toFPTL for the provision of national telephone, telegraphand telex services from the beginning of 1990 (FPTL an-nual report 1990). This entitlement was later transferredto Telecom Fiji Limited (TFL) on further restructuring of

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FPTL in 1996. TFL functions were to maintain, provideand install domestic fixed line and mobile telecommuni-cations data transmission and telex services (TFL annualreport 1996). Other services such as telecommunicationsapparatus and products are non-regulated and the sup-ply of these services is an opportunity for private sector(Opportunities for Growth 1993).

FPTL’s Commercial Ethos 1989–92

Before corporatisation, Fiji’s postal and telecommunica-tions services were considered a public service. Money,costs and profit were not the prime concerns and ap-peared to play a minimal role in determining the purposeand meaning of daily activity. Acceptance of the gov-ernment’s moral obligation to provide basic postal andtelecommunication services to its citizens legitimatedthe creation and continued existence of a nationalisedmonopoly utility. Public accountability was important,given that P&T management should be seen to be actingin the public interest. Systems of accountability were setup with the aim of ensuring that P&T management waspublicly accountable to parliament through the Ministerof Telecommunications.

The World Bank and the Asian Development Bankwere lenders to the Fiji government and their generalideology favoured greater efficiency and responsivenessto the needs of customers. Corporatisation, involvingchanges to personnel at the highest level, brought aboutrestructurings and new accountabilities. All operationalstaff were required to resign their positions and to reapplyfor newly created positions in the corporatised organisa-tion. This was a firm signal to staff that changes in organi-sational routines were necessary, but they did not happenovernight. Change agents, such as board members, hadto effect the changes not only in physical systems butin cultural, institutionalised ways of behaving. Consul-tants from Andersen in 1992 undertook a strategic re-view of the company. Granlund and Lukka (1998) pointout that consultants generally support mimetic processesand Andersen’s report was no exception, recommendingpractices that overseas telecommunications companieshad adopted after privatisation. As the consultants wereprofessionals, they could also be characterised as havingattributes of normative isomorphism.

Institutional Contradictions and ControlChanges 1992–95

The newly appointed FPTL board of 1992 inherited anorganisation with a strong public service ethos. Winningthe hearts and minds of the workforce and changing ha-bitual modes of thinking and behaviour was a challenge.There was bound to be uncertainty as institutional con-tradiction or inconsistency arose. The institutional in-

compatibilities created a sense of institutional crisis (seeSeo and Creed 2002) and in times of crisis, agency comesto the fore (Giddens 1991).

According to a manager, it became apparent to theboard that after two years of corporatisation, FPTL’s ef-ficiency had not improved. Profits were generated byprice hikes in 1990 and not by improved efficiency(FPTL annual report 1992). Although routines werebeing changed for the sake of appearing legitimate tooutside constituencies, operational efficiency was unaf-fected (see Seo and Creed 2002, Meyer and Rowan 1977).This institutional inconsistency paved the way for insti-tutional change towards commercial business practices,with the help of institutional entrepreneurs includinghired consultants, the board and senior management.

The Andersen consultants were hired for six monthsand charged with introducing commercial values suchas a focus on profitability, return on investment anddebt/equity ratio, and realigning FPTL’s organisationalstructures. They noted that revenue was generated over-whelmingly by urban customers and that a large urbancustomer wait list needed to be improved. Andersen’s re-port emphasised that FPTL’s return on assets and profitmargins compared poorly with those of other telecom-munications companies in the region, and also againstother large companies in Fiji (Andersen report 1992).The report also suggested that Naqova, the managingdirector of the company, would be unable to lead theorganisation into corporatisation unless he received fur-ther training, possibly a secondment to a telecommu-nications company that had already made a transitionfrom a government department. Andersen also recom-mended a division of the company into five strategicbusiness units headed by general managers and intro-duced the position of chief general manager between thegeneral managers and the managing director.

It was the board of directors that performed the roleof institutional entrepreneur in implementing the con-sultants’ report. The board was attempting to destroy theinstitution’s public service ethos and create a new set ofcommercial business routines, but it failed to establishnew institutionalised behaviours.

Resistance to change 1992–94

In its attempt to introduce a commercial culture toFPTL, the board met extensive resistance to changefrom the managing director, Naqova, and other man-agers. Naqova, an engineer by profession, had been thepermanent secretary for P&T since 1982 and was ap-pointed managing director when P&T was corporatisedin 1990. When advised that the Andersen report recom-mended he be given overseas training, Naqova refusedand was asked to resign. Naqova personalised the inter-nal contradiction introduced to FPTL in which profit-oriented ways of thinking conflicted with a long-standing

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public-sector ethos. One manager pointed out: ‘Com-mercial culture in civil service days was almost non-existent. It was more of a political ambition throughsocial objectives to concentrate on geographical cover-age or telephone service penetration to all at any cost.’

A Parliament Paper (1994, p. 2) pointed out: ‘Thenew board tried to speed up the modernisation of FPTLbut failed to take employees with them mainly throughlack of information and consultation on what they weretrying to do, causing unchecked speculation about staffredundancies and mistrust as to its intention in imple-menting their overseas consultants’ reports, particularlyas they were used to support the forced resignation ofthe Managing Director in February, 1992.’

Naqova was holding back the change process at FPTL.The lack of acceptance of commercial norms stemmedfrom the top and it was only after Naqova was forcedto resign that FPTL management and staff became morewilling to acquiesce to the change process. The work-force needed reassurance that commercialisation wouldnot result in job losses, as evidenced by one of theaccountants’ comments: ‘We were told to accept thechange as no one will be made redundant from the job.[Where services were outsourced] staff were redeployedelsewhere in the company. Those who were shifted weretold by their bosses that the shift was because [the boss]did not like them to lose jobs.’

Uncertainty was reflected in media reports about cor-poratisation leading to redundancies. One interviewee,a manager, was of the opinion that media in Fiji alwaysattempt to sensationalise issues associated with reforms.He said the media emphasise aspects such as potentialredundancies at the expense of wider benefits that thereforms might bring, such as improved services and ef-ficiencies.

Uncertainties clearly existed for both managementand workers. There were tensions at the highest level,and these involved social, political and cultural factorsspecific to Fiji, local influences that may be ignored inconventional portrayals of the isomorphic tendenciesof institutional theory. The new Minister for Telecom-munications added to the uncertainty because of hissupport for the deposed Naqova. One of the managerscommented: ‘The minister gave an ultimatum to Lee (thechairman of the board of directors) to resign. Lee did notresign and the board said it supported Lee. Rabuka, thethen prime minister, intervened and asked Lee to stayon. The board then turned around and sacked our gen-eral manager, Pratap Singh, who was fiercely opposedto change. About 1,000 FPTL workers went on strike insupport of Singh.’

Cultural influences played a pivotal role at FPTL. Thetelecommunications minister who gave an ultimatum toLee was from the same Naitasiri province as Naqova anddid not want the managing director to lose his position.It appeared from the local press (The Review 1992, p. 10)

that only when Rabuka encouraged Lee to stay on did theboard decide to sack Pratap Singh, the influential generalmanager who, like Naqova, opposed change. ‘The boardaccused Singh of subversive action to topple the boardof directors’ (The Review 1992, p. 10). Singh was a sup-porter of Naqova and according to The Review was alsoa friend of the telecommunications minister, providinghim with an FPTL vehicle to use at weekends.

Here the introduction of commercial rules and rou-tines was subjected to resistance as it met socio-culturalinfluences and challenged the traditional interests of thelabour movement as well as a public-service ethos op-posed to profit-seeking from essential services. Publicservice routines dominated by physical production andengineering norms were legitimate during governmentdepartment days. Powell (1991) points out that effortsto change shared expectations, in this case civil serviceethos and engineering norms, are often resisted as theythreaten individuals’ sense of security and disrupt rou-tines. Resistance in the form of taken-for-grantednessis an essential aspect of institutionalisation (Jepperson1991). The philosophical root of resistance to change wasascribed by a manager to the failure of the new systemwhich could be seen as exploitative and making profitsin a monopoly situation.

According to a manager, there was no sign of a res-olution as workers remained on strike. This culmi-nated in the extraordinary event of the board steppingdown ‘in the national interest’. The telecommunicationsminister then threatened the prime minister that un-less Naqova was reinstated, his and Naqova’s Naitasiriprovince would withdraw its support of Rabuka’s party.Rabuka, fearful of the loss of support, gave in to Naqova’sreinstatement (The Review 1992). The consequent un-healthy relationship between the board and its managingdirector led to the board stepping down.

The cultural and political context of Fiji is thus shownto be a complicating factor in institutional change inFPTL. People have close relationships; they appear to as-sociate themselves closely with others from the sameprovince or tribe, as was the case with Naqova andthe minister, and factors such as profitability are sec-ondary to these people. Further, companies legislationand FPTL’s articles of association make it clear that thecompany’s business will be managed by the directors.In reinstating Naqova, the telecommunications ministerhad overruled a board decision.

A new board and management 1993–95

The appointment of a new board and management withbusiness expertise in 1993 required a political will. Thechallenge was to overcome the friction between boardand management and begin the process of implement-ing the Andersen recommendations. The new chairman,Lionel Yee, reported in The Review (1994, p. 56): ‘My

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first job was to stabilise the company because of internalstaff friction. This has not been totally eliminated yet.It takes time. Even those who feel opposed, hopefully intime will see that if they want to be a part of the organisa-tion, they should work together towards a goal of beinga profitable organisation in terms of capital and assetsand so on.’

The chairman ensured that there was better communi-cation and education of employees to dissipate the fear ofchange. There was a massive training program: change-management consultants were brought from overseas toeducate workers. Another pillar of the new chairman’sstrategy was to expose key players to the FPTL trainingcentre, where telecommunications and related coursesfocus on customer service, leadership development andbest-practice sharing.

The FPTL annual report (1993) had forewarned of thechallenges: ‘The restructuring of a Government depart-ment into a commercial company is never an easy taskand there are many examples all around the world of theproblems encountered in such an exercise. A new opera-tional structure inevitably means the relocation of someworking groups, group functions have to be redefinedand new working practices have to be introduced.’

A new chief general manager was appointed in 1993 toeffect the necessary changes at FPTL. With professionalqualifications in accountancy and engineering, he hadworked with companies in Israel, the US and Europe(The Review 1993). His job was to introduce new prac-tices to FPTL. In the language of institutional theory, hewas both a normative and a mimetic influence, bring-ing practices and values from previous company expe-rience as well as professional norms. These norms werebuttressed by the appointment of people from businessbackgrounds. Additional accountants with professionalqualifications were hired. A marketing and operationsofficer from Sri Lankan Telecommunications Ltd, alsowith accountancy and engineering qualifications, wasappointed chief finance manager, bringing to FPTL hisexperience with business plans, budgets, variance state-ments and monthly performance reviews. The board,the chief general manager and the chief finance managerthen developed a strategic business plan for the company,with assistance from Telecom New Zealand consultants.The business plan identified essential benchmarks for thecompany in terms of expected revenue, expenditures, in-vestment and profitability. According to a manager, theplan encouraged employees to wear the ‘hat of finance’and consider shareholder interests.

It could be said that the board, the chief general man-ager and the chief finance manager were institutionalentrepreneurs driving changes in commercial businessroutines. The (1994) Parliament Paper emphasises thatwhile commercial objectives had been introduced, betterindustrial relations and cooperation between the boardand management would be needed. Because of the in-

dustrial actions of 1991 and 1992, and strong resistanceto change by some senior management and staff, FPTL’semployees’ thinking had not fully adapted to commercialroutines.

New Practices: 1995 Onwards

Although the 1991–92 troubles had a temporary negativeeffect on operations and profits, the business recovered(FPTL annual report 1995). The new board of directorsbegan a process of education and training; staff wereinvolved in the change process and the advantages ofnew stabilised procedures were slowly incorporated intodaily routines. Improvements in operational efficiencywere evident: reduced wait lists and a move into fibreoptics, trunk radio and cellular networks, and digitalexchange technology.

Results orientation in terms of customer satisfactionas well as bottom-line profitability began to play a keyrole at FPTL. One interviewee commented: ‘After cor-poratisation, our culture had to change. We were to bemore customer focused and had to change our attitude.Before it used to be 8:00 am–4:30 pm work. Now evenafter 4:30 pm, service is still given. The aim is to fin-ish work. At the end of the day, it is the customer thatmatters.’

An interviewee said that in order to accept changes, to-tal quality management (TQM) was introduced in 1997,enabling the board to set up routines for business and ac-counting norms. Commercial criteria were developed inthe form of performance incentive schemes predicatedon profitability around 1997. The commercial normswere slowly reproduced over time and became institu-tionalised practice. In other words, there were changesin routines as people adapted to the new commercialenvironment.

Over time, FPTL moved from a public-service ethosto one predicated on business norms within an ongo-ing climate of change. There were some delays in thismovement because of uncertainty over the suspension ofsome engineers; other employees were fearful of also be-ing made redundant. However, once this uncertainty wasremoved, the management’s commercial business prac-tices were eventually routinised. ‘We are here to makeprofit; sometimes we don’t realise that our improvedperformance means better sales and consequently betterrevenue for the company,’ said an interviewee.

As the implementation of business norms progressed,although it eventually became accepted that new rulesand routines embodying commercial and financial-oriented assumptions were normal, it took four to fiveyears before business norms were assimilated by actors.The business norms also paved the way for the separationof Post Fiji from TFL in 1996, both pursuing financialreturns as business-like enterprises. The pressure for the

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split emanated from Andersen’s consulting report whichitself reflected the global influence of the concept of ‘newpublic management’.1

Conclusion

People develop routinised, habitual ways of behavingand resist change. If change occurs, it is through theefforts of change agents referred to here as ‘institutionalentrepreneurs’. This paper examined two questions. Thefirst is: If institutions are defined by their stability, how isit possible to explain change?

In this case study, the institutionalised public-sectorrules and routines were challenged by the need for rad-ical change, referred to by Giddens (1991) as ‘systemcontradiction’. Under pressure from the World Bank andAsian Development Bank, the Fiji government had torestructure its public sector. The intervention in the caseof FPTL created an institutional crisis which demandeda cultural change. Once induced, the institutional crisisbrought tension and conflicts which took many years toresolve. Eventually, new institutionalised ways, based ona private-sector model, were established.

The paper illustrates that in order to understand ac-counting and control changes, consideration of bothtechnical and institutional environments is necessary(Abernethy and Chua 1996). Reforms were introducedas part of broader transformation of the public sectorunder the banner of new public management and werepredicated on technical-rational argument concerningvalue for money in public-sector organisations (Sharmaand Lawrence 2005). A more business-like approach wasdemanded. FPTL management responded by introduc-ing new policies and procedures in line with a technical-rational theorisation. The accounting changes enabledFPTL management to demonstrate acceptance of newset of values, legitimacy and survival.

Inside FPTL, the changes were not quickly or uni-versally accepted. The monopoly status of FPTL con-tradicted the market model on which the reforms werebased. A manager recalled that during the early stagesof corporatisation, improvement in profit was a conse-quence not of greater customer service or efficiency, butof price hikes. Pallot (1998) has argued that privatisa-tion of public assets together with the pursuit of a profitobjective is problematic.

Our second question is: If actors’ behaviour is influ-enced by institutionalised rules and routines, how is itpossible for agents to change those rules and routines?

To overcome the problem of ‘institutional embedded-ness’, Seo and Creed (2002) suggest an ontological po-sition that understands the world as always in flux andinstitutional arrangements as temporary (socially con-structed) phenomena which are always evolving. Theseeds of new practical creation lie in the everyday ac-

tivities of actors; and their social constructions reflectparticular interests and power structures.

The management team and the board of FPTL wereinstrumental in institutionalising commercial businesspractices, with input from the consultants. However,there was uncertainty. Political and cultural issues spe-cific to Fiji were pivotal in explaining resistance. Com-munitarian values and tribal obligations in the form ofpersonal relationships at the top management level trig-gered resistance and it was years before the Fiji govern-ment could stabilise the company through the appoint-ment of a new board which introduced new businessroutines.

The paper contributes to both the accounting and in-stitutional theory literature by exploring the accountingand control changes over time and the influences thatmay affect their operation. The study illustrates howchanges in accounting and control systems are a func-tion of agents within FPTL and its institutional environ-ment. In addition to the process of enactment, repro-duction and routinisation of new institutional arrange-ments based on Barley and Tolbert (1997) and Burns andScapens (2000), the paper has brought agency into insti-tutional theory. Using Seo and Creed’s (2002) conceptsof dialectical processes and Beckert’s (1999) model ofinstitutional entrepreneurs, both institutionalised struc-tures and human agency have been incorporated into theunderstanding of stability and change at FPTL.

The accounting literature has portrayed changes asoccurring on an ongoing basis without much resistance(Busco et al. 2006, Zilber 2002, Soin et al. 2002). How-ever, change at FPTL took much longer, which couldbe attributed to cultural and political influences spe-cific to Fiji. The localised, idiosyncratic socio-politicalinfluences have been acknowledged as important influ-ences on the outcomes of attempts to effect change. TheFPTL case study is unique in that cultural and polit-ical influences were pivotal in resistance to change ina developing-country context. Such influences may notbe so pertinent in western industrialised society. Theinclusion of power and interests is an area for furtherdevelopment of institutional theory.

Umesh Sharma and Stewart Lawrence are in the Depart-ment of Accounting, Waikato Management School, Uni-versity of Waikato, New Zealand. The authors thank SvenModell for his valuable comments on the earlier version ofthe paper presented at the AFAANZ conference on the GoldCoast, Australia.

Note

1 Hood (1991, 1995) refers to new public management as one thatlessens or removes differences between public and private sectorsand emphasises a greater element of accountability in terms ofresults.

32 Australian Accounting Review C© 2008 CPA Australia

U. Sharma & S. Lawrence Stability and Change at FPTL

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