Animus Ltd is a mining company operating in Australia.The company has recently developed a new environmental management accounting system.According to institutional theory:
A) The new system is likely to be the result of the Australian culture of being environmentally conscious and the fact that negative environmental impacts can result in significant fines to the company.
B) The new system is likely to be the result of gaining legitimacy and to imitate other mining companies who are 'doing the right thing'.
C) The new system is likely to be the result of stringent government regulations.
D) The new system is likely to be the result of careful,rational,cost-benefit analysis.

Question

Quizplus · Accepted Answer

Institutional theory suggests that organizations develop certain practices and policies not necessarily because of rational analysis, but rather to gain legitimacy and to imitate other successful organizations in their field. Therefore, it is likely that Animus Ltd developed the new environmental management accounting system to gain legitimacy and to be viewed as a responsible and environmentally conscious mining company, similar to their competitors. While culture, government regulations and cost-benefit analysis may have also played a role in the development of the new system, institutional theory suggests that gaining legitimacy is the most significant factor.

Animus Ltd Is a Mining Company Operating in Australia