Transplanting the western approaches to accounting reforms in emerging economies: implementing accrual basis International Public Sector Accounting Standards in Sri Lanka

Through three interrelated papers, this thesis investigates the adoption and implementation of accrual accounting and International Public Sector Accounting Standards (IPSAS) in Sri Lanka. Employing an evolving institutional theoretical framework, the research examines accounting reforms across different levels of government in a developing country context. The first paper employs neo-institutional theory and Oliver's strategic response model to analyse institutional pressures and actors' responses to accounting reforms in Sri Lanka. Findings reveal that international donor agencies (World Bank, IMF, ADB) exerted significant coercive pressure through funding arrangements. Organisational responses varied across sectors, with local governments, state universities, and state-owned enterprises demonstrating more favourable responses than central government organisations, ultimately resulting in institutional decoupling. The second paper adopts an institutional logic perspective to examine actor-centric aspects of reform implementation at the central government level. The study identifies competing institutional logics—state bureaucratic, political, market, and professional—that created tensions in implementing accrual accounting and accrual-based IPSAS. Power dynamics between key actors, including the Ministry of Finance, the Institute of Chartered Accountants of Sri Lanka (ICASL), and the National Audit Office, hindered reform progress. At the same time, the normative pressures exerted by ICASL through professional logic proved significant compared to other developing countries. The third paper explores IPSAS implementation at the local government level through institutional work and entrepreneurship concepts. This paper illustrates how actors' reflexive agency and power relations transformed public financial reporting in local governments. With support from political actors and strategic intervention from ICASL, civil servants disrupted a 40-year-old accounting system and created new institutional arrangements. The public sector wing of ICASL, government accountants, and operational staff emerged as institutional entrepreneurs by leveraging resources to facilitate institutional change. These papers contribute to understanding the complex interplay of institutional pressures, strategic responses, competing logics, and entrepreneurial agency in public sector accounting reforms within developing economies. The findings highlight the importance of considering macro-institutional factors and micro-level actor dynamics when implementing accounting reforms in contexts with diverse stakeholders and institutional environments.