Pricing as an institutionally situated practice: Competing situated rationalities and persistence of cost-plus pricing under market liberalisation

Pricing is commonly portrayed as an economically rational practice responsive to competitive conditions; however, the persistence of cost-plus pricing during institutional transition remains insufficiently explained. This study examines how such persistence is reproduced amid economic liberalisation. Drawing on ter Bogt and Scapens’ (2019) concept of situated rationality, pricing is conceptualised as an organisational practice shaped by historically embedded calculative artefacts, approval infrastructures and accountability arrangements. The analysis is based on an in-depth qualitative case study of a manufacturing firm, drawing on 24 semi-structured interviews, more than 40 organisational documents and extensive field observations. The findings show that, despite intensified market-oriented evaluation—manifested in import competition, benchmarking and profitability pressures—authorised price formation remained anchored in cost-recovery reasoning. This persistence is explained through three interrelated dynamics: differential institutionalisation, which accorded cost-recovery reasoning greater procedural authority within pricing infrastructures; recursive material reinforcement, whereby deteriorating market conditions increased calculated unit costs under absorption costing and raised the internally defensible price floor; and structured situated agency, whereby managerial judgement remained reflexive yet constrained by accounting artefacts and approval routines. The study contributes by demonstrating how accounting infrastructures mediate organisational responses to liberalisation and condition the relative authority of competing rationalities during regime transition.