Power and Legitimacy in the Institutionalisation of New National Accounting and Reporting Systems

This paper develops an integrated conceptual model to explain how power strategies and legitimacy perceptions co-evolve throughout the institutionalisation of new national accounting and reporting systems based on international standards. Drawing on institutional theory, legitimacy and social psychology literature, and Hardy’s [(1985). The nature of unobtrusive power. Journal of Management Studies, 22(4), 384–399] dimensions of power, the model reconceptualises legitimacy as a negotiated and relational process emerging through recursive interactions among regulators, standard-setters, and stakeholder groups. Extending Suchman’s legitimacy framework, it introduces relational legitimacy to capture perceived consensus regarding new accounting and reporting systems, within and across stakeholder groups. This concept becomes salient under conditions of contestation and political conflict. The model highlights meso-level actors’ role in mediating global standards and domestic contexts; and in managing tensions among pragmatic, moral, and cognitive legitimacy claims. Using several theoretical propositions and illustrative examples from financial and sustainability reporting, instrumental and symbolic power strategies are shown to be recursively intertwined, and their alignment can progressively engender relational and cognitive legitimacy of new national systems based on international standards.This paper challenges top-down accounts of standard-setting by theorising legitimacy and power as dynamically co-evolving, offering a foundation for future research on accounting and reporting regulation.