Finalidad y Objetivos de la Investigación

This study relies on institutional and resource dependence (RDT) theoretical lenses to analyse and interpret its research findings. The study uses this dual theoretical framework for three specific reasons.

First, both, institutional and resource dependence theories represent theoretical lenses which add to understanding how the external environment of a NFP influences its behaviors. Institutional theory focuses on the influences and pressures an organisation faces from its overall external environment (Verbruggen et al. 2009). The theory argues that an organisation conforms to the different influences which emanate from its external environment, to attain legitimacy (Meyer and Rowan 1977; DiMaggio and Powell 1983). RDT, on the other hand, emphasises the pressures and influences an organisation faces from its external environment, as a result of its dependence for resource inflows from that environment (Oliver 1991).

RDT explains that, given its resource dependence, an organisation adopts behaviors and practices which signal how well it allocates its resources among competing activities, to achieve its objective; and to eventually demonstrate the legitimacy of its operations (Parsons 1960; Perrow 1970; Dowling and Pfeffer 1975; Milne and Patten 2002). The resource dependence of an organisation influences how the organisation responds to environmental pressures (Tschirhart 1996; Dolnicar et al. 2008); by making the organisation vulnerable to institutional pressures (Oliver 1991; Verbruggen et al. 2011). Institutional and resource dependence theoretical lenses are relevant to the NFP sector as well. NFPs rely on resource inflows from their external stakeholders to maintain and sustain their activities; and this reliance makes NFPs vulnerable to influences from, both, their resource providers (Verbruggen et al. 2011) and their external environment (Meyer and Rowan 1977; Covaleski and Dirsmith 1988; Oliver 1991; Meyer et al. 1992; Ang and Cummings 1997; Irvine 2000; Eikenberry and Kluver 2004; Dolnicar et al. 2008; Akey 2012). For instance, a NFP which is highly dependent on the public sector for its resources is likely to conform to environmental pressures to abide to government rules and regulations (Froelich 1999; Verbruggen et al. 2011). Given, both, institutional and resource dependence theories explain how the external environment of an organisation influences its practices, prior studies (Oliver 1991; Greening and Gray 1994; Carpenter and Feroz 2001; Guler et al. 2002), including NFP researches (Trussel 2002; Guo 2007; Verbruggen 2011) have adopted these two theories, as one theoretical framework, to interpret and understand the influence of the external environment of an organisation, on its behaviors. In summary, institutional and resource dependence theories represent theoretical lenses which contribute to understanding how the practices of a NFP are influenced by its external environment.

Second, institutional and resource dependence theories are two pertinent lenses for studying NFP disclosures. Both institutional and resource dependence theories predict the behaviors, including disclosure practices of an organisation; in reaction to the influences and pressures it faces from the environment in which it operates (Flack and Ryan 2003; Verbruggen et al. 2009; Verbruggen 2011; Verbruggen et al. 2011), as previously mentioned. As this study explores the annual reports of publicly

reporting Australian NFPs, from a financial accountability perspective, both institutional and resource dependence theories argue that organisations disclose financial information in response to the pressures and expectations of their external environment (Meyer and Rowan 1977; Verbruggen 2009; Rodriguez et al. 2012). An organisation is not an "isolated" entity: it operates in an environment which is composed of other similar organisations; and it constantly has to deal with influences and pressures from this external environment to adopt certain behaviors and practices (Thompson 1967; Macedo and Pinho 2006, page 537; Harrison and van der Lann Smith 2015). To be able to maintain operations in its external environment, an organisation has to demonstrate that its activities are legitimate, that is, its operations align with the expectations of the environment in which it operates (Suchman 1995). Organisations highlight the legitimacy of their operations, by engaging in different disclosure practices (Dowling and Pfeffer 1975; Ashforth and Gibbs 1990; Suchman 1995; Froelich 1999; Taylor and Warburton 2003; Christensen and Mohr 2003; Rodriguez et al. 2012), including their accounting disclosure behaviours (Meyer and Rowan 1977; Elsbach and Sutton 1992; Allen and Caillouet 1994; Arndt and Bigelow 2000). Institutional and resource dependence theories, both, consider the different behaviours, including disclosure practices, which an organisation engages into; in response to pressures and influences from the environment in which it operates (Chen and Roberts 2010; Verbruggen 2011; Brey 2014), making these two theories relevant to explicate and understand the disclosure practices of organisations operating in the NFP context (Flack and Ryan 2003; Verbruggen et al. 2009; Verbruggen et al. 2011).

The third reason for using the dual theoretical framework which is made up of institutional and resource dependence theories is to allow analysis of how the external environment of a NFP influences its accounting disclosures. An organisation responds to different influences, from its external environment, in different strategic ways (Oliver 1991; Irvine 1999). Institutional theory acknowledges the conformity of an organisation to external influences; whilst RDT highlights the resistance of an organisation to pressures from its operating environment (Watt Geer 2009). Institutional theory advocates homogeneity in organisational behaviors and practices, by arguing that organisations adhere to their

environmental pressures (Meyer and Rowan 1977; DiMaggio and Powell 1983; Tolbert and Zucker 1983; Scott and Meyer 1991; Verbruggen et al. 2011; Zorn et al. 2011). Institutional theory is built around the idea that organisations operating in the same environment adopt homogenous practices to signal the conformity of their activities with acceptable best practices of that environment (Meyer and Rowan 1977; DiMaggio and Powell 1983; Dart 2004). On the other hand, RDT acknowledges heterogeneity in organisational behaviors and practices. This theory explains that different organisations, operating in the same environment, adopt dissimilar practices; in order to demarcate themselves from each other; and to signal the greater legitimacy of their operations, from other organisations operating in the same external environment, to resource providers (Salamon 1987; DiMaggio and Anheier 1990; Irvine 1999; Guo et al. 2013). Institutional and resource dependence theories are complementary, rather than competing theoretical lenses (Oliver 1991; Wry et al. 2013). This is because each of these two theories hypothesises different behaviors and practices adopted by an organisation, in response to influences and pressures from the environment in which it operates (Oliver 1991; Watt Geer 2009; Verbruggen 2011).

Taking into account the discussions made in this section, the background of the theoretical framework used in this study, is summarised and illustrated, next, in Figure 3.1:

Figure 3.1 Summary of Theoretical Framework Background

Theoretical Framework used in the study

Disclosure-related frameworks

Legitimacy

Theory Agency _Theory

Signalling

Theory Stakeholder _Theory

Dual Theoretical Framework of the study Theoretical Framework Background

These theories have not been considered because they are:

• Under-developed in the NFP context,

• Not as relevant as institutional and resource dependence theories to analyse and interpret the results of this study,

• And/or they overlap theories which have been excluded from the theoretical framework of the study, for specific reasons.

Institutional Theory

Resource

Dependence Theory

These two theories form the theoretical framework of this study; given they, both:

• Add to understanding how the external environment of a NFP influences its behaviours,

• Are pertinent lenses in explaining NFP disclosures, • Enable a comprehensive exploration of how the external

environment of a NFP influences its accounting disclosures

One of the main purposes of this chapter is to outline the theoretical framework of

the study, as specified earlier in section 3.1 of the chapter. In line with this objective,

this chapter has given background to and justification of the theoretical framework used in this study, by giving an overview of the framework, describing different disclosure-related frameworks, and discussing the theoretical lenses of the study. To further align with the above-mentioned aim of this chapter, each of the next two sections elaborate on one of the two theories which form the theoretical framework of this study, namely, institutional and resource dependence theories.