The dynamics of a regulatory space realignment: Strategic responses in a local context

This paper seeks to extend and deepen our understanding of the production and interpretation of accounting regulation. It analyses how, in response to a regulatory crisis, a revised set of regulatory arrangements, principally in the realm of disciplinary procedure oversight, was re-negotiated and re-shaped in the Irish professional accounting context. We mobilize the concept of regulatory space (Hancher & Moran, 1989; Young, 1994) and Oliver’s (1991) typology of strategic responses to institutional pressures to theorise the actor dynamics, strategies and resources enrolled throughout the process of developing and interpreting the proposed regulations. By highlighting the interaction between different sets of actors within the regulatory realignment, we extend Oliver’s (1991) (implicit) focus on the strategic responses of one class of actor during an institutional change. While prior research finds that regulators adopt compromise or acquiescence strategies when confronted with aggressive regulatee resistance, thereby significantly diluting proposed regulations (see, Shapiro & Matson, 2008), we unveil a context where regulators successfully enrolled strategies of defiance to repel this resistance. We also find limited evidence of agreement on meaning between the regulators and regulatees, despite conceptions of regulatory space viewing this agreement as central to the initial interpretation of regulatory rules (Scott, 2001). Our analysis provides a counterpoint to prior research suggesting that the accounting establishment has been highly successful in influencing the design and interpretation of new regulations aimed at overseeing the accounting profession (see, Malsch & Gendron, 2011). Drawing on our findings, we suggest that the passivity of national regulators in the process of developing and interpreting (local or global) regulations should not be automatically presumed. We conclude with a call for an enhanced focus on the influence of national political and social contexts on the development and interpretation of accounting regulations.