The diffusion of new public financial management innovation in developing countries: evidence from Sri Lanka

摘要

A major feature of public sector accounting reform has been the replacement of conventional cash-based accounting with accrual accounting. Even though accrual accounting is a regular practice in the private sector, little is known about the way in which these practices are diffused throughout large and complex public sector organisations. This thesis relies on Rogers’ (1983) Diffusion of an Innovation Theory (DOI) to explore the diffusion of accrual accounting across the three-tiered (Central - Provincial - Local) government of Sri Lanka. The primary purpose of this thesis is to explore and describe the way accounting innovation is diffused throughout different layers of public sector organisations in the context of a developing country. Data was collected from semi-structured interviews and a survey targeting Chief Financial Officers (CFOs) representative of all three tiers of government. The findings revealed that the success of the top-down diffusion process (supply side) does not always rely on higher-level government but to some degree on product champions (e.g. professional associations). The success of diffusion-adoption (demand side) will vary according to how adopters prefer to receive and respond to the diffusion of knowledge about the innovation. The findings also concluded that the rate of adoption was influenced by its observability in practice rather than its perceived advantages. Traditionally, diffusion research emphasises the demand side of the diffusion process but by collecting and analysing data from both supplier and adopter of the accounting innovation, this thesis covered both sides of the top-down diffusion of new accounting practice in Sri Lanka. The findings of this thesis also provided insight into the relevance of accounting innovators (policy makers) and promoters in matching accounting innovation to meet a potential adopter’s requirements. The understanding of the diffusion process may be applied to future applications of the accounting innovation in the public sector for a smooth and quick adoption process.