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Accounting (management accounting) research is explained largely by rational economic theory, and neo-classical theory (the normative view). A major criticism of rational economic theory is that it fails to consider the behaviour of the firm (Berland and Chiapell, 2009). It also neglects the social and political context. Rational economic theory assumes the imperfect market does not exist and therefore neglects the monopoly market, uncertainty, and unpredictability. Institutional theory was adopted as a framework for explaining the role accounting in the GOGCWS (Mete et al., 2010), because it adds the social and political elements that were typically absent or de-emphasized in the rational instrumental approach (which guides most of the recent research on accounting). Institutional theory focuses on both the external (Covaleski, et al., 1996) and internal environment (Bums and Scapens, 2000). This research focused on the regulative pillar and adopted a micro focus. The study took a process approach. This research adopted a hybrid approach (i.e. between inductive and deductive), but mainly an inductive approach. The research also takes a nomalist view and ‘voluntaristic’ view of human behaviour than which guides contingency research (Child, 1972; Schreyogg, 1980). The voluntaristic view was noticeably absent in early neo-institutional research (DiMaggio, 1988 and Oliver, 1991). This approach followed from more recent advances in institutional theory which call for more-in-depth, interpretative analyses of the dialectic between stability and change (Czamiawska and Servon, 1996). A case study approach was adopted in this research. It entailed collecting data for an examination of the GOGCWS. A case study is both a process of induction and deduction. The case study is mainly explanatory (theoretical framework), and exploratory in practice. This research has contributed to our understanding of the role of accounting in general and management accounting in particular in the Egyptian water industry, by providing empirical evidence of accounting practice in one organization. There were no other empirical studies cited in academic literature of Egyptian companies. This research was conducted in a Third world "socialist" country whose environment is different from those of Western developed economies, (on which previous reported research is based). The role of accounting within the GOGCWS can be seen as a "passive optimiser" and "answering machines". The focus of management accounting in the organisation is on the scope dimension, and the accounting system employed has longevity (institutional imprinting). The GOGCWS adopted an incremental budgeting model, standard costing and absorption costs. The Unified Accounting System can be seen as an outcome of coercive isomorphism (Tsamenyi, et al., 2006). The Unified Accounting System contained cognitive, normative and regulative pillars (Scott, 1995). It was clear that the external environment inhibited cognitive learning within the GOGCWS. The effect of the external environment at the GOGCWS, shaped its accounting system. In other words, the institutional pressures dominated the use of accounting in the GOGCWS. The findings of the research were consistent with the argument advanced by DiMaggio and Powell (1991, 1983) who argue that ‘coercive isomorphism’ is the way organisations (such as the GOGCWS) may be subject to external pressures as a result of cultural expectations. This also applied to organisations upon which other organisations are dependent (Carruthers, 1995). Similarly, Egyptian government regulations coerced the GOGCWS into adopting the Unified Accounting System. The findings of this research also support the argument of Hope and Hope (1995: 213) who claim that most organisations remain "tied” to archaic accounting systems and management structures. Results of this research concur with the argument of Scapens (1991). Management accounting texts suggested that in many situations, absorption costing cannot provide relevant costs decision-making and control (Scapens, 1991). In practice, absorption costing seems to be the dominating technique in most Western countries (e.g. the U.S.A. Howell, et al., 1987; the U.K. Drury and Tayels, 1994; 2000; Sweden: Ask and Ax, 1995) and socialist countries (e.g. Egypt). It was argued that the methods of management accounting used in the GOGCWS were compatible with the techniques of management accounting adopted in Germany. For example, the cost method used in the GOGCWS is based on absorption costing, which represented costing practice (a major characteristic of the German tradition).
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