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Key Trends in Institutional Changes Under
Sustainable Development
Olga Karpova1,*, Inna Pevneva2, Irina Dymova3, Tatiana Kostina4, and Sergey Li5
1Kemerovo institute (branch) of Plekhanov Russian University of Economics, Department of
Economic Security, Accounting and Audit, 650992 Kuznetsky pr.39, Kemerovo, Russia
2Kemerovo institute (branch) of Plekhanov Russian University of Economics, Department of
Humanities, 650992 Kuznetsky pr.39, Kemerovo, Russia
3T.F. Gorbachev Kuzbass State Technical University, Department of Management Accounting and
Analysis, 650000 Vessennyaya st., 28, Kemerovo, Russia
4Kemerovo institute (branch) of Plekhanov Russian University of Economics, Department of
Management and Business Technology, 650992 Kuznetsky pr.39, Kemerovo, Russia
5Kemerovo institute (branch) of Plekhanov Russian University of Economics, Department of
Information technology and Applied Mathematics, 650992 Kuznetsky pr.39, Kemerovo, Russia
Abstract. The article is devoted to the consideration of the essential
problems of accounting institution formation under the sustainable
development of the country and the region. The research is based on the
key research the field of the intuition economics and considers the trends
of institutional changes including incremental, evolutionary and
revolutionary. Approaches to the analysis of institutions are presented as
well. The first approach states that economic efficiency is guaranteed by
newly emerging institutions. The second approach involves certain internal
and external incentives for changing institutions. Whereas the third
approach insists on considering institutional changes to be the relation of
individual economic entities to institutional innovations in terms of the net
benefit from their implementation. The conclusion draws the leading role
of the state in the process of the emergence and further development of
newly created institutions focusing on the fact that not every change leads
to greater efficiency. Thus it is crucial to consider the previous background
of institutions’ development at implementing changes in accounting and
control.
1 Introduction
To develop a real sustainable development policy it is vital to take into account the inter-
connection and interdependence of all components, that is economic, social and environ-
mental. Traditional instruments of economic analysis do not allow organizations to reliably
determine the efficiency. Currently we see rather favorable conditions for the further im-
provement of accounting in the field of sustainable economic development as normative
legal acts covering most accounting objects have come into effect.
* Corresponding author: oskarp@yandex.ru
© The Authors, published by EDP Sciences. This is an open access article distributed under the terms of the Creative Commons
Attribution License 4.0 (http://creativecommons.org/licenses/by/4.0/).
E3S Web of Conferences 21, 04023 (2017) DOI: 10.1051/e3sconf/20172104023
e Second International Innovative Mining Symposium
Nevertheless, Russian institutional environment and, accordingly, the region's environ-
ment continues its formation. Under the current economic conditions it is very important to
develop institutions which will contribute to the growth of the economy. Undoubtedly such
are the institute of accounting and the institute of control. The institutional economics theo-
ry defines accounting and control as economic institutions that fully correspond to this the-
ory.
The sustainable development of an enterprise depends on the sustainable condition of
the enterprise itself as an integral element in the external environment and the stability of its
internal processes. Sustainable development of an enterprise is a process of permanent in-
ternal and external changes in which the use of all types of resources including investment,
scientific and technological development, innovations and new technologies, HR and im-
proving the quality of knowledge capital as well as the development of social institutions
are coordinated with each other. They are all aimed at increasing the present and future
potential of the enterprise, meeting its needs and achieving strategic goals. Thus, the princi-
ples of sustainable development are thoughtful management, harmony of the enterprise and
the environment, the development of high technologies oriented to the environmental val-
ues.
As the research shows there is a large number of scientific works devoted to the analysis
of institutional changes. This is due to the fact that institutional changes are an important
condition for highly effective economic development. Traditionally, institutional changes
mean the emergence of new rules with corresponding mechanisms for their implementation
which substitute the old ones. Changes in institutions are related to the fact that the values
that used to ensure their existence change as well come into conflict with other values and
institutions [1-5, 11-14].
The analysis of institutional changes is good to start with considering formal and infor-
mal rules that determine the system of institutions, namely the institution of accounting and
the institution of control. Due to the action of formal and informal institutions a stable insti-
tutional structure is achieved. Stability of the institutional structure of society gives us a
feeling of comfort and confidence in our actions. However, despite the stability of institu-
tions there is no guarantee that the institutions we rely on are effective.
2 Materials and Methods
Today the problem of the efficiency of the institute is one of the most essential in the field
of research of institutional dynamics. Typically, changes in institutions happen due to the
fact that over time the values that condition their existence change or they themselves may
come into conflict with other institutions, as well as values. Stable institutions are also sub-
ject to change, but for the most part development takes place through insignificant incre-
ments that are permanent, although at times revolutionary changes in the institutional struc-
ture of society occur as well.
There are the following types of institutional changes that are described in the economic
literature. Incremental institutional changes that happen due to the consolidation of infor-
mal norms and rules in small groups. Evolutionary institutional changes presuppose a grad-
ual consolidation of informal norms as generally accepted in the formal rules of the relevant
institution. Revolutionary institutional changes manifest themselves in the exogenous bor-
rowing of the institute or their "import".
Some researchers miss the incremental institutional changes focusing on endogenous
and exogenous changes. As mentioned, endogenous changes are carried out through evolu-
tionary changes in existing norms and rules and exogenous institutional changes are radical
and manifest themselves when importing institutions. It should be noted that the import of
institutions does not always lead to an increase in production efficiency or to an accelera-
2
E3S Web of Conferences 21, 04023 (2017) DOI: 10.1051/e3sconf/20172104023
e Second International Innovative Mining Symposium
Nevertheless, Russian institutional environment and, accordingly, the region's environ-
ment continues its formation. Under the current economic conditions it is very important to
develop institutions which will contribute to the growth of the economy. Undoubtedly such
are the institute of accounting and the institute of control. The institutional economics theo-
ry defines accounting and control as economic institutions that fully correspond to this the-
ory.
The sustainable development of an enterprise depends on the sustainable condition of
the enterprise itself as an integral element in the external environment and the stability of its
internal processes. Sustainable development of an enterprise is a process of permanent in-
ternal and external changes in which the use of all types of resources including investment,
scientific and technological development, innovations and new technologies, HR and im-
proving the quality of knowledge capital as well as the development of social institutions
are coordinated with each other. They are all aimed at increasing the present and future
potential of the enterprise, meeting its needs and achieving strategic goals. Thus, the princi-
ples of sustainable development are thoughtful management, harmony of the enterprise and
the environment, the development of high technologies oriented to the environmental val-
ues.
As the research shows there is a large number of scientific works devoted to the analysis
of institutional changes. This is due to the fact that institutional changes are an important
condition for highly effective economic development. Traditionally, institutional changes
mean the emergence of new rules with corresponding mechanisms for their implementation
which substitute the old ones. Changes in institutions are related to the fact that the values
that used to ensure their existence change as well come into conflict with other values and
institutions [1-5, 11-14].
The analysis of institutional changes is good to start with considering formal and infor-
mal rules that determine the system of institutions, namely the institution of accounting and
the institution of control. Due to the action of formal and informal institutions a stable insti-
tutional structure is achieved. Stability of the institutional structure of society gives us a
feeling of comfort and confidence in our actions. However, despite the stability of institu-
tions there is no guarantee that the institutions we rely on are effective.
2 Materials and Methods
Today the problem of the efficiency of the institute is one of the most essential in the field
of research of institutional dynamics. Typically, changes in institutions happen due to the
fact that over time the values that condition their existence change or they themselves may
come into conflict with other institutions, as well as values. Stable institutions are also sub-
ject to change, but for the most part development takes place through insignificant incre-
ments that are permanent, although at times revolutionary changes in the institutional struc-
ture of society occur as well.
There are the following types of institutional changes that are described in the economic
literature. Incremental institutional changes that happen due to the consolidation of infor-
mal norms and rules in small groups. Evolutionary institutional changes presuppose a grad-
ual consolidation of informal norms as generally accepted in the formal rules of the relevant
institution. Revolutionary institutional changes manifest themselves in the exogenous bor-
rowing of the institute or their "import".
Some researchers miss the incremental institutional changes focusing on endogenous
and exogenous changes. As mentioned, endogenous changes are carried out through evolu-
tionary changes in existing norms and rules and exogenous institutional changes are radical
and manifest themselves when importing institutions. It should be noted that the import of
institutions does not always lead to an increase in production efficiency or to an accelera-
tion in the rates of economic growth. Evolutionary changes are studied within the frame-
work of the mainstream theory [6-7] .
3 Discussion
The evolutionary path of change is less painful and more effective as it reduces the costs of
updating changes to the relevant institutional environment. Nevertheless, evolution does not
guarantee the dependence on the previous direction of development, the constant reproduc-
tion of knowledge aimed at maximizing the possible gains precisely in the existing institu-
tional matrix that is a radical change in the institutions necessary for the withdrawal of so-
ciety from stagnation and economic decline. It can’t reduce transaction costs in the econo-
my for such a short time period. Evolution does not reject changes of a qualitative nature,
but refers to their mandatory historical dependence.
Changes in institutions are usually considered in the context of the three-levelled insti-
tutional organization of the economy. The levels of institutional organization are institu-
tional order, institutional environment and institutional arrangement.
Targeted changes predominate at the level of the institutional structure which is primari-
ly a formal institutional constraint. Changes at the level of the institutional structure of ac-
counting are observed quite often in modern Russia. Infinite amendments to the existing
normative legal acts on tax and accounting make it very difficult to focus in formal rules
and create a favorable ground for the use of illegal informal rules.
The main reason for the change is the pressure of the institutional environment. The
conflict between the institution and the environment in which they are function gives an
incentive to activate one or several types of institutional isomorphism to restore conformity.
At present there are different opinions on the issue of institutional changes. We would
like to focus on three basic approaches to the analysis of institutional changes.
The first approach ensures that high economic efficiency is guaranteed only by newly
emerging institutions, and the prerequisites for their emergence presuppose previous chang-
es in various areas from population dynamics to the technology development. The state as
well as political processes in this case are inactive.
The second approach involves certain incentives for changing institutions, both internal
and external. The logic of this approach was set out by D. North, who described the follow-
ing stages. The emergence of new technologies is driven by changes in the level of
knowledge; new technologies change relative prices of resources; new price levels create
incentives for owners to transform ownership; the emergence of rules allowing to maximize
the value of using these rules, lead to new price levels; non-zero transaction costs in the
political market prevent possible institutional changes from being realized [8].
The authors of the third approach state that institutional changes are considered to be the
relation of individual economic entities to institutional innovations in terms of the net bene-
fit from their implementation [9].
Besides, the institutional economy speaks about the Harold Demsets scheme changes.
Demsetz believes that the source of change is external shock which leads to a change in
relative prices. The change in property rights is aimed at the effective use of resources and
technologies. And most importantly it is assumed that the process of change is cost-free and
is not related to the active actions of the state and stakeholding groups and organizations.
This scheme of changes, in our view, can refer to the revolutionary type of institutional
change. Armen Alchian put forward a "naive" theory of institutional changes holding the
view that only effective institutions survive in the course of competition. This theory can
refer to the evolutionary type of institutional change [10].
3
E3S Web of Conferences 21, 04023 (2017) DOI: 10.1051/e3sconf/20172104023
e Second International Innovative Mining Symposium
The above mentioned approaches to the essence of institutional changes have one com-
mon component - the state, which plays a decisive role in the process of the emergence and
further development of newly created institutions.
The institutional changes that restore economic efficiency in the economy or contribute
to its achievement include changes in relative prices. Such changes undoubtedly relate to
the processes of globalization, the tendency of international integration, the growth of in-
ternational cooperation and trade and, as a result, the transition to international financial
reporting standards through the convergence and harmonization of national accounting sys-
tems. New relative prices create new opportunities for income generation by Russian com-
panies, which in turn require appropriate institutional changes.
In addition, new technological opportunities entail the need to develop methods for ac-
counting for new objects and new transactions, which in turn lead to institutional changes.
Such objects can the accounting means of automation, a brand, web sites, scientific and
technical development, advertising etc. These accounting objects are not a luxury but a ne-
cessity of modern companies for successful work and further promotion on the market.
Thus, accounting is changing in order to reflect the company's attitude to innovation, the
impact of risks and costs, obligations and the degree of liability associated with innovation.
In connection with the advent of new technologies in the accounting organization we see
changes in tastes and preferences. Lenders and investors today require for decision-making
an extensive data and information of a different nature that can be easily and quickly gener-
ated through automated accounting systems.
It should be noted that in some cases, institutional changes lead to increased efficiency,
in other cases changes play a redistributive role. There is also a case where there is a de-
crease in economic efficiency. The most common is the redistributive version of institu-
tional changes. Hence, all the institutions can be hypothetically divided into three groups:
increasing the efficiency of the economic system, neutral and reducing the efficiency of the
economic system. In the framework of neoinstitutional analysis institutions that maximize
social wealth are recognized as effective. However in Russia we see a paradoxical situation
when the introduction of formal effective market institutions is accompanied by a decline in
the efficiency of the economic system functioning. Explanation of this phenomenon should
be sought in the mismatch of formal and informal institutions that together represent an
institutional environment.
4 Conclusion
Institute of accounting and control can be attributed to institutions that increase the effi-
ciency of the country's economic system. Despite the various institutional changes in Rus-
sia, the institutions of the command economy have firmly established themselves in the
Russian economic system. Besides, the basic institutions inherent to a planned economy
continue to exist today. Undoubtedly, such institutions include accounting and control.
All in all, the state plays a decisive role in the process of the emergence and further de-
velopment of newly created institutions. Changes in the accounting and control institution
are of an evolutionary nature and increase the efficiency of the economic system of the
country. Implementing institutional changes in accounting with the aim of building an ef-
fective model, it is necessary to take into account the historical background and develop-
ment of institutions.
References
1. D. Dequech, J. Econ. Iss. 36:2, 565-572 (2002)
4
E3S Web of Conferences 21, 04023 (2017) DOI: 10.1051/e3sconf/20172104023
e Second International Innovative Mining Symposium
The above mentioned approaches to the essence of institutional changes have one com-
mon component - the state, which plays a decisive role in the process of the emergence and
further development of newly created institutions.
The institutional changes that restore economic efficiency in the economy or contribute
to its achievement include changes in relative prices. Such changes undoubtedly relate to
the processes of globalization, the tendency of international integration, the growth of in-
ternational cooperation and trade and, as a result, the transition to international financial
reporting standards through the convergence and harmonization of national accounting sys-
tems. New relative prices create new opportunities for income generation by Russian com-
panies, which in turn require appropriate institutional changes.
In addition, new technological opportunities entail the need to develop methods for ac-
counting for new objects and new transactions, which in turn lead to institutional changes.
Such objects can the accounting means of automation, a brand, web sites, scientific and
technical development, advertising etc. These accounting objects are not a luxury but a ne-
cessity of modern companies for successful work and further promotion on the market.
Thus, accounting is changing in order to reflect the company's attitude to innovation, the
impact of risks and costs, obligations and the degree of liability associated with innovation.
In connection with the advent of new technologies in the accounting organization we see
changes in tastes and preferences. Lenders and investors today require for decision-making
an extensive data and information of a different nature that can be easily and quickly gener-
ated through automated accounting systems.
It should be noted that in some cases, institutional changes lead to increased efficiency,
in other cases changes play a redistributive role. There is also a case where there is a de-
crease in economic efficiency. The most common is the redistributive version of institu-
tional changes. Hence, all the institutions can be hypothetically divided into three groups:
increasing the efficiency of the economic system, neutral and reducing the efficiency of the
economic system. In the framework of neoinstitutional analysis institutions that maximize
social wealth are recognized as effective. However in Russia we see a paradoxical situation
when the introduction of formal effective market institutions is accompanied by a decline in
the efficiency of the economic system functioning. Explanation of this phenomenon should
be sought in the mismatch of formal and informal institutions that together represent an
institutional environment.
4 Conclusion
Institute of accounting and control can be attributed to institutions that increase the effi-
ciency of the country's economic system. Despite the various institutional changes in Rus-
sia, the institutions of the command economy have firmly established themselves in the
Russian economic system. Besides, the basic institutions inherent to a planned economy
continue to exist today. Undoubtedly, such institutions include accounting and control.
All in all, the state plays a decisive role in the process of the emergence and further de-
velopment of newly created institutions. Changes in the accounting and control institution
are of an evolutionary nature and increase the efficiency of the economic system of the
country. Implementing institutional changes in accounting with the aim of building an ef-
fective model, it is necessary to take into account the historical background and develop-
ment of institutions.
References
1. D. Dequech, J. Econ. Iss. 36:2, 565-572 (2002)
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university press, Harvard, 2009)
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10. A.A. Alchian, H. Demsetz, Amer. Econ. Rev. 62:5, 777-795 (1972)
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13. L.J. Alston, Emp. Stud. Inst. Chan. 10, 25-30 (1996)
14. G.M. Hodgson, New Polit. Econ. 6:2, 245-253 (2001)
5
E3S Web of Conferences 21, 04023 (2017) DOI: 10.1051/e3sconf/20172104023
e Second International Innovative Mining Symposium
