Management Accounting in the Circular Economy: Developing A Resource Efficiency Measurement Framework Through The Integration of Stakeholder Theory and Institutional Theory

Abstract

The transition to a circular economy has become a defining economic imperative, yet the global circularity rate has fallen rather than risen, revealing a persistent gap between ambition and firm level realisation. Part of this gap is infrastructural: conventional management accounting was designed for a linear model and treats material losses as waste to be expensed rather than as value to be recovered, rendering the benefits of resource efficiency invisible. Existing environmental management accounting tools, such as material flow cost accounting, have developed in a fragmented, technical register and lack an integrated theoretical foundation explaining why and for whom firms measure resource efficiency. Adopting a desk-research methodology grounded in the synthesis, analysis, comparison, and evaluation of academic, standard-setting, and policy literature, this study develops a dual-lens measurement framework that integrates stakeholder theory and institutional theory. Stakeholder theory specifies the endogenous demand for measurement transmitted through investors, customers, and communities, while institutional theory characterises the exogenous coercive, normative, and mimetic pressures that compel and align measurement practice. The proposed three-tier framework links these dual drivers to a structured set of resource-efficiency indicators and, in turn, to circular strategic decision-making and organisational legitimacy, yielding three research propositions calibrated to the Vietnamese context. The paper contributes a theoretically integrated foundation for circular management accounting; its principal limitation is that the framework awaits empirical validation.