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«Paul M. Collier Aston Business School, Aston University Accounting for Managers Accounting for Managers: Interpreting accounting information for ...»

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of power and language. He argued that power relationships are seen as being reflected in daily life through the use of language, myths and symbolic displays directed at maintaining the status quo. Viewed as a form of language, quantitative data is selectively deployed by the state not to reflect underlying economic conditions, but to create public values, acquiescence and support. As Edelman (1977, 58) observed:

Language is always an intrinsic part of some particular social situation; it is never an independent instrument or simply a tool for description. By naively perceiving it as a tool, we mask its profound part in creating social relationships and in evoking the roles and the selves of those involved in the relationships.

Consent of the governed, then, comes about not from the conscious acceptance of rules of procedure, but as acquiescence to and taking for granted an accepted language, thus at once creating and supporting a hierarchical relationship between the governed and the state. Always cloaked in the appearance of objectivity and neutrality, this language is ultimately directed toward establishing and maintaining hierarchies of authority and status (Clegg 1987). This acceptable discourse, such as accounting information, is always an intrinsic part of some particular social situation; it is never an independent instrument or simply a tool to be assessed for such attributes as its representational faithfulness. On this point,

Scott (1987, 509) emphasized that:

Outcomes will... be strongly shaped by the agents’ differential ability to lay successful claim to the normative and cognitive facets of the political processes: those identified by such concepts as authority, legitimacy, and sovereignty.

Finally, Abbott’s (1988) work on professions can be meaningfully integrated into the concern of interpretive perspectives. Here Abbott has observed both that the professions seek to legitimize themselves to society by attaching their expertise to the widely held values of rationality, efficiency and science, and that a key characteristic lies in the use of power both externally to preserve an


system of knowledge and, more importantly, internally in terms of hierarchical stratification and differentiation (see also Sarfatti-Larson 1977). Joining Abbott in recognizing the importance of power, Freidson (1986) alluded to a decoupling between the administrative or formalized and structurally oriented component of professional bureaucracies and the practitioner component comprised of those possessing and using internalized values and norms. Objectivity, having a close association with scientific endeavor, encodes expertise in an organizational structure and away from individuals (Freidson 1986; Abbott 1988). Both authors pointed to the necessity of conducting research at the micro-level of everyday practitioner experience, where self-interest may come into play, in order to understand professional endeavor. Abbott (1988) lamented that insufficient attention has been directed at studying professionals, not as freestanding autonomous agents, but as members of organizations, particularly for professions arising out of a commercial enterprise


such as accounting. Abbott’s (1988, 226–235) findings suggest that in the early twentieth century, U.S. engineers battled accountants for professional jurisdiction over the growing volume of quantitative work associated with corporations; a battle won by the accountants who won control and established a professional monopoly (Loft 1986; see also Armstrong 1985).

In summary, interpretive perspectives of managerial accounting and organizations take issue with the assumption of an objective reality, arguing that the implementation of such apparently rational, bureaucratic mechanisms as managerial accounting systems is one manner in which the social world flows through organizations and changes them. These theorists have begun to see managerial accounting practices and information as socially constructed phenomena with the full implications of the power and politics of social construction rather than as a technically rational function driven by and serving the internal operations of organizations. Furthermore, these interpretive perspectives recognize that once managerial accounting practices and information are implemented, what it accounts for shapes organizational members’ views of what is important and, more radically, what constitutes reality. Managerial accounting, then, is seen as being implicated in the social construction of reality rather than as being passively reflective of the reality as depicted in contingency theory and its predecessors.

Although the thrust of the interpretive perspectives in general and institutional theory in particular have received a growing amount of empirical support, a number of useful criticisms of them have been offered. DiMaggio (1988), for example, suggested that an apparent paradox resides in the two senses in which theorists have used the term ‘‘institutionalization.’’ Institutionalization as an outcome places societal expectations and organizational structures and practices beyond the reach of power and self-interest; expectations of acceptable practice merely exist and are taken for granted (Perrow 1985; Powell 1985). By contrast, institutionalization as a process may be profoundly political and reflects the relative power of organized interests (see also Tolbert 1988; DiMaggio and Powell 1991). Within this concern for institutionalization as a process, the major problem in institutionalized settings can be defined in terms of finding some mechanism that can be mobilized by interested actors to change an overly stable social system (DiMaggio 1988), or in terms of finding some process wherein social order is produced in a system where organizations are constantly eroding (Zucker 1988). Regarding power and group interest, DiMaggio (1988) has observed that institutional and interest-based explanations of organizational practices are not necessarily antagonistic to one another, but combined, may yield a more comprehensive theoretical apparatus for gaining insight into the social dynamics of organizations. He concluded that allusions to power and group interests tend to be smuggled into the institutional perspective rather than provide the focus of a sustained theoretical analysis.

Critical perspectives

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practices in society. These critical perspectives in accounting research are marked by a great deal of intellectual ferment evident in the different theoretical approaches and methodologies deployed and the wide range of topics and issues addressed.

Accordingly, in the light of such heterogeneity and the constraints of space, our intent is to provide a flavor of these alternative accounting research agendas without claiming to be exhaustive.4 Classifying these heterogeneous theoretical stances as ‘‘critical perspectives,’’ in contrast to the functionalist and interpretative traditions explored above, can be justified by their singular attention to the interrelation between accounting and issues of conflict, domination and power. Despite the theoretical differences within the different strands of the critical perspectives regarding the manner and form in which to conceptualize power, they all avoid a consensus view of society that is the hallmark of both the functional and interpretive perspectives.

It may be argued that power, in both the functional and interpretive perspectives, is formulated as if it were a possession belonging to someone which he or she exercises for individual gain and further, that this power is diffused over society in a manner as to preclude the sustained and systematic negation of any individuals’ preferences (Alford and Friedland 1985). In sharp contrast, this individualist basis of power and ultimately consensus view of society is eschewed by the critical perspectives which attempt to deal explicitly with conflict, domination and power (Cooper and Sherer 1984). For example, rather than treating various managerial accounting practices as a response to transaction costs considerations as in Johnson and Kaplan (1987) or agency cost considerations as in Christensen (1983), they are treated as modes by which the extraction of labor from laborers is made possible (Hopper and Armstrong 1991) and as methods by which the actions of individuals are made visible and susceptible to greater discipline and control (Hoskins and Macve 1988, Miller and O’Leary 1987). Accordingly, class conflict, the hegemony of elites, and the power of experts and professionals are some of the elements that the critical perspectives systematically foreground (not all such analyses incorporate all of these emphases) in their attempt to understand accounting practices.

Despite the theoretical richness within the critical perspectives, we will confine our attention to two major research strands that have illuminated our understanding of managerial accounting. First, we will consider the labor process perspective which draws from the Marxist tradition and then we will examine the Foucaultian perspective which, as the name suggests, draws from the work of Michel Foucault.

While both of these alternatives are critical in orientation, there are significant differences in the kinds of insights they offer and consequently, we will first describe their relevant theoretical infrastructure and then, tease out from extant accounting studies their implications for our understanding of managerial accounting.

For a more in-depth treatment of alternative research agendas in accounting, consult for example, Critical Accounts by David Cooper and Trevor Hopper (1990), Sociological Perspectives on Modern Accounting by Robin Rosenlender (1992), The Social and Organizational Context of Management Accounting by Anthony Puxty (1993), and Accounting as a Social and Institutional Practice by Anthony Hopwood and Peter Miller (1994).


The labor process perspective It thus becomes essential for the capitalist that control over the labor process pass from the hands of the worker into his own. The transition presents itself in history as the progressive alienation of the process of production from the worker; to the capitalist, it presents itself as the problem of management.

(Braverman 1974, 58, emphasis in original) Harry Braverman, in the much acclaimed Labor and Monopoly Capitalism: The Degradation of Work in the Twentieth Century, offered a resounding critique of conventional understandings of work processes in capitalist economic systems.

Drawing from the pioneering work of Karl Marx, Braverman asserted the primacy of the social relations of production for any attempt to understand the manner and modes in which goods and services are created in the capitalist economy. Specifically, Braverman (1974, 52) following Marx, suggested that the differentia specifica of capitalist economies was ‘‘the purchase and sale of labor power.’’ Understanding the historical novelty of this feature is crucial, for this defining aspect of modern economies which we take for granted is, as a general phenomenon, unknown to prior epochs of human history. Capitalist economies are accordingly differentiated from prior epochs by the social relation embedded within the employment relation.

Employment relations in contrast to, say, self-employment as the general form by which modern people earn their livelihood is an extremely recent phenomenon, and requires that workers sell their labor power to capitalists; for a wage. This historical reduction of persons to hired hands deprive them of their connectedness to the production process. Treated as a commodity, labor consequently ‘‘has no material interest in doing more that securing the highest wages and best conditions for the minimum of sacrifice’’ (Hopper et al. 1987, 445).5 Wage labor, or hired labor, is treated within capitalist economies as a cost of production – as any other input factor of production – which need, from the capitalist’s point of view, to be both minimized and optimized. The minimization of labor costs is ‘‘rational’’ since it avoids the dependence on a factor of production that, unlike other factors, can rebel against its own use. Similarly, optimizing the use of labor is ‘‘rational’’ since, as with any other factor of production, the efficient use of resources is the precondition for profits. Consequently, and built into the capitalist relations of production are the pressures to not only supplant labor by machinery but also to control the labor process – how labor power is deployed, the actual mode of work – in all its aspects, in the interest of capital accumulation. It is this pressure that motivates the capitalist to gain control over the labor process According to Braverman (1974, 53) ‘‘In the United States, perhaps four-fifths of the population was self-employed in the early part of the nineteenth century... by 1970 only about one-tenth of the population was self-employed.’’ Laborers in having to sell their labor power as a commodity, are now alienated from the fruits of their labor. This is the significance of the labor theory of value which asserts that the value of goods and services originate from and thus belong to those who make them. Moreover, since workers can produce far more per unit time than is necessary to keep them alive, this surplus value created is the source and object of capitalist strategies to make more profits. Accordingly, profits come from extracting as much labor from the purchased labor power, and then expropriating the surplus value so generated.


and make the latter ‘‘the responsibility of the capitalist’’ (Braverman 1974, 57).

However, treating human beings as just another factor of production sets the stage for the exploitation and expropriation of labor by capital. Accordingly, there is an irreducible conflict between capital and labor ensuring perpetually antagonistic relations between the classes. It is on this backdrop of capitalist social relations that the labor process perspective on cost and managerial accounting is fleshed out (see also Edwards 1979; Burawoy 1979; Noble 1977; Clawson 1980).

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