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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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Foucault’s work has, as already been stated, sparked much attention in the critical accounting tradition. In a recent paper, Walsh and Stewart (1993) explored the history of managerial accounting practices from a rigorously Foucaultian perspective. In comparing ‘‘two assemblages of people making things,’’ one from the 1700s and the other from the 1800s, they find support for one of Foucault’s most provocative theses. By asserting that ‘‘the individual’’ was the result of disciplinary mechanisms, Foucault also is implying that prior to the late eighteenth century individuals could not be known and therefore controlled since they lay below the threshold of description. Accordingly, what we consider axiomatic in managerial accounting – namely the linking of accounting calculations and measures to the work of individuals and groups – must not have been prevalent prior to the late eighteenth century. Indeed, this is precisely what Walsh and Stewart (1993) find when they compare the New Mills Woolen Manufactory (1681–1703) with the New Lanark Cotton Factory (1800–1812). Some features which characterized the manufactory of the late seventeenth century include: master-servant relationships between the managers and workers; customary rather than market driven rates of profit, calculations of selling prices and wages; use of the pillory and the prison as threats of retribution to workers for pilferage or shortages in piece work;

bookkeeping as a ‘‘physical memory of the real proceedings of each day and each week to be certified by the masters’’ (Walsh and Stewart 1993, 786).

While Walsh and Stewart (1993) focused on the early days of the factory system to provide some solid evidence and support for Foucault’s thesis, Miller and O’Leary (1994) studied another time period to examine the rising popularity of standard costing and budgetary practices in the U.S. during the turn of the century.

Again, using a Foucaultian perspective, they illuminated dimensions of that much studied period that have hitherto escaped attention. Miller and O’Leary (1994, 99) argued that such accounting practices as standard costing and budgeting should be understood ‘‘as a technology of government,’’ where the latter is understood as ‘‘the ensemble of rationalities and technologies’’ by which ‘‘authorities attempt to act on the conduct of others, to shape their beliefs and behavior in directions deemed desirable.’’ Accordingly, the widespread emergence of standard costing and budgetary techniques by the 1930s in both the U.K. and the U.S. are seen as indicative of a new modality in the governance of economic life. This emergence was linked not only to the scientific management movement associated with Taylor and the spread of industrial psychology but also to the concern with national efficiency in the U.K. and the ‘‘efficiency craze’’ in the U.S. The term efficiency was deployed in a wide range of contexts from individual performance on the factory floor to articulation the social responsibilities of the state in correcting the ills of society, and subsumed under itself a host of financial and nonfinancial techniques. Linkages were also forged between the scientific management of industrial enterprises and the rational and orderly planning of society as a whole.

A host of such social sciences as public administration, engineering, and sociology as well as a slew of such experts as accountants, urban planners and economists sought to ‘‘normalize and govern populations of individuals’’ (Miller and O’Leary 1994, 111). It is this new modality of governing economic life that forms a context


that is both constitutive of and constituted by the standard costing and budgetary practices of the early twentieth century.

To date, within accounting as well as organizational theory, a majority of work applying what has been termed Foucault’s archeological and genealogical perspectives have had an historical perspective. However, the application of Foucault’s insights into the functioning of modern societies is not limited to forays into the past. More pertinently, his work proves to be of continuing value as it is being profitably used to illuminate certain aspects of the contemporary uses and redefinitions of accounting. For example, Preston (1992, 64) studied the relative emergence of Diagnostic Related Groups (DRGs) as an ‘‘accounting technology based upon principles of cost control rather than cost reimbursement.’’ Using a longitudinal study Preston (1992, 97) showed how this practice of reimbursement cannot be exclusively related to a ‘‘a logic of economic incentives and rational economic behavior.’’ Rather, a shifting complex of events, including Medicare and Medicaid, the private structure of American health care, the power of professional associations, changing public attitudes towards health care, is seen as being part of this transformation of accounting practices. Accordingly, Preston, following Foucault, revealed the emergence of DRGs as being implicated in a wider and more general transformation in the ‘‘politics of health’’ which involves not only economic factors but more decisively, social and cultural ones as well. On this same issue of contemporary application of Foucault’s work, Rose (1991) argued for an interrelation between the mode of liberal democratic governance and the technology of quantification, numeracy and statistics. Rose (1991, 691) stated that ‘‘numbers have an unmistakable power in modern political culture’’ evident from opinion pools to the federal budget and the national income statistics. The role of accounting in this Foucaultian view, is that accounting, along with other various calculations, form the basis for democratic politics whose singular characteristic is ‘‘arms-length’’ management from a distance.

Consistent with the underpinnings of critical perspectives, the Foucaultian view situates management accounting in a wider political and social context.

Specifically, in the Foucaultian approach, management accounting is considered as part of a larger historical trend through which people at large were subjected to a variety of disciplinary techniques. Whereas in labor-process theory, management accounting appears within the context of a class-divided society to aid economic expropriation, the Foucaultian tradition reveals management accounting as an element of a general historical process by which people are made calculable and governable. The Foucaultian view also considers management accounting as a social practice rather than a technique by examining the intricacies and richness in such social relations that are embedded in social patterns of interaction as language, discipline and intimacy, all cultural norms and forces which potentially impinge on the roles and nature of management accounting.

Closing discussion It is important to note our interpretation of the relationship among the alternative managerial and sociological theories considered, as well as their relationship


to more traditional perspectives of managerial accounting: can these various perspectives be compared and contrasted or possibly blended, and a ‘‘champion’’ paradigm isolated? In exploring the structure of more general scientific revolutions, Kuhn (1970) reasoned that because of fundamentally different philosophical presumptions, it is impossible to employ the tenets of one paradigm to assist those subscribing to a second paradigm to transition to understand the first paradigm.

But rather, the ‘‘leap’’ from one paradigm to another must be based on faith in order to fully appreciate what a particular paradigm may offer for understanding our existence. In this spirit, and more closely concerned with organizational analysis, Morgan (1980) (see also Burrell and Morgan 1979; in accounting see Dirsmith et al. 1985) theorized that different paradigms both address different sorts of problems and, where paradigms address common problems, portray them in fundamentally different ways and thereby offer differing insights into their nature. Thus, what is called for is not a blending of paradigms nor the isolation of a particular paradigm as champion, but rather paradigmatic pluralism as a way of enhancing our understanding of issues in the social sciences. Consequently, we offer the various paradigms not as competing perspectives but in some sense as alternative ways of understanding the multiple roles played by management accounting in organizations and society.

Extending this theme and drawing upon Churchman’s (1971) characterization of influencing systems, Mitroff and Mason (1982) offered a useful way to understand the properties of more orthodox research approaches and one which calls for a plurality of theories used in a dialectic fashion. The argument of Mitroff and Mason (1982) also highlights fundamental differences in the types of problems which may be addressed. Within the traditional approach to management accounting research, one seeks regularity, consistency or consensus by two means. In the first, one seeks patterns in specific sets of empirical data in a purely inductive mode.

‘‘Consensus’’ of data is in essence a guarantor of faithfully representing a concrete reality. Any lack of regularity or consensus in the data (e.g., low r 2 ) serves to question the validity of the pattern isolated or theory used. One seeks improved understanding by refining the model’s specification. In the second approach, one seeks internal consistency in a postulational system wherein reality is the axiomatic structure. In a deductively driven system, only the lack of internal consistency or conflict in the propositional network can cause one to abandon it in favor of a competing network.

The rational frame of reference importantly assumes that the phenomena under investigation are either well specified and well known, or able to be well known through some preliminary fieldwork (Keating 1995), or further refinement of the model or propositional network, and hence, are eminently structurable. However, because of its reliance on a set of fixed concrete data or variables expressed in a fixed postulational structure, it is limited in its abilities to preserve or reflect anomalies and uniqueness in phenomena and to capture the essence of ill structured problems. Its use is, therefore, relegated to examining well structured though perhaps technically complex problems. Paradoxically, because of their very comprehensiveness, these traditional perspectives tend to suppress conflict, anomaly and uniqueness. By contrast, a more interpretive or critical view emphasizes


the use of multiple conceptual views of ill structured, anomalous phenomena on the presumption that reality is too ill structured to be meaningfully represented by any set of data or propositional network, no matter how comprehensive they may appear.

The use of alternative research theories also has resulted in alternative research methods of forms of inquiry. The general literature which describes the use of qualitative, naturalistic methods in field research is growing in volume and stature. From this literature, it is possible to outline various criteria of ‘‘good’’ research which are provisionally consistent with the knowledge claims advanced by its theoretical perspective discussed in the paper (Morgan (1983) sounds a useful warning note in such matters). However, we avoid detailed treatment of such philosophical issues as epistemology, or such methodological issues as falsification, or indeed of research methods. These and related matters have been adequately dealt with in both the philosophy of science and accounting literatures.7 Denzin and Lincoln (1983) offer a useful discussion regarding criteria to consider for alternative methods of research inquiry. The first criteria is credibility which relates to the believability of the observations and interpretations to both the academic community and participants in the study. This criteria is addressed through such techniques as prolonged engagement at the organizational context studied which provides research scope, and persistent observations which concerns penetration into the context studied to identify relationships, forces, etc., which have salience in understanding the lived experiences of organizational members. Representative adequacy also is important to credibility which entails having sufficient notes, transcripts, audio or video recordings enable different researchers to examine field observations and form similar though not necessarily identical interpretations.

The second criteria is transferability, or the ability of the interpretations of one organizational context to be transferred to another. Given the primary focus on the context or substantive domain and the lived experience of its members, interpretive and critical field members would typically emphasize the importance of providing thick description in the research text, presenting vibrant, exact interview quotes, archival abstracts, etc., that provide both scope and depth in understanding the context. This thick description, in turn, influences theoretical perspectives being provisionally used to interpret the organizational context. It is this informed theory, not the observations, that may be transferred to begin providing another organizational context.

The third and fourth criteria are dependability and conformability. The former concerns developing reliable interpretations, but interpretations that simultaneously recast the state of its organization studied (i.e., its stability) and the process by which the organization is changing (i.e., its instability); in turn the field worker concedes instrumental unreliability, albeit a constructive unreliability. The latter Notable in this regard was the paper by Tinker et al. (1982). Others addressing the philosophical underpinnings of different accounting research, include Christenson (1983), Chua (1986) and Hopper and Powell (1985). For statements by philosophers on the philosophy of science, consult Bernstein (1978), for those by organizational theorists see Burrell and Morgan (1979).


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