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Critical Perspectives on Accounting (1992) 3, 225-257

UNDERSTANDING MANAGEMENT
ACCOUNTANTS: THE RATIONALITY
OF SOCIAL ACTION
T. COLWYN JONES
Department of Economics and Social Science, Bristol Polytechnic

In investigating management accounting, field researchers attempt to


understand those who practice it. This involves explaining management
accountants actions in terms of their meanings. Practitioners do not see
accounting as a purely technical activity-objective, factual and neutral.
Instead, they see it as a social activity and draw on many meanings-
objective, subjective, inter-subjective, positional-in explaining how they
construct practice within specific social contexts. It is this which constitutes
management accounting rationality in practice. Critical accountants need to
understand this rationality if they are to explain, and change, management
accounting.

Introduction
This paper is concerned with field research into management accounting
practice. In particular, it explores what can be learned from practioners’
personal accounts of practice, and how this can be learned. In doing this the
paper makes two claims. First, that in order to explain accounting practice it
is necessary to understand the meanings that this practice has for manage-
ment accountants. Second, that these meanings may be understood as
rational if we adopt a broad concept of rationality drawn from social theory.

Understanding The paper adopts a specific usage of the term


understanding which refers to linking “actions” (which may be observed) to
the “meanings” which give rise to them (which are not observable). This is
seen as a particular act of the field researcher facing personal accounts of
practice. In linking actions to meanings, the researcher claims to make sense
of practice-and says, “I understand”. The first methodological concern of the
paper is-what do we need to know in order to understand management
accountants?

Reasons and Reasonings Linking actions to meanings initially involves


identifying the reasons advanced by management accountants for what they
do. But it involves more than this. It is also concerned with the explanations of
these reasons-of the ways reasons are constructed. In explaining reasons,
management accountants refer to reasonings-processes of calculating the
means and ends of action. Whilst some of these are narrowly technical-
Address for correspondence: Colwyn Jones, Department of Economics and Social Science
Bristol Polytechnic, Frenchay, Bristol BS16 IQY, UK.
Received 6 June 1990; revised 1 December 1990; accepted 24 July 1991.
225
1045-2354/92/030225 + 33 $08.00/O 0 1992 Academic Press Limited
226 T. C. Jones

economic, others are personal, social and political-and practitioners are


aware this is so. These explanations of practice in terms of conscious
reasoning -through the calculation of means and ends-constitute the
rationality of management accounting practice. How this rationality may be
investigated is the second methodlogical concern of this paper.

Context Personal accounts of practice disclose explanations which are


generated within specific times and places, and to which they refer. They have
a context. In making a claim to understand, the researcher locates reasons
and reasonings within a context where they appear meaningful. This context
is established by both the practitioner and the researcher. The extent and
manner in which the researcher constructs this “context” is the third
methodological concern of the paper.

Management Accounting My concern with these issues arises from sub-


stantive research in a specific area-investment appraisal and its role in
investment decision processes (Dugdale & Jones, 1990, 1991). There has been
longstanding academic advocacy of DCF as the technically superior technique
for investment appraisal. Despite this, we found organizations where Payback
was the only method employed; where both DCF and Payback (and ARR and
IRR) were used; and where the outcomes of DCF calculations were reported in
terms of Payback. Thus, practice in this area may appear haphazard, and
practitioners have been accused of being ill-informed (Woods et a/., 1984, p.
36) or outdated (Kaplan, 1986, p. 87) in relation to investment appraisal.
However, in exploring this issue with management accountants, we found
they were able to provide coherent explanations of their choice of appraisal
techniques and their relationship to the wider decision processes. These
explanations were not confined to technical assessment of techniques-they
referred to the personal experiences and skills of the accountants, to
organizational “cultures” and to the “political realities” of the organizations.
Far from being haphazard, investment appraisal now appears as reasoned
activity.

Accounting Rationality Whether or not such reasons are regarded as


“rational” depends on the concept of rationality employed. Narrow, technical
views of rationality may suggest “one-best-way” accounting methods and
decisions outcomes. But field research has found such a view a poor guide to
practice, especially in relation to “the validity of rational choice models of
decision making as an adequate description of information use in organisa-
tions” (Ansari & Euske, 1987, p. 549). Instead, the relationship between
accounting and decisions is seen as “ambiguous” and “elusive” (March,
1987). This does not imply, however, that accounting should be seen as
irrational. Ansari and Euske have called “for researchers to move beyond the
traditional notion of economic rationality and incorporate other forms of
rationality” (1987, p. 563). This paper explores some broader concepts of
rationality, suggests how they might be incorporated into accounting re-
search, and indicates the limitations of such an approach.
Understanding management accountants 227

Focus Although the methodological concerns of the paper may have a


much wider applicability, the paper will remain close to its substantive origins
by exploring issues in relation to accounting and decisions. It argues that
academic discussions of these issues generally fail to consider practitioners’
views of accounting, or provide unconvincing stereotypes of them. Manage-
ment accountants advance many reasons and reasonings for their practice
which are neither reflections of conventional academic accounting theory, nor
conform to the image of practitioners implicit in “critical accounting” writing.
They display a complex, social rationality.

Structure The paper is in four main sections. The first examines accounting
and decisions through models derived from “critical accounting” and “man-
agement science” academic literature. It concludes that these models are an
inadequate basis for understanding management accounting practitioners. In
particular, the narrow or selective treatment of “rationality” poses difficulties.
The second section broadens discussion of rationality through the work of
Max Weber. It concludes that his “action approach” provides a potentially
useful theoretical base, which needs more detailed refinement, for field
research in management accounting. The third section attempts this refine-
ment by constructing a “socio-rational” framework for researching manage-
ment accounting through the personal accounts offered by practitioners. The
fourth section considers the limits, not only of the socio-rational framework,
but of the action approach from which it derives. A study of action-rational
or otherwise-can be only one element in accounting research. In confronting
the issues of the context of accounting, researchers are obliged to consider
their own actions-their means and ends.

Purpose Critics of current accounting practice have rejected claims that it


provides an objective account of the world. In rejecting narrow views of
accounting rationality there is a danger that all concepts of reasoned action
are marginalized or discarded (except in the residual form of post hoc
rationalization). I hope this paper may make some contribution to the
academic rehabilitation of the concept of “rationality”. More importantly, I
wish to emphasize study of accountants as a necessary element in the study
of accounting.
Without some commitment both to reason as a force for change in
accounting and to an understanding of those who practice accounting, it is
difficult to see how academics can hope to achieve the aspirations laid out in
the first editorial of this journal, and summarized in its “Aims and Scope”-
“to reformulate corporate, social and political activity, and the theoretical and
practical means by which we apprehend and affect that activity”.

Accounting and Decisions


This section constructs models of accounting (drawn from critical accounting
literature) and of decision making (from management science). Together they
reflect academic views of the relationship between accounting and decisions
which reject narrowly economistic concepts of rationality.
228 T. C. Jones

Critical Perspectives and Accounting Rationality

Since the mid 1970s accounting has come under increasing scrutiny from
academic accountants who may be collectively identified as adopting a
“critical perspective”. Their project may be summarized as an attempt to:
identify current accounting practice; discover the theoretical base or assump-
tions of this practice; develop alternative theoretical bases; and (in some
cases) to propose alternative practices constructed upon these bases. This has
been an extraordinarily wide-ranging project in which it is difficult to detect
any central defining tendency other than the attempt to generate radically
new perspectives and to contrast these starkly with what are seen as the
currently dominant theories and practices of “conventional” accounting.
Critical accounting has been variously informed by a number of intellectual
sources. Some have drawn on labour process theory or, more broadly, on
political economy in the Marxist tradition (e.g. Cooper & Sherer, 1984; Tinker,
1985; Hopper et a/., 1987). Others have been influenced by interpretative and
interactionist microsociology (e.g. Colville, 1981; Tomkins & Groves, 1983).
Yet others have been inspired by Foucault’s discussion of discourse (e.g. Loft,
1986; Knights & Collinson, 1987; Roberts & Scapens, 1985) or by Derrida’s
deconstructionism (e.g. Arrington & Francis, 1988; Macintosh, 19881, and
other theoretical approaches continue to emerge.
Such a wide field is clearly difficult to encapsulate and it may be that
whatever coherence does exist in critical accounting rests upon the stress on
distancing it from (and often hostility to) conventional accounting theory and
practice. However, a central theme of these writers is that accounting should
be seen as a social activity. Hopwood (1985, p. 367) identifies this view among
members of a committee of the Social Science Research Council (a UK
government research grant agency) set up to examine social and political
research in accounting, who argued that “the origins of specific accounts
resided in the articulation of particular interests, in the creation of legitimacy
for them and in the construction of a calculative and administrative apparatus
which would further those interests”.
This view is supported by Hopper et al. (1987, p. 438) who see accounting as
“a fully social practice [that is] both the medium and the outcome of the
politico-economic context in which accounting is embedded”. The theme is
echoed by many other critical accounting writers (e.g. Armstrong, 1985, 1987;
Berry et a/., 1985; Burchell et a/., 1980; Cooper & Sherer, 1984; Knights &
Collinson, 1987; Loft, 1986; Tinker, 1985). In identifying accounting as
“social”, stress is variously placed on: subjectivity; the cultural or ideological
nature of knowledge; and the political nature of accounting in relation to
interests.
Despite the critical accounting view that accounting is a social activity, this
perspective is not seen as shaping the meanings that accounting practitioners
attach to accounting. Their views are instead characterized as “technical”. In
Hopwood’s (1985) discussion, “technical” is variously linked with the terms
“calculative”, “neutral”, “professional”, “uncritical” and to belief in “pro-
gress” and “efficiency”. This echoes the views of other accounting academics
in their identification of existing, conventional accounting. Accountants in
Understanding management accountants 229

practice are presented as claiming objectivity and seeing “the setting of


accounting standards as a purely technical activity” (Tricker, 1975). Conven-
tional academics are seen as viewing accounting as a factual and objective
form of knowledge (Loft, 1986). Textbooks are found to portray accounting as
a technical and neutral information service for decision making (Hopper et a/.,
1987).
Thus, a theme which runs through critical accounting is that conventional
accounting espouses a technical perspective which typically stresses objec-
tivity, factuality and neutrality. Further, this objective/factual/neutral view of
accounting practice is related to what are seen as the dominant influences in
accounting theory-neo-classical economics and functional organization
theory (Tinker, 1985; Hopper et al., 1987). Thus, critical accountants have
created a dichotomous model which offers the possibility of examining
different perspectives on accounting-see Table 1.
Although this model offers interesting, indeed dramatic, insights into
different accounting perspectives, there are some severe problems with its
use for interpreting practitioners’ views.
The “conventional” perspective is largely constructed by its opponents
rather than being advanced by those who, it is claimed, espouse it. Even in
the case of Hopwood, who is reporting the views of others, there is little doubt
that his own perspective is social. Now, whilst there is nothing inherently
“wrong” in seeking to categorize the views of opponents, there is clearly a
possibility that they will not recognize the perspective as their own, or will see
it as a gross caricature of their views. The latter certainly seems likely to
create difficulties between researcher and practitioner in field investigations of
accounting.
The model assumes a fairly close, and often causal, relationship between
theory and practice. However, research over recent years has often stressed
the gap which exists between accounting research and theory on the one
hand, and practice on the other (Dent et al., 1984; Kaplan, 1984; Woods et a/.,
1984, 1985; Johnson & Kaplan, 1987; Scapens, 1988). This gap cannot be
explained merely by reference to a time-lapse between the creation of theory
and its utilization in practice (Scapens & Arnold, 1986; Dugdale, 1989). We
need to consider the possibility that the theory of and the practice of
accounting have different roots, different developments and different pur-

Table 1. Perspectives on accounting


-
Conventional Critical
---___ __~--~ ____ ___~- ~-
Overall perspective Technical Social
Theoretical base Neo-classical economics Political economy/labour process
Functional organization theory Interpretive/interactionist
Discourse (Foucault)
Deconstructionism (Derrida)
Other
Key concepts Objectivity Subjectivity
Factuality Ideology/culture
Neutrality Position: class/gender/race
230 T. C. Jones

poses, rather than assuming that practice has a theoretical base. The
conventional/critical model may be more applicable to the theoretical orienta-
tions of academics than to the perspectives of practitioners.
Sociological work in other fields of occupationally organized knowledge
suggests that we are unlikely to find practitioners’ presentation of accounting
as purely technical since this would appear to be a claim to “technician”
rather than “professional” status for the occupation. Jamous and Peloille
(1970) argue that the establishment of an occupation as a profession depends
upon the balance of “technicality” and “indetermination” which exists in
claims made for the occupation. When looking at the creation of a profes-
sional product, technicality is defined as “the part played in the production
process by ‘means’ that can be mastered and communicated in the form of
rules”, whilst indetermination refers to “the ‘means’ that escape rules and, at a
given historical moment, are attributed to the virtualities of producers” (1970,
p. 112). Only those occupations which successfully claim a high level of
individual judgement (indetermination) as well as objective, factual, codified
technique (technicality) are likely to become established as professions. On
this basis we would expect to find professional judgement (subjective and
purposeful) as well as technical skill (objective and neutral) in the presentation
of accounting. A claim by practitioners to be so/e/y involved in applying
objective techniques to factual data would appear to be a fragile basis for
maintaining the occupational position of accountants.
Field research with practitioners gives little support to the conventional
model (Jones, 1990; Dugdale & Jones, 1990, 1991). Management accountants
do not portray their activities as exclusively technical, and nor is technicality
necessarily characterized as objective, factual and neutral.
Subjectivity (“the virtualities of producers”) appears in the form of stress
placed on the qualities of “good management accountants”, which include:
extensive personal experience of business; knowledge of the company’s
products, production methods and markets; understanding other managers;
and broad view of business decision making. These are not seen as attributes
external to accounting, but as central in generating subjective opinions and
estimates. Typically, management accountants do not see accounting as
dealing with, let alone producing, facts- instead they treat data supplied by
managers, and, more-so, shop-floor workers, with considerable scepticism.
Even the question of neutrality is not clear-cut. Practitioners may describe
themselves as “observers” or “scorekeepers” who are aloof from the partisan
machinations of other managers, but there are also comments (sometimes
from the same people) which suggest a fairly blatant cynicism about
“accountants know which side their bread is buttered” and “who pays the
piper calls the tune”. In addition, there is insistence that accounting should
produce information which is useful-not in some abstract, universal sense,
but for the specific purposes of those who are employing the accountant.
Beyond technical aspects of accounting, practitioners stress judgement.
However, instead of seeing this as creating indetermination in accounting
(differing subjectivities resulting in divergent judgements), many practitioners
seem instead to see it as producing convergent solutions. From this view it
is not so much that objective techniques produce “correct answers” in
Understanding management accountants 231

accounting, but rather than these techniques when combined with profes-
sional judgement produce a limited cluster of acceptable answers. The key to
this convergent view seems to be “rationality” (both the techniques and the
judgements of accountants being seen as having a rational basis) which
practitioners believe can be justified to other “reasonable” people through
“reasoned” discussion.
Management accountants include subjectivity, uncertainty/estimation and
purposefulness in their explanations of accounting and, in doing so, come
closer to the critical perspective than to its image of conventional accounting.
This disparity between critical accountants’ views of practitioners and prac-
titioners’ views of themselves may be a result of critical accounting’s concern
with demystifying accounting’s public image rather than with understanding
its practitioners. Or, that its image of practitioners is derived from conven-
tional accounting texts rather than from personal experience or field research.
Whatever its origin, the conventional perspective cannot provide an adequate
conceptual framework for the study of accounting in practice. The conven-
tional perspective captures only one aspect of practitioners’ views, or only
those views expressed in particular contexts at particular moments.
In summary, only a partial interpretation of practitioners’ views is offered by
the conventional/critical model. The work of critical accountants in “de-
bunking” the “myth” of conventional accounting has presented a strong
challenge to the image of accounting as a narrow technical activity. But there
is a danger of creating another myth: that management accountants them-
selves see their activities in this way-as objective, factual and neutral. This
may be one element of their self-image but it does not recognize the elements
of subjectivity, estimation/uncertainty and purposefulness which they recog-
nize in “professional judgement”. Nor does it consider the ways these
elements are combined in practitioners’ reasons and reasonings-their
rationality.

Perspectives on Decision Making and Accounting Rationality

In explaining practice as judgemental, management accountants refer to the


wider organizational context of their actions. Centrally for the concerns of this
paper, this involves organizational decision processes. Academic views of
these processes can be drawn from management science literature. Here,
narrow views of rational decision making have come under increasing attack
and alternative formulations offered. Three main perspectives on decision
making may be identified in this literature-“rational”, “administrative” and
“political”.

Rational Perspective This perspective draws heavily on neo-classical econ-


omics in generating a view of decision making based on the concept of
“rational choice”. The perspective is constructed partly from what is actually
claimed by writers who hold this view, and partly from the critique offered by
those who offer an alternative perspective based on an “administrative” (or
“administrative rationality”) view of decision making. Lindblom (1968) claims
that the essential elements of the rational perspective can be listed as a
232 T. C. Jones

number of steps in which a given problem is solved by successively:


clarifying goals; listing alternative actions; investigating and comparing
these; and then selecting the action which maximizes achievement of goals.
He states “some people define a rational choice as one which meets these
conditions. Others have merely claimed that these are the steps that any
rational problem-solver should take. Either way, these steps constitute a
classical model of rational decision” (Lindblom, 1968, p. 12).
From this perspective the purpose of accounting is the provision of all
relevant financial information which enables decision makers to select from
all available courses of action the one which will maximize the achievement of
known and agreed corporate goals. As Drury, in a leading UK text, puts it:
“accounting is concerned with providing information which will help decision
makers to make good decisions” (1985, p. 3). This accounting information is
seen as closely related to facts which are objective truths about the company,
which, being carefully gathered, are comprehensive, valid and reliable. In
providing information accountants select facts on the basis of an objective
criterion of relevance and present them in an appropriate manner to the
decision maker. This presentation is achieved by the application of universally
valid accounting techniques. Accounting information is seen as existing prior
to decisions and to “inform” them. Accountants are portrayed as standing
outside the decision-making process itself, which is the responsibility of
managers or other non-accountants.
Here, accounting is seen as a rational activity because it deals with facts
rather than opinions/prejudices/guesses, and because it operates with stand-
ardized, formal procedures validated against universal professional criteria
rather than hunches/feelings or other idiosyncratic methods. In this way the
rational perspective produces a view closely matched to critical accounting’s
representation of conventional accounting.
The perspective has been attacked as a mechanistic and unrealistic
portrayal of actual decision making. Simon (1976, p. xxvii) regards it as
“preposterous”, describing it as “having great intellectual and aesthetic
appeal but little discernible relation to the actual or possible behaviour of
flesh-and-blood human beings”. Against the rational perspective it is argued
that goals are seldom clear or given, and instead must be searched for (Scott,
1967; Lindblom, 1968), and, indeed, that “Organisations, per se, don’t have
goals. The goals belong to, and are sought after by, groups and individuals
within the organisation” (Salaman, 1979, p. 84).
Further, since these organizations have finite resources-of time, finance,
expertise, etc-identification and investigation of all alternatives is unrealistic.
Given ambiguity and/or disagreement about the goals of decision, it will be
impossible to generate clear, agreed criteria for selecting the “best” decision
choice. In this view, “It is impossible for the behaviour of a single, isolated
individual to reach any high degree of rationality” (Simon, 1976, p. 79)-if this
is defined in the manner of the rational perspective-because of “the inability
of the human mind to bring to bear upon a single decision all the aspects of
value, knowledge and behaviour which would be relevant” (p. 198).

Administrative Perspective This perspective is especially associated with the


work of Simon and his colleague, March. Simon constructs a view of
Understanding management accountants 233

“administrative rationality” in which the decision maker seeks to “satisfice”


rather than “maximize” in selecting courses of action, and “recognizes that
the world he [sic] perceives is a drastically simplified model of the buzzing,
blooming confusion that constitutes the real world” (Simon, 1976, p. xxix).
This perspective is based on the social psychology of decision makers who
are seen as “limited” in skill, values and knowledge, and on the organizational
context of decisions which constructs the “premises” on which choice is
based. Thus, although the decision maker is “intendedly rational”, the
actuality of decisions is a “bounded rationality” within the limits of personal
subjectivity and organizational norms. These lead to sequential investigation
of alternatives beginning with the status quo, uncertainties about the world
are absorbed by those who provide information and the individual decision-
maker exists in a context of “unobtrusive control”. The end of this process is
“a course of action that is satisfactory or ‘good enough”’ (Simon, 1976, p.
xxix).
In this perspective the purpose of accounting information is to enable
decision makers to move sequentially through a limited range of possible
courses of action until a satisfactory outcome is detected. Thus, not all
potentially relevant information is required, only that applicable to the
particular actions being investigated. Even here this information is limited
both at the individual and organizational level. At the individual level, facts are
identified and selected on the basis of the subjective perspectives and values
of accountants which are influenced by particular personal experiences in
education, training and employment (and more generally by their status, age,
gender, race and other extra-organizational factors). At the organizational
level, in addition to the structuring of the identification and selection of factors
by formal decision rules, division of labour, lines of communication and so
on, the existence of “decision premises” results in the “unobstrusive control”
of accountants. These factors also apply to the selection of “appropriate”
techniques in the light of the capacities and experiences of accountants and
the norms of the organization, Since we can expect significant differences
between individuals, the accounting information which is eventually produced
is likely to vary considerably rather than being a universal product (March,
1987).
Here, accounting is seen as a rational activity in that it is pragmatic-based
on a “realistic” appraisal of the personal capacities of accountants, within
organizational resource constraints, to provide information which is “ap-
propriate” in terms of organizational decision premises. “Facts” are seen as
objective but selective, and “information” is socially produced from them.

Political Perspective The exploration of power is at the core of political


perspectives on decision making. Potentially, there could be as many political
models in management science (at the micro level of the organization) as
there are in political science (at the macro level of the state). However,
management science literature tends to be dominated by a pluralist approach.
This emphasizes the ways in which organization goals are not “givens” or
“premises” at the outset of decision making but are outcomes of bargaining
processes. individuals and groups are seen as attempting to protect and
advance their “preferences”. Groups may be based on extra-organizational
234 T. C. Jones

factors or on position within the organization. The process of decision making


is seen as competition between pressure groups. Management is seen either
in a pseudo-governmental role balancing the interests of these competing
groups, or is itself one of the pressure groups in organizational politics
(Nichols, 1969).
If, however, we adopt a political model of organization which draws on
Marxist traditions, another perspective can be generated. The enterprise is
seen as a site of endemic conflict between capital and labour in which there is
a marked disparity of power in favour of capital. Management may be seen as
holding delegated power to act as an agent of capital. Here the goals of the
enterprise are not seen to be the personal objectives of all the participants,
nor a compromise between participants, but to be imposed by a dominant
group. Indeed, they may be seen not as the preferences or motives of
individuals but as a “logic” which is imposed through the operation of market
forces in capitalist economies (Zeitlin, 1974; De Vroey, 1975). The language
used in this approach is less one of “bargaining and compromise” than of
“struggle and resistance”, where a dominant class is capable of imposing its
interests on management and, through this, on labour, although it does not
usually succeed in entirely eradicating opposition. Within the general frame-
work of class interests, sub-groups compete for advantage within manage-
ment (Armstrong, 1985).
In political perspectives there is no one purpose to which accounting
information is directed. Instead, individuals and groups attempt to influence
organizational goals through compromises with others, or by imposing their
own interests upon them. In this political process accountants may act both as
“servants of power” giving support to one or other sectional interest and as
“political actors” attempting to protect and advance their own positions
within the organization (or outside it).
In this context “facts” are closely and reciprocally related to power. Facts
can be tools or weapons in bargaining and struggle between sectional
interests in justifying some particular decision choice. But, simultaneously,
the ability to define any statement as a “fact ” is itself an attribute of power,
with more powerful individuals and groups likely to be more successful in
gaining acceptance of (or at least partially overcoming resistance to) their
“truth claims”. The way in which these “facts” are processed into “informa-
tion” is seen not only as limited (in the sense implied in administrative
rationality) but purposive. This purposiveness may be demonstrated in the
deliberate construction of information to produce desired results. Burchell et
a/, (1980) label the role of accounting in this circumstances as “an ammunition
machine”. Additionally, accounting information may be seen as purposive
when it is used to justify decisions already taken (labelled, by Burchell et a/., a
“rationalization machine”) serving to legitimate, rather than inform, decisions.
For some, this perspective would appear to deny that accounting is a
rational activity. The so-called “facts” on which it is based are seen as political
artifacts which are open to negotiation or may be imposed rather than
accepted. “Information” may be created as much to mis-inform as to inform,
and carries messages which may be intended to serve the interests of
accountants or those who have power over them. The importance of
Understanding management accountants 235

accounting in decision making is seen as stemming not from its distinctively


rational contribution to the enterprise, but instead stems from the power
generated by accounting through its “truth-claims”, and the acceptance of
these “truth-claims“ as facts through the powerful positions occupied by
accountants. In this process of protecting and advancing interests in which
there can be no universally “best” solution, only solutions which benefit some
parties at the expense of others. Claims to “rationality” are viewed as
ideological: either rationality is highly partial and distorted; or it provides a
vocabulary of decision which obscures the “real” decision processes which
are political.
However, even in political perspectives it is possible to investigate the
rationality (or otherwise) with which individuals and groups: identify their
interests; seek alliances with others; purposefully create information; predict
the consequences of decisions; and so on. The identification of the organiza-
tion as a political arena of competing interests does not exclude investigation
of action within that arena as rational self interest. Management accountants
may be as aware of this as the academics who propose political perspectives.

Perspectives on Decision Making The three perspectives generate starkly


contrasting, and apparently incompatible, views of accounting. These concern
both the purpose and nature of accounting, and suggest quite different
approaches to the question of whether accounting can be viewed as a rational
activity-see Table 2. The decision-making model offers the potential of a
variety of differing concepts to stimulate insights into the views of accounting
practitioners, but there are some significant difficulties with it.
As with the conventional/critical model the perspectives generally reflect
the views of academics rather than academic investigation of the views of
accountants themselves. In the particular context of this paper this is quite a
severe limitation. Again, the separation of perspectives is partly achieved by
the proponents of alternative perspectives distancing themselves as far as
possible from other perspectives, and presenting them as essentially
exclusive-that is, as comprising contrasting and inherently incompatible
approaches. Thus, the researcher is forced to choose one perspective rather
than use the model as a whole (Pfeffer, 1981, p. 30).
However, each of the perspectives has a concept of rationality which may
be applied to accountants. The rational perspective sees rationality in terms of

Table 2. Perspectives on decision making

Administrative Political
Rational perspective perspective perspective
.__
Facts Objective Subjective: Subjective:
rule-based interest-based
Information Relevant representational Selective: Selective:
partial purposeful
Purpose Maximization/optimization Satisficing Sectional
Key concepts Technique Perception Interests
values
236 T. C. Jones

“pure reason” of an objective, universal and quasi-scientific nature. The


administrative perspective adopts a “realistic” view based on subjective
rationality (in relation to individuals’ perceptions, values, experiences and
capacities) and on the rule-based rationality of organizational contexts. The
political perspective contains an underlying concept of rational self interest.

Accounting, Decisions and Rationality


In this section I developed two models which might help us to understand
practitioners; first, in relation to accounting practice and, second, in relation to
wider decision processes. However, both models have significant short-
comings.
The critical construction of conventional accounting as a technical activity-
objective, factual and netural-does not enable an adequate understanding of
practice. In particular, it fails to recognize the complexity of practitioners’
reasonings in which the rationality of judgement is far more than a technical
issue.
The decision-making model offers a number of different concepts of
rationality-as pure reason, as practical reasoning, as rules and as self
interest. However, these are treated as contradictory and incompatible, which
restricts rather than enriches our potential understanding of the complex
reasonings which practitioners advance for their practices.
In order to understand practitioners’ reasonings it is necessary to develop a
concept of rationality which is broader than the technicality of the conven-
tional model, and is more comprehensive and coherent than the fragmented
perspectives of the decision-making model. For this we need a social theory of
rationality-which is the concern of the next section of the paper.

A Social Theory of Rationality


The most significant contribution to a social theory of rationality is the work of
Max Weber (1864-1920). The central theme of Weber’s work is the increasing
rationality of modern society. Like many nineteenth century writers he
perceived the modern world as one in which beliefs based upon tradition and
religion were being replaced by rational modes of thinking. But, whereas
other writers saw this in terms of “practical reason” (“Vernunft”) as a
common property of ordinary people in “the age of reason”, Weber treats
rationality as a highly specialized form of thinking (“Ratio”), which develops
around clusters of activity. Commerce as one such cluster of activity produces
its own rationality (and the military, for example, another). The clearest
development of the rationality of modern society was, for Weber, the
capitalist enterprise. The rationality of this form of organization was dem-
onstrated most particularly by its accounting. Thus, for Weber, accounting-
as a rational activity-stands close to the centre of the development of
modern society.

Social Action
In order to appreciate how Weber saw accounting as a rational activity it is
important to understand his concept of social action. Weber argued that some
Understanding management accountants 237

human activities can be identified as “behaviour” when there is no delibera-


tion or consciousness or intention in the mind of the person who exhibits
such activity. The term “behaviour” can be ascribed to activities such as
blinking, dilation of the eyes’ pupils or reflex knee-jerks, which carry no
intrinsic meaning for the individual who is observed giving these “responses”
to “stimuli”. This “behaviour” may be studied, throught Weber, using the
positivist, natural science methodologies of his time-through investigation of
cause and effect.
Action, is a different matter. “Action” is the label Weber applies to that kind
of activity behind which lie intentions or motives of the actor. Action cannot
be understood without an attempt to uncover the meanings which lie behind
it. Weber further distinguishes between “action” and “social action”. An
activity is action “in so far as the acting individual attaches a subjective
meaning to his [sic] behaviour- be it overt or covert, omission or ac-
quiesence. Action is ‘social’ in so far as its subjective meaning takes account
of the behaviour of others and is thereby oriented in its course” (Weber, 1968,
p. 4)‘.
From this perspective it is impossible to use positivist methods of observa-
tion to identify and relate stimulus/response, cause/effect, in order to
understand action. Action, being meaningful to the actor, must be interpreted
before it can be understood. Weber’s discussion of the rationalization of
modern society is based on his view that meanings underlying action were
becoming increasingly rational.

Rational Action
Weber presents us with two forms of action which are non-rational. “Tradi-
tional” action (based on custom, convention or habit) and “affective” action
(which springs directly from feelings or emotional states and may be shown
in expressions of “joy” or “rage”). What separates these two non-rational
forms of social action from rational forms is that the latter entails meanings
based on calculation. Here, “calculation” implies deliberation in conscious
attempts to “think through” the action.
“Value-rational” action (“Wertrationalitat”) concerns calculation of the
means appropriate to the achievement of some ultimate goal (or value) which
is itself not amenable to calculation-it is an end in its own right. “Purpose-
rational” action (“Zweckratinalitat”) is concerned with the calculation, through
systematic reasoning, of the appropriateness of both means and ends. In
purpose-rational action the actor not only calculates means for achieving ends
and evaluates those means in terms of their subsequent success or failure,
but also re-evaluates the ends themselves in the light of events.

Rationality
Two forms of rationality are identified which underlie both value-rational and
purpose-rational action’. “Formal” rationality refers to “the extent of quan-
titative calculation or accounting which is technically possible and which is
actually applied” (Weber, 1968, p. 85) and is concerned with procedures as the
means of achieving ends. “Substantive” rationality (as it applies to economic
238 T. C. Jones

action) is “the degree to which the provisioning of given groups of persons . . .


with goods is shaped by economically oriented social action under some
criterion . . . of ultimate values” (Weber, 1968 p. 85). The ultimate values are
“bases from which to judge the outcome of economic action” (p. 86,
emphasis in original).
Both forms are presented as rational and Weber is not concerned with the
question of which is the more rational, but with the identification of different
rationalities. However, the two forms of rationality may lead people towards
very different outcomes. The relationship between formal and substantive
rationality is an uneasy one, and although substantive rationality cannot exist
without formal rationality, the development of form may challenge
substance-technicality dominating purpose. For those who wish to identify
the rationality of an action in terms of the “success” of its outcomes, or to
claim that rationality is synonymous with “efficiency”, this presents severe
difficulties.

Routinization

Weber further identifies tendencies of routinization in modern society which


lead to the development of formal rationality in which life is increasingly
subject to the calculation of means. Weber relates this to the development of
free markets, free labour, autonomous private enterprises, the calculability of
the technical conditions of production and the functions of administration,
and the commercialization of economic life based on a monetary economy.
The development of rational administration of permanent enterprises (bur-
eaucracy), rational accounting, rational technology and rational law all in-
crease the calculability of means in modern capitalism3.

Rationality and Action

Weber’s discussion of rationality is subtle and well developed. He separates


“rational action” from “rationality”, offers us more than one form of
rationality and does not identify rationality with “correctness” or “accuracy”
but rather as modes of thought which give meaning to action (see Table 3).
Further, he locates this rationality in particular forms of society and traces its
historical development in relation to technological, legal, economic and
political change. Rationality is not analysed (at least overtly-see below) in
terms of a pragmatic judgement (e.g. that it is whatever produces
“efficiency”) or a moral judgement (e.g. that increasing rationality in society
implies “progress”). In identifying accounting as a key ingredient of rational

Table 3. Weber’s types of social action

Non-rational action Rational action Rationality

Traditional Value-rational Substantive


(based on custom or habit) (calculability of means-ends)
Affective Purpose-rational Formal
(based on emotion) I (calculability of means)
Understanding management accountants 239

action he would appear to offer highly relevant insights into the views of
accounting to be found among accounting paractitioners.

Rationality and Efficiency


There are, however, a number of problems in applying Weber’s ideas to a
study of accountants. In part these stem from the very subtlety which
commends Weber’s work to many sociologists. This “subtlety” may also be
viewed as “ambiguity”, and generate quite different perspectives under the
banner “Weberian”. In much management science literature, including those
management accounting textbooks which mention him, Weber’s discussion of
rationality is the backdrop to an account of bureaucracy in which his view that
“the decisive reason for the advance of bureaucratic organization has always
been its purely technical superiority over any other form of organization”
(Weber, 1968, p. 973) becomes a claim that it is the most efficient form of
organization or even that Weber “advocated” bureaucracy in order to achieve
efficiency (see Salaman, 1979, 1981, for discussion of this tendency in
“organization theory”).
Following Albrow (1970), sociologists have generally held that there is no
such connection between rationality and efficiency in Weber’s work (see Lee &
Newby, 1983, p. 193). The tension and contradictions between formal and
substantive rationality certainly suggest that it would not be possible to derive
a single notion of “efficiency” from either or both of these concepts. Yet
Weber also explains the “technical superiority” of bureaucracy in terms of its
“Precision, speed, unambiguity, knowledge of the files, continuity, discretion,
unity, strict subordination, reduction of friction and of material and personal
costs-these are raised to the optimum level in the strictly bureaucratic
administration . . .” (Weber, 1968, p. 973). There is scope for reading this
passage as an alternative view of bureaucracy and rationality to be found in
Weber’s work. The items in this list may well be seen as representing
ingredients of what management science writers would identify as
“efficiency”.
Now it may well be true that “to conflate ‘rationality’ and ‘efficiency’ would
be to offend against Weber’s view that science cannot arbitrate on questions
of value and should not make value judgements about outcomes” (Lee &
Newby, 1983, p. 193). But, it may also be the case that Weber himself offends
against this view. Weber is certainly not an “advocate” of bureaucracy. He
refers to it as an “iron cage” and insists “That ‘democracy’, as such, is
opposed to the ‘rule’ of bureaucracy” (Weber, 1968, p. 988), whilst warning
that “once fully estabilished, bureaucracy is among those social structures
which are the hardest to destroy” (Weber, 1968, p. 987).
His feelings about rationality are harder to pin down. His view that
rationalization is an irreversible phenomenon in the modern world seems to
be linked to his disappointment (or perhaps something stronger) over the
“disenchantment” of that world. It would be surprising if Weber was able
totally to separate these feelings from his analysis of rationality. His work can
be read as strictly distinguishing between rationality and efficiency at one
moment and as fearing that the efficiency of bureaucratic rationality makes it
indestructible at the next moment.
240 T. C. Jones

Rationality and Accounting


A second problem in applying Weber’s ideas is that they are located at a high
level of generality reflecting his concern with large-scale historical change in
the development of civilizations. His concern with identifying lines of cleavage
between modern society and its predecessors highlights overall tendencies
but needs to be refined when looking more closely at specific features within
modern society.
Weber appears to use the term “accounting” in two senses. At a general
level, Weber refers to the development of accountability within social
institutions, based on administrative rules, legal codes and calculation, which
is much broader than the activities conventionally associated with the
professional practice of accounting. At a more specific level he refers to the
“determination of income-yielding power by calculation according to the
methods of modern book-keeping and the striking of a balance” (Weber, 1961,
p. 207), which is a fragment of the sphere of modern accounting. It is not clear
how much detailed knowledge Weber had of the accounting practices of his
time. In the light of this we may suspect that Weber’s conception of the formal
rationality of accounting may have been based on his perception of the
“public face” of accounting, or its “mystique”, rather than its detailed
practice.
Critical accounting and management science discussions of accounting
information and its relationship to organizational decision making have
strongly challenged Weber’s view of the “strict calculability” of “rational
accounting” and “rational administration”. Thus, although Weber’s identifica-
tion of accounting as a key element in the rationalization of the modern world
may be accepted, this need not necessarily imply that accounting practice is
entirely a matter of formal rationality and purpose-rational action.
In conclusion, Weber’s discussion of rationality opens up the concept for
examination and frees it from narrow emphasis on technique and on
assumptions about efficiency. It places rationality firmly in the social world
through the concept of social action. It does not, however, give immediate
access to the meanings, rational or otherwise, which underlie the social
actions of management accountants.

A Socio-Rational Model
The model presented here is a refinement of Weber’s discussion of rationality
and social action which incorporates critical accounting views of accounting
as a social activity, and the various aspects of rationality discussed in
management science perspectives on decision making. It has been developed
in field research with management accountants (Jones, 1990; Dugdale &
Jones, 1990, 1991). The four elements of the model are illustrated by
responses given in semi-structured interviews concerning investment ap-
praisal and its relationship to organizational decision making-see Table 4.

Objective Rationality
Some of the ways accounting practitioners explain their actions seem to
confirm the “technical” viewpoints ascribed to them by critical accountants
Understanding management accountants 241

Table 4. Practioner views of investment appraisals and decisions

(a) Objective
“Payback? Its strength is it is simple.”
“DCF is really only relevant if you’re into a large interest rate and it‘s many years
before [benefits arise].”
“From a theoretical point of view the time value of money is important and Payback
doesn’t give you that.”

lb) Subjective
“I think I may have done [DCFj when I was in the Civil Service 15 years ago. If you
asked me to do one now I’d have to go and see if I could find a book.. because I
wouldn’t have much clue now.”
“[Most benefits are] intuitively obvious-you’re buying a new machine because
you’re going to cut down on waste, something like that.”
“The last two months are the first time I’ve done any of this in practice. So a lot of it
is going to be brainwashing from my accounting training . I think I’m the victim
of my training rather than anything else.”

(c) Inter-subjective
“DCF? My managers wouldn’t understand that. I know they wouldn’t understand that
I’m sure I could get into [DCFI if I was in [an academic] environment.”
“You just go round and figure out what [kind of appraisal] you think people will want
to see . Somebody, somewhere is going to ask you for all of them, for each in
turn. Invariably you’ll end up doing them all.”
“Because of the way [The Company] recruits, most of [the senior managers] are all
MBAs anyway. They’re numerate people-they’ve been trained in the use of all the
investment appraisal techniques.”

(d) Positional
“When you’re part of a big group you tend to think sometimes it’s other people’s
problems-the finance side of it-they’re our bankers, they’re worried about that
. I you can get [a project] on a simple method, why complicate it?”
“Decisions are less financial than strategic . We’re driven by all sorts of things that
aren’t financial.”
“Practically we’ll do whatever it takes to get the proposal up the [hierarchy].”

Source: Dugdale and Jones (1990).

(e.g. Table 4a). Reference is made to the factual basis of accounting where a
“fact” is seen as a universally accepted (or at least potentially acceptable)
statement about the “real world”. Where these statements are ambiguous or
contested more rigorous investigation or exposition will clarify the state-
ments, thus making them “facts“. Information is seen as a matter of
presenting such facts through the use of techniques which are themselves
capable of universalistic validation. The process involved in these techniques
is one of pure calculation (formal rationality) in which the proper carrying out
of procedures ensures a single, correct solution.
The validation of such techniques is concerned with their logic, rigour,
internal consistency, accuracy, reliability, relevance and so on. Hence, a
technique which recognizes the time-value of money is preferred as more
rigorous than one that does not. The development of accounting techniques is
seen as stemming from increasing intellectual knowledge and more refined
analysis, and thus represents a “progress” from less sophisticated (Payback)
to more sophisticated techniques (DCF). The superiority of “advanced”
techniques as means can be demonstrated against the ends they are intended
242 T. C. Jones

to achieve since these are seen as unambiguously specified. The goal (or set
of objectives) of accounting processes is single (or a single set) and
constitutes the problem to which one technique is shown to provide a
solution which is maximal (or optimal). Hence, the process is essentially
closed-ended.
The defining feature of objective rationality as an explanation of action is
that it is directed at the rationality of the accounting technique itself, In
explaining their action accountants call upon others to exercise universal
human reasoning and pure calculation to recognize this rationality.

Subjective Rationality

Not all the ways accountants explain their actions reflect such objective
rationality. Some explanations refer to the particularistic rationality of the
individual actor. Here it is not the technique itself which is emphasized but its
application, especially in relation to the importance of personal competence
and judgement-both “professional” and “commercial” (e.g. Table 4b).
“Facts” are seen to be statements which need not be universally held to be
true but which have been constructed by individuals. Given the virtually
infinite supply of potentially knowable elements in the world, the creation of
facts depends on particularistic identification and selection of elements which
then are held to be “facts”.
A large body of psychological research has shown this particularism to vary
very considerably through individual perception (identification) and values
(selection). Thus, individual perceptions and values are key elements in the
construction of “facts”, and their processing into “information”. Although
perception and values vary between individuals this does not imply that they
are arbitrary or irrational. Their source may be located in the individual’s
personality and experience.
Thus, accountants draw on their accounting experience in perceiving facts
[and in checking statements which they believe to be non-factual (Harper,
1988)] and in evaluating which are the most important of these facts. Practical
reasoning, based on their experience, shapes accountants’ perceptions and
values, and produces skilful actors who assess means against ends as a basis
for action. However, to the extent that the experiences and personalities of
individuals are different, then the means will be different. So too is the
manner of evaluating means against ends. Ends are not seen as “givens” but
are instead “discovered” by actors through their particular perceptions (e.g.
where the company is going) and values (e.g. where the company ought to be
going). Thus, the outcomes of subjective rationality are open-ended-different
accountants identify and select different means to achieve different ends.
The defining feature of subjective rationality in an explanation of action is
that it is directed at the rationality of the accountant as actor. Accountants
recognize that others would act differently, that the practical reasoning they
refer to is pat-ticularistic not universalistic. In explaning actions, the actor calls
upon others to recognize that they are rational in relation to the perception
and values, and the personal skills, of the actor.
Understanding management accountants 243

Inter-subjective Rationality

Analysis solely in terms of subjective rationality may suggest an extreme


relativist view of accounting practice in which unique individuals use unique
means to achieve unique ends. Here there is no generalizing way of
understanding accounting, only explanations which attach to individual
accountants.
However, individual perceptions and values are not formed in a social
vacuum. The meanings which attach to action are social both in the limited
sense used by Weber (that action is oriented towards others) and in the wider
sense that meaning itself may be socially constructed through interaction with
others, and through the socially shared and created language we use in
thinking about and expressing meaning. In this way perceptions and values
can be understood as inter-subjective, as attributes of individuals created
within social groups. Individuals may be “members” of many social groups-
family, school, company, occupation, society. To the extent that social groups
generate, or are delineated by, distinctive perceptions and values, then the
meanings which attach to action can be viewed as social rather than personal.
In the case of accountants two social groups seem likely to be the most
salient-the accountancy profession and the business organization. The
meaning of accounting action may be explained by reference to the shared
reasoning of the profession or company or both (e.g. Table 4~).
Facts and techniques are identified and selected, and information produced,
in relation to established norms outside the individual. Accounting is seen as
a socially organized activity (Armstrong, 1985, 1987; Loft, 1986). Within the
social group, norms create a social framework within which actions have
shared meaning-they constitute the “common-sense” or “taken-for-granted”
world of the accountant. Accountants recognize, however, that this world is
not universal since outside the social group (in another occupation, in another
company) other norms exist. For the individual the source of social percep-
tions and values is social interaction with twin processes of “socialization”
and “social control”4.
Socialization is the process of internalizing the norms of a social group so
that they become the actor’s own. Accountants may be formally socialized
into “professional” ways of thinking and acting (e.g. through extensive
education and training) and informally socialized through interaction with
accounting colleagues at work and outside. The development of “organiza-
tional” ways of thinking and acting may be generated through company
training schools, “mission” statements and interaction in “management
teams”, and thus action may be understood in terms of “organizational
culture”.
Social control refers to external forming of action where sanctions (rewards
and punishments) are applied by others. Hence, action can be understood as
rule-based when these rules are both internal (a socialized attribute of the
individual) and external (an aspect of the social control of the occupation or
organization).
Although these rules differ between social groups they are not arbitrary or
irrational. They have been constructed through the application of objective
244 T. C. Jones

rationality (in examination of their logic, rigour, internal consistency and so


on) and subjective rationality (in the experience of their application by many
individuals). Within the social group they may be treated as though they
represent universal reasoning, but are recognized as particularistic in relation
to other social groups. Within each social group the processes of socialization
and social control imply that outcomes are relatively closed-ended, in that
although each individual differs in relation to means and ends, these
differences are contained within a social field (e.g. we can detect distinctive
accounfing “problems” and “solutions”). In other social groups individual
differences are contained within different social fields (e.g. engineering
“problems” and “solutions”).
The defining feature of inter-subjective rationality is that explanations of
action are directed at the rationality of the shared rules of the accounting
profession and/or the company. These rules can be both formal and informal
and are shared within the group, whilst accountants recognize that other
groups share other rules. In explaning action accountants call on others to
recognize its rationality in relation to the shared perceptions and values, and
rules (codified procedures and informal norms) of profession or company.

Positional Rationality

Analysis based on inter-subjective rationality presents a world in which


alternative (social) rationalities co-exist, but it fails to deal with the interaction
between these rationalities. These rationalities exist within a social structure
and may be viewed as competing, not merely alternative, views of the world.
Thus, the meanings which attach to action may reflect not merely an
occupational or organizational rationality, but may also refer to the actions of
others who do not share that rationality (e.g. Table 4d).
Where rationalities compete, the strength of a particular case is partially
determined by the kinds of claims which can be advanced to support it on the
basis of objective rationality (e.g. the level of rigour of the technique),
subjective rationality (e.g. the level of experience in using the technique) and
inter-subjective rationality (e.g. the level of acceptance of the techniques
within the profession). In addition, however, it is influenced by the position of
the actor. Here “position” refers to a place in the social structure (say within
the profession or company). In addition to individual and group differences of
perception and values, there are differences in interests which attach to the
different positions in the social structure occupied by individuals or groups.
Rationality here is concerned with the pursuit of these interests-with
thinking through what those interests are (ends) and the potential strategies
and tactics for achieving them (means). This involves consideration of the
positional power of individuals (and groups) to advance their interests in
relation to the interests and power of others. Thus, positional rationality is
concerned with political processes in which individuals and groups advance
truth claims, the recognition of which as “facts” is partially dependent on the
relative power of the positions of those individuals and groups. Claims to high
levels of objective, subjective and inter-subjective rationality are a power
resource in actors’ pursuit of their interests (Armstrong, 1985, 1987). Although
Understanding management accountants 245

there may be different personal and social perceptions and values in relation
to means and ends these differences may be eliminated in political processes
in which particular interests impose their means-ends on others, or where
interests are combined to produce a compromise outcome. Thus, positional
rationality may lead to relatively closed-ended outcomes where alternative
rationalities are eliminated or merged in political processes of competition
between individuals and groups of unequal power5,
The defining feature of positional rationality as an explanation of action is
that it is directed at the rationality of the pursuit of interests conditioned by
the power of the actor. In explaining their actions, accountants call upon
others to recognize that action is rational in relation to the “realities” of
position, interests and power of themselves and others.

Socio-Rational Model

I have identified four facets of rationality which underlie accountants’ action.


Each involves a conscious thinking-through of action, a process of reasoning,
which distinguishes it from non-rational action (say, traditional or affective).
The nature of this rationality differs in the four forms and is directed at
different aspects of action-objective at the rationality of accounting tech-
niques; subjective at the practical reasoning of individual accountants;
inter-subjective at the rationality of social rules guiding accounting action;
and positional at the rational pursuit of the interests of accountants. Since
each is directed at a different referent, these forms of rationality are not
analytically incompatible (although they may create tensions when combined
in the meanings of the actor).
An understanding of accounting action involves investigation of these many
forms of meaning which underlie any particular act. These meanings relate to
both the means and the ends of accounting. Some meanings have strong
tendencies towards closure of human action (objective and positional rational-
ity) whilst other tend to individual or group openness (subjective and
inter-subjective). These differences are summarized in Table 5.
The socio-rational model represents four forms of rationality separately but
this does not imply four forms of rational action. Instead, in any single rational
act the underlying forms of rationality are fused. For example, claims to
objective rationality are an input to the rational pursuit of interests. For
example, subjective rationality influences the identification of interests. For
example, the validation of the objective rationality of a technique is influenced
by the positional power of the validators. For example, the construction of
inter-subjective rationality is conditioned by the power of “contributors” to
enter the “discourse”. In these ways, and others, the facets of rationality
“leak” into each other and fuse into accounting rationality which gives
meaning to accountants’ action (this is represented in Figure 1).
The model has been used in field research in: the design of interview
schedules; as an aid in conducting interviews; and in analysis of the data
collected (Dugdale & Jones, 1990, 1991). It may be described as a “listening
device” in that it sensitizes the researcher to the many meanings which lie
behind observed action. Rather than stereotyping accounting practitioners as
246 T. C. Jones

Table 5. Socio-rational model

Rationality

Objective Subjective Inter-subjective Positional

Means
Facts/ Universal Individually Socially Politically
information reality constructed constructed constructed
reality reality reality
Process Pure Individual Social Political
calculation perceptions perceptions interests
and values and values
Source Quasi- Individual Socialization Positions
scientific experience social control power
laws and
personality

Ends
Goals Single Personal Shared Contested
Outcomes Closed Open Intra-group closed/ Politically
inter-group open closed

Rationality

/[T\ j

-----w Inter-subjective

Positional

Figure 1. Rationality and action.


Understanding management accountants 247

seeing their activities as “technical” (objective, factual, neutral) the model


enables the researcher to understand action as technical, personal, social and
political at the same moment, in terms of its meaning. These facets of
meaning are disclosed in the ways practitioners explain their practice, and
when investigating why certain actions are observed all these meanings are
relevant.
Further, the socio-rational model may “offer a conceptual grid within which
practising accountants can recognize for themselves the variety of meanings
which inform their practice, and through which the context within which they
operate is interpreted” (Armstrong, 1989). It does this by drawing out the
facets of meaning which are revealed in practitioners’ own explanations of
their action.
In these respects the model facilitates dialogue between researcher and
practitioner. However, as with any approach, there are limitations. These will
be discussed in the next section.

The Limits of Understanding


There are limitations in this socio-rational approach for field research. These
stem, perhaps, from the particular model, but more generally, from the
emphasis on rationality and indeed from use of the action approach itself.
These limitations mark the boundaries of the usefulness of Weber’s concept
of “understanding” in explaning practice.

Rationality and Meaning

Non-rational Action Meanings have been explored only in terms of rationa-


lity, but there may also be non-rational interpretations of accounting action.
Perhaps accounting might be examined as “affective” action, where concepts
such as “prudence”, “caution”, “conservatism” and “pessimism” could be
linked to emotions or feeling-states rather than reason. Here, rationality may
be the mode of discourse through which non-rational meanings are ex-
pressed. Additionally, accounting could be viewed as “traditional” action,
based on custom and habit, rather than as deliberate reasoning. The original
reasoning behind particular accounting practices in enterprises may well be
forgotten over time if those practices are long-established.
The initial explanation of these practices may well be expressed affectively
(“I guess we just like it this way”) or traditionally (“This company has always
done it this way”). In more extended discussion with these practioners,
reasons for the practices may then be “remembered” or “reconstructed” and
expressed in rational terms. There is clearly a possibility that such meanings
convey not an original rationality of action but instead post hoc rationalization
of practices. This issue needs to be explored through longitudinal studies.

Irrational Action Apart from the issue of non-rational meanings, account-


ing action may also be seen as irrational-opposed to rationality. In one
company all the accountants interviewed explained their actions by reference
to the wishes of the managing director who was accorded attributes which
248 T. C. Jones

could be described as “magical”. In deciding on investment, particularly in


takeovers of other companies, accountants said that he used “hunch”, “feel”
and claimed “he can smell a good investment”. These accountants were in
awe of this power, which they saw as near-infallible, and which they
interpreted as “entrepreneurial flair”. This power seems more deep-seated
than that based on position and might be examined through Weber’s concept
of “charisma”. Whatever the psychic source of this power, whatever modes of
thought it represented, these accountants were convinced that it was superior
to their own rationality as they uncomfortably internalized the MD’s view
(retold in every interview] that “accounting is the carbuncle on the arse of
industry”. Here, accounting practice may be seen as conditioned by a potent
irrationality outside accounting. Whether accounting itself is seen as irrational
is less clear, but to the extent that practitioners are conscious that accounting
is used for irrational purposes then they may see practice itself as irrational.

Behaviour A further difficulty with an emphasis on rationality is that actors


are assumed to be capable of explaining the origins of action in terms of
meaning. Despite reference to “personality”, I have not explored the question
of whether there might be deep-seated drives, motives, instincts or
obsessions which underlie what people do. If so, then what we observe is
“behaviour”, which cannot be directly explained by individuals, or the origins
of which may only emerge in psycho-analysis. The meanings which actors
present to explain their behaviour may be only a superficial presentation of
deeper “reasons”, and may need to be explored with some concept of “the
accounting personality”. This issue raises fundamental questions of about
how we should treat the explanations advanced by actors (see Wallis & Bruce,
1983). Here the socio-rational model should not be seen as offering a
complete framework for understanding management accountants, but as
dealing with one aspect of such an understanding-how they themselves
explain their action.

Ideology Such explanations may be challenged as ideological repr-


esentations of action. They might be aimed at creating favourable images-a
mystique of accounting- rather than at aiding understanding. Explanations
may convey “how management accountants represent what they do [-] to
themselves, to each other, or to the world at large” (Ansari, 1990).
The socio-rational model identifies forms of reasoning-subjective (refer-
ring to self), inter-subjective (to other accountants) and positional (to the
world at large]-as equally valid. Each form is interrelated, meanings of one
form refer to meanings of anothe?; and action and meaning are also related’.
Therefore, it is theoretically dubious to separate “rational” from “ideological”
explanations.
More directly, it is methodologically impossible within the framework of
understanding. Where field researchers suspect a gap between practice and
explanation for it, and probe this issue, they are offered further explanations
which disclose yet more meanings in which technical, personal, social and
political forms intertwine. There is no moment at which the researcher can
distinguish rationality and ideology in terms of meanings.
Understanding management accountants 249

Outcomes This problem might be overcome if rational actions could be


directly related to rational outcomes. Following Weber, I have argued that the
rationality of actions cannot be judged from their outcomes-their “success”
or “effectiveness” or “efficiency”-but only in respect to the meanings which
underlie them. In social interaction, even where each individual actor is
rational, we cannot assume that the collective outcome will reflect the
rationality of all, or any, of the actors, To examine outcomes we need to
consider the context of action outside the meanings of the actors.

Rationality and Context

Wallis and Bruce argue: “No-one will adequately explain social action who
does not understand how individuals interpret their world. But no-one will
understand how individuals interpret their world who is not aware of the
social and historical context within which they do it” (1983, p. 109). However,
there are a number of difficult issues in synthesizing meaning and context in
such explanations.

Contextual Rationality Rationality may be a function of context rather than


of action itself. For example, in the context of selecting investment appraisal
techniques, responses such as “I tossed a coin for it”, “I prayed to God for
guidance” or “I felt like a change” would appear to be non-rational or
irrational actions. However in other contexts (say in starting a sporting match,
deciding to become a monk or nun, or in making holiday plans) the responses
may appear rational. Since “context” here must include “context-as-
perceived-by-the-actor”, does this imply that once the context is accepted as
“given” then all forms of “thought-through” behaviour, of systematic thinking,
must be defined as rational? If so, then it may be impossible to distinguish
between science and magic, between knowledge and belief, between true and
false8.
The central issue here is whether it is possible to construct a valid concept
of the specific historical context which is separate from the actor’s perception
of this context. This, of course, is one of the central controversies of social
theory. At one extreme the external reality of the world is emphasized (for
example in classical and Marxist functionalism), whilst, at another, “the world”
is seen as constituted by meanings (for example in much ethnomethodological
and post-modernist work).
I will not attempt any resolution of this issue here (it is likely to exist for as
long as social theory). Instead, I wish to make two points of immediate
relevance in case study research. First, to the extent that the researcher has
access to the meanings of many actors, then it is possible to construct a
concept of context which is different from that held by any individual actor.
Second, in doing this the researcher constructs a personal concept of context
which, inescapably, is held to be “real” by the researcher.
Thus, some concept of context, separate from the meanings of any single
actor, and constructed by the researcher, must appear in the understanding of
action. The rest of this section outlines the concepts of context which have
informed my understanding of management accountants.
250 T. C. Jones

The Social Context of Accounting Rationality

In explaining their social action, management accountants make reference to


social structures. Here, these structures will be examined in terms of the
professional and corporate organization of management accounting, and,
more broadly, its class formation.

Accounting Profession Much critical accounting discussion of accounting


practice stresses that it is an occupationally organized activity. Here, account-
ants are seen as part of a coherent occupational community, engaged in a
“collective mobility project” to establish and maintain accountancy as a
profession (Larson, 1977; Armstrong, 1985, 1987; Loft, 1986). This involves
the delineation of a field of “knowledge” and its mystification and monopo-
lization by accountants. In this process accountancy’s relation to capital and to
the state is seen to be crucial to its construction as a profession (Johnson,
1980; Puxty et a/., 1987). Accounting as a profession, particularly in Anglo-
American societies, is portrayed as having a fundamental influence on the
production, realization and distribution of value in capitalist and public
enterprises, and in the state’s management of the collective interests of
capital (Neimark & Tinker, 1986; Berry et al., 1985; Lehman & Tinker, 1987;
Puxty et al., 1987).
The location of management accountants in such an occupational collective
is an important feature in understanding their actions and their reasoning of
these actions. Accounting as a profession influences accountants through the
specification of education and training, representation of knowledges and
skills, structuring the supply and demand for accounting in the labour market,
and so on. The profession consistutes a powerful reference group in the
process of creating and legitimizing meanings.

Corporate Organization Although the professional position of accountants


is undoubtedly important, I feel it has been over-emphasized, particularly in
relation to management accountants. In investigating meanings, the context
of the corporate organization of accounting may be as important as its
occupational organization-accountants seeing themselves primarily as
employees of the enterprise rather than as members of a profession.
In field research (partly reported in Jones, 1990) management accountants
indicated only a tenuous link between themselves and the accountancy
profession. Typically, they did not read accounting journals (only the “situa-
tions vacant” columns of the weekly accounting newspapers), were not
interested in contemporary accounting debates among academics, did not
attend conferences or short courses organized by the professional bodies, and
largely saw accounting as a starting point for a managerial career which
would lead them away from accountancy. In some cases they had let their
membership of their professional association lapse, or had transferred
membership to the British Institute of Management.
For many accountants their professional association seemed little more
than the body which set the examinations they had passed many years
before. In contrast, the influence of the company was seen to be highly
Understsnding management accountants 2%

important. The company set specific rules, presented interpretations of


modern accounting practices, offered career paths, organized training courses
and provided a general cultural framework in “management briefing”
sessions.

Professionalism and Bureaucracy Discussions of professionals employed in


corporations have suggested a conflict between professional orientation and
the bureaucratic organization of work (Scott, 1966; Hall, 1968; Friedson, 1971).
However, rather than seeing accountants in conflict with bureaucratic rules it
may be more appropriate to view them as the creators and arbiters of such
systems (Berry et al., 1985; Hopper et a/., 1987). Certainly, if a tension does
exist between an “administrative principle” (bureaucracy) and an “occupa-
tional principle” (professionalism) it is not clear that typically this is resolved
in favour of the latter, as Friedson (1971) claims, at least in respect of
management accountants.
Here there may be a difference between management accountants and
financial accountants’. In our interviews (Jones, 1990; Dugdale & Jones, 1991)
we found that “management accountants” emphasized their detailed knowl-
edge of the company (its products, processes, people and systems) and
anticipated career advancement within the company, or with a similar
company in the same industry. In contrast, financial accountants were more
inclined to stress the transferability of their knowledge and skills, and were
optimistic about career advancement through leaving their present firm.
This difference might be characterized in terms of Gouldner’s (1957)
distinction between “locals” and “cosmopolitans”. It prompts an expectation
that financial accountants’ abstract, universal, transferable knowledge/skills
may lead them to emphasize objective rationality whilst management ac-
countants’ concrete, practical, grounded knowledge/skills might point to a
greater emphasis on subjective rationality. To the extent that the corporation
(and other managers in particular) is the most important reference group for
management accountants, then, this will shape the inter-subjective rationality
of their decisions over techniques rather than the collective wisdom of the
profession and/or accounting academics.

Social Closure To the extent that management accountants share similar


individual trajectories-in selection, training and career-then, we may identify
social closure in construction of the occupation (Parkin, 1979). This occurs
where there is selective recruitment of its membership in terms of gender,
race, family and educational background. It is reinforced to the extent to
which individuals are similarly constrained by educational qualification re-
quirements which are tested and validated by the profession (although some
of the those holding even senior management accounting positions hold no
formal accounting qualifications and describe themselves as “qualified by
experience” in the “university of life”). Further socialization takes place within
firms and in anticipation of future careers.
Here the trajectory of individual careers through the social structure may
create a unified “world view” among management accountants temporarily
holding different positions. Further, to the extent to which these accountants
252 T. C. Jones

share important components of their life chances and life styles with
non-accounting managers, this is also a basis for a broader, unifying,
managerial perspective.

Division of Labour However, operating against such unifying processes are


divisive forces. As Braverman (1974) argues, the processes of fragmentation,
deskilling and polarization, implicated in the development of the labour
process and its administration, also affects administration itself. Management
accounting has experienced a detailed division of labour in which tasks that
may be identified as “accounting” (and which may have been unified in the
nineteenth century “book-keeper”) have separated into routine numerical
processing (carried on by “accounting clerks”) and interpreting, advising,
controlling duties (carried out by “management accountants”). This divide is
clearly marked by the gender composition of the two categories, and it seems
likely that the frequency of individual trajectories leading from lower to the
higher levels is decreasing (Crompton & Jones, 1984). Even within the
“management accountant” category we may find significant variation be-
tween “core” and “periphery” firms in the economy (Edwards, 1979), and that
specific features of firms’ markets and technology will constitute positions
differently. Thus, management accounting is increasingly characterized by
social cleavage, rather than unity, in the positions occupied by its
practitioners.

Accountants, Capital and Labour This social cleavage is further com-


pounded by the instability of the class locations of these positions. As part of
“the middle layers” of the capitalist enterprise (Braverman, 1974) these
accountants are ambiguously located within class structures and struggles.
Class analysis of what is usually termed “the new middle class” has
suggested that it occupies a location with mixed economic functions-both
“global functions of capital” and “functions of collective labour” (Carchedi,
1977). These positions are not economically identified by ownership of capital
(although individuals may well hold capital) but by the employment of labour
(although individuals are themselves employees). Although not direct produ-
cers of surplus value (and hence not being exploited), neither are they ultimate
beneficiaries of capital accumulation (although their salaries may be seen as
revenue from surplus value). In acting as controllers of labour the middle
layers are themselves controlled by capital.
If capital is identified as owner/employer/exploiter/controller and labour as
producer/employee/exploited/controlled, then the new middle class cannot
be located in either category with certainty. This leads to a wide range of
views that the middle layers are: the agents of capital (Poulantzas, 1975); the
upper edge of socialized or collective labour (Mallet, 1975); simultaneously
performing functions of capital and labour (Carchedi, 1977); or in a doubly
“contradictory class location” between capital and labour (Wright, 1978).

Centripetal and Centrifugal Forces The social context of management ac-


counting generates both unifying and fragmenting social forces.
Understaudiug management accountants 253

Cenrriperel forces exist to the extent to which positions are similarly


constituted, and filled through processes of social closure. This would imply
considerable similarity in subjective rationality, and a high degree of inter-
subjective rationality, in the reasonings of management accountants.
Centrifugal forces exist by virtue of the increasing fragmentation of
positions which management accountants occupy. This implies a potential for
significant variation in positional rationality reflecting differences in interests
and power.
It is within this changing tension of centripetal and centrifugal social forces
that management accounting rationality is generated and articulated.

Researchers and Practitioners


The act of “understanding” links researchers to practitioners. As Wallis and
Bruce (1983, p. 109) put it: “Understanding why interpretations and beliefs . . .
made sense in a particular social context-understanding, that is, what counts
as rational procedures-requires a close appreciation of the historical con-
text” (emphasis added).
In doing this, researchers are forced to re-examine their own rationality and
their views of context. Research is no more a mere technical activity-
objective, factual, neutral-than management accounting is. Pretending that
we can stand outside what we study is unconvincing since “even ‘inaction’ is
a political act that inevitably changes/reproduces social relations, and thus we
can never stop at ‘understanding’ management accounting but . . . need to
concern ourselves with how we inevitably change management accounting
and the social context of which it is part” (Tinker, 1990). This raises questions
for researchers-to borrow two famous titles-“Whose Side Are We On?”
(Becker, 1967) and “What Is To Be Done?” (Lenin, 1902).
Each researcher must construct their own answers to these questions. My
concern in this paper has been to argue that an understanding of current
practice, through the meanings of practitioners, is an essential element in this
task. We do not need to convince practitioners that accounting is a social
activity-they already see it this way. What we do need to do is consider
whether, in reformulating accounting, practitioners are likely to be allies,
hindrances or opponents. This depends on the interaction of practitioner and
researcher rationality-the extent to which we can share ends and means in
changing accounting and its social context.

Conclusion

In studying accounting as social action we need to be concerned with the


meanings which underlie it. These meanings can be investigated through the
complex rationality-technical, personal, social and political-of practitioners.
As they thoughtfully construct practice, management accountants do not see
their activities in a narrowly technical manner. As people actively engaged in
interpreting and acting in a social world they are not simply “putting
accounting theory into practice”, nor are they merely “agents” of their social
context-they are not “subjects” constituted by discourse, nor “bearers” of
254 T. C. Jones

the logic of capitalism. If critical accountants are to change management


accounting they need to understand the complexity of its practitioners. This
implies that researchers need to investigate the explanations of actions which
management accountants offer-and to take these explanations seriously.

Acknowledgements
The early development of this paper was greatly influenced by discussions with Jem
Thomas (on Weber) and Dave Dugdale (on management accounting). Comments on
earlier drafts were made by Shahid Ansari, Peter Armstrong, Trevor Hopper, Paula
Thomas, Tony Tinker and a number of participants at the Management Accounting
Research Conference (University of Aston, September 1989). My thanks to all of them.

Notes
1. Weber’s distinction between “behaviour” and “action” is fairly clear in principle, although
there may be difficulties in application. For example, although “blinking” may be meaningless,
“winking” can have many meanings. The distinction between “action” and “social action” is
more problematic. Weber illustrates his distinction like this-“Social action does not occur
when two cyclists collide unintentionally; however, it does occur when they try to avoid the
collision or sock one another afterwards or negotiate to settle the matter peacefully” (1968, p.
1375). Here, Weber’s emphasis is upon the immediate, other-directedness of social action.
However, it may be argued that if the cyclists, before they meet, perceive their action as (say) a
“leisure pursuit”, and expect others to recognize the meaning of ‘leisure’, then their action is
firmly linked to time and place--to a particular society. Only when and where a shared concept
of “leisure” exists can the actor explain the meaning of cycling in this way. In this sense
perhaps all action is social.
2. Kalberg identifies four types of rationality in Weber’s work, including “practical rationality”
when the actor “accepts given realities and calculates the most expedient means of dealing
with the difficulties they represent” (p. 1152) and theoretical rationality which “involves a
conscious mastery of reality through the construction of increasingly precise abstract concepts
rather than through action” (p. 1152). I have taken the view that these concepts are alternative
formulations of Weber’s core concepts of substantive and formal rationality and hence have
limited my discussion to two types.
3. The emphasis here is on capitalist society. Weber also considered that bureaucratization would
be as, or more, important in socialist society. Indeed, for Weber, the great struggle of the
twentieth century would not be capitalism versus socialism, but bureaucracy versus
democracy.
4. I am not claiming that the processes of socialization and social control are absolute, or
complete. It is not suggested that “actors” should be seen as “social robots” which are
pre-programmed or governed. However, in studying people’s active processes of reasoning,
we do need to investigate the construction and maintenance of social action.
5. Again, I am not proposing that power should be viewed as absolute or its effects as complete.
Although some decisions or some rationalities may be “closed-out” in political processes, this
does not imply that such closure is full or final. Those with less power may still mobilize what
power they have in opposition to past decisions, lack of cooperation with present applications,
and attempts to re-influence future decisions.
6. For example, representations of investment appraisal as an “important” accounting activity
contain criteria of importance held by the individual accountant, supported by the accountancy
profession and expected to convince the listener.
7. For example, claims that accountants pursue investment appraisal “rigorous/y” need to be
backed by the action of checking data and calculations if this claim is to withstand the scrutiny
of managers affected by accounting information.
8. The problem is vividly highlighted by Evans-Pritchard’s (1937) discussion of the Azande
people. The context of their action, as they perceive it, is a world of witchcraft. In dealing with
this world the Azande have developed a systematic body of ideas (“magic”) and a set of
decision techniques (“oracles”). These techniques are hierarchically ordered so that the lowest
Understanding management accountants 255
level (“termite oracle”) can be validated against a higher level (“rubbing-board oracle”), which
in turn can be evaluated by the highest level technique (“poison oracle”). When the outcome
of the highest technique is challenged then it may be repeated by another expert practitioner.
Where results fail to match, the “witchcraft” may be used in explaining a “distortion”. The
central problem is that the Azande’s repeated experiments lead to the reinforcing of their
underlying ideas system. If we accept the Azande’s perception of the context of action, then
their “oracle” experiments may seem as rational as our society’s use of “scientific”
experiments to confirm or refute previous scientific experiments, which simultaneously
reinforces the ideas system of “science”.
9. In the UK accountancy is organized by a number of professional bodies. The Institutes of
Chartered Accountants (England and Wales/Scotland) are mainly concerned with financial
accounting; the Chartered Institute of Management Accountants with management account-
ing; and the Chartered Association of Certified Accountants has both kinds of members.
However, there is no requirement for this to be reflected in recruitment to positions in
corporations. Thus, the position of “management accountant” in industry may be occupied by
a member of any of the professional accounting bodies, a member of a non-accounting body
(e.g. Chartered Institute of Secretaries) or a “non-professional”. Thus, the difference between
“management” and “financial” accountants in corporations may be as much a matter of
career experience as of training and qualification.

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