Journal accounting and auditing

Accounting, Auditing &Accountability JournalAccounting as codified discourseGuest Editors: Sue Llewellyn and Markus J. Milne

Volume 20 Number 6 2007

ISSN 0951-3574

www.emeraldinsight.com

Celebrating 20 years 1987-2007

aaaj cover (i).qxd 26/10/2007 12:26

Access this journal online _______________________________ 803

Editorial advisory board _________________________________ 804

INTRODUCTIONAccounting as codified discourseSue Llewellyn and Markus J. Milne _________________________________ 805

Discourse and audit change: transformations inmethodology in the professional audit fieldRihab Khalifa, Nina Sharma, Christopher Humphrey and Keith Robson ___ 825

Social and environmental reporting and hegemonicdiscourseCrawford Spence________________________________________________ 855

Enrolling discourse consumers to affect materialintellectual capital practiceSuresh Cuganesan, Christina Boedker and James Guthrie _______________ 883

Analysing accounting discourse: avoiding the ‘‘fallacyof internalism’’John Ferguson__________________________________________________ 912

Accounting, Auditing &Accountability Journal

Accounting as codified discourse

Guest EditorsSue Llewellyn and Markus J. Milne

ISSN 0951-3574

Volume 20Number 62007

CONTENTS

The current and past volumes of this journal are available at:

www.emeraldinsight.com/0951-3574.htm

You can also search more than 150 additional Emerald journals inEmerald Management Xtra (www.emeraldinsight.com)

See page following contents for full details of what your access includes.

Access this journal electronically

Reply to: ‘‘Analysing accounting discourse: avoidingthe ‘fallacy of internalism’’’Sonja Gallhofer, Jim Haslam and Juliet Roper ________________________ 935

Calls for papers ___________________________________________ 941

CONTENTScontinued

As a subscriber to this journal, you can benefit from instant,electronic access to this title via Emerald Management Xtra. Youraccess includes a variety of features that increase the value ofyour journal subscription.

How to access this journal electronicallyTo benefit from electronic access to this journal, please [email protected] A set of login details will then beprovided to you. Should you wish to access via IP, pleaseprovide these details in your e-mail. Once registration iscompleted, your institution will have instant access to all articlesthrough the journal’s Table of Contents page atwww.emeraldinsight.com/0951-3574.htm More informationabout the journal is also available at www.emeraldinsight.com/aaaj.htm

Our liberal institution-wide licence allows everyone within yourinstitution to access your journal electronically, making yoursubscription more cost-effective. Our web site has beendesigned to provide you with a comprehensive, simple systemthat needs only minimum administration. Access is available viaIP authentication or username and password.

Emerald online training servicesVisit www.emeraldinsight.com/training and take an Emeraldonline tour to help you get the most from your subscription.

Key features of Emerald electronic journals

Automatic permission to make up to 25 copies of individualarticlesThis facility can be used for training purposes, course notes,seminars etc. This only applies to articles of which Emerald ownscopyright. For further details visit www.emeraldinsight.com/copyright

Online publishing and archivingAs well as current volumes of the journal, you can also gainaccess to past volumes on the internet via Emerald ManagementXtra. You can browse or search these databases for relevantarticles.

Key readingsThis feature provides abstracts of related articles chosen by thejournal editor, selected to provide readers with current awarenessof interesting articles from other publications in the field.

Non-article contentMaterial in our journals such as product information, industrytrends, company news, conferences, etc. is available online andcan be accessed by users.

Reference linkingDirect links from the journal article references to abstracts of themost influential articles cited. Where possible, this link is to thefull text of the article.

E-mail an articleAllows users to e-mail links to relevant and interesting articles toanother computer for later use, reference or printing purposes.

Structured abstractsEmerald structured abstracts provide consistent, clear andinformative summaries of the content of the articles, allowingfaster evaluation of papers.

Additional complimentary services availableYour access includes a variety of features that add to thefunctionality and value of your journal subscription:

Xtra resources and collectionsWhen you register your journal subscription online, you will gainaccess to Xtra resources for Librarians, Faculty, Authors,Researchers, Deans and Managers. In addition you can accessEmerald Collections, which include case studies, book reviews,guru interviews and literature reviews.

E-mail alert servicesThese services allow you to be kept up to date with the latestadditions to the journal via e-mail, as soon as new materialenters the database. Further information about the servicesavailable can be found at www.emeraldinsight.com/alerts

Emerald Research ConnectionsAn online meeting place for the research community whereresearchers present their own work and interests and seek otherresearchers for future projects. Register yourself or search ourdatabase of researchers at www.emeraldinsight.com/connections

Choice of accessElectronic access to this journal is available via a number ofchannels. Our web site www.emeraldinsight.com is therecommended means of electronic access, as it provides fullysearchable and value added access to the complete content ofthe journal. However, you can also access and search the articlecontent of this journal through the following journal deliveryservices:

EBSCOHost Electronic Journals Serviceejournals.ebsco.com

Informatics J-Gatewww.j-gate.informindia.co.in

Ingentawww.ingenta.com

Minerva Electronic Online Serviceswww.minerva.at

OCLC FirstSearchwww.oclc.org/firstsearch

SilverLinkerwww.ovid.com

SwetsWisewww.swetswise.com

Emerald Customer SupportFor customer support and technical help contact:E-mail [email protected] www.emeraldinsight.com/customercharterTel +44 (0) 1274 785278Fax +44 (0) 1274 785201

www.emeraldinsight.com/aaaj.htm

AAAJ20,6

804

Accounting, Auditing &Accountability JournalVol. 20 No. 6, 2007p. 804# Emerald Group Publishing Limited0951-3574

EMERITUS BOARD MEMBERS

Professor Allan BartonThe Australian National University, Australia

Professor Trevor HopperUniversity of Manchester, UK

Professor Tom LeeEdinburgh, UK

Professor Reg MathewsCharles Sturt University, Australia

Professor David OwenNottingham University Business School, UK

EDITORIAL ADVISORY BOARD

Professor Carol AdamsLaTrobe University, Australia

Professor Richard BakerAdelphi University, USA

Professor Jan BebbingtonSt Andrews University, UK

Professor Niamh BrennanUniversity College Dublin, Ireland

Professor Jane BroadbentRoehampton University, UK

Professor Garry CarnegieUniversity of Ballarat, Australia

Dr Chung Lai HongNanyang Technological University, Singapore

Professor Christine CooperUniversity of Strathclyde, UK

Professor David CooperUniversity of Alberta, Canada

Professor Craig DeeganRMIT University, Australia

Professor Mahmoud EzzamelCardiff University, UK

Professor Richard FleischmanJohn Carroll University, USA

Professor Tim FogartyCase Western Reserve University, USA

Professor Warwick FunnellThe University of Canterbury, UK

Professor Sonja GallhoferDundee University, UK

Professor Andrew GoddardUniversity of Southampton, UK

Professor Robert GraySt Andrews University, UK

Associate Professor Theresa HammondBoston College, USA

Professor Jim HaslamDundee University, UK

Professor Christopher HumphreyUniversity of Manchester, UK

Professor Kerry JacobsAustralian National University, Australia

Professor Mike JonesCardiff University, UK

Ms Linda KirkhamRobert Gordon University, UK

Professor Katsuhiko KokubuKobe University, Japan

Professor Kim Langfield-SmithMonash University, Australia

Professor Irvine LapsleyUniversity of Edinburgh, UK

Professor Stewart LawrenceUniversity of Waikato, New Zealand

Professor Cheryl LehmanHofstra University, USA

Professor Sue LlewellynUniversity of Manchester, UK

Professor Ken McPhailUniversity of Glasgow, UK

Professor Kenneth MerchantUniversity of Southern California, USA

Professor Markus MilneUniversity of Canterbury, New Zealand

Professor Jan MouritsenCopenhagen Business School, Denmark

Professor Christopher NapierRoyal Holloway, University of London, UK

Professor Dean NeuUniversity of Calgary, Canada

Professor Brendan O’DwyerAmsterdam Graduate Business School, The Netherlands

Professor David OtleyUniversity of Lancaster, UK

Associate Professor Chris PoullaosUniversity of Sydney, Australia

Associate Professor Vaughan RadcliffeUniversity of Western Ontario, Canada

Professor Bob ScapensUniversity of Manchester, UK

Professor Prem SikkaUniversity of Essex, UK

Professor Tony TinkerCity University of New York, USA

Professor Stuart TurleyUniversity of Manchester, UK

Professor Jeffrey UnermanRoyal Holloway, University of London, UK

Professor Stephen WalkerCardiff University, UK

Professor Paul WilliamsNorth Carolina State University, USA

Professor Joni YoungUniversity of New Mexico, USA

INTRODUCTION

Accounting as codified discourseSue Llewellyn

Manchester Business School, The University of Manchester,Manchester, UK, and

Markus J. MilneCollege of Business and Economics, University of Canterbury,

Christchurch, New Zealand

Abstract

Purpose – This paper aims to introduce the AAAJ special issue on “Accounting as codifieddiscourse”, explicate the idea of codification and locate the notion of a “codified discourse” within thebroader tradition of discourse studies in management.

Design/methodology/approach – The approach is conceptual and discursive, and provides atheoretical framework for understanding codification and a discursive context for the accepted papersin this special issue.

Findings – Theoretically, consideration of the more determinate relationship between codifieddiscourse and practice can add to the general understanding of the discourse/practice dynamic inorganisation studies. Several issues are identified that call for further empirical investigation. First,some of the broad-spectrum accounting codes (e.g. historic cost) are currently under review in theexpectation that change will enable constructive accounting innovation. Second, the impact of morecodified accounting on management practice in organisations requires evaluation. Third, how far“intangibles” and “externalities” can be codified is a pertinent current agenda. Fourth, work is neededon whether and to what extent professional power is curtailed when politicians and policy makersintroduce more codified discourses.

Research limitations/implications – Currently “codification” is not well understood in theliterature. This AAAJ special issue opens up the debate but there remains considerable scope for futurework to take this agenda forward – to enable more detailed understanding of accounting as codifieddiscourse.

Originality/value – Although “discourse studies” and “discourse analysis” are now firmlyembedded in the organisational/management literature, “codified discourses” have not featured inthe debate. This is a significant omission as codification is a key feature of many discourses –especially in professional fields like accounting, law, and medicine. Moreover, codified discourses arebecoming more widespread. The value of this paper lies in its exposition of accounting as codificationin relation to discourse.

Keywords Accounting, Accounting policy, Language

Paper type General review

The current issue and full text archive of this journal is available at


The authors are grateful to James Guthrie and Lee Parker for their guidance and support in theediting of this special issue. They would also like to thank them for arranging the refereeing ofthis paper, and the referees for helpful remarks. Finally, they would also like to extend thanks toall the people who supported this AAAJ special issue by submitting papers or acting asreviewers for these papers.

Introduction

805

Received July 2007Revised August 2007

Accepted August 2007


Vol. 20 No. 6, 2007pp. 805-824

q Emerald Group Publishing Limited0951-3574

DOI 10.1108/09513570710830254

IntroductionIn this AAAJ special issue the distinctive character of accounting as a discourse isexplored[1]. The starting point is Fairclough’s (2005) understanding that:

A discourse is a particular way of representing the (physical, social, psychological) world . . .[2].

Accounting represents the financial world. This world is differentiated; it consists ofdifferent realities (Llewellyn, 2007a), having some physical, or perhaps better describedas material, aspects (tangible assets like buildings, equipment and cash) but,predominately, consisting of socially embedded elements (intangible assets such asintellectual capital, concepts like value and activities such as exchange). With regard tothe material aspects of the financial world, these are relatively easily cast into numbers;the socially embedded side presents more difficulties. Accounting as “the language ofbusiness” is a specialised form of discourse, in part, because it relies, primarily, onnumerical representations but also, and relatedly, because it is codified.

By “codified”[3] we mean that accounting is cast into systematic forms thatprescribe codes for practices. Like a recipe, rule, guideline, template, protocol or law,accounting tells people how to do things. For example, “discounted cash flow” tellsmanagers how to make investment decisions through a particular way of valuing theirlikely returns. So accounting prescribes practice in the financial world, but accountingitself is also the result of prescriptions. For example, a balance sheet is the outcome of aparticular way of accountants following codes to represent assets and liabilities.Codification fixes financial realities. Once particular codified rules are adopted thehistory of the underlying economic realities becomes “. . . legally and sociallyirreversible . . . ” (Suzuki, 2003) as the ability is “un-pick” the codes, to recover whatwas represented, is lost. Accounting is professionalised, its “instruction codes” areprofessionally constituted and regulated. Only the professional elite[4] can encode, inthe sense of setting or amending the codes. Any decoding (e.g. deciphering the meaningof a balance sheet) takes place within the ambit of professional accounting practice.

In the domain of financial accounting, specific normative codes are adopted; theseare interpreted but they cannot be discarded. “Historic cost”, for example, is abroad-spectrum code that is highly constraining vis-a-vis potential accountinginnovations. Coding rules apply to the various accounting categories. For example,detailed codes dictate what can count as an asset. Asset codes reflect aspects oftangibility, property rights, future benefits and service potential (for a review, seeWilliams, 2003).Within a nation state all companies follow the same set of codes.Periodically, the aggregate results of any company converge in the nodal accountingtext – the financial “accounts”. The representations in this central text must conformto the “correct” codes; moreover, these codes must be seen to be interpreted and appliedin the manner prescribed. This codification, albeit to an attenuated form, also “spillsover” into the narrative text of annual reports, enabling and constraining what canwritten about and how it can be represented. Auditing is a codified procedure thatchecks the “correct” application of codes in accounting texts. This monologic approachto the codes that dictate financial reporting is not without its critics. Macintosh andBaker (2002), for example, argue for a more open method; they suggest heteroglossicaccounting reports[5]. Such accounting texts would speak with “multiple voices” thusrevealing various possible ways to code financial realities to the accounts[6]. Inmanagement accounting there have always been “multiple voices”; as this information

AAAJ20,6

806

is for internal company use, there is more flexibility and less prescription. For example,company managers do not have to employ “discounted cash flow”, they can use“payback”. But whatever technique they mobilise, managers represent their financialdecisions through accounting codes.

This AAAJ special issue is concerned to understand accounting as a written,instructional, codified text but, dependent on the research agenda, we also wish toexplore how people mobilise accounting in organisational dialogue. So ourunderstanding of discourse encompasses both “talk and text”. Moreover, becausediscourse analysis will often focus on how accounting is elaborated in organisationaland social interaction, “. . . discourse studies are about talk and text in context” (vanDijk, 1997, p. 3, emphasis in the original). It seems to us that accounting discoursecentres around three main agendas. First, there are professionalised instructionaldiscourses – practice codes – for accountants; for example, the rules that underlie theconstruction of a profit and loss account or the codified procedures that underpin anaudit. Second, there are the codified accounting texts that result from theseinstructional codes; for example, a balance sheet or a financial audit. Third, there arethe professional, organisational or societal discourses that elaborate, make claims foror seek to change these practice codes and/or accounting texts; for example, the“accruals”, “standard setting”, and “creative accounting” discourses. So we are positinga threefold schema for the analysis of accounting discourse: “practice code”-”codifiedtext”-“codified discourse”. Clearly, in addition, accounting often features innon-codified discourse, as a means of arguing for a specific organisational strategy,for example.

But, as the papers in this AAAJ special issue reveal, this multi-level definition ofaccounting discourse does raise some issues for research, as analytic textualmethodologies are not always integrated easily with what are, generally, ethnographicapproaches to empirical work in organisations. Nor, for reasons we discuss later, wouldthe “results” of textual analyses necessarily be supported by the ethnographic“findings” of how these texts were received and mobilised in specific organisationalsettings. As Iedema (2007, p. 932) remarks:

[. . .] tensions remain between discourse research defined as the application of aconceptual-analytical procedure to “a text”, and discourse research defined as a way ofengaging with a workplace, its politics and its (dis)organization.

Moreover, accounting discourse is not restricted to the organisational arena, asaccounting has a broad social function in protecting the public interest, soethnographic research in accounting can extend beyond organisational boundaries.

We now turn to consider the individual contributions of the papers in this AAAJSpecial Edition in some depth; these are examined along the “practice code”-“codifiedtext”-“codified discourse” categorisation. As we discuss the papers, we reflect uponhow this schema plays out in actual organisational and societal context- thus raisingthe tensions that Iedema points out on the uncertain relationship between analysing atext and researching the politics of discourse in organisations.

Key issues in the papersThe first paper is this issue by Rihab Khalifa, Nina Sharma, Chris Humphrey and KeithRobson focuses on the professionalised instructional discourse of auditing over the

Introduction

807

past decade. By drawing on a wide range of interviews with auditors and closediscursive readings of two audit manuals from KPMG, Khalifa et al. (2007) illustratethe discursive shifts in big firm audit methodology from 1997 through to 2005. Theyshow that back in the late 1990s the practice codes for audit were being changed. Thetalk and texts of audit methodologies emphasised a broad-based focus on businessrisk, strategic analysis, benchmarking, and other value adding activities that permittedaudit firms to offer clients additional services in audit/consulting hybrids. Suchbusiness risk auditing (BRA) practices were considered the justifiable response tomarket and competitive pressures on audit fees. Moreover, and based on interviewevidence, BRA practices were judged by audit partners as methodologies that wouldprove exciting to graduate recruits, and provide the means to recover lost revenues andlost esteem in comparison to other business advisory and service lines offered by theaudit firms. To deliver on BRA, Khalifa et al. (2007) note, for example, that KMPGrequired hew forms of auditor expertise, which itself led to new training andmethodology texts and professional body initiatives all reflecting the new vocabularyof business risk and valued added.

In contrast to the BRA discourse of the late 1990s, Khalifa et al. (2007) showprofessional auditing has now entered a new phase and new audit discourse of makingauditing auditable. Largely out is the discourse of business risk and value adding andin is a discourse of “audit quality” and enabling audit practices themselves to becomeauditable. Through a series of interview extracts from auditors, and references toagencies such as the UK’s Audit Inspection Unit, and the US’s Public Oversight Board,Khalifa et al. (2007) evidence the growing attention to improving the monitoring ofaudit quality through adequate documentation. Such changes in the discourse ofauditing are traced back to the Enron collapse, other associated events, and theauditing regulators response. The interview findings are supplemented with evidencefrom the two audit methodology texts and these show the relative frequency of termslike “risk”, “quality”, “value”, “evidence”, “business” and “client”, for example, varydramatically across the two texts. Overall, one is left in no doubt that talk of auditingpractice has changed significantly over the decade examined.

Interestingly, however, and of relevance to our discussion of discourse and practicebelow, quotes from some audit practitioners suggest a belief that the practice of audithas not changed, well in so far as the conducting of “quality audits” – what haschanged they claim is the documentation required to demonstrate one has conducted aquality audit. Of course, as Khalifa et al. (2007) themselves note, evidence of changeddiscourse is not necessarily evidence of changed practice. Likewise, however, auditpartners may be unwilling to admit that the quality of audit practices has now changed(improved) at the same time implying previously they were inferior in a highlycompetitive market. As we discuss below, changed talk and changed practice may ormay not be co-emergent.

The second paper by Crawford Spence explores the role of social and environmentalreporting (SER) within the wider context of organisational and societal discoursesconcerning organisation-socio-environmental interactions. Drawing on the politicalphilosophy and discourse theory of Laclau and Mouffe, Spence (2007) analyses theemerging and increasingly codified practice of social and environmental reporting withinthe constraints of a business case discourse for sustainable development and corporatesocial responsibility. As Spence (2007) shows, the recent emergence of SER practice since

AAAJ20,6

808

the 1990s is in part due to a capacity on the part of business to discursively alignextra-business interests with its conventional interests, namely profit, returns andgrowth. By articulating a “business case” discourse within the broader business, socialand political community and articulating a more specific, and increasingly codified,discourse for SER practice, through such guidelines as the GRI (2000, 2002) business hasbeen able to render its own version of SER. Spence’s concern is that currentbusiness-based SER discourse and practice is antithetical to the original intent of earlierproposals for reform, to a democratic and fair society, and to any requirements forhumanity to adapt to a pressing ecological crisis. By specifically analyzing a series ofinterview extracts from corporate executives, Spence illustrates the hegemonic potentialof this new SER discourse as projected through corporate reporting practice.

While much SER practice remains non-codified, or perhaps pre-codified in our senseof the terms, rules and protocols, or standards for the conduct of SER practice arebeginning to emerge (see, for example, GRI, 2000, 2002; Milne and Gray, 2007;UNEP/SustainAbility, 2000, 2002, 2004). Similarly, codified texts (i.e. SERs) do not yetexist in the fashion described for the central texts of financial accounting. Instead,general agreement on these and the practice codes for their production remain to beworked out in the broader context (and contest) of professional, organisational andsocietal discourses. Nonetheless, foreshadowing the increasing likelihood andsedimentation of a fully codified form of SER practice in the future, for Spence(2007), and others with like concerns over the business-case discourse, this likelihoodsuggests a need to challenge and resist such forms of codification. Indeed, a key pointto emerge from Spence’s analysis is how much of current SER practice is backed byand projects a business-case discourse that constrains corporate accountability, shapesthe thinking of organisational actors, and potentially imprisons them within anideological hegemony (see also Livesey, 2002; Milne et al., 2006; Tregidga and Milne,2006). Moreover, by appearing to provide discursive “closure” under the illusion oftransparency, objectiveness and completeness, Spence (2007) claims the business-caseSER discourse functions as myth.

Historically the SER discourse as propounded by academics had remainedoppositional to, and largely outside of the conventional discourse of business. Its callsfor business to discharge duties under a social contract, fulfil accountabilityobligations, and internalise externalities posed a counterpoint to conventional modes ofeconomic organisation and accounting. The SER discourse of the 1970s and 1980spresented obvious threats and challenges, both in terms of vested interests in materialrelations, and in terms of fitting it within the existing codified discourse ofconventional accounting. The result was that few organisations attempted toundertake such reporting, and professional initiatives like the AAA committees onsocial costs (e.g., AAA, 1971, 1972, 1973, 1974, 1975, 1976) and the Corporate Report(ASSC, 1975) were abandoned on such grounds that social and environmental impactscould not be measured and quantified financially, or such procedures were difficult orimpossible to audit. In effect, they could not be fitted into the existing codifieddiscourse of accounting. Spence’s concern is that the modern SER discourse aspropounded by business itself obscures fundamental conflicts between business,society and the environment. Consequently, further codification of SER practice basedon the business case SER discourse may prove a significant hindrance and contrary tothe emanicipatory aims of social accountants.

Introduction

809

Like Spence, Suresh Cuganesan, Christina Boedker and James Guthrie (Cuganesanet al., 2007) concern themselves with an emerging and pre-codified discourse:intellectual capital accounting. Based on an ethnographic case study of an Australianpublic agency, Cuganesan et al. (2007) provide an empirical account of how a largelynew and vaguely understood discourse takes hold in organisational dialogue.Moreover, they argue and illustrate that the pre-codified discourse of intellectualcapital accounting, because it remains vague and ambiguous, has helped members ofthe agency – discourse consumers – connect an otherwise alien discourse to theirinterests and concerns and thus shape material practice.

By proving sufficiently flexible and pliable, the intellectual capital discourseintroduced into the public lands agency has enabled a series of changed subjectpositions in relation to its interpretation and adaptation without apparentcontradiction on the part of organisational agents. While the adaptability of themanagement and the flexibility of the discourse have been important, Cuganesan et al.(2007) also illustrate the importance of other factors in the emergence of changed talkand practice. Of significance appears to be a climate primed for changed talk andpractice, and in this case study the need to cope with an ageing workforce and securecontinuing funding for long-term organisational survival appears to have beenparticularly critical. Also important, and particularly as an initiator, was the principalinternal champion for changed talk, the agency’s CEO. Nonetheless, while these factorswere important in getting the discourse launched, it is clear that managers wereinitially reticent and perhaps even hostile to the notion of intellectual capitalaccounting. What is of most interest in the case study, however, is how managerssubsequently changed their minds and practices, and through the flexible discourse of1C sought to reconnect solutions with the pre-existing management problems of anaging workforce and funding needs.

A further point to emerge from Cuganesan et al.’s (2007) paper is the tensionbetween codification and ambiguity in discourse, and particularly how this may aid orinhibit changed practice. A point they note in their study is that the lack of codificationin the IC discourse ultimately contributed to its wider take up as potential discourseconsumers were able to find ways to (re)connect it with their interests and concerns.While codified discourses reduce the need for sense making and make clear thechanged practices required - that is they prescribe what is to be done - they may alsoalienate those agents from whom change is sought by narrowly or “over” prescribingwhat is to be done.

The final two papers in this special issue by John Ferguson (Ferguson, 2007) andSonja Gallhofer, Jim Haslam and Juliet Roper (Gallhofer et al., 2007) relate to concernsof how researchers should go about analysing accounting discourse. Based on a criticalreview of an earlier paper by Gallhofer et al. (2001), and more general observations ofaccounting research examining accounting “texts”, Ferguson (2007) is keen to ensurediscourse researchers avoid the “fallacy of internalism” – a concern based onThompson (1990) that suggests researchers often overemphasise the internalcharacteristics of texts and neglect their context, while at the same time drawinginferences about or speculating on such contexts. As we have noted in thisintroduction, our focus is on accounting as a codified discourse; that is, a focus on talkand text in context as it relates to the practice codes for accountants and accounting,the codified “accounting texts” that result, and the contextual discourses within which

AAAJ20,6

810

these occur. Ferguson’s (2007) concerns, then, while directed more towards broadercontextual discourses than ours, potentially have important lessons for researchersinterested in accounting as codified discourse. And we now touch on several of thesedrawing on both his critique of Gallhofer et al. (2001), and their reply (Gallhofer et al.,2007).

Following Thompson (1990), a key point Ferguson (2007) makes is that texts shouldnot be treated in isolation, but that researchers also need to consider thesocial-historical contexts of their production, transmission and reception. QuotingThompson, and drawing on a series of critiques of Fairclough’s “critical discourseanalysis” – the approach adopted in Gallhofer et al. (2001) – Ferguson (2007)emphasises a traditional concern of hermeneutics to study interpretive processesdirectly, and to recognise that texts are produced, transmitted and received within aseries of existing power relations. Similarly, and echoing Barthes (1999), uncoveringauthorial intent is also deeply problematic, but a point Ferguson (2007) makes is that inmuch (critical) discourse analysis, including Gallhofer et al. (2001), “producers andconsumers of texts are never consulted [and] no attempt is ever made to establishempirically what writers might have intended by their texts” (Widdowson, 1998, p. 143quoted in Ferguson, 2007). By equating accounting discourse and more particularly“accounting texts” with mass communication, a further point Ferguson (2007) takesfrom Thompson is a need to consider the “structured break” between messageproducer and recipient, and the consequent institutional mechanisms of messageproduction and diffusion. In short, then, Ferguson (2007) is keen to ensure discourseresearchers treat context seriously, and his suggested solution is to advise thewould-be researcher to follow Thompson’s (1990) tripartite approach.

Such advice results in calls for researchers to (first) consider the opinions, beliefs,and understandings held and shared by the individuals who produce the symbolicforms (practice codes, codified texts, and codified discourse) of interest. Byethnographic means (interviews, participant observation, etc.) we may come toelucidate the understandings of those who produce and transmit messages. Suchmeans also permit us to (second) treat audiences seriously – to consider how messagerecipients receive and appropriate such messages. And (third and) finally, in turning tothe symbolic forms themselves – the texts – emphasis is given to a variety oflinguistic methods such as semiotic analysis, conversation analysis, syntactic analysis,narrative analysis and rhetorical analysis.

In replying to Ferguson (2007), Gallhofer et al. (2007) ask whether it is reasonable orpractical to attend to all parts of Thompson’s tripartite approach in one study or onepaper. They also ask whether Thompson’s framework, which was developed in thecontext of mass communication, is universally applicable to accounting texts andcontext. And finally, they are moved to carefully draw a distinction between thepolitical and linguistic motives of researchers using critical discourse analysis[7]. AsGallhofer et al. (2007) point out, both Fairclough and Thompson do not seek toprescribe or proscribe particular methods of research but outline broad methodologicalframeworks. In part, then, while Ferguson’s (2007) advice might be seen ascomprehensive, or perhaps idealistic, it should not be taken as implying (partial)studies are necessarily deficient. Indeed, both Spence (2007) and Cuganesan et al. (2007)in this issue illustrate the insights that can be obtained by partial analyses of discourseproducers and consumers. Cuganesan et al.’s (2007) paper also illustrates the

Introduction

811

complexities involved with concepts like the production and consumption of texts.They note that much discourse literature seems to privilege analysis of discourseproducers and texts, and like Ferguson (2007) they suggest a focus on discourseconsumers. Cuganesan et al. (2007) however, illustrate that discourse “consumers” arecontextually relative. Ordinarily, we might conceive of managers involved in theproduction of intellectual capital statements as discourse producers, but clearly theyare also consumers of the talk and texts that precede such reports, and most likely ofthe reports they themselves produce.

The strength of Ferguson’s (2007) work lies with those instances where accountingis used rhetorically. Where there is evidence that accounting is being used to persuadethe public to see a company in a favourable light, then a “mass communication”context is appropriate. For example, glossy annual reports that present favourablecomment on the social and environmental impact of companies’ activities can beconsidered as part of the media industry. However, most instances of accountingdiscourse are produced and understood in a specialised context. Any implementationof Thompson’s tripartite approach as Ferguson (2007) urges, then, requires carefulconsideration in the light of the research focus taken and questions asked[8].

Locating codified and non-codified discoursesWhat can an exposition of accounting as a discourse add to the work that has alreadybeen undertaken in management/organisation studies? The papers in this AAAJspecial edition illustrate concerns with the impact of discourse on practice and thepower of codified texts. In the sections below we discuss the potential furthercontribution of studying accounting as a codified discourse. We structure thediscussion into three sections “discourse and practice”; “reading codified texts andparticipating in codified discourse”; and “the spread of codified discourses”.

Discourse and practiceOne key aspect in “discourse debate” is the relationship between discourse andpractice. Texts do not just sit on shelves or lie in wait for the computer to be switchedon. The practices of talking and writing use (and produce) texts, so, in one sense,discourse is a practice. As Fairclough (1995, p. 7) puts it:

My view is that “discourse” is use of language seen as a form of social practice, and discourseanalysis is analysis of how texts work within sociocultural practice.

But clearly practice is more than discourse; just as people may talk without acting, theymay also explore or intervene in the world without discourse. Moreover, discourse andpractice may not be aligned. Various positions have been taken on the impact ofdiscourse on practice.

First, Iedema (2007), for example, asserts that discourse and practice are usually“co-emergent” so new ways of talking (or writing) tend to accompany new ways ofacting. As Khalifa et al. (2007) narrate, while business risk audit was being written upby KPMG, audit practitioners were paying more attention to the key business risks ofthe companies whose books they audited. Hatherly (1998) argues that auditors werebeginning to see “risk” less as a prime auditing concept and more through the eyes ofmanagement. Audit practice was changing as audit discourse took a new turn-theywere co-emergent.

AAAJ20,6

812

However, new discourses and any associated new practices do not emerge into avacuum. Discourses represent the world and, hence, they tell us what the world means.“Meaningfulness” is embedded in human practice, so discourse and practice arenormally aligned or “reciprocally confirming” (Williams, 1962, cited in Sayer, 2000, p.44). A new way of talking (or arguing) is usually expounded primarily in relation to aproject[9], so as Hardy et al. (2000, p. 1232) remark:

[. . .] people engage in discursive activity to pursue their plans . . . [and] with particularintentions in mind . . . but they do so against a backdrop of multiple discourses that havecomplex, far reaching effects that are beyond the control of single individuals.

This makes it clear why new discourses may struggle to prevail and often fail, not leastbecause the current discourse/practice may serve powerful interests (Grant and Hardy,2003). An emergent discourse may be valuable and convincing but if it challengeshegemonic discourse/practice, it may, ultimately, have no impact. This implies that anew way of talking precedes a new way of acting and that a change in practice is by nomeans guaranteed consequent on a change in “talk”. So the second position on therelationship between discourse and practice is that, rather than being co-emergent,changes in discourse precede any changes in practice.

The third position is that changes in practice precede discursive change. This ismost likely when the agents of practice transformation are powerful enough to change“how things are done” without open talk about what their change strategies mean. It isoften easier, quicker and, strategically, more effective to act first and let those affectedwork out later what the new agenda implies – when it is often too late for effectivecounterattack. The executive branch of government, through dictatorial powers or astrong mandate, is sometimes able to act without discursive debate. Or it can even bethe case, as Brunsson (2002, p. xiii) points out, that discourse and practice point indifferent directions, “. . . organizations may talk in one way, decide in another and actin a third.” This situation may, as Brunsson (2002) argues, reflect a “hypocrisy” thatarises because of the complexity of the demands placed on an organisation (along withthe difficulty in satisfying all involved) or it may signal a deliberate manoeuvrepracticed to pre-empt any opposition. In sum, discourse and practice are usuallyreciprocally confirming but, during social and organisational change, they mayco-emerge, one may precede the other or they may even be mis-aligned, for reasons ofexigency or duplicity.

Codification makes this complex relationship between discourse and practice moredeterminate; indeed this is one, if not the main, purpose of codification. Clearly it wouldnot be in the public interest if company management could talk about shareholdervalue or portray their profitability in whatever way they chose. Practice codes dictatehow accounting is carried out in organisations and accounting texts embed thesepractice codes. Moreover, as discussed earlier, only the professional accounting elitecan change the instructional practice codes and their prescriptions are mandatory. Thisimplies that changes in practice cannot occur without discursive change becausepractice is in accordance with explicit codes. So where there is codification, newpractices cannot precede discourse. Accounting discourse (as other codified discourses)should have a stringent hold over practice; when new codes are introduced practiceshould change more or less immediately. Unlike the case of non-codified discourses,whose protagonists may struggle to be heard, the privileged proponents of codified

Introduction

813

discourses should expect a guaranteed response in terms of practice change. Wherethere is codification, one would anticipate the strongest evidence of the “reciprocallyconfirming” nature of discourse and practice. In particular, accounting codificationshould prevent management “talking, deciding and acting” in inconsistent andarbitrary ways vis-a-vis the financial status of their companies.

However, codification turns out to be a less than perfect solution. Indeed, currently,companies can stray across the boundary between legal and illegal practice withouttheir “excursions” being readily apparent in the accounts, as scandals of the likes ofEnron, Worldcom and Parmalat demonstrate. Because accounting is codified, the laypublic are apt to imagine that accounting texts represent financial realities through asingle, non-negotiable, one to one mapping but, as Khalifa et al. (2007) make clear, thisis not the case. Accounting can be manipulated, in large part this is due to thecomplexity of practice codes; the realisation that accounting can be “creative” hasengendered public dismay and fuelled the so-called “expectations gap” over thelegitimacy of accounting and audit. One function of audit is to leverage transparencyand strengthen one-to-one mapping. Despite code complexity being at the root of the“creative accounting” problem, more transparency is frequently equated with yet morecodification. With respect to companies, there are demands for a more prescriptiveaudit (see Khalifa et al., 2007) with many stakeholders arguing that a more codifiedaudit will close the “expectations gap”.

Reading codified texts and participating in codified discoursesThe complexity of the codes embedded in accounting prescriptions renders themopaque to the uninitiated. Not all readings of accounting texts are equal. Indeed, anuninformed reading would be simply wrong. The production and reception of codifiedaccounting texts takes place within the professional accounting jurisdiction. But,sometimes, dependent on the basis of the codification, accounting jurisdictions becomecontested. For example, the project to codify (and then audit) environmental reportshas led to a contest between scientists, engineers and accountants over whose expertiseshould prevail (Power, 1997). Unequal discursive rights is also a feature of non-codifieddiscourses, as Hardy et al. (2000, p. 1236) comment, “. . . the subject position of theenunciator [of a discourse] must warrant voice, otherwise other individuals will simplyignore his or her statements . . . ”; this “warranted voice” is a particularly strong featureof discursive positioning with respect to codified discourses. The technical nature ofcodified discourses is such that most non-professional voices are simply ruled out- asthey lack the expertise to speak.

There are arguments that codification can diminish professional power; beingcommitted any kind of codified text reduces the judgemental elements of practitioners’decision making as practice becomes more standardised (Edwards et al., 1999; Doolin,2002; Llewellyn and Northcott, 2005). Wherever a codified discourse dictates practice,practice will become more uniform. Codification (like classification[10]) reducesjudgement and flexibility whilst increasing standardisation and transparency; so it canbe a driver in reducing professional discretion and, hence, professional power. But, asargued above, because only professionals can encode and decode, their power is notnecessarily diminished with the advent of codification. What may occur is that thepower of the professional elite is advanced whilst professional power “on the ground”is more circumscribed.

AAAJ20,6

814

This raises a more general issue: that of active/passive discursive positioning. Onthe one hand as Doolin (2002, p. 375) points out: “Discourses...provide ways in whichindividuals come to know themselves as subjects.” On the other hand, Hardy et al.(2000) portray discourse as a strategic resource that people mobilise to achieve theirpreferred outcomes. In the case of codified discourses, only those who possess requisiteand recognised expertise are able to elaborate the discourse in pursuit of their aims. Incontrast, those who lack expertise will frequently find themselves positioned assubjects “bamboozled” by technical jargon. This remains likely even when thediscourse in question is actually in pursuit of a general organisational aim, a specificstrategy, for example.

The spread of codified discoursesDespite the frequent failures of codified discourses to “deliver” their practicerecommendations, in business, and in organisations more generally, the popularity ofcodified forms is increasing. In consequence, they are spreading. There is pressure oncompanies to produce accounts that codify areas of their activities that – if they wererepresented at all – were discussed in a non-codified way. For example, the social andenvironmental movement have called for the “triple bottom line” report; this will givecodified information on the impact of companies in areas which used to be consideredas “external” to their profit-making agenda. As a result of this activity, there is now agrowing set of companies that produce a “stand-alone” report on their social andenvironmental impact. As discussed in the Spence (2007) paper, there is also pressurefor an audit of such environmental reports, with developments on guidelines for bestpractice reporting and auditing.

Another example of codification “spread” is the plea for “intangible” assets, such asintellectual capital, to be coded for inclusion in the accounts (see Cuganesan et al.,2007). The agendas around both environmental accounting and intellectual capitaldemonstrate that thought is required on how far “externalities” and “intangibles” havethe materiality that allows instructional codification, numerical representation andverifiability. Indeed, there is now quite a debate over whether broad-spectrum codes(such as historic cost) should change to allow more accounting innovation. AmongstUS academics, Ross Watts argues that accounting should remain as traditionally andconservatively conceived (based on historic cost and transactions oriented) while theFASB and others propose fair value and mark-to-market accounting in the belief thatmodern accounts should incorporate value-based estimates (see, for example, Barthet al., 2001; FASB, 2005a, b, 2006; Holthausen and Watts, 2001; Schipper, 2005; Watts,2003a, b, 2005).

Meanwhile proposals to codify new areas without fundamental changes to the basiccoding formulae are resulting in equivocal results. Parker (2005) reports thattraditional accounting and accountants were “. . . barely engaged . . . ” with social andenvironmental accountability. Chiang (2007) found that although auditors wereostensibly following a new practice code for environmental matters, this code had nothad a discernable impact on their audits; the key consideration for auditors waswhether the environmental matter had a financial effect that they could quantify. This“quantification proviso” clearly limits the scope of any environmental audit. Currently,Ball et al. (2000) described the verification reports on environmental accounting as ofvery little value.

Introduction

815

Nevertheless, outside of business, and again in the hope that they will constrainpractice, codified discourses are also gaining ground. Politicians have decreed thatsimple forms of cash accounting give too much margin to public sector providers; themore rule-bound accruals concept has been enforced (see, for example, HM Treasury,2005). In this respect, the advent of accruals accounting converges with theintroduction of protocols and guidelines for clinical practice in the health care domain,for example. As in the private sector, this is intended to simultaneously reduce theflexibility and increase the transparency (as compliance with codes can be checked) ofthose with the power to access and commit organisational resources. The eventsportrayed in Cuganesan et al. (2007) can be seen as a reaction to such governmentstrategies. The introduction of accruals accounting was the background to managers atLandsNSW taking forward a project to codify intellectual capital for inclusion in theaccounts- as such an accounting would result in a “better” representation of theirfinancial position.

Although codified discourses, through the analogy with recipes and rules, seem toimply straightforward procedures that can promptly be translated into practice, incomplex professionalised domains characterised by specialised expertise, theproduction of simple codes is unlikely. For example, the accruals discourse is morecomplicated and more abstruse than the cash accounting it replaced. Ezzamel et al.(2005) report that, although politicians pressed for accruals accounting in the publicsector, most of them cannot understand it! However, this does not prevent politiciansmaking discursive claims about how accruals accounting can enhance the performanceof public sector bodies by providing more codified information on such aspects asefficiency (Guthrie, 1998).

In sum, issues associated with the increasing prevalence of codified discoursesfoster a rich research agenda. Theoretically, consideration of the more determinaterelationship between codified discourse and practice can add to the generalunderstanding of the discourse/practice dynamic. Charting the spread of codificationand investigating its success in circumscribing practice is an agenda that requiresethnographic research. Some examples of such work are: the impact of more codifiedaccounting on management practice in companies; how far “intangibles” and“externalities” can be codified; and whether and to what extent professional power iscurtailed when politicians and policy-makers introduce more codified discourses.Finally, textual analyses are called for that show how accounting represents thefinancial world through codified forms.

Concluding issues on researching codified discourseAlthough we are convinced of the value of work on accounting as a codified discourse,at this point we return to some of the issues raised by research on discourse. As wediscussed in the introduction, Iedema (2007) speaks of the tensions between textualanalyses and ethnographic research on discourse in organisations. Here we expand onwhat we believe are some of those tensions.

Ferguson (2007), using Thompson’s work on mass communication, argues that anyaccounting research that does not cover the entirety of the discourse “process” (i.e. boththe production and reception of the text, along with the text itself) is essentially limited,and may even be misleading. As discussed above, we believe that the strength of hiscase lies where accounting is being used rhetorically, for example, in research that

AAAJ20,6

816

studies how companies use social and environmental reporting to create a “halo” effectaround their activities and whether such propaganda efforts are successful. In otherareas it is not so clear that such an encompassing approach, even if feasible, isnecessarily productive.

Bhasker (1975) argues that research in social science grapples with threedimensions: the real, the actual and the empirical. In the study of discourse, as anyother area of research, these three dimensions do not necessarily accord. One can be a“realist” in the sense of believing that there are real causal powers embedded in asituation but these powers may not be activated and, hence, not actualised. As Archer(2003, p. 2) argues, causal powers are mediated through social agency, so whethercausal powers are activated and the extent to which they are actualised depends onagents reproducing these powers. Agents generally do reproduce social powers,whether through constraint, habit, tradition, proclivity or desire. But they do notalways, and the extent to which they do is variable. For example, accounting has realcausal powers; accountants cannot prepare (and auditors cannot audit) financialstatements in whatever way they choose. But auditors can sometimes “turn a blindeye” and, hence, powers are not activated in a particular instance or they may begin tosee situations “through the eyes of management” and, so, the powers of audit arepartially thwarted. As Khalifa et al. (2007) make clear, the power of both the “businessrisk” and “audit quality” discourse were diffused “on the ground” with variable“take-up” amongst different auditors.

So agents have real powers too. At the extreme of some postmodern thought,agency is dismissed for discourse, as Archer (2000, p. 2) remarks: “. . . strident voiceswould dissolve the human being into discursive structures and humankind intodisembodied textualism.” Although we are promoting the study of accounting as adiscourse, this is not our position. Agents do not just mitigate the effects of discursivestructures they also instigate projects. An agent, by definition, has the capacity tocarry out a project (Llewellyn, 2007b). As the Cuganesan et al. (2007) paper showsmanagers started to push for “intellectual capital” to be included in the accounts. Ininstigating this move they were actively seeking to counteract some of the effects ofaccruals discourse/practice – in other words, there were agents with projects atLandsNSW. So another reason that the real structural powers embedded in anysituation may not be actualised, is that agents may be pursuing projects that challengethose powers. Or the unintended consequences of agents’ actions may attenuate ormagnify real powers. Hence, the “real” is not coterminous with the “actual” or, in otherwords, what “actually” happens is not entirely predictable through knowledge of the“real” powers embedded in the situation – because what agents will do is not entirelyknowable.

The empirical (or what we discern as researchers in any situation) is not necessarilycongruent with either the “real” or the “actual”. Our respondents may not know of thereal powers embedded in the situation being researched. Moreover, they may notcorrectly identify what is actually going on. Some respondents are moreknowledgeable and/or more perceptive than others or they may be in moreprivileged positions vis-a-vis the issues being researched (Llewellyn and Northcott, inpress). Similarly, if we are conducting observational research, our perceptions asresearchers, are fallible regarding the real and the actual.

Introduction

817

Hence any research that attempts to integrate ethnographic research on discursiveproduction and reception with textual analyses may come up with equivocal results.For example, the real powers embedded in an accruals text will have a variable impacton the practice of managers dependent upon whether they accept, attempt to evade orwork to challenge the accruals discourse. This actual response does not deny the realpower of accruals – as disclosed by a textual analysis. Similarly, the real powers of atext are not negated by the failure of some to comprehend it. Ethnographic work mayreveal that many managers do not grasp the import of accruals but again this empiricalfinding does not demonstrate that an accruals discourse has no power. Moreover, if adiscourse becomes naturalised/institutionalised within an empirical settingrespondents may not discern its impact. Once again this does not deny discursivepower – rather it can point to the magnitude of its effects. In a similar manner,production can be disengaged from both the text and its impact; the producers of theaccruals code are unlikely to have been intending, for example, to reduce professionalpower. Producers’ intentions, the powers embedded in texts and the effects of adiscourse may be aligned or at variance with one another.

We are advocating a variety of research approaches but because of“real-actual-empirical” distinctions we do not expect that the findings ofethnographic work will necessarily be in accordance with textual analyses on thepower of a discourse. Both are valuable but their findings will not always “add up” or“triangulate”. Research questions can be limited to textual analyses or mattersconcerning the production and/or impact of texts without fear that such work issomehow incomplete. So although we are arguing that codified discourses have a moredeterminate effect on practice than do non-codified ones, this does not imply that theirimpact is determined[11]. As we argued earlier, accounting tells people how to dothings and makes them act in particular ways but it cannot completely encode theiractions.

Overall, we posit that the significance of codified discourse is increasing and furtherwork is called for to investigate its multifarious dimensions. Accounting is animportant example of a codified discourse as it has a profound impact on bothorganisational and social practice. As discussed above, there is much current debateaimed at re-casting the broad spectrum codes applied in accounting; now is athought-provoking time to pursue research on accounting as a codified discourse.

Notes

1. There has already been work on the discursive aspects of accounting and corporate reportsin the general tradition of the ideological power of language (see, for example, Hines, 1988;Arrington and Francis, 1989; Burchall et al., 1980, 1985; Cooper and Shearer, 1984; Tinkerand Neimark, 1987; Collison, 2003). There is also work on accounting representations or(mis)-representations (see, for example Baker and Hayes (2004); Ezzamel et al. (2004); Lilleyet al. (2004); Porter (1995); Robson (1992); and Sikka (2001)). We do not demur from either ofthese bodies of work but we are aiming to do something rather different- to identify thegeneral characteristics of accounting as a discourse (i.e. the type of representationaldiscourse accounting is).

2. Interest in discourse analysis has mushroomed consequent upon our contemporary relianceon representational “texts” (the internet, television, news media) to understand the world. Wenow know the world less and less through our immediate encounters and more and morethrough representations (see, for, example Wittgenstein, 1953; Austin, 1962; van Dijk, 1977;

AAAJ20,6

818

Foucault, 1972, 1980; Bakhtin, 1986). Societal reliance on representation emphasises theincreasing contemporary significance of signs and symbols (see, for example, Burke, 1966;Baudrillard, 1981; Lyotard, 1984).

3. “Codified” has also been used in a weaker sense to indicate explicit (as opposed to tacit)knowledge mat can be managed and transferred (see, for example, Hall, 2006; Mathiassenand Pourkomeylian, 2003). Clearly, our sense of “codified” encompasses this understanding(albeit that knowledge is only an aspect of discourse) but also extends it- as we focus on linksbetween codification and practice.

4. By “professional elite” we refer to entities such as the Financial Reporting Council (UK), theAccounting Standards Board (UK), the Auditing Practices Board (UK), the FinancialAccounting Standards Board (US), the Accounting Standards Review Board (NZ), and theInternational Accounting Standards Board see www.irc.org.uk, www.fasb.org, www.asrb.co.nz or www.iasb.org for more details (accessed 15 July 2007).

5. Macintosh and Baker (2002) illustrate their argument with reference to the oil and gasindustry where they argue that four different methods of accounting have been used:immediate write off of all costs; full cost; successful efforts; and reserve recognition, Each ofthese ways of coding the financial reality of the oil and gas industry has advantages anddisadvantages. Macintosh and Baker (2002) suggest that the public’s understanding ofaccounting would be enhanced, if they were allowed to see how multiple ways of accountingresult in varied representations of the “success” of any oil and gas company.

6. An example where multiple approaches were permitted, albeit briefly, was over how to copewith inflation where SSAP 16 allowed supplementary inflation accounts alongside historiccost.

7. A particular interpretation that might be taken here is that Thompson’s (1990) tripartiteapproach may be insufficiently critical and overly linguistically oriented to provideresearchers sufficient space to provide politically motivated discourse critiques. Thompson’s(1984) earlier work on theories of ideology, discourse analysis, and his “depth-hermeneutics”,however, suggest a broad-based framework much in common with that of Fairclough.

8. See Barry et al. (2006) for further discussion on the tensions between discourse analysts’capacities to research text and/or context using singular, multiple or combined methods.

9. Exceptions are some academic/intellectual discourses that aim only to shift how people think(and argue) rather than also change what they do. For example, the debate as to whether“structure” and “agency” are only analytically distinct or whether they actually reflectseparate ontological slrata does not appear to have implications for practice.

10. See, Bowker and Star (1999), for similar arguments as applied to classification.

11. As was implicit in our earlier discussion on the relationship between discourse and practice,we reject “strong versions” of social constructivism that conflate discourse and its materialeffects (for examples of such “strong” constructivism see Gergen, 1985; Edwards et al., 1995;Potter, 1996, 1998). Such positions imply that discourse determines practice. Some writers inthe management area appear to have been influenced by such views. Hardy (2001, p. 26,emphasis added) speaks of “. . . practices of talking and writing, which bring objects intobeing through the production, dissemination and consumption of texts.” This statementportrays discourse as straightforwardly performing material effects, i.e. producing objects.Indeed, as Sayer (2000, p. 45) points out, ”Conflating discourses with their effects [assumes]that performativity involves producing not only effects but the exact effects intended orstated . . . ”. Clearly, although we are arguing that codified discourses are produced with theintention of having effects of practice, such intentions are not always realised and arecertainly not simply produced.

Introduction

819

References

Accounting Standards Steering Committee (ASSC) (1975), The Corporate Report, ASSC, London.

American Accounting Association (AAA) (1971), “Report of the Committee on non-financialmeasures of effectiveness”, The Accounting Review, Supplement to 46, pp. 165-212.

American Accounting Association (AAA) (1972), “Report of the Committee on measures ofeffectiveness for social programmes”, The Accounting Review, Supplement to 47,pp. 337-98.

American Accounting Association (AAA) (1973), “Report of the Committee on environmentaleffects of organizational behaviour”, The Accounting Review, Supplement to 48, pp. 72-119.

American Accounting Association (AAA) (1974), “Report of the Committee on social costs”,The Accounting Review, Supplement to 49, pp. 99-114.

American Accounting Association (AAA) (1975), “Report of the Committee on social costs”,The Accounting Review, Supplement to 50, pp. 51-89.

American Accounting Association (AAA) (1976), “Report of the Committee on accounting forsocial performance”, The Accounting Review, Supplement to 51, pp. 38-69.

Archer, M. (2000), Being Human: The Problem of Agency, Cambridge University Press,Cambridge.

Archer, M. (2003), Structure, Agency and the Internal Conversation, Cambridge University Press,Cambridge.

Arrington, C.E. and Francis, J.R. (1989), “Letting the chat of the bag: deconstruction, privilegeand accounting research”, Accounting, Organizations and Society, Vol. 14 Nos 1/2, pp. 1-28.

Austin, J.L. (1962), How to Do Things with Words, Oxford University Press, Oxford.

Baker, R.C. and Hayes, R. (2004), “Reflecting form over substance: the case of Enron Corp”,Critical Perspectives on Accounting, Vol. 15 Nos 6-7, pp. 767-85.

Bakhtin, M.M. (1986), Speech Genres and Other Late Essays, University of Texas Press, Austin,TX (trans. by Vern W. McGee).

Ball, A., Owen, D.L. and Gray, R.H. (2000), “External transparency or internal capture? The roleof third party statements in adding value to corporate environmental reports”, BusinessStrategy and the Environment, Vol. 9 No. 1, pp. 1-23.

Barry, D., Carroll, B. and Hansen, H. (2006), “To text or context? Endotextual, exotextual, andmulti-textual approaches to narrative and discursive organizational studies”, OrganizationStudies, Vol. 27 No. 8, pp. 1091-110.

Barth, M., Beaver, W. and Landsman, W. (2001), “The relevance of the value-relevance literaturefor financial accounting standard setting: another view”, Journal of Accounting andEconomics, Vol. 31 Nos 1-3, pp. 77-104.

Barthes, R. (1999), “The death of an author”, in Lodge, D. and Woods, N. (Eds), Modern Criticismand Theory: A Reader, Longman, Harlow.

Baudrillard, J. (1981), Simulacra and Simulation, University of Michigan Press, Ann Arbor, MI(trans. by Glaser, S.F.).

Bhasker, R. (1975), A Realist Theory of Science, Leeds Books, Leeds.

Bowker, G.C. and Star, S.L. (1999), Sorting Things Out: Classification and its Consequences,The MIT Press, Cambridge, MA.

Brunsson, N. (2002), The Organization of Hypocrisy, 2nd ed., Copenhagen Business School Press,Copenhagen.

AAAJ20,6

820

Burchall, S., Clubb, C. and Hopwood, A. (1985), “Accounting in its social context: towards ahistory of value added in the United Kingdom”, Accounting, Organizations and Society,Vol. 10 No. 4, pp. 381-413.

Burchall, S., Clubb, C., Hopwood, A., Hughes, J. and Nahapiet, J. (1980), “The roles of accountingin organizations and society”, Accounting, Organizations and Society, Vol. 5 No. 1, pp. 5-27.

Burke, K. (1966), Language as Symbolic Action, University of California Press, Berkeley, CA.

Chiang, C. (2007), “The consideration of environmental matters in financial reports: somepreliminary evidence on current audit practices”, paper presented at the 5th Asia PacificInterdisciplinary Research in Accounting Conference, Auckland, New Zealand, 8-12 July.

Collison, D.J. (2003), “Corporate propaganda: its implications for accounting and accountability”,Accounting, Auditing & Accountability Journal, Vol. 16 No. 5, pp. 853-86.

Cooper, D.J. and Shearer, M.J. (1984), “The value of corporate accounting reports: arguments for apolitical economy of accounting”, Accounting, Organizations and Society, Vol. 9 Nos 3/4,pp. 207-32.

Cuganesan, S., Boedker, C. and Guthrie, J.E. (2007), “Enrolling discourse consumers to affectmaterial practice: a case of intellectual capital”, Accounting, Auditing & AccountabilityJournal, Vol. 20 No. 6.

Doolin, B. (2002), “Enterprise discourse, professional identity and the organizational control ofhospital clinicians”, Organization Studies, Vol. 23 No. 3, pp. 369-90.

Edwards, D., Ashmore, M. and Potter, J. (1995), “Death and furniture: the rhetoric, politics andtheory of bottom-line arguments against relativism”, History of the Human Sciences, Vol. 8No. 2, pp. 25-49.

Edwards, P., Ezzamel, M. and Robson, K. (1999), “Connecting accounting and education in theUK: discourses and rationalities of education reform”, Critical Perspectives on Accounting,Vol. 10 No. 4, pp. 469-500.

Ezzamel, M., Lilley, S. and Willmott, H. (2004), “Accounting representation and the road tocommercial salvation”, Accounting, Organizations and Society, Vol. 29 No. 8, pp. 783-813.

Ezzamel, M., Hyndman, N., Johnsen, A., Lapsley, I. and Pallot, J. (2005), “Accounting,accountability and devolution: a study of the use of accounting information by politiciansin the Northern Ireland Assembly’s first term”, The Irish Accounting Review, Vol. 12 No. 1,pp. 39-62.

Fairclough, N. (1995), Critical Discourse Analysis: The Critical Study of Language, Longman,London.

Fairclough, N. (2005), “Discourse analysis in organization studies: the case for critical realism”,Organization Studies, Vol. 26 No. 6, pp. 915-39.

Ferguson, J. (2007), “Analysing accounting discourse: avoiding the ‘fallacy of internalism’”,Accounting, Auditing & Accountability Journal, Vol. 20 No. 6, pp. 912-34.

Financial Accounting Standards Board (FASB) (2005a), Proposed Statement of FinancialAccounting Standards (Exposure Draft). Business Combinations, a Replacement of FASBStatement No. 141, FASB, Norwalk, CT.

Financial Accounting Standards Board (FASB) (2005b), Statement of Financial AccountingStandards No. 15X. Fair Value Measurements, FASB, Norwalk, CT.

Financial Accounting Standards Board (FASB) (2006), Proposed Statement of FinancialAccounting Standards. The Fair Value Option for Financial Assets and Financial Liabilities(Exposure Draft), FASB, Norwalk, CT.

Foucault, M. (1972), The Archeology of Knowledge, Tavistock, London (trans. by Sheridan-Smith,A.M.).

Introduction

821

Foucault, M. (1980), in Gordeon, C. (Ed.), Power/Knowledge: Selected Interviews and OtherWritings, 1972-77, Harvester, Brighton.

Gallhofer, S., Haslam, J. and Roper, J. (2001), “Applying critical discourse analysis: struggles overtakeovers legislation in New Zealand”, Advances in Public Interest Accounting, Vol. 8,pp. 121-55.

Gallhofer, S., Haslam, J. and Roper, J. (2007), “Reply to: ‘analysing accounting discourse: avoidingthe ‘fallacy of internalism’‘”, Accounting, Auditing & Accountability Journal, Vol. 20 No. 6,pp. 935-40.

Gergen, K.J. (1985), “The social constructionist movement in modern psychology”, AmericanPsychologist, Vol. 40 No. 3, pp. 266-75.

Global Reporting Initiative (GRI) (2000), Sustainability Reporting Guidelines on Economic,Environmental and Social Performance, GRI, Boston, MA, June.

Global Reporting Initiative (GRI) (2002), Sustainability Reporting Guidelines, GRI, Amsterdam,October.

Grant, D. and Hardy, C. (2003), “Introduction: struggles with organizational discourse”,Organization Studies, Vol. 25 No. 1, pp. 5-13.

Guthrie, J. (1998), “Application of accrual accounting in the australian public sector – rhetoric orreality?”, Financial Accountability & Management, Vol. 14 No. 1, pp. 1-19.

Hall, M. (2006), “Knowledge management and the limits of knowledge codification”, Journal ofKnowledge Management, Vol. 10 No. 3, pp. 117-26.

Hardy, C. (2001), “Researching organisational disclosure”, International Studies of Managementand Organisation, Vol. 31 No. 3, pp. 25-47.

Hardy, C., Palmer, I. and Phillips, N. (2000), “Discourse as strategic resource”, Human Relations,Vol. 53 No. 9, pp. 1227-48.

Hatherly, D. (1998), “Is the risk-driven audit too risky?”, Accountancy, August, p. 86.

Hines, R. (1988), “Financial accounting: in communicating reality, we construct reality”,Accounting, Organizations and Society, Vol. 13 No. 3, pp. 251-62.

HM Treasury (2005), Delivering the Benefits of Accruals Accounting for the Whole of the PublicSector, HMSO, London.

Holthausen, R. and Watts, R. (2001), “The relevance of the value-relevance literature for financialaccounting standard setting”, Journal of Accounting and Economics, Vol. 31 Nos 1-3,pp. 3-75.

Iedema, R. (2007), “On the multi-modality, materiality and contingency of organizationaldiscourse”, Organization Studies, Vol. 28 No. 6, pp. 931-46.

Khalifa, R., Sharma, N., Humphrey, C. and Robson, K. (2007), “Discourse and audit change:transformations in methodology in the professional audit field”, Accounting, Auditing &Accountability Journal, Vol. 20 No. 6, pp. 825-54.

Lilley, S., Lightfoot, G. and Amaral, P. (2004), Representing Organization, Oxford UniversityPress, Oxford.

Livesey, S. (2002), “The discourse of the middle ground: Citizen Shell commits to sustainabledevelopment”, Management Communication Quarterly, Vol. 15 No. 3, pp. 313-49.

Llewellyn, S. (2007a), “Case studies and differentiated realities”, Qualitative Research inAccounting and Management, Vol. 4 No. 1, pp. 53-68.

Llewellyn, S. (2007b), “Introducing the agents . . .”, Organization Studies, Vol. 28 No. 2, pp. 133-53.

Llewellyn, S. and Northcott, D. (2005), “The average hospital”, Accounting, Organizations andSociety, Vol. 30 No. 6, pp. 555-83.

AAAJ20,6

822

Llewellyn, S. and Northcott, D. (in press), “The singular view in management case studies”,Qualitative Research in Organizations and Management: An International Journal.

Lyotard, J.F. (1984), The Postmodern Condition: A Report on Knowledge, University of MinnesotaPress, Minneapolis, MN (trans. by Bennington, G. and Massumi, B.).

Macintosh, N.B. and Baker, C.R. (2002), “A literary theory perspective on accounting: towardsheteroglossic accounting reports”, Accounting, Auditing & Accountability Journal, Vol. 15No. 2, pp. 184-222.

Mathiassen, L. and Pourkomeylian, P. (2003), “Managing knowledge in a software organization”,Journal of Management Knowledge, Vol. 7 No. 2, pp. 63-80.

Milne, M.J. and Gray, R.H. (2007), “The future of sustainability reporting”, in Unerman, J.,O’Dwyer, B. and Bebbington, J. (Eds), Sustainability Accounting and Accountability,Routledge, London.

Milne, M.J., Kearins, K.N. and Walton, S. (2006), “Creating adventures in wonderland: the journeymetaphor and environmental sustainability”, Organization, Vol. 13 No. 6, pp. 801-39.

Parker, L. (2005), “Social and environmental accountability research: a view from thecommentary box”, Accounting, Auditing & Accountability Journal, Vol. 18 No. 6, pp. 842-60.

Porter, T. (1995), Trust in Numbers: The Pursuit of Objectivity in Science and Public Life,Princeton University Press, Princeton, NJ.

Potter, J. (1996), Representing Reality: Discourse, Rhetoric, and Social Construction, Sage, London.

Potter, J. (1998), “Fragments in the realization of relativism”, in Parker, I. (Ed.), SocialConstructionism, Discourse and Realism, Sage, London, pp. 27-45.

Power, M. (1997), “Expertise and the construction of relevance: accountants and environmentalaudit”, Accounting, Organizations and Society, Vol. 22 No. 2, pp. 123-46.

Robson, K. (1992), “Accounting numbers as inscription: action at a distance and the developmentof accounting”, Accounting, Organizations and Society, Vol. 19, pp. 45-82.

Sayer, A. (2000), Realism and Social Science, Sage, London.

Schipper, K. (2005), “Fair values in financial reporting”, paper presented at the AmericanAccounting Association Annual Convention, San Francisco, CA.

Sikka, P. (2001), “Regulation of accountancy and the power of capital: some observations”,Critical Perspectives on Accounting, Vol. 12 No. 2, pp. 199-211.

Spence, C. (2007), “Social and environmental reporting and hegemonic discourse”, Accounting,Auditing & Accountability Journal, Vol. 20 No. 6, pp. 855-82.

Suzuki, T. (2003), “The accounting figuration of business statistics as a foundation for the spreadof economic ideas”, Accounting, Organizations and Society, Vol. 28 No. 1, pp. 65-95.

Thompson, J.B. (1984), Studies in the Theory of Ideology, Polity Press, Cambridge.

Thompson, J.B. (1990), Ideology and Modern Culture: Critical Social Theory in the Era of MassCommunication, Polity Press, Cambridge.

Tinker, T. and Neimark, M. (1987), “The role of annual reports in gender and class contradictionsat General Motors: 1917-1976”, Accounting, Organizations and Society, Vol. 12 No. 1,pp. 71-88.

Tregidga, H. and Milne, M.J. (2006), “From sustainable management to sustainable development:a longitudinal analysis of a leading New Zealand environmental reporter”, BusinessStrategy and the Environment, Vol. 15 No. 4, pp. 219-41.

UNEP/SustainAbility (2000), The Global Reporters: The 2000 Benchmark Survey,UNEP/SustainAbility, London.

Introduction

823

UNEP/SustainAbility (2002), Trust Us: The Global Reporters’ 2002 Survey of CorporateSustainability, UNEP/SustainAbility, London.

UNEP/SustainAbility (2004), Risk and Opportunity: Best Practice in Non-financial Reporting,UNEP/SustainAbility, London.

van Dijk, T.A. (1977), Text and Context: Explorations in the Semantics and Pragmatics ofDiscourse, Longman, London and New York, NY.

van Dijk, T.A. (1997), “The study of discourse”, in van Dijk, T.A. (Ed.), Discourse as Structureand Process,Vol. 1, Sage, London, pp. 1-34.

Watts, R. (2003a), “Conservatism in accounting part I: explanations and implications”,Accounting Horizons, Vol. 17, September, pp. 207-21.

Watts, R. (2003b), “Conservatism in accounting part II: evidence and research opportunities”,Accounting Horizons, Vol. 17, December, pp. 287-301.

Watts, R. (2005), “What has the invisible hand achieved?”, paper presented at the Institute ofChartered Accountants in England and Wales Information for Better Capital MarketsConference, London, 20 December.

Widdowson, H.G. (1998), “The theory and practice of critical discourse analysis”, AppliedLinguistics, Vol. 19 No. 1, pp. 136-51.

Williams, R. (1962), Communications, Penguin, Harmondsworth.

Williams, S.J. (2003), “Assets in accounting: reality lost”, Accounting Historians Journal, Vol. 30No. 2, pp. 133-74.

Wittgenstein, L. (1953), Philosophical Investigations, Basil Blackwell, Oxford (trans. byAnscombe, G.E.M.).

Further reading

Power, M. (1991), “Auditing and environmental expertise: between protest andprofessionalisation”, Accounting, Auditing & Accountability Journal, Vol. 4 No. 3, pp. 30-42.

Corresponding authorSue Llewellyn can be contacted at: [email protected]

AAAJ20,6

824

To purchase reprints of this article please e-mail: [email protected] visit our web site for further details: www.emeraldinsight.com/reprints

Discourse and audit changeTransformations in methodology in the

professional audit field

Rihab KhalifaWarwick Business School, Warwick University, Coventry, UK

Nina SharmaCardiff Business School, University of Cardiff, Cardiff, UK

Christopher HumphreyManchester Business School, University of Manchester, Manchester, UK, and

Keith RobsonCardiff Business School, University of Cardiff, Cardiff, UK

Abstract

Purpose – This paper aims to develop understanding of how the pursuit of practice change inauditing, especially in relation to audit methodologies, is conveyed, presented, reflected in and enabled(or hindered) through discursive, textual constructions by audit firms.

Design/methodology/approach – The paper uses an extensive series of interviews with auditpractitioners, educators and regulators and a textual study of the content, concordances and narrativescontained in two key audit methodological texts published by KPMG, one of the Big Four accountingfirms.

Findings – Major discursive shifts in audit methodologies are identified over the last decade, withthe dominant audit discourse switching from one of “business value” to one of “audit quality”. Suchshifts are analysed in terms of developments in the wider, organisational field and discursive(re)constructions of audit at the level of the audit firm.

Originality/value – The identified shifts in auditing discourse are important in a number ofrespects. They demonstrate the significance of discursive elements of audit practice, contradictinginfluential prior claims that methodological discussions and developments in audit over the lastdecade had focused consistently on notions of “audit quality”. Methodologically, they demonstrate theimportance and opportunities for knowledge development available by combining institutional,field-wide analysis with a detailed discursive study of individual interviews and texts.

Keywords Auditing, Quality, Risk management, Organizations

Paper type Research paper



The authors would like to give many thanks to Thomas Ahrens, David Cooper, Mark Dirsmith,Brendan O’Dwyer and Mike Power for their constructive comments on this paper. Earlierversions of this paper were presented at the EARNet Workshop, Amsterdam, October 2005,EAA Dublin, March 2006, EIASM Workshop on Audit Quality, Milan, November 2006 andAmsterdam Business School Staff Seminar Series, January 2007. They would also like to thankdiscussants and other participants at these events and the AAAJ reviewers and Editors of thespecial issue for their helpful suggestions. The research on which this paper is based wassupported by an ESRC grant (Risk audit methodologies, knowledge practices and organisationallegitimation: RES-00-23-0977) and an initial grant from the former Manchester Federal School ofBusiness and Management. Both are gratefully acknowledged.

Discourse andaudit change

825

Received December 2005Revised November 2006,

July 2007Accepted July 2007


Vol. 20 No. 6, 2007pp. 825-854


DOI 10.1108/09513570710830263

As the 20th century draws to a close, an unprecedented array of technological, political, andeconomic events has changed the nature of business and the risks organizations face . . . Someauditors now believe, however, that the audit methodology that was appropriate for theindustrial age may not be sufficiently broad for the information age, when assets areintangible, commerce is electronic, markets are global, and the pace of change isever-accelerating. Aware of how these factors pose new risks for organizations, and how theyhave the potential to significantly affect financial reporting, some auditors are expandingtheir approaches to the financial statement audit (Elliott et al., 1999, pp. 4-5).

[D]espite the apparent rapidity of changes in and around financial auditing, it is alwaysdangerous to equate talk of change with change at the level of practice itself. We are still at avery early level of practice development (Power, 2000, p. 4).

There have been relatively few studies of audit methodologies – or other auditingpractices – to match the level of interest in studying, for example, managementaccounting in its organisational and social context (for reviews, see Humphrey, 2001;Power, 2003). This neglect extends even to the role of audit in major corporatescandals. While there have been a number of commentaries on, and analyses of, ArthurAndersen’s approach on the Enron audit (e.g. Gwilliam, 2003; Morrison, 2004;O’Connell, 2004) and a number of texts documenting the lives of key individuals insideArthur Andersen “before the fall” (e.g., see Squires et al., 2003; Toffler and Reingold,2003; Cruver, 2003; Eichenwald, 2005), the impact of Enron and other such scandals onthe work of corporate external auditors and associated discourses of audit has notattracted great research attention.

No doubt part of the neglect of studying audit practice could be attributed to theproblematic nature of access and co-operation from the large audit firms, includingapparent concerns over the confidentiality of audit practice. Studying audit, however,is not simply a process restricted to observing the everyday work of auditors inchecking internal controls, verifying the existence of assets and documenting auditfindings. A significant part of the conditions of possibility for audit are the discursivepractices and processes through which auditors promote, justify and account for theirwork. Through the terms or vocabulary embedded within their work they connectwith, and facilitate responses to, shifting discourses within the broader, organisationalfield of audit. In this way, “audit” can be viewed not simply as a technology, but ahybrid of shifting discursive (and non-discursive) practices, shaped by and shaping anetwork of key relations between auditors, audit firms, audit clients and key(regulatory) agencies. Accordingly, in this paper we adopt a discursive analysis ofaudit and seek to demonstrate its value as an important supplement to existing modesof audit research.

Robson et al.(2007) argued that changes in auditing technologies are linked totransformations within the organisational field of audit. Their study of the rise ofbusiness-risk auditing approaches in the 1990s – as expounded above in bold terms byauthors such as Elliott et al. (1999) – showed how organisational tensions withinauditing firms and the relative status and prestige of audit as compared to otherbusiness lines, notably management consultancy, played significant roles instructuring the development of new audit technologies within the Big Five (as was).Other studies have spoken of the growing fragmentation of the audit process and thecreation of competitive sub-fields, such as risk management, and predictedprofessional turf battles (both inter and intra) within the larger firms as they create

AAAJ20,6

826

internal structures to differentiate “overlapping” product lines (Covaleski et al., 2003;Power, 2000, 2003; Khalifa, 2004).

Robson et al. (2007, p. 431) suggested that the field of audit would reconfigurepost-Enron and, in this paper, we seek to study the significant shifts in the discoursesrelating to audit methodologies that have taken place as the business-risk focus hasbeen supplanted by a methodological emphasis on “audit quality”. We provide ananalysis of discursive shifts in the organisational field of audit through two principalmechanisms – a series of interviews with auditors, audit educators and regulatorsdiscussing audit methodological developments and the study of two important audittexts published by one of the multinational audit firms between 1997 and 2005.

Instead of being seen simply, or even primarily, as a “technical” phenomenon, auditemerges from our study as a highly discursive practice, enabling and reflectinginstitutional (regulatory, cultural and normative) and competitive (audit markets)changes in the audit field, and shifting prevailing conceptualisations of the role ofaudit. In studying the extent to which recent methodological developments in audithave relied upon, and been supported by, a careful use of appropriate discourse, wesuggest that textual content analysis of keywords and concordances offers aparticularly powerful method for analysing the shifting practice of audit. Indeed, indocumenting a clear shift from a discourse of (business) value to one of (audit) quality,the paper serves to challenge recent assertions that methodological developments inaudit during the last decade have all been “about audit quality” (see Peecher et al.,2007).

The paper is organised around four sections. The next section provides a briefoverview of relevant literature that has sought to understand and explaincontemporary audit practices, emphasising the importance of examining thediscursive textual practices that constitute audit. Section two then presentsdiscourse analysis as a mode for exploring methodological changes in the auditfield, and outlines our specific research methods. Section three draws on findings fromanalyses of field-based interviews and other textual material, such as web sites, andaudit firm publications, to identify a clear shift in the methodological discourse of auditfrom the mid-1990s to the mid-2000s. Such a shift is connected to changes in the widerorganisational field of audit. The paper closes by considering the significance of such arelationship and its implications for the future study of auditing.

1. Discursive shifts in auditDuring the last decade researchers have begun to access firms in ways that haveenabled examinations of the audit process itself (McNair, 1991; Pentland, 1993; Power,2000; Barrett et al., 2005). Of these, some have addressed changes to audit methods andmethodologies, and processes through which audit methods change (Carpenter andDirsmith, 1993; Humphrey and Moizer, 1990; Power, 1992). Commentators have notedthe movement from discourses of professional judgement in auditing towards thosethat advocate a greater reliance on highly structured auditing techniques. This gradualshifting from apparent individual expertise towards, for example, scientific sampling,has been, as Francis (1990, 1994) suggests, indicative of an order of scientism in auditpractice and a development that has occluded the importance of tacit knowledge andpractical consciousness in the enactment of audit.


827

While beliefs in the science of audit and the possibility of optimal audit techniqueshave motivated movements towards new audit technologies and perpetual reform ofaudit procedures, there are many other “contextual” issues that connect to this shiftfrom apparent “judgement” to “technique”. Humphrey and Moizer (1990), in a study ofaudit planning processes, claimed that new audit processes have to demonstrate thepotential to enhance audit profitability (or perceptions of the value of the audit) in theface of client pressures to keep audit fees low and intensified commercial motivationsto expand the range of non-audit services to clients (also see Anderson-Gough et al.,1998; Carpenter and Dirsmith, 1993; Kosmala MacLullich, 2003). The increasingformalisation of audit can, as Fogarty (1996) has argued, be connected directly to theperceived need among audit firms to seek more “technological” and “scientific”discourses within which to justify audit practices to clients and/or the courts, as well asissues of controlling “work” of audit employees (Pentland, 1993; Fischer, 1996; Power,2003). As audit has become more formalised and codifed and so, as Fogarty (1996)suggests, it has become more mobile and transferable to organisations and institutionspreviously uncolonised by audit practices and auditing firms.

Seen in these terms, the rise of new audit technologies involves more than asimplistic shift from practices of “decision by judgement” to “decision by technique”.The works of Pentland (Pentland, 1993, 2000; Pentland and Carlile, 1996) and Harper(1988, 1989) suggest a process in which becoming “comfortable with (accounting)numbers” involves a complex interplay between formal regulations and informalmethods through which auditors exercise their tacit knowledge, and draw on previousaudit experiences and relationships, perhaps with the same client, to gain confidenceof, and from, the client, their peers and important agencies, such as regulators, in theaudit field. Barrett et al. (2005) explore the intra-organisational interplay between auditoffices in different jurisdictions that produce an audit opinion. Audit technologiesrepresent a kind of negotiated settlement with the key agents (clients, regulators,professional administrators) in their field in which matters of legitimacy and marketrelationships structure audit processes. Moreover, as studies of professionalsocialisation have shown, audit is a performative practice in which audit“professionals” engage in symbolic displays to their client, their seniors and otherimportant agents through impression management, appropriate use of organisationaldiscourse, legitimate forms of socialising and temporal commitment (Anderson-Goughet al., 1998, 2000, 2001).

Fischer (1996) demonstrates that the implementation of new audit methodologies isproblematical as audit staff struggle to learn and follow procedures of which they feelunsure and for which the justification is often obscure. In this context, the newtechnologies fail to become embedded within “old” or previous audit practices suchthat auditors follow “rules” ritualistically, without much understanding of supportingprinciples, and in ways which merge comfortably with prior beliefs and judgementsabout the client. Fischer’s work is valuable in pinpointing the problem of internalvalidity amongst audit staff themselves, without which new technologies of audit willfail to become embedded in audit routines and, most significantly for our study, itraises the issue of external legitimation of new audit technologies in their auditenvironment. In such a scenario, audit practice continues to follow previous methodsand models, while new audit technologies take on an enabling and symbolic role

AAAJ20,6

828

redolent of the “loose coupling” relationships between administrative reform andoperative routines suggested by neo-institutional theorising (Meyer and Rowan, 1977).

This paper addresses this latter feature of Fischer’s work, namely the relationship ofan audit technology to its environment and the importance of discourse to auditpractice and transformations in audit methodologies. It is through discourse that thelarge public audit firms re-present and legitimate their audit practices to clients andsignificant others. Audit practice is in part affirmed and sanctioned by reference toappropriate forms of discourse. In this paper, we explore the discursive shiftsassociated with changes to auditing methodologies over the last decade, drawingparticularly on the substantial, publicly available texts that one of the Big Fouraccounting firms, KPMG, has used to promote and explain such developments (see Bellet al., 1997, 2002, 2005; Elliott et al., 1999).

To date, there has been relatively little study of audit discourses and, in particular,the texts that surround and support the methodologies that audit firms produce both toguide and to legitimate their work. Yet during the 1990s it was widely noted that anumber of the Big Five (as was) had introduced (and heralded changes, as the openingquotation to this paper indicates) in their audit methodologies (Lemon et al., 2000;Knechel, 2007; Elliott et al., 1999; Power, 2000; Robson et al., 2007). By the late 1990s anew normative consensus had emerged around business risk based-audit methods.KPMG, PwC, Ernst & Young and Arthur Andersen each produced varieties on anaudit methodology focusing on client business risk as the key element of a new auditapproach (Eilifsen et al., 2001; Lemon et al., 2000; Knechel, 2007; Perrin, 1998; Winogradet al., 2000). KPMG allowed academics to follow trials of their audit method and assesstheir ability to provide knowledge “spillovers” to the client (Eilifsen et al., 2001). ArthurAndersen attempted to promote its Business Audit across North America and Europe,though with varying degrees of success (Toffler and Reingold, 2003). In 1997, to heraldtheir new audit approach, KPMG published Auditing through a Strategic Systems Lenswhich outlined the approach’s underlying theories and methodologies. According toone of the authors, over 200,000 copies were printed and distributed in the US to clients,academics and other interested parties. KPMG also provided substantial researchfunding to examine KPMG’s methodology and to assist in the development of theirbusiness measurement process (the KPMG methodology for assessing business risk –see Bell et al., 2002).

By 2001 academics, regulators and professional bodies were considering theimplications of the business risk methodology for research, practice and modes of auditregulation. The language of business and associated understandings were evidentlyinfluencing discourses of audit change and penetrating regulatory processes in theaudit field (Lemon et al., 2000; Gwilliam, 2003; Bagshaw, 1999; Curtis and Turley, 2007;Knechel, 2007). However, it is evident today that the conceptualisation of audit haschanged once more – in response to new events and relationships in the organisationalfield which, in turn, have spawned new legitimating discourses for “quality” auditmethodologies. It is this shift upon which our discursive analysis will focus, drawingon recent advances in the study of discourse and institutional change (Franzosi andMohr, 1997; Ventresca and Mohr, 2002; Philips et al., 2004). Accordingly, our focus ondiscourse is concerned with the level of cultural and institutional, rather thanindividual, meanings. In the next section we outline our approaches to discourseanalysis across two key time periods: the mid- to late-1990s, which was essentially an


829

era of business risk; and the post-Enron era, which has been increasingly dominated bya new movement promoting audit quality and the need for audit to be made“auditable”.

2. Audit discourse, structure and practice2.1. Audit technologies, discourse and legitimacyAudit practitioners draw on discourse both to construct the sense of their world and tointervene within it, and it this co-construction of discourse and the field of auditactivities that sets the boundaries of our analysis (Robson et al., 2007). In general terms,“practice” understands activities in terms of how they transform the world withinwhich they occur. The distinction that we play upon in this paper is that betweendiscursive and non-discursive practices, even though every discursive act necessarilyhas a non-discursive aspect to it (Foucault, 1972; Prior, 2003, p. 126). This focus upondiscursive practice is grounded in four insights concerning discourse (Sarangi andCoulthard, 2002). One is the affirmation that social realities are in partlinguistically/discursively constructed. The second is the appreciation of thecontext-bound nature of discourse: hence, following a neo-institutional frame (Scott,2001), the importance of an organisational field-level approach. The third is the idea ofdiscourse as practice and social action that intervenes on and constructs a field ofactivities (Foucault, 1972; Coupland et al., 2001; Sarangi, 2001; Prior, 2003; Robson et al.,2007). The fourth is the understanding that meaning is established in interaction,rather than being present once and for all in single, abstracted, context-less utterances(Drew and Heritage, 1992).

While previous studies have explored practitioners’ “sense making and theirinteraction with the surrounding structures and its discourse” (Kosmala, 2005; p. 31), inour study we seek to show how audit discourses construct audit methodologies interms appropriate to their audit field. Neo-institutionalists have demonstrated the roleand importance of symbols and cultural processes in the theory of organisations andtheir environments (Meyer and Rowan, 1977; DiMaggio and Powell, 1983; Scott andMeyer, 1994; Scott, 2001). By linking the work of symbolic interactionism andethnomethodology of the 1960s to questions of social structure, numerous theoreticalapproaches within the social sciences have begun to emphasise the duality of relationsbetween structures and cultural meanings (Mohr, 1998; Bourdieu, 1977; Cicourel, 1982;Giddens, 1984; Swidler, 1986; Sewell, 1992). In embracing a form of phenomenologicalstructuralism, neo-institutional theory has considered how the production of meaningsthrough discourse is linked to the field of organisational relations within which theyare articulated.

Discourse, in this context, is carried through speech and writing, both formal andinformal (Potter and Wetherell, 1987). At the same time discourse helps defineacceptable ways of talking or writing about a particular topic (Fairclough, 1989, 1992).Spoken and written “texts” constitute a framework, emphasising the prevalence ofcertain criteria, terms, concepts and vocabularies over others at particular points intime (Foucault, 1972; Prior, 2003, p. 25). As such, and in line with the hermeneuticstradition, our paper is concerned with interpreting and understanding processes ofobjectification of audit firms’ actions, especially in relation to new methodologies, andin this instance from different sources of text (Llewellyn, 1993). While Berger andLuckmann (1966) addressed the discursive processes by which institutions are

AAAJ20,6

830

constructed, there have been few studies examining the discursive processes ofinstitutional transformation (Philips et al., 2004). This neglect underplays the role ofdiscourse (as texts) in carrying, enabling and communicating such transformations:

It is primarily through texts that information about actions is widely distributed and comes toinfluence the actions of others (Philips et al., 2004, p. 635).

By highlighting the role of texts in sense making and the cultural production ofmeaning, Philips et al. (2004, p. 635; see Berger and Luckmann, 1966) suggested thatthey form a crucial part of the establishment of institutional structures:

[. . .] actors interact and come to accept shared definitions of reality, and it is throughlinguistic processes that definitions of reality are constituted.

Innovators or “institutional entrepreneurs” (Suddaby and Greenwood, 2006) trying toestablish new practices reaffirm their message through discursive acts; those seekingto gain or repair legitimacy produce and distribute texts that establish or verifychanges to meanings and actions (Philips et al., 2004). By drawing on discourses fromother fields, organisational actors can extend institutional boundaries. Texts andstrategic deployment of language can be used to convey and reflect values and socialinterests at particular points in time, and, in so doing, initiate change (Suddaby andGreenwood, 2005).

By examining discursive changes within auditing we can begin to understand howdiscourse helps audit firms to maintain, or indeed reconstruct, relationships betweenthe firm, its audit work and the audit field. Barry et al. (2006) refer to this as a combinedexo/endotextual approach, working both within a text and outward from a text to itsfield. In effect we are trying to locate field-level institutions in the local textualpractices – the structuration of the audit field: New discourses emerge from reworkingexisting discourse and as a result of structural or strategic organisational changes,which in turn means that the new discourses contribute to changes within and betweenorganisations (Fairclough, 2005). Through institutionalisation processes, discourses ofchange are embedded and influence meanings and understandings within theorganisational setting.

Our intent is to explore the discursive changes associated with recent auditmethodological developments and to relate them to changes and patterns in theorganisational field of audit. In so doing, it is hoped that the paper will serve to indicatethe importance of discourse analysis, and textual practices in particular, in terms ofunderstanding processes of audit change. In the next section we outline the methodswe have deployed to conduct discursive analysis.

2.2. Conducting discourse analysis: methodology and methodOur chosen methodological approach comprises two dimensions. The first draws onfindings from seventy interviews with auditors, audit educators and regulators,seeking to gain an understanding of the prevailing vocabulary of auditing practice, theway in which audit methodologies and associated discourses are changing, and theregulatory, normative, cultural and competitive influences on such changes[1]. Themajority of these interviews have been in London, Manchester, Birmingham andCardiff, with audit practitioners (in different firm sizes and at varying stages in theircareers, encompassing newly qualified audit seniors, audit managers, senior audit


831

managers and audit partners. The interviews were semi-structured and usually lastedbetween one to one and a half hours. Most were digitally recorded and subsequentlytranscribed. Interview transcripts were analysed both manually and using qualitativedata analysis software, Nvivo version 7 and Nud *Ist. In summary terms, theinterviews have sought information and viewpoints on interviewees’ backgrounds andtraining, their understanding of changes in the audit regulatory environment andexperiences of shifts in the nature of audit practice and methodological changes pre-and post-Enron. Through such narratives, auditors and auditing regulators constructversions of past events and project their interpretations in describing shifts in the auditfield. These oral accounts helped us to identify the principal dimensions of thediscourses prevailing within the audit field at different points in time.

The second major dimension of our research approach involves the analysis of keywritten texts, particularly those that outline methodological approaches in audit. Inthis paper, we focus on two important audit texts by KPMG, the Big Four audit firmthat has most visibly promoted its audit methodology, whether through monographs,sponsored research and/or publicity material. The KPMG audit methodology texts (seeBell et al., 1997, 2005) are examined through two main strategies. First, we subjectedthem to keyword analyses using text analysis software[2], TextStat[3] and Nud *Ist,.The objective of this analysis was to provide content analysis comparisons across thetwo texts. In general terms, content analysis provides basic statistical semanticsdescribing the contents of any form of communication (Prior, 2003; Krippendorf, 2004).To this end computer-assisted content analysis has advantages of speed and reliabilityin the performance of a textual content analysis (Krippendorf, 2004. pp. 257-62). Ourcontent analysis was partly latent in that initially we aggregated uses of words in thetwo KPMG texts, rather than using coding to fit texts into a set of predefined categoriesset up by ourselves as researchers (Berg, 2004; Franzosi, 2004, p. 60). Other keywordswere selected intentionally on the basis of their presence in the audit field: indiscussions of audit regulation, education, the “market” for audit, and included,amongst others, terms such as “audit”, “business”, “risk”, “value” and “quality”. In thatsense some of our content analysis was partly manifest (Berg, 2004, pp. 269-70). Oncethe keyword list was constructed, we used the textual analysis software to retrieve allinstances in which these keywords occurred in the two audit methodology texts.

Our second analytical strategy with respect to the KPMG texts was to examine theusages of these keywords in context. Here our purpose was to try to focus on thenarrative grammar of the texts – not simply how often words are used (relative to eachtext) but also to understand something of the active or passive structural relationshipsbetween key terms, and to examine the co-occurrence of terms associated with the keywords. This we largely accomplished by picking up the keywords and then exploringtheir concordances within the texts. Concordances are simply descriptors for theimmediate textual context of a key word or term, and can be examined readily throughappropriate textual analysis software. The purpose is to understand usages of termsand the structures of meaning in which particular key words are embedded[4].

Examples of this kind of keyword analysis have become more common withinsocial science and organisational analysis as a means of trying to interrogate changinginstitutions and cultural meanings (Franzosi and Mohr, 1997; Ventresca and Mohr,2002). For example, Guillen (2001) and Drori (2006) both used keywords to explore theemergence and growth of terms such as globalisation and governance in popular

AAAJ20,6

832

media, NGOs and governmental organisations. By focusing upon growth of, andchanges in, the usage of words, we become aware of the discursive processes throughwhich certain practices are “realised” and problematised. In our study the words thatsurround terms like “audit” and “risk” serve to signal (and perform) changing prioritiesin the audit field, and shifting usages in the discursive practice of audit within firms.The combination of interviewee accounts and the analysis of written texts isparticularly useful in this respect in that it not only serves to highlight thepervasiveness of particular audit vocabularies, but also helps to frame andcontextualise our analysis of the main discursive shifts occurring in the audit fieldover the last decade.

3. Audit discourses and transformations in the audit field3.1 Value-added audit: the rise of business risk methodologiesWhen four of the Big Five audit firms started to pursue a new methodology of audit inthe early to mid-1990s, it was clear that audit fee pressure was beginning tocompromise audit’s profitability within audit firms (Suddaby et al., 2007). This is not tosay that the Big Five firms were struggling: non audit services – in particularmanagement consulting services – had increased significantly as a proportion offirms’ total revenue (Zeff, 2003a, b). Yet, audit had begun to suffer from a competitivemarket in which clients were keen to shop around for audit services and auditors wereincreasingly competing on fee levels (see Humphrey et al., 2002):

There was a lot of pressure on fees and we, I know at the time, we did a lot of work takingtime out of audits. . . And we really started to look at that and that then really came in theconcept of materiality to a big, big way and that’s stayed with us ever since now and perhapseven more aggressively from the point of view of if something is considered low risk and it’snot material, just don’t look at it, you know, document your reasons but just move on(AP1: 3[5]).

The new varieties of audit offered a hybridised version of audit by incorporating anauditor’s assessment of the client company’s business risks as a central component ofthe audit process. Analyzing business risk implied that the auditor would assess theclient’s strategy and strategic risks, its core business processes and offer benchmarkcomparisons with similar companies in the client’s industrial sector. This preliminaryanalysis of business risk formed the basis for identifying potential key audit risks.Business risk assessment, in short, became the basis for the audit planning processesbeing promoted by Ernst & Young, PricewaterhouseCoopers, KPMG and ArthurAndersen (Lemon et al., 2000; Curtis and Turley, 2007; Knechel, 2007).

Audits founded on the analysis of business risk would, it was suggested, help tostreamline audit and reduce audit fee pressure. A better planned and more focusedaudit, based upon an initial assessment of business risk, could cut audit costs, and alsohelp affirm a new identity for audit that promised more interest for prospective auditstaff recruits. Part of this new construction of audit was dependent upon theincorporation of business knowledge, such as benchmarking, business processre-engineering and strategic analysis (Jeppesen, 1998; Bell et al., 1997). As Eilifsen et al.(2001) noted in their field work study of KPMG’s audit methodology in the late 1990s,business risk type audit had the potential to offer a better service to clients by feedingback to them the auditor’s insights into a client’s possible business risks. Though thisnew audit was not “consulting”, and not labelled as such, the business risk audit could


833

“add value” to the audit. Hence, the new audit could be conceived as anaudit/consulting hybrid (Jeppesen, 1998), with the focus on business risks potentiallyoffering opportunities for audit firms to provide additional services to help the clientmanage their business.

The introduction of the new business risk methodologies in auditing, as with otherauditing developments, has tended to be accompanied by a central, seeminglytrouble-free official narrative, such as that offered by Elliott et al. (1999)[6]. Economic orcost-based rationales figured highly – as they did in our interviews with Big Firmaudit partners, who saw business risk auditing (henceforth, BRA) as a justifiableresponse to market or competitive pressures on audit fees:

A lot of it [BRA] in all honesty had to be a cost issue, where the competition was, everyonewas looking at taking time out, making it more efficient . . . So you know, I think it waslargely a commercial pressure that forced us to look at how we did our work, how we could bemore efficient and how we could keep or win more big orders (AP1: 3).

The economic benefits of BRA to the audit itself were seen to reside in a greaterreliance on understanding business risk exposures, assessing the strength of internalcontrol systems and generating consequent reductions in levels of substantive testing:

There’s no doubt in my mind, that in theory if you are absolutely confident from a range ofcontrols, that you understand everything about the business, the business is low-risk, thefinancial processes covering that business are entirely robust, and those financial processeslead inescapably to the production of financial statements, which are thoroughly competent,then you can get to cutting down your work very substantially (AP2: 5).

Many audit partners that we interviewed emphasised the importance of the auditingbeing able to compete with the profitability of other functional disciplines. Large firmsappeared no longer content to view themselves as auditors but as “professional servicefirms” competing in a range of business service and advisory markets (Jeppesen, 1998;Robson et al., 2007). After experiencing decreases in income derived from audits,interviewees spoke of the adoption of BRA as helpful to audit partners in recoveringsome of their lost prestige within their firms:

[. . .] the audit partners realised that if they were to justify their existence in their own firm –and also, to be honest, they had – if they were to attract people, they had to change audit frombeing reactive, to actually being what – you know, the solutions provider, you know, valueadded – all those sort of trendy management consultant type words, basically they had tocome up with bright ideas, and I think that encouraged them to be quite aggressive in termsof the ideas and the way they would treat things (FormerAP: 1[7]).

BRA, accordingly, was supported as it offered enhanced opportunities to auditdivisions to provide other, “added-value” services to their audit clients – placing thedivision in a better fee-earning position in relation to other service lines. Ourinterviewees also spoke of the potential human resource benefits of BRA. It enabled theauditing activity to be marketed in more positive terms to current and prospectiveaudit staff. According to interviewees, if BRA methodologies were able to make theaudit process more “relevant” and “creative”, their firm had a much greater chance ofattracting and retaining top-rate graduates:

I mean the business adviser stuff is partly to make it a bit more sort of sexy and – you know,to other graduates joining, you know, you’re going to be talking to managing directors about

AAAJ20,6

834

their issues – ok, you might be, but you probably need ten years experience before you’regoing to have a sensible conversation [. . .] coming back to the business advisory, I think it’s –partly you’re selling it to recruits, you know, “you’re not just going to be, you know, doingboring things like ticking tick-boxes” (AP2: 5).

Gaining such experience was also considered to have positive spillover effects forclients in that they would be gaining, and demanding access, to quality businessadvisers:

[. . .] it’s partly selling it to clients, where you say, you know, “the people you get will bebusiness advisers, they’ve got loads of experience”, but that’s very much a sort of – youknow, an add-on, and it comes from experience, I mean – you know, the number of businessesthat John will have seen, John’s analytical skills honed during audit work are quite valuable toa client, so he will ask John “I have this particular problem, should I make this investment,how do I set up in America”, he’s a natural person to ask (AP2: 5).

As Jeppesen (1998) notes, KPMG’s approach to BRA (as detailed in Bell et al., 1997)presented an eclectic mix of strategic analysis, business process re-engineering andbenchmarking. Such forms of knowledge do not reside conventionally within thenormal education of auditors – both professional and in-house – and thus theeducation and training of auditors required a re-orientation towards new forms ofauditor expertise. In the UK KPMG’s business risk audit was subsumed within a newaudit methodology known as Audit 2000, which required both new training andInformation Technologies (such as information databases measuring key performanceindicators across firms and sectors). Educational initiatives within professional bodiessuch as the ICAEW during the late 1990s also began to reflect this vocabulary ofbusiness risk and value added. In 1997 the ICAEW issued a document on educationreform of professional examinations entitled Added Value Professionals (ICAEW,1996). Specialist routes in professional education and training were proposed. AnotherICAEW working party, headed by Robert Hodgkinson of Arthur Andersen, suggestedthat companies could produce a Statement of Business Risk for shareholders thatauditors could then audit (see ICAEW, 1997, 1999, 2002a).

Figure 1 provides a representation of the business risk, added value discourse andthe key supporting dimensions within the audit field that constituted the discourse of“value added audit”. This discourse had five main components: a problematisation ofthe market for audit services and the profitability of audit; an associatedproblematisation of the status of audit within self-styled “professional service firms”(PSFs); the incorporation of business knowledge into the audit function itself; thefurther integration of audit into cross-selling opportunities; and the re-education ofaudit and auditors seen to be required by the new business risk audit philosophy.

Market conditions in audit and the evolving structure of audit firms to PSFs were allof a piece with the new methodology of business risk that drew upon businessknowledge, such as benchmarking and strategic analysis, (see Jeppesen, 1998; Bell et al.,1997), in an attempt to “add value” to audit. Supported by changes in education andproposed regulations, business risk also tied in entrepreneurial opportunities for other“added value” services that audit firms could provide, including internal control. Inshort, the isomorphism present in the development of new audit methodologies acrossthe “Big” audit firms (Deloitte excepted) was also reflected in the rationales in play inthe professional institutions operating within the organisational field of auditing.


835

3.2. Making audit auditable – the rise of audit quality

Well, I think the mantra has become quality. I think people would say that has been the toppriority . . . If you think also back in the 1990s in part, yes, the profession was talking aboutvalue added, but in part it was because society and the business community no longer valuedaudit. It was a pretty natural reaction I think to the fact that audit had become commodified.If you sat in at the meeting with an audit committee their primary objective how am I going toget as little fee for the audit? . . . So I think it was a pretty normal reaction for the firms tothink, well how do we create value back into the service? . . . And there’s little doubt that theimpetus behind the business risk idea was more to understand the issues that the seniorpeople in an entity were battling with. What were the things that kept management awake atnight, those sorts of catchphrases were being banded around, and if you knew what keptmanagers awake at night it might give you a clue about what to worry about in the accounts. . .Now, of course, all that’s largely gone (AP2: 1).

As the above interviewee notes, auditing regulators, “Enron” and associated events in2001 have set in train a different set of discourses and ideals around audit that nowocclude reference to business risk. The most visible response to Enron, the passing of

Figure 1.Business risk audit andthe audit field

AAAJ20,6

836

the Sarbanes Oxley Act in the US, introduced restrictions on the provision of non-auditservices by audit firms in order to enhance “independence” and required that auditorsgive greater attention to clients’ internal control systems. Arguably some of the agendafulfilled by the Sarbanes-Oxley Act pre-existed Enron, with the Panel on AuditEffectiveness of the Public Oversight Board, for example, in the US having alreadyraised concern at the commercialisation of audit and the “tone at the top” set by thepartners of the Big Firms:

The Panel calls on audit firms to reaffirm, within their organizations and to the outside world,the importance of their audit practices and to stimulate their auditors to proudly hold high thebanner of objectivity, independence, professional scepticism and accountability to the publicby performing quality audit work . . . The Panel recommends that audit firms ensure that theperformance of high-quality audits is recognized as the highest priority in their professionaldevelopment activities, performance evaluations and promotion, retention and compensationdecisions (POB, 2000, p. xi, emphasis added).

The global significance of Enron and other such scandals (WorldCom, Global Crossing,Parmalat and Ahold) arising in the immediate aftermath, coupled with the additionalstimulus provided to regulatory regimes outside of the USA by the extraterritorialreach embodied in the provisions of the Sarbanes-Oxley Act, gave weight andmomentum to a new regulatory emphasis on notions (and the language) of “auditquality”:

Recent corporate failures have. . .also led to questions as to the effectiveness of audits and theintegrity of the audit process and emphasized the key role of high quality auditing standards(IAASB, 2003a, p. 3, emphasis added).

The introduction of inspections of audit work initiated by the PCAOB in the US andvarious agencies in the UK such as the Audit Inspection Unit (AIU) of the ProfessionalOversight Board (POB)[8] have reflected concerns with the effectiveness ofself-regulatory, professional “peer review” systems and a desire to validate theprocess of providing an audit opinion (see PCAOB, 2004, 2006; AIU, 2005, 2006).Accordingly, while the primary regulatory focus has become “audit quality”, this hasbeen coupled with a process intended to enable audit practices to become more“auditable” (see FRC, 2006a, b; POB, 2006a, b, 2007).

This focus is particularly evident in the formal remit of the regulatory inspections.For example, the AIU in the UK states that:

The overall purpose of our work is to monitor and promote improvements in audit quality,thereby enhancing investor confidence in the audit process and financial reporting. Ourresponsibility extends beyond compliance with specific requirements of the regulatoryframework and includes an assessment of the key audit judgments made (AIU, 2005, para.4.1, emphasis added).

The emphasis on monitoring and micro-control is reflected in regulatory requirementsfor audit firms to set out in writing how their audit methodology meets therequirements of UK Auditing Standards. Audit firms must show they have in place anannual compliance review process which covers a sample of completed audits (referredto by the UK’s AIU as the Audit Quality Review (AQR) process). A constant themerunning throughout the AIU’s 2004/5 audit inspection report is the identified failings orlimitations in standards of documentation:


837

We identified a need to improve the quality of audit documentation across all firms, in respectof many of the audit engagements we reviewed . . . In many cases we found that audit workundertaken could not be fully understood without obtaining oral explanations from the auditteam and that the rationale for key audit judgments was not adequately recorded on the auditfiles . . .

Senior management within the audit firms must emphasise that poor audit documentationis unacceptable. This message needs to be reinforced by the importance that thoseresponsible within firms for reviewing audit working papers attach to proper documentationof audit work undertaken and audit judgments exercised (AIU, 2005, para 5.3.6, emphasesadded).

The AIU has emphasised the value of documentation in terms of the maintenance and,significantly, the monitoring of audit quality:

Insufficient documentation of audit work undertaken and the basis on which audit judgmentshave been made poses risks to quality for the firms. It not only renders internal quality controlreviews less effective but also affects the ability of the firm, if challenged subsequently, tojustify the conclusions reached. Inadequacies in audit documentation have also rendered ourown reviews more difficult, especially as regards the consideration of audit judgments (AIU,2005, para 5.3.6, emphases added).

This discourse of audit quality and (lack of) auditability has been reinforced in theAIU’s annual inspection reports. While concluding that the reviewed audits hadgenerally been conducted to a high or acceptable standard, it has noted a lack ofemphasis on high quality audits in the strategies of some of the firms reviewed:

We identified a strong emphasis on the importance of audit quality in communications fromthe leadership of all the firms, including a clear message that the recurring deficienciesidentified during our initial inspections needed to be addressed. . . . In particular there isinsufficient visibility of quality indicators in the documented goals and objectives set forpartners and senior staff and the basis on which their performance is assessed. Thedocumentation we examined indicated that commercial considerations and measurescontinued to be a driver of performance assessment (AIU, 2006, para. 4.2.1, emphases added

The AIU has also stressed the need for continuing development in the documentationof audit processes and associated auditor judgements, finding no overall improvementin the standard of documentation explaining the rationale behind such judgements. Itconcluded that a cultural change was necessary to secure this on the part of certainaudit partners and firms (para. 4.4.2), noting a number of areas where the monitoring ofaudit quality could be improved[9].

In the USA, the Sarbanes-Oxley Act required the PCAOB to undertake a continuingprogramme of inspections to assess the degree of compliance (in terms of auditperformance) of each registered public accounting firm and associated persons of thatfirm. Such inspections are required to include reviews of selected audit engagementsand an overall evaluation of the sufficiency of the quality control system of the firm,and the manner of the documentation and communication of that system by the firm.The PCAOB undertook limited inspections of the Big Four firms in 2003 (see PCAOB,2004), followed by the first full series of inspections of all the registered publicaccounting firms in 2004. In accordance with Section 104(g)(2) of the Sarbanes-OxleyAct of 2002, the PCAOB does not make public any portions of those reports that dealtwith criticisms of any of the firm’s quality control systems, but would do so if any of

AAAJ20,6

838

the firms failed satisfactorily to address such criticisms within 12 months (an approachalso adopted by POBA in the UK). In March 2006, the PCAOB issued a publicstatement declaring that the Big Four firms had satisfactorily addressed the criticismsmade during the 2003 limited inspections – crafting steps that fully implementedwould, in the views of the PCAOB, have beneficial effects on audit quality and themonitoring of audit quality (PCAOB, 2006, pp. 3-7).

Revised, reinforced international auditing standards (ISAs) have adopted a form ofwording that accommodates more traditional, audit-risk methodologies and placesconsiderable emphasis on the rigour and visibility of risk-assessment at all levels ofaudit enquiry, including the demonstration of a clear linkage between risk assessmentsand audit procedures (see IAASB, 2003a, b, c, d, e; Robson et al., 2007; Curtis andTurley, 2007). A similar emphasis on clarity and rigour was evident in the PCAOB’s(2005) report on Sarbanes-Oxley required audit reports on internal controls relating tofinancial reporting – the report criticising auditors for taking too uniform an approachto internal control testing and for not adopting a more thoughtful, risk-based approach,a view also supported by the SEC (2005). Other illustrations of the increasing qualityemphasis in audit standard setting and regulation include a revised SAS 240, in theUK, on Quality Control for Audit Work (issued in September 2001)[10], an internationalquality control standard (ISQC 1) and revised international standards for “Auditdocumentation” (ISA 230) and “Quality control for audits of historical financialinformation” (ISA 220)[11].

Post-Enron, regulatory agencies have articulated an emergent discourse on thesignificance of audit quality, bringing with it the emphasis on the documentation ofaudit processes and procedures:

(W)hat’s changed is the regulators, I suppose it started in the US and has ended up in the UK;the Audit Inspection Unit and everybody else around you . . . .Unfortunately a lot of the focusis not in terms of, have you signed the right audit opinion, the focus is actually have you gotall the schedules on the file you should have . . . I don’t think quality has changed, I think thequality was already in there, was built in there. What people are looking for is evidence thatthe quality is there (AP1: 1).

Audit hasn’t changed fundamentally but it’s much more prescriptive about what you shouldbe doing to be able to say, yes we’ve done an audit (AD2: 1[12]).

The Audit and Assurance Faculty of the ICAEW published a detailed report on thesubject of audit quality in November 2002. Building in part on a series of earlierpublications entitled Towards Better Auditing (see ICAEW, 2001), the foreword to thereport stated that the emphasis of the report was on how audit quality is achieved inpractice with illustrations of good practice being given throughout the text. It also“intended to help inform wider stakeholders about the remit, purpose and limitations ofan audit and to give reassurance on the audit profession’s commitment to audit qualityin the UK” (ICAEW, 2002a, p. 2). The report reviews a number of dimensions of auditquality and issues that firms could consider in seeking to improve their audit work andassociated processes of practice management. Over time, inspections have increasinglyfocused on assessing whether procedures and controls were being operated properlyand/or tailored appropriately to deal with non-standard situations (see ICAEW, 2002b,p. 63).


839

Continuing indications of the growing regulatory discourse centred on thepromotion and monitoring of audit quality can be found in the establishment in the UKin 2005 of the Audit Quality Forum (AQF). The AQF is convened by the ICAEW butcomprises leading representatives from the accounting profession, investor groups,banks, regulators and government. Its initial focus addressed topics such ascompetition and choice in the audit market (a topic subsequently taken up by theDepartment of Trade and Industry (DTI) and the Financial Reporting Council (FRC) –see below), the transparency and quality of auditing procedures, including the right forshareholders to question the auditor, enhanced disclosures regarding the contractualterms of the audit, the name of the partner responsible for the audit and the content ofauditor resignation letters, and the relationship between audit quality and auditorliability. It has subsequently published papers on the purpose of the audit,principles-based auditing standards, making global standards local and auditorreporting (for more details on the AQF work programme and associated publications,see www.icaew.com/index.cfm?route ¼ 125705)[13]. The FRC has also recently clearlyemphasised its own interest and commitment to overall standards of audit quality,issuing a discussion paper on the subject of “promoting audit quality”, seeking viewsas to whether it was felt that all was being done to maintain and enhance the quality ofaudits (see FRC, 2006b).

The DTI/FRC commissioned Oxera (2006) report on the level of competition withinthe UK auditing services market and the resulting responses both from regulators andinstitutional investors reiterated the significance of the importance of market choice toaudit quality and the continuing desires for enhanced levels of visibility/transparencyof audit quality to enhance client choice. Linking audit quality to market choice, theOxera report identified significant barriers to entry in the audit market associated withlarge companies, with the Big Four audit firms being responsible for the audits of 97per cent of the FTSE 250 and any significant entry into this market by non-Big fouraudit firms likely to be uneconomic unless market conditions and perceptions change:

The loss of another Big Four firm (four-to-three) would exacerbate problems around auditorchoice, requiring regulators to make exceptions to auditor independence rules. A lack ofaudited accounts in the event of a Big Four firm exit would be a significant concern forinvestors, who also worry about the consequences for audit quality of a further increase inaudit market concentration (DTI/Oxera, 2006, p. i).

In issuing a consultation paper on the findings and implications of the Oxera study, theUK’s Professional Oversight Board (POB, 2006a, b) emphasised that a restricted degreeof market choice may well represent a risk to audit quality and competitively pricedauditing. Given audit’s stated centrality to a well functioning capital market, the POBpaper sought to stimulate public debate on the nature of risks to the effectiveness of theaudit market and possible ways of mitigating these risks. Responses to the paper frominstitutional investors have also have echoed issues regarding audit quality,particularly its visibility. Hermes, one of the largest pension fund managers in the Cityof London, exemplified such views in arguing that a lack of visibility on audit qualitystifles innovation, commodifies audit and drives competition down to issues of price,which in turn generates barriers to entry. Overall, the written responses to Oxerareinforced the contemporary importance of quality and visibility of auditing practice,not just from the perspective of audit regulators or audit firms but also from a marketbased perspective, incorporating the views of a range of key stakeholder groups[14].

AAAJ20,6

840

Internationally, the pursuit of audit quality has figured centrally in the formalpolicy remit of the International Forum of Independent Audit Regulators (IFIAR),formed in September 2006 and now having a membership of independent auditregulatory bodies from 22 countries. At its first meeting (Tokyo, March, 2007), IFIAR’sagenda was dominated by the issue of audit quality, including discussion of the driversof audit quality, the availability and sustainability of quality audits (given existingmarket conditions), audit inspection and the global promotion of audit quality[15].

In summary terms, this dominant discourse of audit quality can be seen to have fivekey dimensions: regulatory concerns with the “independence” of audit, post-Enron,which found expression in new legislative or supervisory provisions governing thestructure of audit regulatory regimes; new audit practice standards; a greater emphasison the role of inspection in delivering enhanced transparency and visibility of auditpractices; a renewed commitment to providing a competitive and sustainable marketfor audit services; and the advocacy of new audit methodologies in which calls forevidence and documentation of audit quality have deposed prior concerns withbusiness risk and adding value services. Figure 2 diagrammatically illustrates themain elements of this discourse of audit quality.

Figure 2.Audit quality and the

audit field


841

In the next section we take our analysis of the field of audit and associated auditdiscourse to a textual examination of the technical audit methodologies – focusing,specifically, on the audit methodologies of KPMG as articulated in texts published in1997 and 2005.

3.3. A case study of textual practice: KPMG’s audit methodology 1997 and 2005Our concern in this section is to explore the extent to which the above notedtransformations in the audit field are evident in formal audit texts outlining thetechniques and methodologies of audit. The publication in 2005 by KPMG of a revisedperspective on audit methodology, The 21 st Century Public Company Audit (see Bellet al. (2005) – henceforth KPMG2005) allows for a consideration of the impact thatregulatory shifts in the audit field have had on methodological discourse as reflectedpreviously in KPMG’s 1997 statement on Auditing through a Strategic Systems Lens(Bell et al., 1997 – henceforth KPMG1997)[16]. As outlined in the previous section, thenarrative of audit methodologies in the late 1990s clustered around the concept ofbusiness risks and analysis of strategy as modes of audit planning. Our first focus wasthus to examine whether this vocabulary was still central to KPMG’s newmethodology.

As the keyword count in Table I indicates, in the 2005 (KPMG2) monograph muchless textual emphasis is given to terms such as strategy and related words (strategy,strategies, strategically, strategic) in explaining KPMG’s audit methodology. The termrisk (risks, risk-assessment) continues to play a significant role in the articulation of themethodology in KPMG2005 but it is rarely qualified with the adjective business –unlike in KPMG1997 where terms such as strategic risk and business risk serve centralexplanatory roles. The radical innovation claimed for KPMG’s “new” methodology in1997 is indicated by the prevalence of terms like “traditional” in KPMG1997 –distinguishing the strategic-systems audit from old style compliance audit. Termssuch as “new”, in relation to descriptions of the methodology, are also more prevalentin KPMG1997 (Table II).

KPMG1997 KPMG2005

Tradition, traditional 23 3New 82 43Strateg * (strategy, strategic, etc.) 264 45Risk * 287 353Business 496 104

Table I.Keyword differences intwo KPMG auditmethodologymonographs: strategyand risk

KPMG1997 KPMG2005

Business process, -es 63 13Business strategy 19 0Business risk 81 10Audit risk 17 27

Table II.Keyword differences intwo KPMG auditmethodologymonographs: risk andbusiness concordances

AAAJ20,6

842

Looking at the concordances for risk, although the term still occupies a central place inthe discussion of the 2005 methodology, its usage is clustered around terms such as“internal”, “fraud” and in particular “assessment”, signalling the role of the word “risk”in contexts that refer to conventional audit notions of “audit risks” (inherent, control,detection) rather than “business” or “strategic” risks. In KPMG2005, the word businessis used mainly to qualify nouns such as “managers”, “management”, “representations”,“environment”, “organisations” or just stands as a noun. However, the word-couple ofbusiness risk or business risks occurs just 10 times in total in KPMG2005. InKPMG1997, the word “business” is not only much more prevalent but also normallyacts as the qualifier to terms like “risk” (81 instances), “process”, “strategy”, “model”and “measurement”. The term business risk is clearly a much more significantmethodological element in KPMG1997 than it is in KPMG2005.

Less obvious, however, is the relative scarcity of the term client in KPMG2005. AsAnderson-Gough et al. (1998) argued, “client” is one of the more ambiguous terms ineveryday auditor discourse. Although legally the term “client” refers to the owners forwhom the auditors are appointed to conduct an audit, normally the client is used as amore general term, incorporating not just shareholders but also the management onwhose financial reports the auditors are commenting. Indeed, in everyday auditlanguage, auditors frequently deploy the terms “client” to refer to the management andstaff of the organisation being audited (see Humphrey and Moizer, 1990).

In KPMG1997, the word “client” is ubiquitous and generally encompasses bothmanagement and shareholders – suggesting a harmony of interest. KPMG2005, however,deploys this word much less frequently, with the main category-grouping of actors in themonograph (apart from auditor) being “manager, management”. Although the usage ofthe term “manager” is roughly equal across the two texts (KPMG1997, p. 183; KPMG2005,p. 163), the term “client” almost disappears from KPMG2005. In contrast, as Table IIIindicates, KPMG1997 has over 200 usages of either “client” or “clients”.

The word “value” is not as abundantly dispersed in KPMG1997 as might have beenexpected, particularly in comparison to related KPMG promotional material (such asElliott et al., 1999). Nevertheless, it is notable that the term value is only used inKPMG2005 to refer to the “value of audit” or financial statements more generally,whereas in KPMG1997 it is linked to “value creating” as in “value creating strategies”and other contexts in which business value creation is seen as central to the businessrisk assessment process. Terms such as “market” and “customer” are similarly moreprevalent in KPMG1997.

In KPMG2005, a much greater importance is attached to issues surrounding theaccumulation of audit evidence to support audit opinions and assessments of “auditrisk”. As Table I shows, the word evidence occurs to a negligible degree in KPMG1997,

KPMG1997 KPMG2005

Client 208 13Manage * 179 163Manager, -s 14 12Market(s) 51 12Choice 6 2Customer 53 16

Table III.Keyword differences in

two KPMG auditmethodology

monographs: managerand client


843

whilst in KPMG2005 it is referred to nearly 400 times. That is not to say thatKPMG1997 has no concern with “evidence” in audit but that it asserts the need to haveevidence, rather than outlining the approaches and methods through which evidence isto be generated and validated.

In contrast, in KPMG2005 concordances for the word “evidence” show that it isoften clustered with terms such as “triangulation”, “sources”, “direct”, “indirect”,“acquire” (and “acquiring”) that indicate a more focused concern with due auditprocess than KPMG1997. Whilst a similar focus with risk remains from KPMG1997, inKPMG2005 the use of audit risk assessments in setting up audits, testing controls andundertaking substantive tests is much more central – with particular reference to the“validity” and “robustness” of types of information and sources. Words associatedwith the term “test” occur in KPMG2005 almost four times more frequently than inKPMG1997 (96 and 26). Other terms such as documentation and standards(standardisation) also occur more frequently in KPMG2005 than in KPMG1997,exemplifying the new centrality of the concern with audit process and compliance.

Regulation (regulatory) words do occur marginally more frequently in KPMG1997,but they appear mainly in the context of discussions of clients’ strategic businessenvironments. In KPMG2005, regulation words refer more often to audit andaccounting regulators. Fraud is discussed frequently in KPMG2005, but is hardlymentioned in KPMG1997. However, the impact of internal control discoursespost-Enron is evident in the KPMG2005 monograph vis-a-vis KPMG1997. The termcontrol is much more strongly associated with management control in the value-addedaudit discourse than that of audit quality (Table IV).

Given this greater focus on the collection of audit evidence, it is highly symbolic thatthe term audit or auditor appears nearly twice as much in KPMG2005 than it does inKPMG1997 (874 to 478). KPMG2005 is much more concerned with the auditor’sengagement in the practice of audit testing rather than in terms of advising businesses.It is also more concerned with notions of audit quality, compliance and levels of testing.The term quality appears almost twice as frequently in KPMG2005 than KPMG1997.Most significantly, the term quality in KPMG2005 signals audit quality (the majority ofinstances of the word quality refer to audit) whilst in KPMG1997 quality refersexclusively to client issues such as product quality, earnings quality, TQM, strategies,management. In KPMG1997, quality is never used in the context of “audit quality”(Tables V and VI).

KPMG1997 KPMG2005

Evidence 26 384Test 26 96Triangulat * 0 67Control 116 189Document * 7 30Standard * 13 38Information 87 60Management control 7 1Internal control 3 36Fraud 6 85

Table IV.Keyword differences intwo KPMG auditmethodologymonographs: auditevidence words

AAAJ20,6

844

In summary, the above keyword counts confirm a discursive shift in the terms andcategories that dominate the discussion of KPMG’s technical audit methodology.KPMG1997 highlights a methodology that was centrally concerned with making auditvaluable as a business tool – creating and adding further value to traditional audit.KPMG2005 demonstrates the (current) focus on audit procedures, evidence,triangulation, assessment and auditor-management relationships – the centraldiscursive construction of which is the creation and validation not of “value” in aneconomic sense, but of “quality” in a verification sense. Quality in KPMG2005 residesin an audit that is well documented, considers multiple sources of evidence and theparties that generate different kinds of evidence, and attempts to triangulate auditevidence through risk assessments, controls testing and substantive tests oftransactions and balances.

The shifts in textual emphasis from discussing audit as a “new” and non-traditionalvalue creating practice for “clients” towards a more evidence-based practice in thename of audit quality, is consistent with the changes noted in the organisational field ofaudit. KPMG1997 demonstrates the linkages between audit texts and normativesources of authority in the audit field: business and management knowledgeemphasising the role of adding value to the business and the importance of strategicanalysis to management control. KPMG1997 both reflects and enables these practicesby rationalising and legitimising a view of audit as a value creating “productive”practice. KPMG’s audit methodology in 2005 reflects a different and, in some sense,more traditional conception of the audit practice ideal. By focusing upon auditprocedures, testing and the triangulation of evidence, KPMG’s new audit methodologymatches a new regulatory environment in which state agencies, professional bodiesand supra-national regulatory agencies increasingly seek more transparent indicationsof audit quality in the market for audits. Business risk is downplayed while auditquality is examined, explored and rationalised through appropriate audit evidence.

Concluding commentsSpecific audit discourses gain momentum at particular points in time, reflecting andprivileging the current aims of the audit profession and dominant conceptions of keyproblematics in the wider organisational field of audit. Talk of change, in and of itself,however, needs to be treated carefully: As Power (2000) asserted, in one of thequotations that opened this paper, it is dangerous to equate “talk” of change withchange at the level of audit practice. We agree with this in the sense that what people

KPMG1997 KPMG2005

Audit þ quality 0 30Service, product or support þ quality 14 4

Table VI.Keyword differences in

two KPMG auditmethodology monographs:

quality concordances

KPMG1997 KPMG2005

Auditor 478 874Value 36 8Quality 38 65

Table V.Keyword differences in

two KPMG auditmethodology

monographs: value andquality


845

do and what they say they do are not the same. Audit practices and methodologies are,however, constructed partly through discourse (Philips et al., 2004).

This paper demonstrates the value of studying how the pursuit of practice change isconveyed, presented, reflected in and, potentially, enabled through discursive, textualconstructions. By comparing discourses of audit methodologies pre- and post-Enron, ithas situated the changing categories and concepts of audit methodologies in theirwider, organisational field and highlighted significant dimensions of, or pressurepoints for, change in audit practices. In studying how audit is shaped within networksof relationships in the audit field and how these shift across time, our analysis of thecontent, concordances and narratives contained in the 1997 and 2005 KPMGmethodological monographs is particularly pertinent. It demonstrates how wider shiftsin the audit field are reflected in discursive (re)constructions of audit at the level of theaudit firm and shows how audit discourse has switched from one of “business value” toone of “audit quality”. As such, the paper provides strong evidence that methodologicaldiscussions and developments in audit during the last decade have not always focusedcentrally on “audit quality”, as has been claimed elsewhere (e.g., see Peecher et al.,2007). To recall just one finding of our textual analysis, in KPMG1997, the word qualityis never used in the context of “audit quality”, while the latter term appears 30 times inKPMG2005. Our study has also illustrated how conceptualisations of “risk” are nowclearly appended to the term “audit risk”, as opposed to the “business” or “strategic”risks which were central to the mid-1990s methodological leanings of most of the bigaudit firms. A concern with “adding value” has been replaced by a discursive emphasison an evidence-led audit process, with the core rationale centred on achieving “auditquality”. The emphasis on choices of testing, evaluation of sources, triangulation ofevidence, and completion of documentation are all symptomatic of a wider institutionalshift from the potentialities of “value creation” in audit to the affirmation ofcompliance, process and documentation – and the production of audits that canthemselves be auditable by today’s reinforced inspection and regulatory regimes.

The “re-invention” of audit pursued through BRA may well have offered a usefulsource of internal legitimacy to the audit services for several of the Big Four firms (seeRobson et al., 2007). However, a developing body of evidence suggested that BRAmethodologies have struggled in practice to displace reliance on prior audit approachesor have proved less popular in particular geographical regions, notably in Europe (seeCurtis and Turley, 2007; Toffler and Reingold, 2003). Additionally, Jeppesen’s (2005)analysis of the internal organisational structures of the larger accounting firms hasargued that BRA methodologies are not particularly compatible with audit approachesclaiming to be rooted in the “core conceptual space of business strategy” (Power, 2000,p. 2). Jeppesen (2005, p. 27) went on to conclude that the profession and its regulatorsmay ultimately decide that:BRA is not the future for auditing and return to an auditapproach that relies more on testing transactions, an “Audit Classic” to paraphrase therecent marketing fad of reintroducing old products.Revised international auditingstandards have chosen a form of wording that also accommodates more traditionalaudit-risk methodologies (see IAASB, 2003a, b, c, d, e; Robson et al., 2007; Curtis andTurley, 2005). Nevertheless, the unsettled or competing form of the discursive arena iswell illustrated by regulatory reports from the PCAOB (2005, 2007) which have beencritical of the lack of application by some audit firms of a risk-based approach inassessing company internal controls.

AAAJ20,6

846

It remains open what impact such efforts and initiatives are having on theoperational conduct of day-to-day auditing practice. There is a continuing need formore light to be cast on the everyday practices not just of auditors but also of thoseregulating the production of auditing services. Our ideal for this paper is that it maystimulate new lines of inquiry into the conceptualisation and recognised fundamentaldimensions of audit “practice”. We hope that it will promote investigations andenhanced understanding of the contemporary audit arena not just in terms of thepractical utilisation of audit methodologies and associated techniques, but also inrelation to the discourses that serve to carry them and help to promote (or hinder)changes in practice. The discursive analysis provided in this paper has shown theparticular value of combining neo-institutional assessments of the organisational fieldof audit with the study of key auditing texts – enabling a clear delineation of shiftingpatterns of methodological development and demonstrating the significance of therelationship between discourse and practice. It is evident that talk of “business risk”and the “value added” audit are no longer the terms through which changes in theaudit field are likely to be enabled, even if audit practitioners and theoreticians retain aresiding belief in the strength of related methodological approaches and associatedeconomic or business justifications. Audit “talk” and texts are now dominated by adiscourse of “audit quality” and to be a serious actor in the audit field one has to drawupon the audit quality discourse to promote or resist specific agendas, whether they beproposed audit practices, new regulations, changes in market or firm structures, oreducational and training initiatives.

Notes

1. Of these 70 interviews, 15 date from 2001-2002 and the immediate aftermath of a group ofscandals perhaps best considered collectively under the phrase “Enron” (but not confinedsimply to that one company). The remaining 55 interviews have been conducted fromSeptember 2005 to date.

2. The textual analysis software package we used to examine keyword counts andconcordances was TextSTAT-2. The two texts that we examine closely (see Bell et al., 1997,2005), each have a word count of around 28,000 words (KPMG1997 – 27411; KPMG2005 –29033) and, hence, the individual word counts serve adequately as numerical bases forcomparisons across the two texts.

3. An approach similar to that used by Gephart (1993).

4. The work here was facilitated by the use of textual analysis software, Nud *Ist. As well ascounting words and concordances, this software allowed us to conduct a relational analysisto interrogate clustering (thematic groupings) of words and concepts across the two texts.Nud *Ist also allows the generation of concept maps that provide a visualisation of thecentrality (relative frequency) of concepts and the interrelationships between key concepts ina text.

5. Interviewees are coded to protect anonymity, where AP refers to rank within theorganisation (i.e. Audit Partner), the first number denotes the reference to the individual’sfirm and the second refers to the individual. Thus AP1: 3 refers to an audit partner in firm 1who was the third person we interviewed in this firm.

6. The foundations for introducing sampling (Carpenter and Dirsmith, 1993) as an auditprocedure do not seem very different to that of business risk auditing. The narrative offeredin the case of sampling was that: “as businesses grew in sise so did the number oftransactions they conducted. Auditors quickly realised that they could not audit, except in


847

the most superficial manner, every transaction. The audit would simply be expensive.Furthermore, there was no need to look at all transactions if the company itself was engagedin a process of self-checking through its own internal control systems” (Power, 1992, p. 71).

7. This former audit partner now worked in corporate recovery.

8. Formerly known as the Professional Oversight Board for Accountancy (POBA).

9. In focusing on internal audit quality reviews, the AIU called for more rigour in gradingsystems, so that audits with significant deficiencies were more readily highlighted andrecommended the introduction of a mechanism for identifying audits of genuinely highquality (as against adopting a relatively low threshold above which audits would score thehighest quality grade) (para. 4.5). The AIU’s most recent inspection report (see AIU, 2007, p.6) notes an improved quality of documentation on reviewed files but, significantly,emphasises that there has been no clear improvement in the sufficiency of documentationsupporting key audit judgments.

10. This emphasised good leadership in the delivery and maintenance of quality audits,requiring audit firms to appoint a senior partner to set the firm’s quality control policy andprocedures and to monitor compliance.

11. For a practical guide covering implementation issues for accounting firms implementingISQC 1, see ICAEW (2006).

12. AD refers to the position of audit director which is this firm was at a level between seniormanager and partner.

13. The AICPA, together with eight of the largest US accounting firms, recently set up theCenter for Audit Quality to “serve investors, public company auditors and themarkets. . .(and).. to foster confidence in the audit process..(and)..make public companyaudits even more reliable and reliable for investors” (see http://www.thecaq.org/about/index.htm).

14. Following this consultation process, the FRC established a market participants group toadvise it on possible ways by which market participants could mitigate risks arising fromthe nature of the market for auditing services. The interim report of the group (see FRC,2007) emphasised that any action taken to improve the degree of choice in the audit marketmust be subject to the overriding need to protect audit quality. It also emphasised that theFRC should continue in its efforts to promote understanding of audit quality and enhancedtransparency regarding the capabilities of individual audit firms (FRC, 2007, p. 7).

15. See www.asic.gov.au/asic/asic.nsf/byheadline/Meeting þ of þ the þ International þForum þ of þ Independent þ Audit þ Regulators, þ Tokyo, þ 23 þ March þ 2007?openDocument).

16. Our choice of KPMG’s methodology is not intended to highlight or judge this firm’s role inparticular in audit changes. Rather to their credit, KPMG seem to the most open of the BigFour to discussion of their audit methodologies and hence the key issue in our choice is oneof access.

References

Anderson-Gough, F., Grey, C. and Robson, K. (1998), “Work hard, play hard: an analysis oforganizational cliche in two accountancy practices”, Organization, Vol. 5 No. 4, pp. 565-92.

Anderson-Gough, F., Grey, C. and Robson, K. (2000), “In the name of the client: the service ethicin two professional service firms”, Human Relations, Vol. 53 No. 9, pp. 1151-74.

Anderson-Gough, F., Grey, C. and Robson, K. (2001), “Tests of time: organizationaltime-reckoning and the making of accountants in two multi-national accounting firms”,Accounting, Organizations and Society, Vol. 26 No. 2, pp. 99-122.

AAAJ20,6

848

Audit Inspection Unit (AIU) (2005), 2004/5 Audit Quality Inspections, Public Report, ProfessionalOversight Board for Accountancy, Financial Reporting Council, London.

Audit Inspection Unit (AIU) (2006), 2005/6 Audit Quality Inspections, Public Report, ProfessionalOversight Board, Financial Reporting Council, London.

Audit Inspection Unit (AIU) (2007), 2006/7 Audit Quality Inspections, Public Report, ProfessionalOversight Board, Financial Reporting Council, London.

Bagshaw, K. (1999), “The key to a good audit”, Accountancy, No. 124, p. 96.

Barrett, M., Cooper, D.J. and Jamal, K. (2005), “Globalization and the coordinating of work inmultinational audits”, Accounting, Organizations and Society, Vol. 30, pp. 1-24.

Barry, D., Carroll, B. and Hansen, H. (2006), “To text or context? Endotextual, exotextual, andmulti-textual approaches to narrative and discursive organizational studies”, OrganizationStudies, Vol. 27 No. 8, pp. 1091-110.

Bell, T.B., Peecher, M. and Solomon, I. (Eds) (2002), Cases in Strategic Systems Auditing, KPMGand University of Illinois at Urbana Champaign, Business Measurement CaseDevelopment and Research Program, KPMG, New York, NY.

Bell, T.B., Peecher, M.E. and Solomon, I. (2005), The 21st Century Public Company Audit:Conceptual Elements of KPMG’s Global Audit Methodology, KPMG International, Geneva.

Bell, T.B., Marrs, F.O., Solomon, I. and Thomas, I. (1997), Auditing Organizations through aStrategic Systems Lens, KPMG LLP, Montvale, NJ.

Berg, B. (2004), Qualitative Research Methods for the Social Sciences, 5th ed., Allyn & Bacon,Boston, MA.

Berger, P. and Luckmann, T. (1966), The Social Construction of Reality: A Treatise in theSociology of Knowledge, The Penguin Press, London.

Bourdieu, P. (1977), Outline of a Theory of Practice, Cambridge University Press, Cambridge.

Carpenter, B. and Dirsmith, M. (1993), “Sampling and the abstraction of knowledge in theauditing profession: an extended institutional theory perspective”, Accounting,Organizations and Society, Vol. 11 No. 6, pp. 41-63.

Cicourel, A.V. (1982), “Notes on the integration of micro- and macro-levels of analysis”,in Knorr-Cetina, K. and Cicourel, A.V. (Eds), Advances in Social Theory and Methodology,Routledge, London, pp. 51-80.

Coupland, N., Sarangi, S. and Candlin, C.N. (2001), Sociolinguistics and Social Theory, Longman,Harlow.

Covaleski, M.A., Dirsmith, M.W. and Rittenberg, L. (2003), “Jurisdictional disputes overprofessional work: the institutionalization of the global knowledge expert”, Accounting,Organizations and Society, Vol. 28 No. 4, pp. 323-56.

Cruver, B. (2003), Enron: Anatomy of Greed – The Unshredded Truth from an Enron Insider,Arrow Books, London.

Curtis, E. and Turley, S. (2005), “From business risk audits to audit risk standards”, paperpresented at the European Accounting Association Annual Congress, Goteborg, May.

Curtis, E. and Turley, S. (2007), “The business risk audit – a longitudinal case study of an auditengagement”, Accounting, Organizations and Society, Vol. 32 Nos 4-5, pp. 439-61.

DiMaggio, P.J. and Powell, W.W. (1983), “The iron cage revisited: institutional isomorphism andcollective rationality in organizational fields”, American Sociological Review, Vol. 48, April,pp. 147-60.

Drew, P. and Heritage, J. (1992), Talk at Work: Interactions in Institutional Settings, CambridgeUniversity Press, Cambridge.


849

Drori, G.S. (2006), “Governed by governance: the institutionalization of governance as a prism fororganizational change”, in Drori, G.S., Meyer, J.W. and Hwang, H. (Eds), Globalization andOrganization: World Society and Organizational Change, Oxford University Press, Oxford.

Eichenwald, K. (2005), Conspiracy of Fools: A True Story, Broadway Books, Random House, NewYork, NY.

Eilifsen, A., Knechel, R.W. and Wallage, P. (2001), “Application of the business risk audit model:a field study”, Accounting Horizons, Vol. 15 No. 3, pp. 193-207.

Elliott, R.K., Rasmussen, T.A., Rucker, S.C., Strange, J.T. and Williamson, A.L. (1999),The Financial Statement Audit: Why a New Age Requires an Evolving Methodology,Assurance and Advisory Services, KPMG LLP, New York, NY.

Fairclough, N. (1989), Language and Power, Longman, London.

Fairclough, N. (1992), Discourse and Social Change, Polity Press, Cambridge.

Fairclough, N. (2005), “Discourse analysis in organization studies: the case for critical realism”,Organization Studies, Vol. 26 No. 6, pp. 915-39.

Fischer, M.J. (1996), “Real-izing the benefits of new technologies as a source of audit evidence:an interpretive field study”, Accounting, Organizations and Society, Vol. 24, pp. 333-62.

Fogarty, T.J. (1996), “The imagery and reality of peer review in the US: insights frominstitutional theory”, Accounting, Organizations and Society, Vol. 21 Nos 2/3, pp. 243-67.

Francis, J. (1990), “After virtue? Accounting as a moral and discursive practice”, Accounting,Auditing & Accountability Journal, Vol. 3 No. 3, pp. 5-17.

Francis, J. (1994), “Auditing, hermeneutics and subjectivity”, Accounting, Organizations andSociety, Vol. 19 No. 3, pp. 235-69.

Franzosi, R. (2004), From Words to Numbers: Narrative, Data and Social Science, CambridgeUniversity Press, Cambridge.

Franzosi, R. and Mohr, J. (1997), “New directions in formalization and historical analysis”, Theoryand Society, Vol. 26 Nos 2-3, pp. 133-60.

Financial Reporting Council (FRC) (2006a), “Discussion paper: choice in the UK audit market”,FRC, London.

Financial Reporting Council (FRC) (2006b), “Discussion paper: promoting audit quality”, FRC,London.

Financial Reporting Council (FRC) (2007), Choice in the UK Audit Market: Interim Report of theMarket Participants Group, FRC, London.

Foucault, M. (1972), The Archaelogy of Knowledge, Pantheon Books, New York, NY (trans. bySheridan Smith, A.M.).

Gephart, R.P. (1993), “The textual approach: risk and blame in disaster sensemaking”,The Academy of Management Journal, Vol. 36 No. 6, pp. 1465-514.

Giddens, A. (1984), The Constitution of Society, Polity, Cambridge.

Guillen, M.F. (2001), “Is globalization civilizing, destructive or feeble? A critique of five keydebates in the social-science literature”, Annual Review of Sociology, Vol. 27, pp. 235-60.

Gwilliam, D.R. (2003), “Audit methodology, risk management and non-audit services: what canwe learn from the recent past and what lies ahead?”, Briefing 05:03, Centre for BusinessPerformance, Institute of Chartered Accountants in England and Wales, London.

Harper, R. (1988), “Not any old numbers: an examination of practical reasoning in anaccountancy environment”, The Journal of Interdisciplinary Economics, Vol. 2 No. 2,pp. 297-306.

AAAJ20,6

850

Harper, R. (1989), “An ethnography of accountants”, PhD thesis, Department of Sociology,Manchester University, Manchester.

Humphrey, C. (2001), “Audit research: looking beyond North America”, Critical Perspectives onAccounting, Vol. 12 No. 3, pp. 369-76.

Humphrey, C. and Moizer, P. (1990), “From techniques to ideologies: an alternative perspective onthe audit function”, Critical Perspectives on Accounting, Vol. 1 No. 3, pp. 217-38.

Humphrey, C., Bowerman, M., Owen, D. and Stride, C. (2002), The Contemporary Nature andSignificance of the External Audit Function: An Empirical Survey of the Views of ICAEWMembers, Chartered Accountants’ Trustees Limited for the P.D. Leake Trust, Centre forBusiness Performance, ICAEW, London.

Institute of Chartered Accountants in England and Wales (ICAEW) (1996), Added ValueProfessionals: Chartered Accountants in 2005, ICAEW, London.

Institute of Chartered Accountants in England and Wales (ICAEW) (1997), Financial Reportingof Risk: Proposals for a Statement of Business Risk, ICAEW, London.

Institute of Chartered Accountants in England and Wales (ICAEW) (1999), No Surprises:The Case for Better Risk Reporting, ICAEW, London.

Institute of Chartered Accountants in England and Wales (ICAEW) (2001), Towards BetterAuditing, 3rd ed., Auditing and Assurance Faculty, ICAEW, London.

Institute of Chartered Accountants in England and Wales (ICAEW) (2002a), No Surprises:Working for Better Risk Reporting, ICAEW, London.

Institute of Chartered Accountants in England and Wales (ICAEW) (2002b), Audit Quality,Auditing and Assurance Faculty, ICAEW, London.

Institute of Chartered Accountants in England and Wales (ICAEW) (2006), Quality Control in theAudit Environment: A Practical Guide for Firms on Implementing ISQC (UK and IrelandNo. 1), Audit and Assurance Faculty, ICAEW, London.

International Auditing and Assurance Standards Board (IAASB) (2003a), IAASB Action Plan2003-2004, IAASB, New York, NY.

International Auditing and Assurance Standards Board (IAASB) (2003b), International Standardon Auditing 200. Objective and Principles Governing an Audit of Financial Statements,IAASB, New York, NY.

International Auditing and Assurance Standards Board (IAASB) (2003c), International Standardon Auditing 315. Understanding the Entity and its Environment and Assessing the Risks ofMaterial Misstatement, IAASB, New York, NY.

International Auditing and Assurance Standards Board (IAASB) (2003d), International Standardon Auditing 330. The Auditor’s Procedures in Response to Assessed Risks, IAASB, NewYork, NY.

International Auditing and Assurance Standards Board (IAASB) (2003e), International Standardon Auditing 500. Audit Evidence, IAASB, New York, NY.

Jeppesen, K.K. (1998), “Reinventing auditing, defining consulting and independence”, EuropeanAccounting Review, Vol. 7 No. 3, pp. 517-39.

Jeppesen, K.K. (2005), “The risk of business risk audits – are big audit firms organised to meetthe risks that face them?”, paper presented at the 3rd EARNET Symposium, Amsterdam,27-29 October.

Khalifa, R. (2004), “Gendered divisions of expert labour: professional specialisms in UKaccountancy”, PhD thesis, University of Manchester, Manchester.


851

Knechel, W.R. (1997), “The business risk audit: origins, obstacles and opportunities”, Accounting,Organizations and Scoiety, Vol. 32 Nos 4-5, pp. 383-408.

Kosmala, K. (2005), “Insights from Ricoeur’s hermeneutics on best practice in professionalservice firms: on perpetual myth creation?”, Qualitative Sociology Review, Vol. 1 No. 1,pp. 31-50.

Kosmala MacLullich, K. (2003), “The emperor’s new clothes? New audit regimes: insights fromFoucault’s technologies of the self”, Critical Perspectives on Accounting, Vol. 14 No. 8,pp. 791-811.

Krippendorf, K. (2004), Content Analysis, Sage, London.

Lemon, W.M., Tatum, K.W. and Turley, W.S. (2000), Developments in the Audit Methodologies ofLarge Accounting Firms, ABG Publications, London.

Llewellyn, S. (1993), “Working in hermeneutic circles in management accounting research: someimplications and applications”, Management Accounting Research, Vol. 4 No. 3, pp. 231-49.

McNair, C.J. (1991), “Proper compromises: the management control dilemma in public accountingand its impact on auditor behaviour”, Accounting, Organisations and Society, Vol. 16 No. 7,pp. 635-53.

Meyer, J.W. and Rowan, B. (1977), “Institutionalised organizations: formal structures as mythand ceremony”, American Journal of Sociology, Vol. 83 No. 2, pp. 340-63.

Mohr, J. (1998), “Measuring meaning structures”, Annual Review of Sociology, Vol. 24 No. 1,pp. 345-70.

Morrison, M.A. (2004), “Rush to judgment: the lynching of Arthur Andersen & Co.”, CriticalPerspectives on Accounting, Vol. 15 No. 3, pp. 335-75.

O’Connell, B.T. (2004), “Enron.con ‘He that filches from me my good name . . . makes me poorindeed’”, Critical Perspectives on Accounting, Vol. 15 Nos 6/7, pp. 733-49.

Oxera (2006), Competition and Choice in the UK Audit Market, report prepared for theDepartment of Trade and Industry and Financial Reporting Council, Oxera Consulting,Oxford, April.

Peecher, M.E., Schwartz, R. and Solomon, I. (2007), “It’s all about audit quality: perspectives onstrategic-systems auditing”, Accounting, Organizations and Society, Vol. 32 Nos 4-5,pp. 383-408.

Pentland, B. (1993), “Getting comfortable with the numbers: auditing and micro-production ofmacro-order”, Accounting, Organizations and Society, Vol. 18 Nos 7/8, pp. 605-22.

Pentland, B.T. (2000), “Will auditors take over the world? Program, technique and theverification of everything”, Accounting, Organizations and Society, Vol. 25 No. 3,pp. 307-12.

Pentland, B. and Carlile, P. (1996), “Audit the taxpayer, not the return: tax auditing as anexpression game”, Accounting, Organizations and Society, Vol. 21 Nos 2/3, pp. 269-87.

Perrin, S. (1998), “Spot the difference”, Accountancy, June, pp. 84-5.

Philips, N., Lawrence, T.B. and Hardy, C. (2004), “Discourse and institutions”, Academy ofManagement Review, Vol. 29 No. 4, pp. 635-52.

Potter, J. and Wetherell, M. (1987), Discourse and Social Psychology, Sage, London.

Power, M. (1992), “From common sense to expertise: the pre-history of audit sampling”,Accounting, Organizations and Society, Vol. 17 No. 1, pp. 37-62.

Power, M. (2000), The Audit Implosion: Regulating Risk from the Inside, ICAEW, London.

Power, M. (2003), “Auditing and the production of legitimacy”, Accounting, Organizations andSociety, Vol. 28 No. 4, pp. 379-94.

AAAJ20,6

852

Prior, L. (2003), Using Documents in Social Research, Sage, London.

Professional Oversight Board (POB) (2006a), Reporting on Audit Quality Monitoring –A Consultation Document, Financial Reporting Council, London.

Professional Oversight Board (POB) (2006b), Transparency Reporting by Auditors of PublicInterest Entities – A Consultation Document on the Implementation of the 8th CompanyLaw Directive on the Statutory Audit of Annual Accounts, Financial Reporting Council,London.

Professional Oversight Board (POB) (2007), Reporting on Audit Quality Monitoring –Implementing a New Approach. A Consultation Document, Financial Reporting Council,London.

Public Company Audit Oversight Board (PCAOB) (2004), Limited Inspection Reports 2003,PCAOB, Washington, DC.

Public Company Audit Oversight Board (PCAOB) (2005), Report on the Initial Implementation ofAuditing Standard No. 2: An Audit of Internal Control over Financial Reporting Performedin Conjunction with an Audit of Financial Statements, PCAOB Release No. 2005-023,PCAOB, Washington, DC.

Public Company Audit Oversight Board (PCAOB) (2006), Observations on the InitialImplementation of the Process for Addressing Quality Control Criticisms within 12Months after an Inspection Report, PCAOB Release No. 104-2006-078, PCAOB,Washington, DC.

Public Company Audit Oversight Board (PCAOB) (2007), Report on the Second-YearImplementation of Auditing Standard No. 2: An Audit of Internal Control over FinancialReporting Performed in Conjunction with an Audit of Financial Statements, PCAOBRelease No. 2007-004, PCAOB, Washington, DC.

Public Oversight Board (POB) (2000), The Panel on Audit Effectiveness: Report andRecommendations, POB, New York, NY.

Robson, K., Humphrey, C., Khalifa, R. and Jones, J. (2007), “Transforming audit technologies:business risk audit methodologies and the audit field”, Accounting, Organizations andSociety, Vol. 32 Nos 4-5, pp. 409-38.

Sarangi, S. (2001), “A comparative perspective on social theoretical accounts of thelanguage-action relationship”, in Coupland, N., Sarangi, S. and Candlin, C.N. (Eds),Sociolinguistics and Social Theory, Longman, Harlow.

Sarangi, S. and Coulthard, N. (2002), Discourse and Social Life, Pearson, Harlow.

Scott, W.R. (2001), Institutions and Organizations, 2nd ed., Sage, Thousand Oaks, CA.

Scott, W.R. and Meyer, J.W. (1994), Institutional Environments and Organizations, Sage, London.

Securities and Exchange Commission (SEC) (2005), Commission Statement on Implementation ofInternal Control Reporting Requirements, SEC, Washington, DC, available at: www.sec.gov/news/press/2005-74.htm

Sewell, W.H. Jr (1992), “A theory of structure: duality, agency and transformation”, AmericanJournal of Sociology, Vol. 98, July, pp. 1-29.

Squires, S.E., Smith, C.J., McDougall, L. and Yeack, W.R. (2003), Inside Arthur Andersen: ShiftingValues, Unexpected Consequences, Pearson Education/Financial Times Prentice-Hall,Upper Saddle River, NJ.

Suddaby, R. and Greenwood, R. (2005), “Rhetorical strategies of legitimacy”, AdministrativeScience Quarterly, Vol. 50 No. 1, pp. 35-67.

Suddaby, R. and Greenwood, R. (2006), “Institutional entrepreneurship in mature fields: the bigfive accounting firms”, Academy of Management Journal, Vol. 49 No. 1, pp. 27-48.


853

Suddaby, R., Cooper, D.J. and Greenwood, R. (2007), “Trans-national regulation of professionalservices: governance dynamics of field level organizational change”, Accounting,Organizations and Society, Vol. 32 Nos 4-5, pp. 333-62.

Swidler, A. (1986), “Culture in action: symbols and strategies”, American Sociological Review,Vol. 51, April, pp. 273-86.

Toffler, B.L. and Reingold, J. (2003), Final Accounting: Pride, Ambition, Greed and the Fall ofArthur Andersen, Broadway Books, Random House, New York, NY.

Ventresca, M. and Mohr, J. (2002), “Archival methods in organization studies”, in Baum, J.A.C. (Ed.),Companion to Organizations, Blackwells, Oxford.

Winograd, B., Gerson, J. and Berlin, B. (2000), “Audit practices at PricewaterhouseCoopers”,Auditing: A Journal of Practice & Theory, Vol. 19 No. 2, pp. 175-82.

Zeff, S.A. (2003a), “How the US accounting profession got where it is today: part I”, AccountingHorizons, Vol. 17 No. 3, pp. 189-205.

Zeff, S.A. (2003b), “How the US accounting profession got where it is today: part II”, Accounting,Horizons, Vol. 17 No. 4, pp. 267-86.

Further reading

Czarniaswka, B. (1998), A Narrative Approach to Organization Studies, Sage, Thousand Oaks,CA.

Feldman, M., Skoldberg, K., Brown, R. and Horner, D. (2004), “Making sense of stories:a rhetorical approach to narrative analysis”, Journal of Public Administration Researchand Theory, Vol. 14 No. 2, pp. 147-71.

Franzosi, R. (1998), “Narrative analysis – or why (and how) sociologists should be interested innarrative”, Annual Review of Sociology, Vol. 24 No. 1, pp. 517-54.

Grant, D. and Hardy, C. (2004), “Introduction: struggles with organizational discourse”,Organization Studies, Vol. 25 No. 1, pp. 5-13.

Iedema, R. and Wodak, R. (1999), “Introduction: organizational discourses and practices”,Discourse and Society, Vol. 10 No. 1, pp. 5-19.

Knechel, R. (2004), “The business risk audit: origins, obstacles and opportunities”, Accounting,Organizations and Society, Vol. 32 Nos 4-5, pp. 383-408.

Power, M. (1996), “Making things auditable”, Accounting, Organizations and Society, Vol. 21 Nos2/3, pp. 289-315.

Corresponding authorRihab Khalifa can be contacted at: [email protected]

AAAJ20,6

854


Social and environmentalreporting and hegemonic

discourseCrawford Spence

School of Management, University of St Andrews, St Andrews, UK

Abstract

Purpose – The purpose of this paper is to explore the construction/reproduction of capitalistdiscourse through social and environmental reporting (SER) and, from this, to consider theimplications that this may have for the function that SER serves.

Design/methodology/approach – The paper employs the discourse theory of Laclau and Mouffeto frame SER as a hegemonic practice. Laclau and Mouffe’s discourse theory is also used as a lens bywhich to interpret the findings of an empirical study exploring managerial perceptions of SERmotivations and organisational-socio-environmental interactions.

Findings – The paper finds that both SER and corporate social responsibility (CSR) are driven bynumerous motivations, although these motivations essentially form part of a business case. In turn, thenecessity of this business case appears to shape and constrain the ideologies that underpin and arecommunicated through SER.

Research limitations/implications – The debate within the SER literature around which set ofmotivations best explains the existence of SER is challenged here by the notion that the vast majorityof these motivations may be understood as falling into some sort of business case. Moreover, thisbusiness case is one that constrains the perceived function of practices such as SER and CSR. Onelimitation of the study relates to the importance of SER in wider processes of ideology constructionand dissemination. SER may be peripheral in this regard.

Practical implications – A practical implication of this paper is the recognition of the structuraland ideological impediments to fuller accountability that are faced by corporate managers.

Originality/value – The paper explores SER combining both critical theory and qualitativefieldwork. It is one of very few papers to interpret SER explicitly through the lens of discourse theory.

Keywords Social environment, Audit reports, Language, Myths


Ideologies are historical facts which must be combated and their nature as instruments ofdomination revealed . . . in order to make the governed intellectually independent of thegoverning (Gramsci, in Sassoon, 1988, p. 196).

IntroductionSocial and environmental reporting (SER), although having a long history (Hogner,1982; Maltby, 2004), has become particularly more entrenched as an organisational



The author would like to thank Jan Bebbington, David Carter, John Ferguson, Rob Gray, IanThomson and John McKernan and participants at the 2005 CSEAR Conference, St Andrews forcomments on earlier drafts of this paper. The comments of two anonymous referees alsoimproved the paper significantly. The financial assistance of the ACCA is warmlyacknowledged.

SER andhegemonic

discourse

855

Received December 2005Revised November 2006,

March 2007Accepted April 2007


Vol. 20 No. 6, 2007pp. 855-882


DOI 10.1108/09513570710830272

practice in the last 20 years or so. Several thousand companies, including many of theworld’s largest, now report social and environmental information.UNEP/SustainAbility (2004, p. 8) assert that in the ten years since they firstlaunched their annual SER survey “the number of reporting companies has exploded,the overall quality of reporting has improved considerably and the range of issuesaddressed has broadened spectacularly”. That survey goes on to state that we are inthe midst of a “transparency revolution” (UNEP/SustainAbility, 2004, p. 11).

However, many academics and civil society organisations are critical of the extentto which SER renders organisations transparent, instead suggesting that SER is drivenmore by concerns with legitimacy, stakeholder management and masking conflict thanby accountability (see, for example, Bebbington, 1997, 2001; Birkin et al., 2005; Deeganet al., 2002; Gray et al., 1987, 1995, 1996; Lehman, 1999, 2001; Milne and Patten, 2002;O’Dwyer, 2002, 2003; Owen et al., 2000, 2001; Thomson and Bebbington, 2005; Tinkerand Neimark, 1987; Tinker et al., 1991; Unerman and Bennett, 2004). As Gray (2002, p.689) notes, the principal argument for Corporate Social and Environmental Reporting(SER hereafter) must lie in its “emancipatory and radical possibilities”. This potentialis conceived here in terms of SER’s ability to expose and problematise the conflicts andantagonisms inherent in advanced capitalism (see, for example, Arnold and Hammond,1994; Bebbington, 1997; Gallhofer and Haslam, 1997a, b; Thomson and Bebbington,2005; Tinker and Neimark, 1987; Tinker et al., 1991). Given current predictionssurrounding the ecological crisis (see, for example, Meadows et al., 2003; Porritt, 2005;WWF, 2004), the active obfuscation of these conflicts and antagonisms presents itselfas a serious obstacle to any attempt to move humanity back within ecological limits.Nevertheless, some authors suggest that even though SER has been captured bybusiness, it retains some democratic potential, opening up a space for some sort oforganisational change to take place and creating possibilities for social movements toincrease pressure upon corporations (Gray, 2006; Levy, 2005; Livesey, 2002; Liveseyand Kearins, 2002).

This paper attempts to explore the motivations that underlie SER and, in doing so,explore the ideological implications of these motivations. More specifically, the paperseeks to link the motivations underlying SER with the images and representations oforganisational socio-environmental performance that are projected by SER. This isattempted by virtue of an empirical study that consisted of interviews withrepresentatives of 25 large capitalist enterprises in the UK who produce a stand-aloneSER. These interviews explored the perceived motivations for producing SER andmanagerial perceptions of conflict between economic and socio-environmental criteria.This empirical work was then interpreted using discourse theory, which, as a result ofthe empirical and theoretical analysis underlying the paper, characterises SER here asan organisational practice that discursively aligns business interests withextra-business interests. As such, and in line with prior literature (see above), it isposited from the outset of the paper that SER attempts to reduce antagonism towardbusiness from various social segments, obtaining consent for its actions and thereby(re)producing its ideological hegemony. The results of the paper represent an attemptto elucidate how SER comes to be a hegemonic practice. That is, what are the keydiscursive and material axes which frame SER within organisations and which shapethe way in which individuals think about SER. From these insights into theconstruction of SER discourse, which may illuminate to some extent what drives the

AAAJ20,6

856

process, it then may be possible to infer something about the structural constraints oncorporate accountability and the ability of individuals within organisations to escapethe ideological hegemony that supports those very same structures.

The paper proceeds as follows. The following section introduces Laclau andMouffe’s discourse theory and places it within the context of Gramscian thought. Theterm Neo-Gramscian is used subsequently throughout the paper to indicate that Laclauand Mouffe represent a development on Gramsci’s thought rather than a doctrinairereproduction. This section also interweaves Laclau and Mouffe’s discourse theory withthe SER literature, positing SER as a practice whose function is to disseminatesanitised portrayals regarding business-socio-environmental interactions. Thisconception of SER provides a context for the remainder of the paper and frames theempirical study[1]. The subsequent section delineates the research methods andmethodology employed in the paper. Semi-structured interviews were undertaken withcorporate managers and directors, exploring both corporate motivations to reportsocio-environmental information and managerial perceptions regarding conflictsbetween economic and socio-environmental criteria. This section describes the way inwhich these interviews were carried out and how the data were analysed, withparticular attention being placed on the relationship between theory and data. Thesection titled “CSR discourse” describes the results of the empirical study inconjunction with a theoretical interpretation of these results. In short, the results arebroken down into two main sub-sections: the motivations underlying SER andcorporate social responsibility (CSR); and perceived conflicts underlyingorganisational-socio-environmental interactions. These results are then synthesisedin the final discussion section along with consideration of the implication of theseresults for the study of SER.

SER and languageA discourse is, at its simplest, “a particular way of talking about and understandingthe world (or an aspect of the world)” (Phillips and Jørgensen, 2002, p. 1). The field ofdiscourse analysis is characterised by a number of different schools of thought andmethodological tensions (see, for example, Grant et al., 2004; Phillips and Jørgensen,2002; Torfing, 1999). However, underlying all forms of discourse analysis is the beliefthat our ways of talking do not neutrally reflect the world, but play an active part inshaping it. The discourse theory used in this paper is that of Laclau and Mouffe, whoare of interest principally because of their positioning within the Gramscian traditionof theorising hegemony. One of Gramsci’s contributions to Marxist theory lay inemphasising that social relations were reproduced via the cultural realm. In particular,Gramsci highlighted the influence of civil society institutions such as the church,academe and the media in cultivating ideological consent among the masses for thehegemonic, or dominant group. Hegemony rests not simply on domination or coercion,but on the ability of the hegemonic group to demonstrate moral and intellectualleadership (Levy and Egan, 2003; Gramsci, 1971). Thus, hegemony is much moresophisticated and resilient than authoritarian political systems because it rests on theconsent of the masses.

This Gramscian notion of hegemony is the departure point for Laclau and Mouffe,who look at the particular role of language in forming consent. The insights of Laclauand Mouffe in this context are of particular interest in making sense of the language

SER andhegemonic

discourse

857

that permeates SER and in inferring any hegemonic character from SER. Language isviewed by Laclau and Mouffe as constitutive of social reality. That is, discourseactively shapes the world around us by providing conceptual guidance for actions,policy prescriptions, institution building etc. In this sense, Laclau and Mouffe suggestthat discursive elements cannot be viewed as separate from non-discursive materialelements. Mouck (1995), for example, uses Laclau and Mouffe to argue that thediscourse of financial accounting has become so dominant that its implicit assumptionsabout property rights, market exchange and the corporation as a legal entity are talkedinto reality. One could extend this to argue that if financial accounting reduces allproblems to economics, activities that have malign social and environmentalconsequences begin to appear rational and desirable. In ignoring these social andenvironmental consequences financial accounting actively shapes social reality. This isa radically different view from that which presupposes that financial accountingreflects reality in an objective or truthful fashion. The post-structuralist conception ofreality that is being put forward in this paper is at odds with any notion of truthful orfaithful representation. It is presumed here that reality is “overdetermined”[2], meaningthat there are no two planes: that of underlying essence and that of appearance,because there is no possibility of fixing an absolute literal meaning for things (seeLaclau and Mouffe, 1985, p. 98). In Laclau and Mouffe, these two planes are conflatedand it is presumed, for example, that people or social groups have no real essencebeyond the precarious identities that they adopt in relation to the establishment of aparticular order. Moreover, and this is where we see Laclau and Mouffe’s departurefrom structural Marxism, the identities that people adopt are not pre-given ornecessarily class-based, but contingently constructed. That is to say that there are aplurality of identities that agents could adopt (e.g. working class, environmentalist,feminist, gay, etc.) but those which are adopted depends on particular historical andsocial circumstances.

From this contingent notion of (over-determined) identity we can quickly movetowards the notion of an over-determined reality, implying that there are moreinterpretations of the world than could possibly be communicated through onetotalising conceptualisation. The persistence of competing claims and mutuallyexclusive political projects indicates an excess of meaning that society[3] is unable tomaster. Indeed, Laclau and Mouffe point towards the impossibility of the notion ofsociety because of this infinitude of meaning: “consequently, ‘society’ as a unitary orintelligible object which grounds its own partial processes is an impossibility” (Laclau,1990, p. 90). There is a continual competition between different discourses striving todominate and exclude other interpretations of the world. This perpetual antagonismand contestation implies that these discourses can never succeed completely in fixingmeaning. However, meaning can be relatively fixed and is so when certain discoursescome to dominate others and become the main guide for action.

Therefore, the social is constituted through a war of competing discourses, each ofwhich is a simplification of an over-determined reality. This simplification is bothimpossible and necessary. It is impossible because the construction of any discourseentails the fictitious presentation of a coherent story; the denial of the over-determinednature of reality; of filtering the excess of meaning that characterises the social. Theseprocesses will always find political opponents that subject such a discourse tocontestation and preclude the possibility of that discourse ever fixing meaning

AAAJ20,6

858

absolutely. At the same time, however, such simplification is also necessary in order toproduce a coherent and digestible vision of the world that can tractably constituteidentity and create attachments. In this sense, simplification is an unavoidable part ofhuman communication: “without that fictitious fixing of meaning there would be nomeaning at all” (Laclau, 1996, p. 205)

Thus discourses are formed by excluding certain realities and including others. Forexample, financial accounting excludes the social and environmental consequences oforganisational activity insofar as they cannot be captured in financial terms, therebyallowing these to continue and even be justified in the name of economic rationality. Inthe discursive field of accounting where the discourse of financial accounting dominates,SER is a marginal discourse and is therefore not the primary guide of organisationalactions. Nonetheless, as an established discourse in constant antagonism with financialaccounting, the existence of SER holds open the possibility that organisational life mightbe engulfed with a different logic and shaped in new ways.

This paper is an attempt to explore the rationales that organisational participantsarticulate for SER. In doing so it is hoped to shed light on the motivations underlyingSER and on the potential that SER holds for organisational transformation. Although itis often argued that SER has transformative potential in that it could renderorganisations transparent and accountable for their social and environmental impacts(Gray et al., 1987, 1996), it has thus far failed to achieve this in a meaningful form. Anumber of critiques of SER suggest that it is based on partial environmentalreporting[4], cherry-picked social information, and a very limited notion ofsustainability (see, for example, Adams, 2004; Erusalimsky et al., 2006; Fayers, 1998;Gray and Bebbington, 2000; Gray and Milne, 2002, 2004).

Indeed, viewed from a post-structuralist perspective, the notion that SER could everportray a complete social and environmental reality is itself impossible. Gray andMilne (2004) point towards the impossibility of organisations ever being able toproduce a sustainability account[5]. At best, SER could only ever present a partial andsimplified view. Notwithstanding this a priori limitation, SER could still problematiseand illuminate the contradictions and conflicts that permeate organisational activityby showing how and where the pursuit of economic objectives conflicts with socialwelfare and exacerbates the ecological crisis. However, discursive and interpretiveanalyses indicate that current SER practice achieves the opposite. The notions ofsustainable development and CSR are presented by companies as largely congruentwith business-as-usual and that, in fact, it makes good business sense to pursue thesethings. For example, Laine (2005) shows how SERs treat the potentially radical notionof sustainable development as something that is entirely manageable and consistentwith current institutional arrangements. In addition to this, Milne et al. (2006) suggestthat SERs portray sustainable development as a “journey”, a metaphor which isdeployed in conjunction with descriptions of abstract management systems in orderdeflect attention from companies actually defining what sustainability entails andoutlining how companies might have a part to play in its achievement (see alsoTregidga and Milne, 2006). Essentially, these arguments suggest that through partialand skewed reporting business attempts to present itself as socially andenvironmentally responsible and, in some cases, sustainable, thereby projecting theargument that there are no fundamental conflicts between business and society/theenvironment and that our future is safe in their hands (Gray and Bebbington, 2000).

SER andhegemonic

discourse

859

Given the mounting evidence on the state of the ecological crisis (see, for example,Meadows et al., 2003; WWF, 2004) as well as the profound social dislocationsengendered by modern corporations, these representations of organisationalsocio-environmental interactions are highly contestable. However, they are alsoactively decontested by organisations, which present their SERs as objective realities(Thomson and Bebbington, 2005) and by permeating disclosures with metaphors oftransparency and accountability (Livesey and Kearins, 2002). A number of studieshave suggested that SER is employed as part of a change-resistance strategy aimed atcurtailing accountability pressures (see, for example, Gray et al., 1995;Larrinaga-Gonzalez et al., 2001). Nevertheless, Larrinaga-Gonzalez et al. (2001) notethat it is in such situations that transparency emerges as a key phrase in the discourseof organisational actors.

SER motivationsThese sanitised portrayals of socio-environmental performance are presumed here tohave the intent of aligning extra-business interests around the fundamental concerns ofbusiness, coercively brought about by pressure from the financial markets to send riskmanagement signals (see, for example, Deegan and Rankin, 1996; Freedman andPatten, 2004; Gray, 2006; Neu et al., 1998; Patten and Trompeter, 2003; Solomon andSolomon, 2006). Although this hegemonic conception of SER paints a somewhat bleakpicture, a number of scholars imply that the motivations that underlie SER are actuallymore complex. For example, Adams (2002) infers that different organisationalprocesses, somewhat independent of risk management motivations, affect the way inwhich companies report social and environmental information. Adams (2002, p. 223)suggests that a number of “internal contextual factors” specific to each organisationmay explain the diversity in SER practice. Bansal and Roth (2000) also argue thatcorporate responses to dealing with environmental issues generally are nothomogenous. In addition to competitiveness and legitimacy concerns, Bansal andRoth (2000) suggest that corporate ecological responsiveness can be driven by ethicalconcerns also. Furthermore, Bansal and Roth (2000) show that firms can arrive at astate of ecological responsiveness from different initial conditions, via a variety ofdifferent paths and driven by different configurations of motivations. This conclusionis supported by Buhr (2002), who investigated the initiation of environmental reportingin two Canadian companies. It was found that changing environmental disclosurepractices is a long and complicated process, and that it varied across the two firmsstudied. In one case the strong domination structures of capitalism were used by aproactive institutional investor to influence the reporting practices. However, in theother case, agency played a bigger role in that someone inside the company waschampioning the process.

The motivations underlying SER may therefore be somewhat more multifariousand complex than sending risk management signals to investors. Neither would itappear that SER construction within organisations is a smooth or entirely successfulprocess. For example, O’Dwyer (2003) investigated managerial conceptions of CSR inIrish firms. Overall, O’Dwyer (2003) describes a process of managerial capture wherebysocial and environmental responsibilities are articulated insofar as these are achievablewithin conventional business frameworks. However, these “Enlightened Self Interest”(O’Dwyer, 2003) conceptions of CSR were met with significant resistance by the

AAAJ20,6

860

managers interviewed who expressed personal ethical concerns that diverged from thecorporate line. Bebbington and Thomson (1996) similarly describe how managerialconceptions of Sustainable Development were somewhat more radical than the“official” conceptions projected by their organisations. These two studies do notdirectly address the potential for agency to bring about transformative potential,although they do suggest that even if instrumental criteria do dominate corporatestrategies, how this comes to be the case may be ridden with conflict, internal strugglesand contradiction[6].

Livesey (2002) suggests that SER serves multiple, contradictory functions. Eventhough captured and self-serving, SER can change organisations and open them up tonew criticism. Livesey (2002) and Livesey and Kearins (2002) both characterise SER asa means of restoring the “discursive regularity” of business which has been rupturedby radical environmentalism. Livesey (2002) in particular argues that organisationshave responded to the environmental agenda by proliferating win-win discoursewhich, although fundamentally conservative, represents an advance on theconventional business viewpoint and may have “greened” organisations by accident.Thus, it is implied that SER, in spite of its apparent capture[7], maintains some sort ofTrojan horse capacity (see also Gray, 2000). This paper is an attempt to explorewhether organisational participants conceive of a broader role for SER than to satisfythe risk management concerns of investors.

This paper responds to Livesey’s (2002, p. 253) call for more research into the way inwhich tensions are playing out in SER between narrow definitions of economicprogress and wider notions of social and environmental justice. In particular, thispaper explores whether these tensions have been sufficiently obfuscated by businessas to render SER insignificant in some wider struggle for social justice or whether itdoes indeed retain some Trojan horse capacity in this respect. This was exploredthrough interviews with managers in UK companies. Through a series of interviews,the motivations underlying SER in various organisations were explored. Additionally,conceptions of organisational relationships to society[8] and the environment werediscussed in order to probe into the perceptions that are held by the individualsresponsible for producing organisational SER. In particular, the combination of thesetwo exploratory themes is to shed light on the limits to agency in the context of SER.O’Dwyer (2003) and Bebbington and Thomson (1996) both suggest that there is somedegree of ideological dissonance between managers and their organisations. However,these two studies do not explore the extent to which this dissonance is successfullytempered by organisations or the extent to which the personal ethical concerns ofmanagers translate into organisational actions.

Method and methodologyA series of in-depth interviews were undertaken between June and September of 2004with representatives of 25 large commercial organisations in the UK. The firmsinterviewed were generally in the FTSE100 and were drawn from various industries.Each firm produced a SER on either an annual or bi-annual basis. A letter and/or followup phone call was made to the organisations requesting an interview with theindividual responsible for preparing the SER. Of the 25 positive responses, five of theseindividuals were directors who oversaw the SER process but whose responsibilitiesextended into areas other than the SER. The remaining 20 were managers below board

SER andhegemonic

discourse

861

level whose primary responsibility was to produce their organisation’s SER. The vastmajority of individuals (20) therefore worked in environment, CSR or sustainabilitydepartments. The remaining five comprised two individuals below board level (publicaffairs and business policy) and three directors (purchasing and internal affairs;marketing; and human resources) whose remit partly covered CSR issues and SER. Allof the individuals were ultimately accountable to the board of directors who had theresponsibility to sign-off the accounts before they were disseminated.

The interviews explored a number of themes, although the main focus was onexploring motivations to SER and on exploring managerial perceptions of conflict. Asregards to motivations, interviewees were asked what were the key motivationsunderlying their decision to report socio-environmental information in the form of asocio-environmental report. As regards to conflicts, interviews were asked twoquestions: firstly to describe any conflicts that they had come across between economicand socio-environmental issues; and secondly, interviewees were presented by theresearcher with the notion that business growth and environmental stewardship werein fundamental conflict and were asked to respond with their own views and thoughtson this.

The interviews themselves were conducted in a semi-structured fashion. Aninterview protocol was used to structure what may be thought of as guidedconversations (Llewellyn, 2001), where the views of the interviewees were sought inrelation to the derived themes of theoretical interest. This semi-structured approachhas been described as one that empowers respondents, “enabling them to speak in theirown voices” (Llewellyn, 2001, p. 599). Interviewee responses to questions were at timeschallenged by the researcher during the interview, in an attempt to interrogate thetheoretical issues identified by the researcher prior to the interview setting. Thequestioning was therefore not entirely open-ended, but guided by concerns tounderstand interviewee perceptions of conflicts and organisational motivations.

Although the theoretical lens used to illuminate and interrogate the empiricalmaterial was explicitly Neo-Gramscian (see below), the wider methodological approachto the research study can be understood as hermeneutic. More specifically, the“philosophical hermeneutics” of Hans-Georg Gadamer as an approach to social scienceresearch was followed. Key to Gadamer’s philosophical hermeneutics is the ontologicalframework of the hermeneutic circle. Tracing its origins to the protestant-catholicconflict of reformation times, the hermeneutic circle is based on the Lutheran idea thatpassages can only be understood with reference to the whole text, and vice versa. Littleexcerpts give the reader an idea of the whole. The reader iterates between excerpts tothe whole repeatedly, until understanding is reached. The “part” and the “whole” existin an interpenetrative duality rather than a dualism:

A person who is trying to understand a text is always projecting. He projects a meaning forthe text as a whole as soon as some initial meaning emerges in the text. Again, the initialmeaning emerges only because he is reading the text with particular expectation in regard toa certain meaning. Working out this fore-projection, which is constantly revised in terms ofwhat emerges as he penetrates into the meaning, is understanding what is there (Gadamer,1989, pp. 266-267).

Gadamer likens this process of textual interpretation to the way we live our lives andcome to understand the world generally. Essentially, Gadamer’s work can be seen asan attempt to rehabilitate the notion of prejudice. The Enlightenment sought to rid man

AAAJ20,6

862

of prejudice in order to generate a presuppositionless reason (Gadamer, 1989).However, Gadamer argues that prejudice is a necessary condition of understanding.Without some sort of fore-understanding, we could not begin to comprehend the world.The challenge for the social scientist is to be reflective about our fore-understandingand open to its re-articulation. The way in which this reflection can be carried out insocial science research is to be explicit about the role of prior theorising.

Hermeneutics provides the methodological framework within which to understandthe way in which theory has been mobilised during the study. Thus, hermeneutics isnot a specific theoretical lens through which to provide rich descriptions of empiricalphenomena but is the ontological canvass on which different theoretical interpretationsmay be painted. Within the hermeneutic circle, theorising can be employed fromvarious schools of philosophical thought. Gadamer (1989) argues that hermeneuticconsciousness is a precondition for even functionalist work. In the case of the presentresearch study, the lens mobilised in order to provide a rich description of the empiricalphenomena was Neo-Gramscian discourse theory. As the interrogation offore-understanding is an iterative process of projection and reflection, thetheorisation of the project also took an iterative form. Initially, the exploration ofperceptions of conflicts was informed loosely by the Neo-Gramscian work of Levy andEgan (2003) that emphasised the importance of “discursive frameworks that activelyconstitute perceptions of mutual interests” (Levy and Egan, 2003, p. 653) inmaintaining business hegemony. However, it should be emphasised that Levy andEgan’s (2003) work served as a heuristic with which to approach the study rather thana fully fledged theoretical position. The more intricate theoretical position of Laclauand Mouffe, also Neo-Gramscian theorists who go into more detail on the use oflanguage than Levy and Egan (2003), was developed later on in the study as the dataanalysis process progressed. The relationship between the different methodologicalelements of the study is represented in Figure 1.

The analysis of the interview data was informed initially by Levy and Egan’s (2003)notion of mutual interests. Matrices were formed in order to systematically record thestreams that were observed in the data (see O’Dwyer, 2004). Both the motivations andthe conflict rationalisations articulated by the interviewees (see below) weresystematically categorised and formed the basis of a largely descriptive narrative. It

Figure 1.The hermeneutic approach

in action

SER andhegemonic

discourse

863

was only after this initial process of analysis and the construction of the descriptivenarrative that the data was interrogated using Laclau and Mouffe’s discourse theory.Laclau and Mouffe were employed in order to provide more depth to the analysis thanLevy and Egan’s (2003) broad heuristic. The analysis of the data with Laclau andMouffe’s discourse theory was carried out iteratively, with the descriptive narrativethat emerged from the data being interrogated with the theory and vice versa. Thiswas a process that entailed rigorous self-critique and one which the researcher hasbuilt-up in reflexive fashion. Undoubtedly the theory has illuminated certain elementsof the narrative and left others submerged, as any theoretical framework does. Theensuing account attempts to give a sense of the views of the interviewees themselvesand, in doing so, lay out as transparently as possible the way in which the data coherewith the theory. In other words, the discourse of the interviewees itself (albeit acondensed and organised version) is laid out below.

CSR discourseBefore discussing in-depth the principal themes of motivations and conflicts, anincidental finding regarding SER and its relationship to CSR will be discussed.Although asked explicitly about their SER motivations, the vast majority ofinterviewees did not discuss their SER in isolation. Rather, SER was conflated withCSR: reporting with the actual activities undertaken by organisations; discursive withnon-discursive elements. More specifically, SER itself appeared to be understoodwithin the context of CSR, as one manifestation of responsible behaviour:

I think for us it [the report] reinforces existing conversations. So this shouldn’t be the onlypiece of information that people get. It should be an additional piece of information in thecourse of a conversation, an ongoing set of conversations, something that the person you aretalking with can use to complete their picture of what [company X] looks like (CSR Manager,Oil and Gas).

Henceforth, this paper talks about an overall discourse of CSR, of which SER is a part.This reflects the interviewees’ language which indicated that SER was a subsection ofa wider conceptual framework of CSR. Rather than conceiving of SER as primarily aform of communication and CSR as a set of organisational actions, the way in whichthese two elements interpenetrate each other suggests that they are part of one overalldiscourse that, in Laclau and Mouffe’s terms, makes no distinction between discursiveand non-discursive material elements. This discourse is both material, in that it shapesactions, and ideological in that it constructs images (whether through formal SERs,other media or simply by perceptions of organisational activities) of organisations asgreen, responsible, sustainable, etc. (see also Lehman (2001) for a similar argumentregarding the material and ideological nature of environmental management).

MotivationsThe overwhelming majority of motivations for SER and CSR that were outlined byinterviewees referred to some sort of commercial imperative, articulated around thenotion of the “business case”[9]. Indeed, socio-environmental[10] motivations did notfeature at all in the articulations of 14 of the interviewees. The majority of intervieweesarticulated motivations for their organisations’ SER and CSR purely in terms ofstrategic considerations. For example, four interviewees talked about the need to betransparent as a driver for their reporting:

AAAJ20,6

864

What we just want to do is represent a real and accurate picture of where we are. That is whatwe are trying to achieve (Environmental Manager, Extractive).

Where socio-environmental concerns were articulated, these were generallyinter-linked with business case arguments. In a limited number of cases it wasdifficult to discern from the arguments of interviewees whether socio-environmentaldrivers or desires to be transparent were entirely free from commercial concerns:

I think a lot of that is basically risk management for us. But it is sometimes difficult todisentangle that from what we would regard maybe as moral values and being responsible. Ithink very often it is quite difficult to place marked boundaries on this (SustainabilityManager, Extractive).

However, other interviewees who evoked socio-environmental drivers did so whilstrecognising the boundaries in a somewhat clearer fashion. For example, it was only inone instance that the “socio-environmental case” was held up explicitly as the primarydriver for what a company does as regards to its reporting and responsibility. In thatcase, the interviewee repeated persistently that CSR was the “right thing to do”.However, in that instance, it would appear as though “the right thing to do” was notentirely detached from the business case:

One of our worst nightmares would be to find out that somewhere in our supply chain wouldbe to find out that child labour is used. Because that is a reputational matter and [company X]is a company that just won’t truck any of that. It is against the ethic of the company(Purchasing and Internal Affairs Director, Publishing, emphasis added).

Even where socio-environmental concerns were evoked at all as partial driversunderlying organisational SER and CSR (and this was in 11 of the interviews), thesewere generally permeated by, or at the periphery of, commercial concerns.

Laclau and Mouffe outline how discourse is not simply the imposition of oneideology onto subordinate groups. Moral and intellectual leadership is created bysynthesising various interests around a fundamental “articulating principle” (Mouffe,1979, p. 192) or a “nodal point” (Laclau and Mouffe, 1985). That is, business discoursedoes not ignore or refute the demands and criticisms made of it by marginal socialmovements. Rather, these demands are brought into business discourse insofar as theycan be made to cohere with business’s fundamental aims of profit and growth. Whathas been inferred from the empirical data here is that the discourse of CSR isconstructed around the nodal point of the “business case”, whereby notions ofresponsibility are married to commercial concerns, where ethics are conflated withreputational issues (as above). How this nodal point manifests itself in various wayswill be outlined below in detail. However, more important for the purposes of this paperthan the multifarious nature of the business case is the dominance per se of a businesscase. That is, although the motivations for SER and CSR and specific stakeholderpressures appear to vary across firms, these all seem to be understood within somemore general conception of a business case. For example, in response to probing onwhether any CSR or SER initiative that was undertaken by the organisation had toyield some sort of business benefit, interviewees matter-of-factly responded in theaffirmative, almost as if one could take for granted that there would have to be anunderlying business motivation. Indeed, in one extreme example an interviewee even

SER andhegemonic

discourse

865

talked about how their attempts to eradicate bribery (the eradication being a socialinitiative) were hampered by commercial concerns:

It is not something that we have talked too much about, but getting bribes out of places likeChina is extremely difficult, but that is what happens. We have to make it absolutely clearthat it is not something as a global company that we could accept. But on the other hand . . .you have to be mindful of the competitive implications of doing that (Marketing Director,Pharmaceuticals).

Even where managers were trying to push through socio-environmental initiatives tosatisfy their own ethical concerns, there was a business case filter for those:

That [recycling] was done for environmental reasons but to sell it [to the board], financialbenefit to the company (Environment Manager, Water and Waste).

Even “philanthropic” activities had to be aligned with an organisation’s core businessactivities, implying that some sort of synergistic relationship was being sought inthose areas. For example, one manager described how their previous support for acancer charity was being discontinued because it did not deliver as tangible and visiblea reputational benefit as support of another charity would.

Thus, the need to find a business case appeared to dominate the concerns ofinterviewees. This was obvious also as they discussed the various components of thebusiness case for SER as it manifested itself in their organisations. Each componentwas underpinned by commercial concerns. These will now be briefly outlined in turn.

The business case for CSR appears to be multifarious within each firm interviewed,as shown in the list of manifestations as follows:

. risk and reputation management;

. stakeholder management;

. peer pressure;

. business efficiency; and

. internal champions.

Each interviewee outlined a variety of motivations for their CSR and SER. Forexample, SER and CSR can bring about tangible financial benefits, quantifiablethrough cost-benefit analysis. Improving energy efficiency or fuel fleet consumptioncan bring about significant cost savings at the same time as showing per unitimprovements in emissions and resource consumption. However, such businessefficiency arguments surrounding direct financial benefits were limited in number anddepth, being articulated only by a minority of interviewees and in scant detail. Rather,the business benefits of CSR and SER were articulated largely in terms of less concreteand quantifiable terms. The business case, it was argued, lay more in “soft” issues suchas managing relationships and responding to social pressures. These are things thatwere not necessarily amenable to cost-benefit analysis, but which were presumed toyield an advantage in the long-term.

One of the more significant drivers would appear to be as a signal of risk orreputation management vis-a-vis the financial markets. In particular, the demands ofthe ethical investment community were at the forefront of demanding more disclosuresfrom organisations as regards their management of social and environmental issues (orrisks):

AAAJ20,6

866

Now that we are listed, that has had a big impact, not just the report. . .but also in terms of theamount of questionnaires that we get in, interest from investors. So now we are doing theDow Jones Sustainability index, FTSE4Good, Insight investment, there is a biodiversityindex and we have been asked to do a health and safety one. So there are now more demandson us than there were before we were listed (Sustainability Manager, Utilities).

This pressure to provide information to the (largely ethical) investment communitywas often recognised with reluctance:

What we wanted to do was produce one [a report] every two years, with more stories, moretime to collect the information. But such are the pressures of risk management that we need tobe producing it more and more often (Environment Manager, Extractive).

Going beyond the specific, and seemingly very powerful, concerns of the investmentcommunity, interviewees talked at length about managing relationships with widerstakeholder groups and stakeholders generally. The pressures from stakeholdergroups clearly had an influence on organisational approaches to both CSR and SER.Reporting in particular was cited by a number of interviewees as a reaction tostakeholder demands:

Stakeholders expect it, employees expect it, the communities expect it, our peers expect it, thegovernment expects it. There is an awful lot of people out there who are watching. Becausewe are such a big company out there. Because we supply a lot of people with their lifeassurance, they want to know that we are a good company. And that is why we do a lot ofwhat we do out there (CSR Manager, Financial Services).

In addition to outlining reactions to specific stakeholder pressures, interviewees alsotalked about how being pro-active with stakeholder management could reap benefits:

Because when you have good relations with the community when you put in a new mast, thenwhen you want to put in another mast, you won’t have problems (CSR Manager, MobilePhones).

As with the discussion of other drivers, stakeholder management issues were wrappedup with both SER and CSR. It was not always easy to separate a reporting response tostakeholders from an actual change in organisational activities response that wasprompted by stakeholders. In this respect, we can see the intertwining of bothdiscursive and non-discursive material elements, the two fusing together inextricablyto create a more holistic organisational response:

If climate change is the biggest problem we face and if regulation is going to graduallyincrease, and not just regulation but I firmly believe that there will be other constraints on us,ultimately from consumers and our customers, the people who buy our materials, to use thenatural environment more responsibly and to try and reduce emissions, then I think it is aswell that we take, where we can, a leadership role on that and present the company as aresponsible environmental player. So it is responding to future and existing pressures(Sustainability Manager, Extractive).

Isomorphic pressures to mimic competitors and peers also appeared to play animportant role for around nine of the companies interviewed. The following quoteexemplifies how reporting itself was perceived to be a trivial activity by theinterviewee but because of peer pressure, it actually became important to produce one:

SER andhegemonic

discourse

867

I think that it is a shame because it costs tens of thousands of pounds to produce it whereaswhat we could do is take everybody who is interested in our business in this way, take themall into a room and talk to them about the contents of this report, for about 10% of the cost onan annual basis. Still get the same information across but then every time a list of the top 250companies comes out that produce reports you would be at the wrong end of it. So you havealmost got this very basic peer pressure that says: ‘you need to have one of these’. So everyyear we spend about £40,000-50,000. But we produce about 15-20,000 copies of it(Environment Manager, Extractive).

This interviewee then went on to describe the malign reputational effects that hiscompany would suffer if they were the only company in the industry to not produce areport, mentioning high profile “lists of shame” that would put them in the spotlight.

The importance of articulating initiatives and activities within a business casediscourse was also expressed by a small number of interviewees who recognised therhetorical nature of that discourse when employed by CSR champions. In this respect,one interviewee pointed out how the internal power dynamics within her organisationwere more important in establishing what constituted a business case than anytangible representation or proof of what business benefits would accrue as a result of aparticular course of action:

The board came back to me and said . . . ‘right, we want to report on our Human Rightssituation after August’. That was the first time the board have actually fed back to me andsaid ‘look into this issue and feed into us again’ . . .They can do that. If the board say that, it isa business case already, if I come up with it I have to prove that it is a business case. That is abit of a discrepancy at the moment, but that is the way business is, I just get on with it (CSRManager, Financial Services).

Thus, the personal agendas of senior management themselves may be legitimisedthrough business case rationalisations. There would also appear to be some discretionfor CSR managers to push through their own initiatives:

There has to be added value in doing what we are doing. We couldn’t just go and dosomething for the environment or the community just because we wanted to. There has to bean added benefit to that [for the business]. Now you can be as clever as you want in definingwhat that added value is. We have five core values that are useful in this area. One is theenvironment but also customers, people, competitiveness, reputation. So if you are doing aproject, you can make a business case for it in terms of how it adds value against those fivethings (Sustainability Manager, Utilities).

These zones of discretion suggest that the business case is something that can bemanipulated to achieve various ends. However, rather than undermining theimportance of the business case to CSR and SER, the potentially rhetorical nature ofthat business case may actually re-enforce its importance, demanding business casearguments and logic for initiatives that may have originally had more altruisticmotivations. With the need to articulate initiatives around the nodal point of thebusiness case, perhaps it is becoming more difficult for managers to pursuesocio-environmental initiatives for their own sake, although there were some whoappeared to be working around these constraints to some extent:

Waste minimisation, no one has really driven it as a business case. I am saying that it shouldbe done as an environmental case with a business spin off (Environment Manager, Utilities).

AAAJ20,6

868

Whether these zones of discretion that either senior management or management lowerdown the corporate hierarchy have are peripheral as regards to the overallsocio-environmental impact of the company was not further explored in the interviews.However, in the context of the vast majority of business case motivations that werearticulated with some clarity, there was little to suggest that there was huge scope forindividuals to covertly reduce environmental impacts or satisfy wider stakeholderconcerns.

ConflictsWhilst it may be hardly surprising that business will do things for only businessreasons, what is of interest from a discourse theory perspective is how this seeminglyblunt self-interest was fused with notions of responsibility and transparency. Or, tophrase it the other way around, how a discourse that expresses notions of community,responsibility and transparency is underpinned by a somewhat more partial set ofmotivations. These representations of relative harmony between business andsocio-environmental concerns were offered following questioning around whetherinterviewees had come across any conflicts between commercial andsocio-environmental criteria. Many interviewees initially denied that there were anysuch conflicts:

I am certainly not aware of any (CSR Manager, Energy).

I don’t think there are conflicts (Purchasing and Internal Affairs Director, Publishing).

I haven’t encountered any so far (CSR Manager, Energy).

On reflection, it appears that these interviewees were responding within the context ofthe previous discussion on motivations and the business cases that they articulated.Thus, the interviewees saw no conflict between commercial and socio-environmentalcriteria because everything that they did on the CSR front fitted within a business case.They were operating within a win-win paradigm of thought (see, for example, Levy,2005; Levy and Egan, 2003; Prasad and Elmes, 2005; Welford, 1997). Anysocio-environmental issue outside of a business case did not immediately enter thediscourse of the interviewees. All socio-environmental concerns had to be harnessed toa business case in some fashion to the extent that it seemed as though the startingpoint for CSR is not any notion of social responsibility as such, but that anything thatorganisations do in the CSR field must bolster their own interests in some way.

It therefore generally required further probing from the researcher to encourageinterviewees to consider potential conflicts. The researcher thus presented theinterviewees with the business growth/environmental impact conundrum. Theinterviewees were asked whether they saw business growth imperatives to be infundamental conflict with environmental impact. A few respondents initiallyresponded to this conundrum by making it very clear that economic considerationswere pre-eminent:

For us, to continue to be a successful company, and achieve the sort of returns that we arelooking for, if that means burning oil and gas, which inevitably impacts on the environment,then we will do that, so long as we remain within the limits imposed upon us in terms of thoseemissions (CSR Manager, Energy).

SER andhegemonic

discourse

869

The implication here is that climate change is an important issue to address because itpresents real and practical constraints on companies. However, even then the extent towhich business would “address” the issue of climate change appears to be tempered byshorter-term commercial concerns.

Some interviewees said more specifically that it was fundamentally important thatthey made a profit, without which they could not begin to be sustainable innon-financial terms. However, all of the interviewees went on to qualify this withfurther explanations as to how the pre-eminence of financial interests was notnecessarily a bad thing. That is, they justified the pursuit of business goals in terms ofthe social and environmental benefits that emerged from that pursuit. For example,many of the interviewees questioned the growth/impact conundrum in terms ofeco-efficiency. Two interviewees actually remarked that growth helped in this regardbecause of the economies of scale that it brought:

If you are making spoons, if you are making ten thousand spoons, you can make them muchmore efficiently than if you are making three spoons. So you will be looking at less resourcesto do it (CSR Manager, Specialty Chemicals).

Efficiency on its own is a necessary but insufficient condition for sustainability(Bebbington, 2001). Efficiency gains can potentially be undone by business growth,thus leaving the business with an overall greater environmental footprint in spite ofper unit eco-efficiency improvements. Other interviewees who stressed the positives ofimproved efficiency invoked slightly more sophisticated arguments. They describedhow efficiency meant an overall improvement for society or the environment, ratherthan being outdone by growth, because they were competing on increasing their shareof a market that was perceived as static:

And it is OK for me to say that we should be sustainable [financially] because if we are doingstuff that is better than other people in the arena, then it is better that we should be here, thanwe should not be here. At the moment we are seen to be amongst the organisations that aredoing this stuff in terms of construction design, the way that we are training and developingpeople, looking at community activities and things like that. If we weren’t doing it, theaverage would step down wouldn’t it? (Engineering and Environment Director, Construction).

This business is quite different to a more consumer oriented industry. So, for example, youcan sell lots more televisions by doing lots more marketing or by changing the product in away that you are creating a new market . . . Now with raw materials it is basically likegovernment build stuff and people build stuff, and they build at a certain rate. You can’t,there is very little that you can do to make people build quicker . . . Basically what everyone istrying to do is compete in terms of differentiating service and value added: so producingexisting products that do the same job. So you have just got product substitution going on allthe time and competition around differentiation to take a bigger slice of the cake. So the pointof the argument is that if the cake has an environmental impact of x, if we take a bigger sliceof the cake, then the overall impact of the industry drops (Environment Manager, Extractive).

A few interviewees questioned the validity of the growth/impact conundrum on thegrounds of technological development. They argued that if growth was coupled withthe introduction of more environmentally friendly technology, then their businesscould grow without increasing its overall impact:

Well it is all to do with, well if you become more profitable it may be because of newtechnology. It is probably more likely to be. Any big changes in the future and if anything

AAAJ20,6

870

changes in building, it is going to be big. The way we are building today hasn’t changed forthousands of years. We are still using brick and blocks. There is a lot of scurrying aroundgoing on in the construction industry . . . We could get more busy and have a lower footprintbecause of technology. It could be pre-fabrication on site, use of different materials . . . So thattraditional adage that if you become more profitable, then you are going to have a greaterimpact . . . unless new technology comes into the equation. Without that new technology, itwould be correct (Environment Manager, Property Developer).

A few interviewees redefined the conundrum between commercial andsocio-environmental considerations in terms of the conflicts that exist between thesocial (or the socio-economic) and the environmental, almost as if the economic had nopart to play:

The most difficult thing is to get the balance between the conflict of social and environmentalisn’t it? If we are building, the architect wants to put nice granite cladding on the building; dowe buy the granite cladding from Cornwall? There are a small number of people employed,we have got to ship the stuff up from Cornwall and it is probably quite expensive. Or do weship the stuff up from China? Import it and incur all those transport things, things like that. InChina you might be employing 1,500 people in a quarry whereas in Cornwall you areemploying ten people. It is very difficult to make these sorts of judgements, very difficult(Engineering and Environment Director, Construction).

A number of interviewees argued that although their organisation had anenvironmental impact there were social positives at the same time:

If we close down, there will be no[environmental] impact. But what about the jobs? You know,you have to take it to the logical extreme (Communications Manager, Property).

The variety of social benefits outlined by interviewees included, not just employingpeople, but the products or services that the company offered as well. This intervieweereferred to the social and economic benefits that were made possible by the activities ofher organisation, and her sector generally:

Ultimately the UK is an island. People use the plane because it is cheap and you can get theremuch quicker than by train or car so I think the social and economic benefits are greater forair travel . . . Environmental costs are obviously really important and we are doing all we canwithin the industry . . . but ultimately we can’t take away people’s demand to air travel . . .people’s right to travel regardless of the environmental cost (Public Affairs Manager,Aviation, emphasis added).

Although conflicts were actively rationalised and tempered by interviewees, they werenot completely refuted. Rather, they were articulated in a way that suggested that theorganisation had found some way of balancing competing claims in a rational andmeasured fashion, thereby pleasing most parties. This is explored below through themetaphor of “achieving a balance”.

Achieving a balanceMany interviewees talked about conflicts in the context of sustainability, in particularthe “three pillars of sustainability”: economic, environmental and social. Although notdenying the existence of conflicts, interviewees did suggest that their organisationfound a balance between the economic, the social and the environmental:

SER andhegemonic

discourse

871

As long as they are all being considered, it is trying to get a balance between them. I work onthe Sigma project. I sit on the committee to make that into a standard. That is looking at howdo you have evidence that sustainability: environment, social and economic, are beingintegrated into decision-making processes? I think that provides a framework for thedecisions that the management team make. I think it allows for decisions to be made on amore balanced perspective (Sustainability Manager, Utilities).

Conflicts between different interest groups were not completely denied, but they werepresented, in the main, as manageable:

So you have got these three pillars: the business needs to satisfy investors and otherstakeholders; you got environmental needs; and you have got customer needs. OK we chargecustomers what is an agreed figure. What more can we put back into that community tobenefit it? We do run charitable funds to actually support activities like that. We try to putback into the sector what we can. These are the tensions that you get all the time(Environment Manager, Utilities).

This interviewee said that because of these tensions, sustainability was actuallyunachievable. He preferred to think of sustainability as a constant journey rather thana steady state. Milne et al. (2006) suggest that the “sustainability as a journey”metaphor is used to deflect attention away from any attempt to envisage what asustainable corporation might look like and onto abstract notions of businessprocesses, thus mystifying the social and environmental impacts of organisations.Another interviewee was quite clear about the environmental impacts that hisorganisation had, but still argued that there was a sustainability case for themcontinuing their activities on the grounds that the alternatives were problematic andthat rapid change could be destructive:

If we switched off and went into wind power, well look at the resistance to wind planning forwind farms in the UK, and increasingly for offshore developments as well. We areundertaking to make enormous investments in renewables in the next six months but it is stillvery much the case, and it is a case that can be made within the SD [SustainableDevelopment] agenda, to continue operating conventional power stations. The reality is that,yes they have an impact but if we stopped using them then that impacts on us economicallyas a company. Again, looking at it from an SD point of view (CSR Manager, Energy).

Nevertheless, even where interviewees did recognise that it is impossible to satisfy allparties, they did imply that they had achieved some sort of workable balance:

What we try to do is provide a balanced approach to reporting that answers as many of ourstakeholder demands as possible. Where a stakeholder wants more information we are happyto provide it. But I think that with an organisation such as ours where we have got so manystakeholders it is quite difficult to say that you are pleasing everybody 100 per cent (PublicAffairs Manager, Aviation).

Another interviewee described how financial considerations were pre-eminent, but thatthey still manage to come out “positive” overall in terms of social and environmentalresponsibility. Rather than a win-win, he described a mixture of various wins andloses:

We can’t invest like Shell or BP in hydrogen cells, renewable energy. We have looked at all ofthese things but it is not something that is commercially viable at the moment. So are wecontributing to sustainability? I take that are we balancing what we take out? No it is

AAAJ20,6

872

impossible. I don’t think there is any small or medium company who can balance what theytake out. We create jobs for people and contribute to various oil provinces, West Africa forexample (CSR Manager, Oil and Gas).

He then went on to describe how this mix of wins and loses could be turned into an“overall win”:

I think it is impossible to have a commercial activity, certainly in our sector, without anenvironmental impact. It is impossible. You will impact on the environment, full stop.Whether you manage that, and leave a net positive impact or at least put in place the type ofplans that make your impact not just acceptable, but preferably minimum or zero, if that ispossible at all, but always strive to have a positive impact. Then I think you have a licence tooperate (CSR Manager, Oil and Gas).

These discursive constructions of corporations balancing the three pillars ofsustainability can be understood as acts of distortion. In a post-structuralist theory ofdiscourse where meaning is presumed to be over-determined, the notions of truth andfalsity lose all traction. However, Laclau (1996) suggests that we can retain the notionof distortion. Because of over determination, meaning has to be manipulated, concealedand deformed in order to form a relatively coherent discourse. Thus, distortion isconcerned with closure, with the projection of a non-illusory nature, with myth. At thesame time, because meaning can never be completely fixed, this act of distortion has tobe visible. There are thus two processes underway during an act of distortion. First, thecontingent nature of distortion must be concealed; secondly, this act of concealmentitself must be made visible.

Although these two processes appear to be somewhat contradictory, this is only thecase when we are talking about purer notions of truth or of the establishment of a fixedmeaning. In the discourse of the interviewees above, we are not talking about starkdichotomies. The interviewees rationalise the conflicts between business and societybut never come to the conclusion that there is complete conflict nor complete coherencebetween these notions. Rather, through the metaphor of “achieving a balance”interviewees rationalise the conflicts in such a way as to present a picture of relativecoherence between business and society. Conflicts do exist, but overall the role ofcorporations in modern society is a positive sum game. Indeed, the notions of businessand society are not completely fused together or dissolved into one notion where we seeno difference between the two. Rather, interviewees maintain the analytical distinctionbetween these two notions and therefore also maintain their inherent particularity andantagonism towards each other. The relative dissolution of this antagonism is achievedby joining these two elements together in a chain of equivalence[11], where they arepresented as mutually re-enforcing in the broad sense. Because two analyticallydistinct notions (in this case societal welfare and business) cannot, by virtue of theirhaving different signifiers, be completely equivalent to each other, the act of distortion,which is the relative equivalence between the two notions, always remains visible (seein particular Laclau, 1996).

What is being explored here is how business myths are constructed and reproduced.Around the nodal point of the business case (which given current structures andinstitutions is the only feasible nodal point for business) extra-business interests ordemands from social movements will be joined together with business interests in a(precarious and contestable) chain of equivalence. The objective of which is to show

SER andhegemonic

discourse

873

that there is no stark or worrisome conflict between business and social welfare orenvironmental sustainability. Indeed, through such chains of equivalence the verynotion of there being interests that are out with the scope of business is called intoquestion, or at least not recognised within the discourse. This would require anarticulation that was not grounded within the business case, something that wasnotably absent from the discourse of the interviewees who appeared to interpret allsocio-environmental acts and initiatives through a business case lens. The hegemonicnature of this discourse will now be discussed below.

Discussion and conclusionsThe discourse of the interviewees is one that may be thought of as providing theplatform by which SER is constructed. Therefore, in exploring perceptions, we canexplore the messages that are sent through SER. By way of synthesising the abovearguments, the discourse of the interviewees performs an act of distortion, asimplification of an over-determined reality that results in a relatively sanitised pictureof business-society relations. Moreover, it is through this distortion that such reportspresent themselves as objective realities (Thomson and Bebbington, 2005). It is thisdenial of the contingent and partial nature of reporting that ascribes to SER anideological and hegemonic character. According to Laclau (1996), ideology becomes sowhen a particular discourse shows itself as more than itself, when it projects anon-illusory image. Ideology is the denial of the illusory nature of things. When adiscourse denies its own partiality and incompleteness and claims to represent thetransparency or “fullness of the community” (Laclau, 1996, p. 206) then we can call itideological. Such “closures” that take place under the illusion oftransparency/objectivity/completeness are referred to by Laclau (1996) as myths.The very function of myth is to hegemonise. Even though SER is a marginal discourseand perhaps limited in how much it actually influences subordinate groups, it ishegemonic because of the form that it takes. Through the metaphor of balance, SERattempts to present the interests of business as largely congruent with social andenvironmental wellbeing. Thus, it tries to synthesise the interests of various socialgroups around the fundamental aims of business.

What is not immediately obvious from the discourse, although this paper has triedto illuminate it, is that this image that is projected is constructed primarily around apartisan notion of business self interest, expressed in the form of the business case.Thus, whilst there has been much discussion in the SER literature around what themotivations are that underpin SER, what is being suggested here is that perhaps thevast majority of these different motivations can be understood within this context ofthe business case. Although there is some evidence to suggest that this business casemay be used rhetorically, especially by individuals within organisations who havemore discretion in their decision making, the ability to deviate from a business casedominated strategy is likely to be limited. Whereas individual managers may havesome discretion to exercise their ethical concerns at the local level, this discretion islimited by macro power structures that place business case parameters around CSR.Although the notion that business will do things because they make business sense isitself hardly surprising, this has not been expressed concretely in the SER literature inthis way, instead having perhaps been concerned with exploring and describingdifferent manifestations of the business case.

AAAJ20,6

874

Furthermore, the discussion around conflicts makes transparent the way in whichthis discourse is constructed and how it may have changed over time. The centrality ofthe business case implies that, in spite of new rhetoric concerning responsibility,accountability and transparency, the same fundamental system of power relations hasexisted since the birth of the corporation. However, interviewees are expressing a newlanguage to describe this old hegemony. Bebbington and Thomson (1996) show thatbusiness conceptions of sustainable development in the 1990s contained a greateracceptance of conflicts between business and society than was found in this study. Thesustainable development agenda initially took business unexpectedly and itsconceptual frameworks were shown to be inadequate for even articulating whatsustainable development means. The work of Milne et al. (2006) and Tregidga andMilne (2006) in particular shows how business still struggles to develop plausibledefinitions of sustainable development. However, even in the absence of coherent andplausible definitions, business manages to talk confidently about sustainabledevelopment and its ability to deal with it. What has changed in the last decade orso could be hypothesised to be a rearguard action from business. Throughorganisations such as the World Business Council for Sustainable Development(WBCSD) business has worked hard at convincing policy makers and governmentsaround the world that business can deal with sustainable development (Gray andBebbington, 2000). An obvious fall-out from this process is the development of an evermore expounded business case for sustainable development, CSR and SER. Theimportance of the development of this business case should not be underestimated.Without this nodal point around which to articulate business-society relations,business appears incapable of dealing with social and environmental issues and thusarguments for regulation or more profound means of redesigning the current economicsystem would present themselves. By subverting the initially radical notion ofsustainable development to fit the business case; by actually conflating it with the lessambitious notion of CSR (see Milne et al., 2006); and by projecting these notionsdiscursively through SER and other means, ideologies with other nodal points becomeincreasingly marginalised. Indeed, the cognitive dissonance between interviewees andtheir organisations that was reported by Bebbington and Thomson (1996) andO’Dwyer (2003) was not in evidence in the discourse of the interviewees above. Thismay be because the business context has changed.

Because of the seemingly pervasive nature of the business case, the transformativepotential of SER would appear to be severely limited. CSR discourse opens up businessto conversations that were not possible some 20 years ago. As such, the frames ofreference have changed. No longer is it a question of whether business should beresponsible, it is a question of how responsible business is. Recognising this, someauthors (Gray, 2002; Levy, 2005; Livesey, 2002; Livesey and Kearins, 2002) suggest thatSER therefore has some sort of Trojan horse capacity, implying that this concessionoffered by business is sowing the seed of its own ultimate downfall. This may be true,although it may be equally true that with the development of the business case as thenodal point for CSR discourse the Trojans are effectively kept inside the horse. A newdiscursive space has been opened up by CSR and SER, but it is filled with primarilythose articulations that are grounded within the business case. If it is to be believedthat fundamental conflicts exist between corporate economic activity andsocio-environmental welfare, then this nodal point sets a profound limit on how

SER andhegemonic

discourse

875

responsible organisations can actually be. Indeed, the CSR initiatives thatorganisations now undertake may hardly be considered concessions or successes atall if they are conducive to bolstering the ideological consent of business to exploitlabour and destroy the environment.

One limitation of the study, and perhaps of the SER literature generally, is ascribingan importance to SER in wider processes of ideology construction. The way in whichSER is received by society, if at all, is an area that has not been subject to a great deal ofresearch. The people interviewed in this study are not the primary intellectuals ofcapital[12]. They are individuals whose structural position demands that theyconstruct or reproduce such an ideology. Whether they are even expressing their owntrue beliefs is not something that the researcher could ascertain[13]. Thus, it would besomewhat heroic to presume that SER was the means by which organisations madesense of their socio-environmental dimensions, and that from this discursive practicebusiness activities and communications were shaped accordingly. Equally, it would betoo easy to dismiss SER as an irrelevant activity that is undertaken primarily so thatthe report preparers themselves can feel good about what they are doing (Morsing,2006). There may be some value in the Gramscian conception of how ideas develop andare disseminated throughout society. Ideas are not pumped out by some central“ministry of truth”. Rather, they are constructed and reproduced at various levelsthroughout society, and by a variety of social groups. In this sense, SER may be boththe reproduction of an existing ideology that is articulated by organisations such as theWBCSD and the ICC and the construction of ideology that in some way, howevermarginally, feeds back into wider discourses. Either way, the message that iscommunicated by this discourse is one which attempts to deflect attention away fromthe ecological crisis and some of the more profound social dislocations that permeateour societies. In this sense, it should be resisted and debunked wherever it manifestsitself. In this sense, there might be value in future research identifying othercommunication outlets where such corporate ideological disclosures manifestthemselves in order that a richer picture of corporate hegemonic discourse be built up.

Notes

1. As is noted in the method section below, this theoretical framework was not present at thebeginning of the study in this form. However, the necessarily revisionist form that the paperadopts does not suggest this.

2. The concept overdetermination was made popular by Althusser although it has roots inpsychoanalysis and linguistics. Laclau and Mouffe try to move beyond Althusser’s moreessentialist use of the term, showing how identity is more fluid and open than Althussersuggested.

3. Laclau and Mouffe prefer the term “the social” to “society”. Although the two will often beused interchangeably throughout this paper, it is Laclau and Mouffe’s conception of thesocial that is used as a guide.

4. In particular, Gray (2000) and Gray and Milne (2002) suggest that organisations shouldattempt to calculate overall environmental impact in the form of an Ecological Footprint.The Ecological Footprint is a comprehensive calculation of the environmental impact of anorganisation, region or economy rendered in terms of productive land area. Full costaccounting is another methodology that may be used to make such an assessment ofenvironmental impact, albeit rendered in financial terms.

AAAJ20,6

876

5. Because sustainability is a systems level concept, Gray and Milne (2004) suggest thatorganisations who produce a sustainability account would have to include all of the socialand environmental impacts of any organisation that they have ever worked with. This, Grayand Milne suggest, would be impossible.

6. It should be noted that the comparison between O’Dwyer (2003) and Bebbington andThomson (1996) does not entirely compare like with like. O’Dwyer (2003) interviewed financedirectors and CEOs whilst Bebbington and Thomson (1996) interviewed CSR managers anddirectors. These two studies therefore looked at two different sets of “managers” as well asdifferent geographical contexts. However, this might actually make the similarity in thefindings of these two studies all the more interesting, implying that the ideologicaleffects/struggles around the notions of CSR and sustainable development withinorganisations are more widely spread than simply one managerial sub-group orgeographical context.

7. For more detail of the “capture thesis”, see Cooper (1992; 2002); Cooper et al. (2005); Lehman(1999, 2001); and Tinker et al. (1991).

8. The word society is used throughout the paper as it refers to the type of language usedduring interviews. However, Laclau and Mouffe’s conception of “the social” underpins anytheoretical interpretation or allusion to societal implications.

9. This phrase the business case emerged strongly from the discourse of interviewees in a pilotstudy which consisted of 11 interviews with corporate managers. It was therefore broughtforward into the main study in order to explore its pervasiveness with a bigger sampleinterviewees being asked whether or not their SER/CSR activities needed to be groundedwithin a business case. Although the actual terminology in the main study was used by theresearcher initially, it is not believed that the subsequent business case articulations of theinterviewees have been imposed by the researcher. Non-business case motivations wereactively sought by the researcher, although these were generally not articulated by theinterviewees.

10. “Socio-environmental” driver is used here to refer to motivations that seem not to beprimarily commercial or business case oriented. That is, where the main driver is articulatedin terms of social or environmental welfare considerations and seemingly unrelated tostrategic or commercial concerns.

11. “Chain of equivalence” refers to the way in which hegemony is formed discursively. Ratherthan absorbing other movements or signs within a dominant movement or sign, the logic ofequivalence entails joining movements together, side by side. This serves to retain theparticularity of each social movement or sign whilst diffusing their antagonism by makingthem equivalent to each other to some extent. This uniting of distinct groups is howhegemony is constructed.

12. Meaning that the interviewees are not at the forefront of articulating and formulatingcapitalist ideology, although they do play some role in its transmission.

13. However, their was no indication given by the interviewees that their own views divergedfrom that of the corporation at all. This can be contrasted with Thomson and Bebbington(2005) and O’Dwyer (2003).

References

Adams, C. (2002), “Internal organisational factors influencing corporate, social and ethicalreporting: beyond current theorising”, Auditing, Accounting & Accountability Journal,Vol. 15 No. 2, pp. 223-50.

Adams, C.A. (2004), “The ethical, social and environmental reporting-performance gap”,Accounting, Auditing & Accountability Journal, Vol. 17 No. 5, pp. 731-57.

SER andhegemonic

discourse

877

Arnold, P. and Hammond, T. (1994), “The role of accounting in ideological conflict: lessons fromthe South African divestment movement”, Accounting, Organisations and Society, Vol. 19No. 2, pp. 111-22.

Bansal, P. and Roth, K. (2000), “Why companies go green: a model of ecological responsiveness”,Academy of Management Review, Vol. 13 No. 4, pp. 717-36.

Bebbington, J. (1997), “Engagement, education and sustainability: a review essay onenvironmental accounting”, Accounting, Auditing & Accountability Journal, Vol. 10 No. 3,pp. 365-81.

Bebbington, J. (2001), “Sustainable development: a review of the international development,business and accounting literature”, Accounting Forum, Vol. 25 No. 2, pp. 128-58.

Bebbington, J. and Thomson, I. (1996), Business Conceptions of Sustainability and theImplications for Accountancy, ACCA Research Report No. 48, ACCA, London.

Birkin, F., Edwards, P. and Woodward, D. (2005), “Accounting’s contribution to a consciouscultural evolution: and an end to sustainable development”, Critical Perspectives onAccounting, Vol. 16 No. 3, pp. 185-208.

Buhr, N. (2002), “A structuration view on the initiation of environmental reports”, CriticalPerspectives on Accounting, Vol. 13 No. 1, pp. 17-38.

Cooper, C. (1992), “The non and nom of accounting for (M)other Nature”, Accounting, Auditing& Accountability Journal, Vol. 5 No. 3, pp. 16-39.

Cooper, C. (2002), “Critical accounting in Scotland”, Critical Perspectives on Accounting, Vol. 13No. 4, pp. 451-62.

Cooper, C., Taylor, P., Smith, N. and Catchpowle, L. (2005), “A discussion of the political potentialof social accounting”, Critical Perspectives on Accounting, Vol. 16 No. 7, pp. 951-74.

Deegan, C. and Rankin, M. (1996), “Do Australian companies report environmental newsobjectively? An analysis of environmental disclosures by firms prosecuted successfully bythe Environmental Protection Authority”, Accounting, Auditing & Accountability Journal,Vol. 9 No. 2, pp. 50-67.

Deegan, C., Rankin, M. and Tobin, J. (2002), “An examination of the corporate social andenvironmental disclosures of BHP from 1983-1997”, Auditing, Accounting & AccountabilityJournal, Vol. 15 No. 3, pp. 312-43.

Erusalimsky, A., Gray, R.H. and Spence, C. (2006), “Towards a more systematic study ofstand-alone corporate social and environmental reporting: an exploratory pilot study ofUK reporting”, Social and Environmental Accounting Journal, Vol. 26 No. 1, pp. 12-20.

Fayers, C. (1998), “Environmental reporting and changing corporate environmentalperformance”, Accounting Forum, Vol. 22 No. 1, pp. 74-94.

Freedman, M. and Patten, D. (2004), “Evidence on the pernicious effect of financial reportenvironmental disclosure”, Accounting Forum, Vol. 28 No. 1, pp. 27-41.

Gadamer, H.-G. (1989), Truth and Method, Continuum, London.

Gallhofer, S. and Haslam, J. (1997a), “Beyond accounting: the possibilities of accounting and‘critical’ accounting research”, Critical Perspectives on Accounting, Vol. 8 Nos 1-2, pp. 71-95.

Gallhofer, S. and Haslam, J. (1997b), “The direction of green accounting policy: criticalreflections”, Accounting, Auditing & Accountability Journal, Vol. 10 No. 2, pp. 148-74.

Gramsci, A. (1971), Selections from the Prison Notebooks, Penguin, London.

Grant, D., Hardy, C., Oswick, C. and Putnam, L. (Eds) (2004), The Sage Handbook ofOrganizational Discourse, Sage, London.

AAAJ20,6

878

Gray, R.H. (2000), “Current developments and trends in social and environmental auditing,reporting and attestation: a review and comment”, International Journal of Auditing, Vol. 4No. 3, pp. 247-68.

Gray, R.H. (2002), “The social accounting project and accounting, organizations and society:privileging engagement, imaginings, new accountings and pragmatism over critique?”,Accounting, Organizations and Society, Vol. 27 No. 7, pp. 687-708.

Gray, R.H. (2006), “Taking a long view on what we know about social and environmentalaccountability and reporting: of Don Quixote, placebos and capitalism”, Electronic Journalof Radical Organisation Theory, Vol. 10 No. 1.

Gray, R.H. and Bebbington, J. (2000), “Environmental accounting, managerialism andsustainability: is the planet safe in the hands of business?”, Advances in EnvironmentalAccounting and Management, Vol. 1, pp. 1-44.

Gray, R.H. and Milne, M. (2002), “Sustainability reporting: who’s kidding whom?”, CharteredAccountants Journal of New Zealand, Vol. 81 No. 6, pp. 66-70.

Gray, R.H. and Milne, M. (2004), “Towards reporting on the triple bottom line: mirages, methodsand myths”, in Henriques, A. and Richardson, J. (Eds), The Triple Bottom Line: Does It AllAdd up?, Earthscan, London, pp. 70-80.

Gray, R., Kouhy, R. and Lavers, S. (1995), “Corporate social and environmental reporting: a reviewof the literature and a longitudinal study of UK disclosure”, Auditing, Accounting& Accountability Journal, Vol. 8 No. 2, pp. 47-77.

Gray, R.H., Owen, D. and Adams, C. (1996), Accounting and Accountability: Changes andChallenges in Corporate Social and Environmental Reporting, Prentice-Hall, London.

Gray, R.H., Owen, D. and Maunders, K.T. (1987), Corporate Social Reporting: Accounting andAccountability, Prentice-Hall, Hemel Hempstead.

Hogner, R.H. (1982), “Corporate social reporting: eight decades of development at US Steel”,Research in Corporate Social Performance and Policy, Vol. 4, pp. 243-50.

Laclau, E. (1990), New Reflections on the Revolution of Our Time, Verso Books, London.

Laclau, E. (1996), “The death and resurrection of the theory of ideology”, Journal of PoliticalIdeologies, Vol. 1 No. 3, pp. 201-20.

Laclau, E. and Mouffe, C. (1985), Hegemony and Socialist Strategy, Verso, London.

Laine, M. (2005), “Meanings of the term ‘sustainable development’ in Finnish corporatedisclosures”, Accounting Forum, Vol. 29 No. 4, pp. 395-413.

Larrinaga-Gonzalez, C., Carrasco-Fenech, F., Caro-Gonzalez, F.J., Correa-Ruiz, C. andPaez-Sandubete, J.M. (2001), “The role of environmental accounting in organizationalchange: an exploration of Spanish companies”, Accounting, Auditing & AccountabilityJournal, Vol. 14 No. 2, pp. 213-39.

Lehman, G. (1999), “Disclosing new worlds: a role for social and environmental accounting andauditing”, Accounting, Organizations and Society, Vol. 24 No. 3, pp. 217-41.

Lehman, G. (2001), “Reclaiming the public sphere: problems and prospects for corporate socialand environmental accounting”, Critical Perspectives on Accounting, Vol. 12 No. 6,pp. 713-33.

Levy, D.L. (2005), “Business and the evolution of the climate regime: the dynamics of corporatestrategies”, in Levy, D. and Newell, P.J. (Eds), The Business of Global EnvironmentalGovernance, MIT Press, Cambridge, MA, pp. 74-104.

Levy, D.L. and Egan, D. (2003), “A neo-Gramscian approach to corporate political strategy:conflict and accommodation in the climate change negotiations”, Journal of ManagementStudies, Vol. 40 No. 4, pp. 803-29.

SER andhegemonic

discourse

879

Livesey, S.M. (2002), “The discourse of the middle ground: Citizen Shell commits to sustainabledevelopment”, Management Communication Quarterly, Vol. 15 No. 3, pp. 313-49.

Livesey, S.M. and Kearins, K. (2002), “Transparent and caring corporations? A study ofsustainability reports by the Body Shop and Royal Dutch/Shell”, Organization andEnvironment, Vol. 15 No. 3, pp. 233-58.

Llewellyn, S. (2001), “Two-way windows: clinicians as medical managers”, Organization Studies,Vol. 22 No. 4, pp. 593-623.

Maltby, J. (2004), “Hadfields Ltd: its annual general meetings 1903-1939 and their relevance forcontemporary corporate social reporting”, British Accounting Review, Vol. 36 No. 4,pp. 415-39.

Meadows, D., Meadows, D. and Randers, J. (2003), Limits to Growth: The 30 Year Update,University Books, New York, NY.

Milne, M.J. and Patten, D.M. (2002), “Securing organisational legitimacy: an experimentaldecision case examining the impact of environmental disclosures”, Accounting, Auditing& Accountability Journal, Vol. 15 No. 3, pp. 372-405.

Milne, M.J., Kearins, K.N. and Walton, S. (2006), “Creating adventures in wonderland?The journey metaphor and environmental sustainability”, Organization, Vol. 13 No. 6,pp. 801-39.

Morsing, M. (2006), “Corporate social responsibility as strategic auto-communication: on the roleof external stakeholders for member identification”, Business Ethics: A European Review,Vol. 15 No. 2, pp. 171-82.

Mouck, T. (1995), “Financial reporting, democracy and environmentalism: a critique of thecommodification of information”, Critical Perspectives in Accounting, Vol. 6 No. 6,pp. 535-53.

Mouffe, C. (1979), Gramsci and Marxist Theory, Routledge & Kegan Paul, London.

Neu, D., Warsame, H. and Pedwell, K. (1998), “Managing public impressions: environmentaldisclosures in annual reports”, Accounting, Organizations and Society, Vol. 23 No. 3,pp. 265-82.

O’Dwyer, B. (2002), “Managerial perceptions of corporate social disclosure”, Accounting,Auditing & Accountability Journal, Vol. 15 No. 3, pp. 106-36.

O’Dwyer, B. (2003), “Conceptions of corporate social responsibility: the nature of managerialcapture”, Accounting, Auditing & Accountability Journal, Vol. 16 No. 4, pp. 523-57.

O’Dwyer, B. (2004), “Qualitative data analysis: illuminating a process for transforming a ‘messy’but ‘attractive’ nuisance”, The Real Life Guide to Accounting Research: A Behind theScenes View of Using Qualitative Research Methods, Elsevier, London, pp. 391-407.

Owen, D.L., Swift, T. and Hunt, K. (2001), “Questioning the role of stakeholder engagement insocial and ethical accounting, auditing and reporting”, Accounting Forum, Vol. 25 No. 3,pp. 264-82.

Owen, D.L., Swift, T., Humphrey, C. and Bowerman, M. (2000), “The new social audits:accountability, managerial capture or the agenda of social champions?”, EuropeanAccounting Review, Vol. 9 No. 1, pp. 81-98.

Patten, D. and Trompeter, G. (2003), “Corporate responses to political costs: an examination ofthe relation between environmental disclosure and earnings management”, Journal ofAccounting and Public Policy, Vol. 22 No. 1, pp. 83-94.

Phillips, L. and Jørgensen, M.W. (2002), Discourse Analysis as Theory and Method, Sage, London.

Porritt, J. (2005), Capitalism as if the World Matters, Earthscan, London.

AAAJ20,6

880

Prasad, P. and Elmes, M. (2005), “In the name of the practical: unearthing the hegemony ofpragmatics in the discourse of environmental management”, Journal of ManagementStudies, Vol. 42 No. 4, pp. 845-67.

Sassoon, A.S. (1988), Gramsci’s Politics, Hutchison, London.

Solomon, J. and Solomon, A. (2006), “Private social, environmental and ethical disclosure”,Accounting, Auditing & Accountability Journal, Vol. 19 No. 4, pp. 564-91.

Thomson, I. and Bebbington, J. (2005), “Social and environmental reporting in the UK:a pedagogic evaluation”, Critical Perspectives on Accounting, Vol. 16 No. 5, pp. 507-33.

Tinker, T. and Neimark, M. (1987), “The role of annual reports in gender and class contradictionsat General Motors: 1917-1976”, Accounting, Organizations and Society, Vol. 12 No. 1,pp. 71-88.

Tinker, T., Lehman, C. and Neimark, M. (1991), “Falling down the hole in the middle of the road:political quietism in corporate social reporting”, Accounting, Auditing & AccountabilityJournal, Vol. 4 No. 2, pp. 28-54.

Torfing, J. (1999), New Theories of Discourse: Laclau, Mouffe and Zizek, Blackwell, Oxford.

Tregidga, H.M. and Milne, M.J. (2006), “From sustainable management to sustainabledevelopment: a longitudinal analysis of a leading New Zealand environmental reporter”,Business Strategy and the Environment, Vol. 15 No. 4, pp. 219-41.

UNEP/SustainAbility (2004), “Risk and opportunity: best practice in non-financial reporting”,The Global Reporters 2004 Survey of Corporate Sustainability Reporting, UNEP, London.

Unerman, J. and Bennett, M. (2004), “Increased stakeholder dialogue and the internet: towardsgreater corporate accountability or reinforcing capitalist hegemony?”, Accounting,Organizations and Society, Vol. 29 No. 7, pp. 685-707.

Welford, R. (1997), Hijacking Environmentalism: Corporate Responses to SustainableDevelopment, Earthscan, London.

WWF (2004), Living Planet Report, WWF, London.

Further reading

Bakan, J. (2004), The Corporation: The Pathological Pursuit of Profit and Power, Constable,London.

Deegan, C. (2002), “The legitimising effect of social and environmental disclosures: a theoreticalfoundation”, Auditing, Accounting & Accountability Journal, Vol. 15 No. 3, pp. 282-311.

Deegan, C. (2004), “Environmental disclosure and share prices – a discussion about efforts tostudy this relationship”, Accounting Forum, Vol. 28 No. 1, pp. 87-97.

Gadamer, H.-G. (1976), “The universality of the hermeneutical problem”, in Ormiston, G.L. andSchrift, A.D. (Eds), The Hermeneutic Tradition from Ast to Ricoeur, State University ofNew York Press, New York, NY.

Gadamer, H.-G. (1998), Praise of Theory: Speeches an Essays, Yale University Press, New Haven,CT and London.

Hughes, S.B., Anderson, A. and Golden, S. (2001), “Corporate environmental disclosures: are theyuseful in determining environmental performance?”, Journal of Accounting and PublicPolicy, Vol. 20 No. 3, pp. 217-40.

Hughes, S.B., Sander, J.F. and Reier, J.C. (2000), “Do environmental disclosures in US annualreports differ by environmental performance?”, Advances in Environmental Accountingand Management, Vol. 1, pp. 141-61.

SER andhegemonic

discourse

881

Larrinaga-Gonzalez, C. and Bebbington, J. (2001), “Accounting change or institutionalappropriation? A case study of the implementation of environmental accounting”,Critical Perspectives on Accounting, Vol. 12 No. 3, pp. 269-92.

Laughlin, R. (1995), “Methodological themes: empirical research in accounting: alternativeapproaches and a case for ‘middle-range’ thinking”, Accounting, Auditing & AccountabilityJournal, Vol. 8 No. 1, pp. 63-87.

Levy, D.L. (1997), “Environmental management as political sustainability”, Organization andEnvironment, Vol. 10 No. 2, pp. 126-47.

Milne, M.J., Tregidga, H. and Walton, S. (2005), “Playing with magic lanterns: the New Zealandbusiness council for sustainable development and corporate triple bottom line reporting”,working paper, Department of Accountancy and Business Law, University of Otago,Dunedin.

O’Dwyer, B. (2005), “The construction of a social account: a case study in an overseas aidagency”, Accounting, Organizations and Society, Vol. 30 No. 3, pp. 279-96.

O’Dwyer, B., Unerman, J. and Bradley, J. (2005), “Perceptions on the emergence and futuredevelopment of corporate social disclosure in Ireland: engaging the voices ofnon-governmental organisations”, Accounting, Auditing & Accountability Journal, Vol. 18No. 1, pp. 14-43.

Patten, D.M. (1992), “Intra-industry environmental disclosures in response to the Alaskan oilspill: a note on legitimacy theory”, Accounting, Organizations and Society, Vol. 17 No. 5,pp. 471-5.

Roberts, R.W. (1992), “Determinants of corporate social responsibility disclosure: an applicationof stakeholder theory”, Accounting, Organizations and Society, Vol. 17 No. 6, pp. 595-612.

Rockness, J. and Williams, P.F. (1988), “A descriptive study of socially responsible mutualfunds”, Accounting, Organizations and Society, Vol. 13 No. 4, pp. 397-411.

Ullmann, A.A. (1985), “Data in search of a theory: a critical examination of the relationshipsamong social performance, social disclosure and economic performance of US firms”,Academy of Management Review, Vol. 10 No. 3, pp. 540-57.

Corresponding authorCrawford Spence can be contacted at: [email protected]

AAAJ20,6

882


Enrolling discourse consumers toaffect material intellectual capital

practiceSuresh Cuganesan

Macquarie Graduate School of Management, Macquarie University,North Ryde, Australia

Christina BoedkerUniversity of New South Wales, Sydney, Australia, and

James GuthrieThe University of Sydney, Sydney, Australia

Abstract

Purpose – The purpose of this paper is to provide an empirical account of the discourse-practicenexus relating to an accounting for intellectual capital (IC) at an Australian public sector organisation(LandsNSW).

Design/methodology/approach – The paper is a case study. Data collection techniques comprisedsemi-structured interviews, in situ observation of meetings and internal presentations, and reviews ofdocuments such as internal memos, strategic plans, IC statements and business performance andannual reports.

Findings – Although ambiguity in discourse may reduce its ability to prescribe particular practices, thepaper argues that such qualities allow discourse producers greater flexibility in attempting to shape action.At LandsNSW, IC discourse was given shape by those mobilising it. Specifically, constructing IC as apotential solution to practical concerns made IC more attractive to discourse consumers. By interesting andenrolling users in this manner, IC discourse was taken up where it had previously been discarded.

Research limitations/implications – External factors that comprised IC discourse outside theorganisation have only been given limited attention. It is also acknowledged that discourse consumersextend beyond practice manager level to also include employees in lower level operational positionsand that these have not been explored in this study.

Purpose – The paper provides useful information on enrolling discourse consumers to affectmaterial intellectual capital practice.

Keywords Language, Intellectual capital, Consumers, Australia


I think there’s been mixed success. I think it is early days. I think intellectual capital itself hasa difficulty in articulating what it is, and who it is, and that is part of the difficulty. . . If youcannot articulate within a framework of an organisation, public or private, in clear, distinct,and objective terms, you cannot expect it to be readily adopted (LandsNSW Director-General,27 September 2005).



The authors would like to thank the NSW Department of Lands for participating in the project;the Faculty of Economics and Business at The University of Sydney for their support; theAustralian Government Consultative Committee on Knowledge Capital and the Society forKnowledge Economics for their ongoing support; and John Dumay, Melissa Jamcotchian andFiona Crawford for their research and editorial assistance.

Enrollingdiscourse

consumers

883

Received 7 December 2006Revised 24 May 2007

Accepted 10 July 2007


Vol. 20 No. 6, 2007pp. 883-911


DOI 10.1108/09513570710830281

1. IntroductionThe study of organisational discourse, in which organisations are conceived as“material practices of text and talk” (Boje et al., 2004, p. 571), has reframed acceptedideas about organisations and their management (Hardy, 2001; Boje et al., 2004). Morerecently, studies concerned with explicating the relations between discourse andmaterial management practices have emerged (see for example, Hardy et al., 2000;Phillips et al., 2004). In the accounting literature, there are also several studiesexamining discourse and material practice, as witnessed by the papers in this AAAJspecial issue. For example, Kahlifael et al. (2007) study discourse and auditmethodological change, while Spence (2007) explores the motivations that underlinethe construction of social and environmental reporting and provides insights intohegemonic discourse.

Two observations from these management and accounting studies are worthy ofnote. First, they are few in number and thus the nexus between discourse and materialpractice remains a somewhat unexplored area. Second, many studies privilege thecodification of discourse in their narratives of how discourse influences practice. Thispaper addresses these issues by providing an empirical account of thediscourse-practice nexus, and by presenting a narrative of how an ambiguousdiscourse affected material practices through being flexible enough to be connected tothe interests and concerns of discourse consumers. Specifically, the paper highlightsalternative possibilities for the discourse-practice relationship and illustrates theeffects of ambiguity in discourse and its possibilities in shaping material practice.

The context for this paper is the still formative discourse of intellectual capital (IC)and its importance for organisations competing in the “information age” and“knowledge-based economies” (Guthrie et al., 2001; Bukh et al., 2005). Two main factorssuggest that such an investigation within the accounting discipline is timely. First, theimpacts of IC discourse on material practices (including accounting practice) appearsignificant. In addition to prescriptions that organisations invest in resources such asemployee competencies, external relationships and innovation-inducing processes(Edvinsson and Malone, 1997; Sveiby, 1997), it is argued that traditional modes ofaccounting are incapable of inscribing the many intangible resources that areimportant for competition, resulting in a need for “alternative forms” of accounting forIC (Mouritsen et al. 2001a). Second, IC discourse is still formative and has yet to achievea coherent and codified structure, especially in its ability to prescribe practice(Mouritsen et al., 2001b; Guthrie et al., 2001). As such, its effects are still unclear andhave been identified as requiring empirical examination (Petty and Guthrie, 2000;Mouritsen, 2006). Hence, in investigating ambiguity and flexibility in discourse, thispaper examines the effects of IC discourse for material practices as reflected in how anorganisation accounts for IC.

The research site is an Australian public sector organisation. At the time of thestudy, the organisation studied (labelled “LandsNSW”) faced the effects of “new publicmanagement” (NPM) reforms characterised by: tight budget environments, changes instructure and mode of operation due to the introduction of government businessenterprise status, and more stringent accrual accounting performance reportingrequirements and accountabilities demanded by funding agencies and the widercommunity (Guthrie et al., 1998; English et al., 2005). At LandsNSW, this resulted in theproduction of IC discourse within the organisation as its executive management sought

AAAJ20,6

884

to make sense of how it could create value for its stakeholders and the Australianpublic and then communicate it and the resources that would enable this to happen.Over time, novel ways of accounting for IC manifested, most tangibly in the form of ICstatements that comprised part of LandsNSW’s annual reports and in systems of keyperformance indicators that operated within the organisation.

The paper is structured as follows. Section 2 provides an overview of the relevantprior work on discourse and practice. This is followed by section three, which presentsa brief overview and characterisation of IC discourse. Section 4 details the researchmethod, while section 5 presents the research findings. The paper concludes with adiscussion and synthesis of findings and conclusions in section 6.

2. Discourse ambiguity and the interests of discourse consumersThe study of discourse within organisations is significant and growing (Oswick et al.,2000). Within this literature, applications of the term “discourse” have been many andvaried (Keenoy et al., 1997; Alvesson and Karreman, 2000). This paper follows Hardy(2001, p. 26) in conceiving of “discourse” as “practices of talking and writing, whichbring objects into being through the production, dissemination and consumption oftexts”[1]. Situated in particular socio-economic and political contexts, discourse bothconstitutes and is constituted by social phenomena (Chia, 2000). Thus, a socialconstructivist ontology is adopted (Hardy, 2001). Of particular relevance to this paperis how discourse located in particular points in space and time shapes materialpractices. While a number of organisational discourse studies have implied a linkbetween discourse and practice, or built on this notion in their arguments, only a fewstudies have explicated the discourse-practice relation in organisations in detail (referto Hardy et al., 2000; Phillips et al., 2004). These studies are reviewed in some depthbelow.

For Hardy et al. (2000), discourse is a resource for individuals to enact strategy andachieve particular outcomes. In this way, discourse is conceptualised as a strategicresource utilised by interested participants within organisations to shape andconstitute organisational “realities”. The authors’ model of discourse as a strategicresource comprises three iterative and overlapping “circuits”. The first circuit involvesthe activity of the individual(s) engaging in discourse to further their interests. Thisinvolves the making of new discursive statements to shape organisational meaning,the use of symbols, narrative and metaphor in this process, and the production of textsthat link material referents to concepts about how “reality” and the relations within areorganised. The second involves the circuit of “performativity”, where otherorganisational actors are engaged. Here, the concepts produced through circuits ofactivity must be related and made meaningful to others. In this, the authors argue thatthe subject position of the actor engaging in the discursive activity and the textsproduced through this activity are important, the former needing to be influential andthe latter receptive to those being acted on. The third involves a circuit of“connectivity” where circuits of activity and “performativity” intersect. This is wherethe texts and the concepts produced are attached to material referents and begin toshape organisational “reality” more broadly, in turn influencing future discursiveactivity.

Phillips et al. (2004) focus on the process of institutionalisation, arguing thatinstitutions are constituted by discourse and the texts that are comprised within the

Enrollingdiscourse

consumers

885

discourse. Thus, actions produce texts that contribute to and are embedded indiscourse, and it is this discourse which gives rise to institutions that constrain andenable future actions. In presenting their discursive model of institutionalisation,Phillips et al. (2004) develop a series of propositions about the factors that influence thisprocess. For the authors, actions that require organisational sense making and/or affectperceptions of organisational legitimacy are more likely to result in texts that arewidely disseminated and consumed. These texts are then more likely to becomeembedded in discourse if the text producer holds a position of power or formalauthority, if the text is generally meaningful and recognisable and if the text links toother texts and discourses. Finally, the characteristics of the discourse (its structureand coherence, and whether supporting or competing discourses exist) influencewhether it produces institutions that then shape future actions.

While the above works are important contributions in an area that has receivedinsufficient theoretical and empirical attention, they are deficient in two significantways. First, they privilege codification and structure in discourse to the detriment ofambiguity and flexibility. Hardy et al. (2000, p. 1236) promote the need for discourseproducers to reduce both potential ambiguities and the need for sense-making inexplaining how “the relevant concepts must have meaning for the individuals to whomthey are directed”. Similarly, Phillips et al. (2004, p. 644) propose that “texts that takethe form of genres, which are recognisable, interpretable, and usable in otherorganisations are more likely to become embedded in discourse than texts that do not”.The authors argue further that the extent to which discourse is able to produceinstitutions that prescribe practice is contingent on its coherence and unified structure,the presence of supporting discourse and the absence of competing ones. Overall, theimplication is that ambiguity impinges upon the sense-making ability of consumers ofdiscursive texts (Markham, 1996).

Although ambiguity in discourse may well reduce its ability to prescribe particularpractices, we argue that such qualities allow discourse producers greater flexibility inattempting to shape action. A central challenge for discourse producers is to ensurethat others (discourse consumers) act in accordance with the practices that areprescribed and proscribed. This requires that discourse consumers be interested intaking up the discourse. Here, the advantage of loosely specified vis-a-vis highlycodified discourse is that the producer has greater degrees of freedom in translating itin different ways to interest, persuade and mobilise consumers to enact it. Lesscoherence and structure, and the non-articulation of concepts may thus be “preferred”in order for consumers to “buy-in”. These alternative possibilities are not discussed ordealt with in the discourse theory frameworks presented earlier and comprise one partof the theoretical focus for the paper[2].

This leads to the second deficiency in the extant work. Both models fail to considerthe interests of discourse consumers in taking up particular texts and discourse andchanging their practices in accordance with these. As discussed, Hardy et al. (2000)focus on the activities of the discourse producer, their subject position andcharacteristics of the discourse. The closest the authors come to acknowledging theagency of discourse consumers occurs when they observe that “the symbols,narratives, metaphors employed by the enunciator must . . . resonate with other actors,otherwise they will fail to convey the meaning intended by the enunciator” (Hardy et al.,2000, p. 1236). In similar fashion, Phillips et al. (2004) focus on the actions and

AAAJ20,6

886

characteristics of the discourse producer and the properties of the resultant texts anddiscourse. Thus, consumers of texts are rendered passive and their agency removed.They become enveloped in the discursive activity provided certain conditions are met,with their practices changing accordingly. However, as noted previously, discourseconsumers have their own interests that may or may not be in accordance with those ofthe discourse producer. Here, we depart from prior studies that attribute the ability ofdiscourse to influence practice primarily to the characteristics of the discourseproducer as well as those of the discourse itself (Hardy et al., 2000; Phillips et al., 2004).While acknowledging the relevance of these factors for the discourse-practice relation,we seek to explain how discourse consumers become sufficiently interested andmobilised to perform discourses through the enactment of material practices.

Our primary focus is thus not on the discourse per se, but the changing subjectpositions of those that consume the discourse in terms of their acceptance andadoption, and the subsequent effects of this for organisational practice. To this end, weborrow from actor-network theory (ANT) and in particular Callon’s (1986) work on thesociology of translation to understand how potential discourse consumers becomepersuaded and interested in the statements of discourse producers.

We use ANT to conceptualise the mobilisation and advancement of discourse as afragile process of network building, enrolling allies and overcoming dissenters. ANTapplies a relational approach in prescribing an examination of how the elements in anetwork, be these human or non-human, material or immaterial, are translated as partof their connections with other entities in the network (Latour, 1987; 1999, 2005; Law,1999). Thus, discourse, its fate and its effects are to be understood as a collective, andits elements operating in a mutually constitutive fashion (Law and Callon, 1988; Law,1992). Callon’s (1986) moments of translation, in particular, enable the conception ofhow potential discourse consumers become interested in the activity of discourseproducers and enact practice accordingly. Applied to this context, Callon’s (1986)moments of translation are as follows[3]:

. Problematisation and interessement. Actors are identified, their interestsestablished and potential concerns problematised. The discourse producer(s)works to convince discourse consumers that the roles it has defined for them areacceptable. Text and discourse producers seek to make the discourseindispensable to discourse consumers by defining the nature and problems ofthe latter and presenting the take-up of the discourse produced as an “obligatorypassage point” to the achievement of their interests. This may include processesby which the discourse producer(s) seek to lock discourse consumers into theroles that are proposed for them.

. Enrolment. The discourse consumers accept the interests / roles that have beendefined for them by the discourse producer(s). If enrolment is successful, thendiscourse consumers become enrolled in the network through which thediscourse producer(s) is seeking to act and through which the texts and discourseflow. The discourse producer(s) has ensured that discourse consumers’ interestsare displaced and translated into those that have been proposed for them. Thediscourse consumers via process of enrolment become co-producers of discourse.

. Mobilisation and continuous stabilisation of allies. The methods used bydiscourse producer(s) to ensure that key elements of the network continue to act

Enrollingdiscourse

consumers

887

in the roles intended for them and the alliances constructed by the discourseproducer(s) with these other network elements continue to hold. Processes ofenrolment, stabilisation and translation never end. Rather they are ongoingprocesses whereby interests and alliances continuously need to be held in placeand stabilised.

Through this perspective, considering these moments of translation, the production ofIC discourse at LandsNSW and how consumers are enrolled, is examined.

3. The discourse of ICIC discourse can be characterised as still in its formative stages and fluid. Severalinternational guidelines, international and national policy bodies, green papers andother reports (see, EC, 2006; SKE, 2005; METI, 2004, 2005; Mouritsen et al., 2003; NIF,2003; MERITUM, 2002; OECD, 1999) have argued that in the past few decades theworld has rapidly moved from an industrial economy (in which economic growth wasconsidered to be mostly determined by the use of tangible resources) towards aknowledge-based economy. In academic circles, several studies have highlightedorganisational practices in regards to managing and measuring knowledge-basedresources (e.g., Boedker et al., 2005; Cuganesan, 2005; Mouritsen and Flagstad, 2005;Leitner and Warden, 2004; Habersam and Piber, 2003), while a number of recent bookson the topic have been released (e.g., Unerman et al., 2007; Roos et al., 2005; Andriessen,2004; Bonfour, 2003).

Importantly for accounting, IC discourse has long been associated with criticism offinancial accounting as a means of measuring and communicating the value oforganisations (Sveiby, 1997). Claims have been made that alternative accountings forIC (such as IC statements) are required which provide a more meaningful narrative andvisual account of organisational performance vis-a-vis traditional accountinginscriptions of organisations (Mouritsen et al., 2001a,b, 2003). IC statements are seenas a means to overcome limitations in traditional accounting representations oforganisations and specifically, the intangible resources of the firm and their capacity tocreate value (Fincham and Roslender, 2003)[4].

Thus as a separate (albeit multi-disciplinary) “field” of management inquiry, IC hasundergone rapid development. However, despite the published research and discussionsurrounding IC, there is still a significant lack of consensus on how it should bemanaged, measured and reported. Apart from the notion that IC can be usefullycharacterised in terms of human, relational and structural capital or external andinternal capital (refer to Edvinsson and Malone, 1997; Roslender and Fincham, 2004;Stewart, 1997; Sveiby, 1997)[5] there is little agreement on much else. There is alsodiversity in prescribed measurement methods (Andriessen, 2004), with over 30alternative approaches being identified (Sveiby, 2006), and beyond illustrations of theprocess of developing an IC statement, there is little specific recommendation orunifiable prescriptions[6]. Moreover, observations of international practices in relationto IC are scant and generally observable but not in a singular framework (Guthrie et al.,2007), suggesting that hitherto “the vocabulary of IC has been established in only themost superficial way” (Mouritsen, 2006, p. 821). The perceivably disparate, ambiguousand non-cumulative nature of IC discourse to date, however, continues to result inwidespread calls for conceptual refinement, methodology consolidation and moreempirical research (Andriessen, 2004; Marr et al., 2003; Petty and Guthrie, 2000). As

AAAJ20,6

888

such, the discourse of IC represents a relevant context for the examination of howambiguity in discourse influences its ability to affect material organisational practices(including, as outlined above, the practice of accounting).

4. Research methodsThe research site is the New South Wales Department of Lands (LandsNSW), anAustralian public sector organisation. The organisation was created in April 2003, andconsists of the Land and Property Information Division (LPI), Crown Lands Division,and Soil Services Division[7]. In addition, LandsNSW has a number of departmentsthat provide corporate support to the three divisions.

In total, actors, events and the production of texts were followed at LandsNSW for aperiod commencing in 2003 and ending in early 2007. The analyses of the empiricalevidence obtained yielded for the researchers a chronological ordering into threeoverlapping phases as follows[8]:

(1) Phase I: 2003 to late 2004 – problematisation and IC discourse production.

(2) Phase II: late 2004 to late 2005 – an accounting for IC and an absence ofinteressement and enrolment of discourse consumers.

(3) Phase III: late 2005 to early 2007 – enrolment and effects on material practice.

Data collection techniques comprised semi-structured interviews, in-situ observation ofmeetings and internal presentations, and reviews of documents such as internalmemos, strategic plans, IC statements and business performance reports. Interviewswere conducted with the director-general, the executive management team and the nextlevel of management comprising practice managers with accountability andresponsibility for particular activities of the three divisions that compriseLandsNSW. Interviewees were chosen at these levels as these were where ICdiscourse and initiatives that had permeated throughout LandsNSW during the courseof the data collection period. Selection was also designed to ensure adequaterepresentation across all three divisions as well as corporate support areas. Interviewswere typically one to two hours in duration and were tape-recorded, transcribed andcoded using NVivo qualitative data analysis software[9]. In total, 46 interviews wereconducted during Phases I, II and III as indicated in Table I.

In addition, approximately 50 days were spent in aggregate over the four-yearperiod in in-situ observation. During this time, several meetings were attended thattypically comprised executive managers as well as practice managers.

In summary, the use of semi-structured interviews, documentary analysis andin-situ observation enabled a triangulation of empirical observations relevant to ourconcern with:

. the production of IC discourse;

. the positions of consumers in relation to their take-up of IC discourse; and

. the subsequent effects on material practice.

Rather than analysing the discourse of IC itself, the empirical analysis focuses on thoseorganisational participants that produce and consume the flexible discourse of IC[10].

Enrollingdiscourse

consumers

889

5. IC discourse and material practices at LandsNSWIn this section, empirical material obtained through the LandsNSW case study ispresented. The presentation follows Callon’s (1986) overlapping phases ofinteressement, enrolment and stabilisation, discussed in Section 4 above.

5.1. Phase I: 2003 to late 2004 – problematisation and IC discourse productionLike many Australian public sector organisations, LandsNSW operates in anenvironment characterised by NPM philosophies (Guthrie et al., 1998). As a newlyamalgamated organisation in 2003, LandsNSW was created as a government businessenterprise (GBE) and tasked with improving organisational performance, both inregards to cost savings and revenue development (Boedker et al., 2004, 2005). Theintroduction of a GBE business model, in which revenues pay wages, placed increasedpressure on the department to “justify” the value it creates for the Australian public.Texts produced within the organisation reflected the rhetoric of the changing publicsector and greater concerns for the organisation’s IC. For instance, a “service-orientedtarget model” was formulated, which was described in internal documents as focusingon the better management of the organisation’s structural capital to improve itsstakeholder relations:

Focal point: Satisfy customer needs through integrated services, customers’ ease ofinteraction via channel of choice (Target Business Model document, 2003, p. 11).

Position title Management level Label Phase interviewed

Director-General, Lands NSW Executive manager EM-1 Phase I, Phase II, Phase IIIChief Technology and InformationOfficer

Executive manager EM-2 Phase I, Phase II, Phase III

General Manager, Land and PropertyInformation

Executive manager EM-3 Phase I, Phase II, Phase III

General Manager, Soil Services Executive manager EM-4 Phase I, Phase IIGeneral Manager, Crown Lands Executive manager EM-5 Phase I, Phase II, Phase IIIGeneral Manager, Corporate Support Executive manager EM-6 Phase I, Phase II, Phase IIISenior Policy Officer Executive manager EM-7 Phase I, Phase II, Phase IIIChief Valuer, Land and PropertyInformation Valuation Services

Practice manager PM-2 Phase I, Phase II, Phase III

Business Development Manager, Landand Property Information


Manager, Registration and TitlingServices, Land and PropertyInformation


Area Manager, Soil Services Practice manager PM-5 Phase I, Phase IIFinance Manager, Soil Services Practice manager PM-6 Phase I, Phase II, Phase IIIFinance Manager, Crown Lands Practice manager PM-7 Phase I, Phase IIManager, People and Performance Practice manager PM-8 Phase I, Phase II, Phase IIIManager, Learning and Development Practice manager PM-9 Phase I, Phase II, Phase IIIManager, Land and PropertyInformation

Practice manager PM-10 Phase I, Phase III

Manager, Communications Solutions Practice manager PM-11 Phase I, Phase IIIManager, Business Consulting SoilServices

Practice manager PM-12 Phase IIITable I.Interview listing

AAAJ20,6

890

Concurrently, a business strategy map for LandsNSW emphasising the followingresponsibilities were developed:

Internal efficiency: Elimination of duplicated effort, rationalisation of activities, improvedcoordination between divisions, streamline systems; Customer focused product innovation:Cross-sell products, improve reliability of products, partner with suppliers, concentrate onvaluable products/services; [and] Dependable [land titles] register fulfilment: Ease of access toregister, safeguard register, ease to interact with register (Target Business Model document,2003, p. 12).

Similarly, the LandsNSW publicly released 2003-06 Corporate Plan (2003, p. 6)highlighted the values of the newly created organisation as being “customer service,accountability, innovation, respect, integrity, teamwork and leadership”.

At this point in time, the director-general appeared to be particularly interested inenacting changes within the newly constructed organisation that related to improvedmanagement of its IC. In this, two factors were relevant[11]. The first was theimperative to better manage and “make visible” organisational knowledge resourcesand specifically to improve retention of the knowledge of an ageing workforce(Boedker et al., 2005), Change would help the organisation transform itself throughbeing able to make sense of its IC and how the organisation’s knowledge-basedresources, including its ageing workforce, were managed internally.

A second factor was the need to communicate how LandsNSW created valuethrough knowledge and IC to external constituents such as funding agencies (e.g.,NSW Treasury) and the community. This second point was influenced by fundingscarcity and the need to “persuade” central agencies of the value of LandsNSW, andspecifically the “totality” of its assets including its knowledge of indigenous lands andland titling not accounted for on the balance sheet or in other performance reports. Inexecutive and public meetings, the need for LandsNSW to report its IC was repeatedlyemphasised by the director-general. This led to early discussions about the possibilityof introducing an IC statement into the organisation.

Enacting these changes would require a shift from management practices that werefocused on “short-term materialistic gains” and would influence the sustainability ofLandsNSW. In the words of the director-general:

The greatest value of organisations in today’s business environment is in intangible assets.However, in most organisations, senior executives pay little attention to the greatest asset intheir organisations, that is the knowledge or intellectual capital. Decision making is skewedtowards short term materialistic gains, which undervalues the real value and influenceswhether an organisation is sustainable or not (EM-1, emphasis added).

During this initial period, talk and text were produced that emphasised value formoney, efficiency, customer service, innovation and transparency. Specifically,discursive statements constructed an image of an organisation that was throwing offthe shackles of its public-sector origins and becoming an innovative and efficient GBEinstead. However, if LandsNSW was to pursue the changes envisioned by itsdirector-general, changes in management practices throughout the organisation wererequired. This was highlighted by a practice manager from the human resourcedepartment when reflecting back on the effects of becoming a GBE:

The financial arrangements introduced by the GBE model, where revenue pays wages andwhere the business is no longer funded by Treasury is a very significant issue and requires a

Enrollingdiscourse

consumers

891

very different mindset . . . Current values, which are based on loyalty and stability, conflictwith the increase in the rate of change (PM-8).

Enacting changes in management practices throughout the organisation required theparticipation and “persuasion” of executive and practice managers across the variousdivisions of the organisation. To help achieve this, the director-general sought toproblematise LandNSW’s management, measurement and reporting of IC as a meansof changing decision making that was “skewed towards [the] short term” anddelivering organisational sustainability (as per the director-general’s observationsnoted earlier). To this end, the director-general initiated the “Intellectual CapitalProject” with academics from three Australian universities to examine existing ICmanagement, measurement and reporting practices at LandsNSW. The IC projectbecame the “obligatory passage point” (Callon, 1986) for enacting change within theorganisation. This initial study was intended as an inquiry into the “status quo”focusing on existing IC practices within the organisation[12]. Through this, “talk”about IC (and also later on “practices” related to IC, see sub-section 5.2), was producedwithin LandsNSW.

The director-general in particular was a key initiator and producer of IC discourseduring this period. When asked what the “key enablers” were of IC discourse atLandsNSW, the following responses from LandsNSW Managers were commonplace:

I think we’ve got a director-general who is clearly committed to it, that’s the first thing (PM-4).

Well undoubtedly it would have been the DG, and the executive level management (PM-6).

It has to be driven, I guess, from the top, and the director-general has been, I guess, a bigdriver in this (EM-3).

With the director-general himself acknowledging his role as an important producer ofIC discourse:

Well I’ve been driving it from the top. I’ve driven it in regard to strategic executive meetings; Igave a public undertaking in my previous annual report, and at public meetings, that I wasgoing to report on intellectual capital in the next annual report. So that’s a demonstrableexample of leadership from the top. So I’ve used it very much as a lever, a tool, and a rallyingpoint (EM-1).

The director-general also attempted to problematise the management, measurementand reporting of IC through initiating an “intellectual capital project”. IC discourseencapsulated and provided “structure” and a potential solution to much of the changeshe was seeking to enact, as his comments below indicate:

The application of IC is a journey within the organisation. And I’ve used it as a part of thebroader awakening of an awareness towards unlocking the intangibles within theorganisation, which I regard as being the most valuable part of the organisation . . . and we’reonly at the start of the journey. It’s enabled me to put some more structural constructs aroundthe principles, philosophies, and the concepts that I’ve had for many years, that are nowespoused within the concept of intellectual capital (EM-1).

Subsequently, the director-general made a public announcement in the LandsNSW2003-04 annual report, released in November 2004, that the organisation would preparean IC statement for disclosure in the next year’s annual report. The 2003-04 annualreport contained the following statement by the director-general:

AAAJ20,6

892

We . . . will seek to achieve a quadruple bottom line where capacity building, organisationalknowledge, staff health and development are equally valued. We will seek to identify, valueand demonstrate the knowledge capital within the business. (Annual Report 2003-04,Director-General’s Foreword, emphasis added).

The director-general’s position as a main discourse producer was important. Evidenceindicated that the subject position of the enunciators was an important and warrantedvoice (Hardy et al., 2000), with the discourse producers perceived as having legitimaterights and authority to speak (Phillips et al., 2004). Not only was the director-general acentral discourse producer, with formal authority over LandsNSW and its charter as aGBE, he was also responsible for setting its direction. His position of seniority meantthat his role as IC discourse producer was strengthened and the likelihood of ICdiscourse taking hold was greater; however, the discourse itself was an important actorin determining its fate.

The “call to action” by the director-general led to a series of IC-related activities atthe organisation, as discussed in the following sub-section.

5.2. Phase II: Late 2004 to late 2005 – an accounting for IC and an absence ofinteressement and enrolment of discourse consumers5.2.1. An accounting for IC emerges. While during Phase I IC discourse had beenprimarily talked about and promulgated by the director-general, during phase II, ICdiscourse began to take a more “tangible” form with the “production” of the ICstatement commencing. This was supervised by the director-general with the mainactivities undertaken by the policy office.

In late 2005, LandsNSW released its first IC statement as part of its 2004-2005annual report. Within this 11- page document, LandsNSW explained its interest in ICreporting to the public (LandsNSW 2004-05 IC Statement, p. 7):

Traditionally, like many organisations, our reporting processes have focused on the financialaspects of our business. We acknowledge that changes in reporting are occurring in theprivate sector, particularly in relation to intangible assets, and recognise that this style ofreporting brings added value to the way in which we manage and plan for the future.

The IC statement also contained a framework described in Figure 1[13] where threeareas of focus were identified and articulated as part of “managerial challenges andefforts”, comprising employee demographics, service delivery and externalrelationships. As Figure 1 depicts, doing so would allow the generation of “financialresults”, and also “public trust, value and confidence”. Performance was redefined toinclude intangible elements as well as just financial results.

The statement also “talked about” the organisation’s internal, external and humancapital (LandsNSW 2004-05 IC Statement, p. 7) and provided examples of how theseresources were managed (LandsNSW 2004-05 IC Statement, p. 10):

In this first Lands Intellectual Capital Statement we seek to report on the three areas ofmanagerial effort – employee demographics, service delivery and the management ofexternal relationships. As indicated earlier, it is our intention that, over time, these indicatorswill change to reflect our improved understanding of these areas of management focus.Innovation, public trust, value and confidence and the significance of financial results are alsokey reporting criteria. In the case of innovation, public trust, value and confidence theseissues are addressed briefly later in this Intellectual Capital Statement. The financial resultsare outlined later in the Annual Report.

Enrollingdiscourse

consumers

893

Examples of how the knowledge-based resources (employees and their demographics,service delivery through technology and external relationships) were performing werealso provided in the form of performance measures and trend lines (see, LandsNSW2004-05 ICS, pp. 11-12). Thus, IC was described in terms of its underlyingknowledge-based resources, and IC discourse constructed LandsNSW as being able tobetter “manage and plan for the future”. In addition, significant benefits of doing sowere to result, with IC discourse highlighting the consequences of managing,measuring and reporting IC in terms of “innovation, public trust, value andconfidence”.

5.2.2. An absence of interessement between discourse producers and consumers. Bylate 2005, the discourse of IC that hitherto had been talked about was supported by anIC statement that defined and attempted to report on LandsNSW’s IC. Despite this,there was little evidence during this period of its take-up across a broader constellationof organisational participants or influence over organisational relationships orpractices. Indeed, the discursive statements and texts appeared to be limited inspace-time due to disinterest, with many executive and practice managers notpersuaded of the need to engage with an accounting for IC. Some questioned the valueof IC and remained sceptical of the practical use of the IC statement. Furthermore, theconcept of IC remained ambiguous and had not (as yet) been translated into activitiesof relevance to a broader audience of “discourse consumers” within the organisation.

Illustrating these sentiments, an executive manager commented on the perceptionthat IC was merely another “management fad”:

All senior managers probably below [the director-general], operated with some scepticisminitially. What caused that initial scepticism? I guess the “management fad” issue. All themanagers I spoke to said “Oh it’s another one of these things that come along” and I think Iwas probably one of those as well (EM-6).

Others were more critical of the organisation’s already extensive reporting andbusiness planning attempts and activities, as illustrated by the observation of one ofthe practice managers:

Figure 1.Lands intellectual capitalframework

AAAJ20,6

894

. . . many people have spent countless hours in workshops coming up with planningdocuments that fit into those particular frameworks, and not seen them . . . make any positivecontribution to either their business or their life with their staff. So there’s a degree ofcynicism I think out there, and realistic I might say (PM-8).

As a result, the initial discourse produced by the director-general remainedquestionable and “isolated” to a small group of people. Comments by a practicemanager summarised these feelings:

I guess despite the fact that it has sort of been driven by the DG, to my knowledge it hasn’treally been picked up and fully embraced by any of the general managers, because they’re sobusy on running the day to day businesses. I just think it’s probably not a high priority forany of them (PM-9).

The consequence of this was that practice managers within the individual divisionsand even some members of the executive team (in spite of the preparation of the ICstatement) saw little practical uptake of the IC discourse within LandsNSW during thisperiod. When they were asked to reflect on IC, the following comments were indicativeof its lack of resonance and connection to the concerns of discourse consumers. Viewedin terms of Callon’s (1986) moments of translation, there was an absence ofinteressement. IC had not been linked to the specific concerns of executive and practicemanagers, and had not materialised as a solution or passage point to the achievementof their interests:

In relation to how I’ve done my job, it has very little effect on it, or anything like that. It’s justan additional task that has to be undertaken, and it’s nothing onerous or anything like that.And it hasn’t flown down to anything lower than the management level . . . IC is just likedoing the annual report, it’s an input, we have to do it, it’s an obligation that falls upon us(PM-6).

So far I haven’t found a specific definition of intellectual capital. I find people at LandsNSWuse IC with different meanings, such as knowledge capital, IP and training and development. . . There is no common understanding. It hasn’t affected us at all (PM-3).

As the previous comments suggest, aspects of IC discourse that were considered a“barrier” to its take-up were its lack of specific prescription for organisational practicesand the ambiguity in its meanings and concepts. IC discourse, despite the IC statementwhich attempted to summarise the value and performance of the organisation’sknowledge resources and provide a definition of IC, was still perceived to beambiguous, and its “value” to the organisation remained questionable to many. Whenasked to reflect on the impacts of IC discourse during this period, many actorscommented on its lack of clear definition or coherence. For example, a practice managerreflected on IC and the difficulties in applying it:

I suppose one of the more difficult things in looking at intellectual capital is to actually get aclear definition. I understand where the Director-General is coming from in what he’s tryingto report, and he’s trying to, as I understand it, include intellectual capital in the bottom linefigures for the organisation, to try and value it and its contribution to the organisation. But Isuppose you’ve got a lot of mixed signals . . . where you’ve got a number of different views onwhat it means, what it actually means (PM-4).

This perception of the “looseness” of IC discourse also resonated amongst executivemanagement. An executive manager, who had been involved with IC discourse from a

Enrollingdiscourse

consumers

895

technology perspective, explained how a lack of definition created problems in makingsense of what IC comprised and its implications for the task of managing atLandsNSW:

. . . there has been no one clear definition of what it [IC] means. The second thing is, nothaving a clear concept of definitions, is how do you apply it in our organisation? Ourorganisation is made up of three divisions, each division is at a different level of maturity, andeach view of how it could embrace intellectual capital will vary from one to the other, and oneshoe doesn’t fit all, so that is the second point (EM-2).

In summary, during phase II, evidence at LandsNSW indicated that the low level ofprescription and codification of the IC discourse constrained its possibilities forshaping material practice. The perceived ambiguity of IC discourse, including the ICstatement, meant that potential consumers struggled to make sense of IC concepts andtheir meaning (Hardy et al., 2000) and the texts that were produced did not appear to begenres that were recognisable and usable (Phillips et al., 2004). Indeed, many wereunsure of what IC meant for them, being unable to “see” the connections between ICdiscourse and their managerial concerns (at both an executive and practice level) andinterests at LandsNSW. Despite being emphasised by the Director-General, and in spiteof the initial preparatory activities associated with the IC statement, there was anabsence of interessement (Callon, 1986) amongst the actors at LandsNSW, some ofwhom suspected that IC could possibly become another “management fad”.

However, while IC discourse appeared to be destined for short-lived prominence dueto its relative ambiguity, the same characteristics simultaneously imbued it with a“looseness” and flexibility. This meant that the discourse of IC had the potential to beconnected to the problems of the organisation and gain relevance for both executiveand practice managers, as follows.

5.3 Phase III: late 2005 to early 2007 – enrolment and effects on material practiceDuring late 2005 to early 2007, two main instances of enrolment were observed whichadvanced the perceived “attractiveness” of IC to LandsNSW managers, resulting in theenrolment (Callon, 1986) of both executive and practice managers. In this, the flexibilityof IC discourse was significant, for ambiguities within IC discourse and what itcomprised ensured that it could be connected to the interests and concerns of amultitude of organisational members. IC discourse was connected to specificmanagement problems at LandsNSW’s, including:

. an ageing workforce and impending knowledge loss; and

. reductions in financial resources allocated by the central funding agency[14].

Each of these resulted in the IC being constructed as addressing specific managerialneeds, as discussed below.

5.3.1. Enrolment 1: IC to manage knowledge loss. As illustrated in phase I, one of themain challenges facing LandsNSW was that of an ageing workforce, and a perceptionthat significant knowledge and “organisational memory” would be lost as employeeswere soon due for retirement. It was estimated that up to 44 per cent of LandsNSWemployees would retire over the forthcoming five to ten years. Many of the retiringmembers of the organisation possessed “unique” knowledge of, for example,Australian indigenous land ownership and traditions, which were not easily codifiable

AAAJ20,6

896

and thus subject to loss upon retirement. Thus, the ageing workforce and impendingknowledge loss was a management “crisis” for LandsNSW as there were perceivedrisks to the future of the organisation and its sustainability. One practice managerexplained:

. . . I’ve been with, well not this department, but its predecessor . . . coming up for 39 years . . .It’s been, I guess, of concern to me that we do lose a lot of knowledge, a lot of skills that wehave within our workforce and particularly in my division of Soil Conservation Service,where there is a lot of practical knowledge more than just the written word (PM-12).

The loss of organisational knowledge was especially concerning in the LPI department,the main revenue generating entity of the organisation, which was responsible, interalia, for land valuations and processing land title. Casting into stark relief the crisis ofknowledge loss was the observation in the department that close to 60 per cent of itsvaluers would retire in the short- to medium-term. To the extent that errors were madein the process, LandsNSW could be liable for compensating the public for any financialloss together with associated credibility effects. Thus, there could be significantfinancial and reputation consequences for LandsNSW. As explained by a practicemanager:

. . . Whilst you have a high level of direct transaction, straight transactions if you like, vanilla[non-complex] transactions, you also have a large enough number of different transactions.And the knowledge that surrounds those is very scarce, and that’s something we’ve really gotto work on to capture them tightly, because at the end of the day if you don’t understand thatpart of the process, you’re [sic. ] assurance fund is at huge risk. So there’s a big dollar risk tothe organisation if you don’t get that right (PM-4).

Another practice manager explained:

The fine detail around legislation and principles and practices of public valuation, or writinga taxing valuation in particular, is a real core knowledge set that we hold within thisorganisation, and is much more difficult to replicate. So I see that as being a real knowledgeintellectual capital issue. How’s this an issue for us? Well I guess we face succession planningissues in that a lot of our staff are, in fact 22 per cent of our valuers are due to retire within thenext two years, and 44 per cent over five years (PM-2).

Against this backdrop, IC was translated into a potential solution. Often referred to as“knowledge management” within the organisation, discourse about IC and its claim toformally manage “human capital” was seen as helping management to overcome theseissues. Indeed, solving the impending “knowledge loss” was seen as inevitable giventhat IC represented a “formal” and “managerial” response to these issues. Theexecutive manager charged with driving the IC initiative and compiling the ICstatement explained how she sought to ensure IC connected with practice managersand how the issue of the ageing workforce issue enabled this:

The strongest area for getting traction here is the age profile of the organisation. It is the onething that every manager can connect to, and which they say yes I understand why we’d dowhat we’re doing, because that’s an important aspect. We need to reinvest in our staff, theneed to develop with the need to involve them. To help them grow and feel their way withinthe organisation. Intellectually they can understand, practically they can put some elementsin place (EM-7).

Enrollingdiscourse

consumers

897

As a result, executive as well as practice managers within LandsNSW began to seehow IC might benefit their division despite its ambiguity and “looseness” and how itcould become tied to practical solutions. IC discourse was starting to be seen as alanguage with which to articulate the issues of knowledge loss. One executive managerexplained how intellectual capital had:

. . . helped highlight and bring it more into awareness that we need to do something aboutthat [knowledge loss] in a more formal structured way (EM-3).

While one of the practice managers highlighted the business and financial benefits thatIC could possibly bring to the organisation:

So I suppose overall we’re moving towards documenting our information more precisely, andunderstanding what we do to a far greater degree than what we’ve done in the past. And atthe end of the day that has to me, as I’ve said, tremendous benefits financially to ourorganisation because it takes a lot of the guess work out. It allows you to structure yourorganisation with the resources that you actually need to operate the business properly . . .

(PM-4).

Thus, during the 2006 period, the problem of knowledge loss, and the potential solutionof IC discourse as a language to both articulate and formally manage this problem,began to connect with user interests. As a result, the initial scepticism seen during the2005 period started to wane. Indeed, the impending retirement of many LandsNSWemployees was a management crisis issue that was important for many executive aswell as practice managers and, which concerned the sustainability and future“well-being” of all members of the organisation. One of the most significant outcomesof the translation of IC into addressing the ageing workforce issue was the “Vision2013” document prepared by managers in LPI in 2006. This was a seven-year plan toprepare the business for the future and specifically for the forthcoming seven to tenyears[15].

As a result of this construction of IC as a solution to practical management issues,IC discourse started to “resonate” and connect with the interests of a multitude of“discourse consumers” across different levels of management, not merely thedirector-general and his close affiliates. Indeed, connected as it was to the crisis ofknowledge loss, IC discourse had been strengthened.

5.3.2. Enrolment 2: IC to acquire financial resources. Concurrent with the connectionof IC to the ageing workforce crisis, IC was being constructed as a potential solution tothe challenge of attracting funding from central agencies. As indicated previously,perceptions of inadequate financial resource allocations by the centralised fundingagency featured prominently at LandsNSW and this was one of the main reasons forthe Director-General embarking on the IC journey back in 2003-04. Reductions inbudget allocations and the move towards GBE structures where “revenue pays wages”during previous years had consequences for the various parts of LandsNSW, asindicated in the following comments by participants. Executive managers wereattempting to manage their businesses in “new” ways:

The recent tightening of budget and increased budget control calls for new ways of runningthe business. In this respect, there is an increased focus on business planning, a functionwhich is new to the department (EM-5).

AAAJ20,6

898

While practice managers in charge of finance within the divisions observed fundingreductions:

The division is currently living off capital reserves as it receives no funding and no supportfrom Treasury (PM-6).

And their counterparts with human resource management responsibilities witnessedchanges in employee management practices:

[The move to a GBE structure] meant hiring freezes, layoffs, including voluntaryredundancies, and imposed a growing threat to job security amongst staff (PM-8).

Overall, insufficient funding was seen as contrary to the changes that were required atLandsNSW if the future envisioned by its director-general was to be realised. Thecomment by one of the executive managers within LandsNSW in charge of policy wasa concise summary of this perception:

We’re still on one hand, reporting back on a very financial basis, where our agreements withgovernment are about dividend payments, about how many staff we can reduce, and whatsavings we can prove, or profit increase, income we can improve. And yet on the other handwe’re talking to staff and management about investing in the future, about sustainability,about developing new ways of communicating new products, all of which require time andtherefore money. And therefore it sounds like a bizarre thing to be doing when they’ve got aformal [financial accounting] mechanism on that’s requiring them to go in a differentdirection (EM-7).

Again, an accounting and management of IC was connected with user interests andcame to be seen as a potential solution to the funding problem. IC was seen as a newlanguage of communicating performance, objectives, required activities and hencebudget requirements. When asked to explain why people were interested in IC, oneLandsNSW executive manager responded:

. . . and I think we’re thinking now of different ways of reporting to Treasury, convincingTreasury to look at us differently as an organisation (EM-6).

While a practice manager expanded on the theme of IC as being a “new” language thatbetter represented the organisation:

I’m not sure how far the concept [intellectual capital] has penetrated within the halls ofTreasury, who are really dictating the activities [of Lands]. But I think it’s a very soundstrategy to try and present a much broader base of what an organisation is worth, rather thanjust very simplistic financially (PM-8).

Indeed, IC was imperative if external funding agencies were to understand thatinvestment was required for organisational sustainability and the continued creationof public value, according to one LandsNSW practice manager:

But I think that would be the immediate message that politicians and others will understand,Treasury will understand. If we don’t invest in these items now, it will cost more tore-establish the loss of experience and . . . databases, community trust, those items that thepublic value that we’re also trying to come to terms with how to articulate what that is, andhow we can measure or demonstrate progress in creating public value (EM-7).

In contrast to the disinterest in IC observed during the earlier period – in which the ICdiscourse (and the first IC statement) was perceived mainly as an “isolated” activity

Enrollingdiscourse

consumers

899

involving only a few “elite” actors – in 2006, the connection of IC to a better ability toconduct operational activity by acquiring more resources enlivened and enlisted moreorganisational participants. Rather than just another “management fad”, IC was nowincreasingly seen to have the potential to result in “real consequences”. The commentsof a practice manager summarised these sentiments:

. . . ensuring that into the future I’ve got people here who have sufficient resources, notnecessarily be trained, but have sufficient resources to access, to be able to make the decisionsand to be able to process the transactions that they are required to do in their daily work(PM-4).

An executive manager echoed similar perspectives:

. . . the bean counters need to be convinced that there is an amount of reinvestment that weneed to do in the people of the organisation . . . The focus has always been you know what wecan cut, how we can cut costs, and there’s never been a holistic look at how that might happeneffectively (EM-6).

Changes in how IC discourse flowed within LandsNSW help explain these changes insentiment, and will be discussed next.

5.3.3 Enrolment and mobilisation of discourse consumers. Through both instancesof enrolment narrated above, more actors at LandsNSW started to be “persuaded” ofthe need to account for IC and became enrolled into the actor-network through which ICdiscourse travelled and proliferated. While the fluid nature of IC discourse had been aproblem in the earlier stage, it was ameliorated by discourse consumers constructingIC as resonating with their interests and of practical use. As the executive managerresponsible for the IC initiative and producing the IC statement explained morebroadly:

Internally, I’ve been involved in discussions with managers and staff, particularly aroundtheir confusion of the terminology in intellectual capital. Interestingly enough often we comeback to the fact that most of the members of staff or managers can identify items that wouldfit within intellectual capital reporting, but they don’t conceptualise them, they don’t viewthem through that particular lens I suppose (EM-7).

In identifying aspects of their business that related to IC, users themselves becamepromulgators of IC discourse. An executive manager commented about the initialambiguity, in part due to the academic language of the researchers, and how peoplehad made it resonate:

I think initially it was too academic; it was far too hard for people to translate down to thenuts and bolts of their day to day issues . . . Let’s say I was fairly cynical six months ago, butI’m quite happy to progress the project. It’s got to be embedded in the culture of theorganisation. It’s got to become part of the day to day, not seen as something that’s anexception, and nice to have (EM-5).

Similarly, the executive manager who had previously highlighted the ambiguousnature of IC discourse as problematic went on to observe how it had gone from the“outside” of the organisation to becoming more attuned to the “inside”, and aconstruction of management practice:

AAAJ20,6

900

As key players in the organisation had immersed themselves in the literature, they started tohave a body of language, and to talk about some concepts, which initially was just academic,but now we understand and we consider the practice (EM-2).

As a reflection of the resonance that IC discourse had gained amongst practicemanagers in particular, a number of those who had previously been disinterested in IC,or claimed that IC was potentially a “management fad”, commented as follows:

I was very sceptical initially when it was first mooted. But seeing the value as its progressedhas been good. I think the role for IC in the future of LandsNSW is going to be quitesignificant, especially with the age profile of the organisation. A lot of corporate knowledgewill be walking out the door, unless there’s some mechanism to transfer that knowledge(PM-6).

Another manager explained:

. . . If you’ve got that ongoing knowledge, and you can do your business in a smart, efficientand accurate way, your organisation continues to have relevance. If you can’t do that, then agovernment has got to look and say well should this remain in government hands . . . (PM-4).

By mid 2006, IC discourse and the network that constituted it had gained strength andstabilised (albeit not permanently). In terms of Callon’s (1986) moments of translation, agreater number of executive and practice managers had become enrolled into thenetwork through which IC travelled. With an actor-network now comprising multipleelements (the director-general as well as executive and practice managers), it wasobserved that IC discourse began to influence management practices and, specifically,the way in which LandsNSW accounted for its IC.

5.3.4 Continuous stabilisation of IC and effects on material practice. As a result ofthe enrolment of more actors, stabilisation of IC continued to occur within LandsNSW.Personnel at executive and now also at practice managerial levels started to highlightthe relevance of IC for “managing the organisation”:

I think we’re now starting to find some direction, in terms of translating it into things like ourannual reporting frameworks, and the draft intellectual capital report. I think we’re trying toturn it into something concrete, but we’re trying to also turn it into a strategic direction thatassists the businesses [to] move forward (PM-8).

And:

. . . [it] has got us over the, I guess, the mentality of reporting financially only; and got usthinking about how the organisation can be more successful. And how we can use theknowledge, but on a grander scale, by the way that we actually manage the organisation(EM-6).

However, with IC, actions that could be interpreted as “investing in intellectual capital”were more attractive than they had been in the past, to the extent that financialresources were provided. Another practice manager commented about the garnering offinancial resources for developing knowledge resources within his division:

. . . I think it’s just a very supportive environment for it, and you encourage within it, andfunding is made available when I need it. So I’ve never had any problem getting funding to dothe things I want (PM-4).

Enrollingdiscourse

consumers

901

There were thus instances of IC discourse beginning to co-exist alongside conventionalaccounting practices as the “calculus” of managerial action. It would orient LandsNSWmanagers as to “which activities to encourage” and, within the business, IC wasstarting to be seen as an appropriate language for how LandsNSW could operate intothe future. Its image of creativity, knowledge and innovation were all ideals that thedirector-general wanted LandsNSW to aspire to and move towards. According to thedirector-general, the process of bringing IC within the organisation was part of areconstruction of its identity:

. . . and I’ve used it [the intellectual capital project] as a part of the broader awakening of anawareness towards unlocking the intangibles within the organisation, which I regard asbeing the most valuable part of the organisation. In particular, the focus on human capitaland also unlocking the value in our data sets (EM-1).

Other executive managers also linked IC discourse to the future and sustainability. Oneexecutive manager alluded to the inadequacies of conventional accountingmechanisms for enabling this, criticising in particular “snapshot in time” and “yearby year” performance views:

Well what I see the difference in intellectual capital would be that it’s really just another wayof putting it all together, a lot of the things that we’re already doing, viewing it in a slightlydifferent way. That whilst we have in many ways been doing elements of the practice that isneeded for intellectual capital, what we haven’t done is really looked into the long term futurein terms of the sustainability of the organisation. That’s where we’ve been failing, we’ve beenfocusing on a snap shot in time, on a year by year basis (EM-3).

As part of the growing perception that alternative accountings of IC were required,initiatives were commenced to broaden the responsibility for the development andmanagement of the IC statement within LandsNSW and to change internal informationpractices accordingly. An internal group labelled the “Organisational CapabilityImprovement Group” (OCIG), led in part by the deputy director-general and the SeniorPolicy Officer, was tasked with an objective to:

. . . facilitate the implementation of a reporting and feedback system for the Department. Thiswill underpin the development of the Lands Intellectual Capital Statement for 2005-2006. Theresult of this reporting process is to facilitate communication of the significance of intangibleassets within the organisation, to provide data on a quarterly basis to the Executive Team asto progress being made and to facilitate the development of the annual Intellectual CapitalStatement.

With representatives from the various area of LandsNSW, the OCIG decided that moremeasurements were required to measure the performance of IC. All OCIGrepresentatives were required to:

Identify key measures, relevant to the business and consider what needs to be done (ifanything) to collect this data on a regular basis . . . [and that] The selected metrics orindicators ought to be accompanied by a narrative or explanation of the significance of thesemeasures (OCIG meeting minutes).

The quantitative measures of IC that were developed as a result were to ultimatelyinfluence the construction of LandsNSW that was made possible through its ICstatement as a text about the organisation.

AAAJ20,6

902

In late 2006, LandsNSW released its second IC statement as part of its 2005-06Annual Report. While the overall IC framework was similar to the previous statement,the second IC statement included more performance measures and was shortened to afour-page statement, down from the initial eleven pages. The IC statement continued tocontain narratives about the management efforts and challenges faced by theorganisation, discussions of the initiatives undertaken to address these, and how thesewere being progressed and measured (p. 8):

Management Challenges: During 2005/06 management and staff have worked together toanalyse and develop solutions to the management challenges identified through our earlierresearch partnerships. These challenges were identified as employee demographics, servicedelivery and external relationships. These issues are being addressed through corporateinitiatives such as workforce planning, administrative and process reviews and developmentof partnerships and networks which will assist Lands in delivering organisational andcommunity outcomes now and in the future.

The 2005/06 IC statement (p. 10) also reported on its activities relating to the ageingworkforce “crisis”:

Employee Demographics: Lands began by analysing existing data within the organisation indifferent ways to assist managers in identifying areas of risk. For example, informationconcerning the age profile is reported in the KPI table on page 17 as an average across theorganisation . . . During the reporting year LPI took significant steps to integrate strategiesrelating to staff profile and skills development, internal process and improved partnershipsinto its corporate and operational plans ensuring that all aspects of their operations areinvolved and have the opportunity to participate in finding solutions . . . Several projects havealready commenced including reviewing and documenting processes, engaging graduatesfrom secondary and tertiary schools and working with staff to identify issues and potentialremedial actions.

And it reflected on the effects of IC reporting (p. 8):

The process of preparing and developing our strategic and corporate initiatives hascontributed to Lands’ intellectual capital. By strengthening our focus upon our staff, ourinternal processes and our relationships and partnerships with other organisations we believethat we will create a more efficient, effective and sustainable organisation.

The director-general continued to emphasise that this reporting of IC was critical inensuring that a longer-term perspective was employed in managing organisations andsecuring their sustainability:

Too many managers get rewarded for creating corporate anorexic organisations that cease tovalue the core intellectual capital of the organisation. It’s easy to, or much easier, to meet shortterm bottom lines by eating away and treating your intellectual capital as disposable. Yet it’sthe one core set of capital that shouldn’t be considered as disposable . . . If we’re going to buildsustainable organisations as we go forward in a competitive world, we’ll only do so by ridingon the back principally of the investment, past and in the future, of the intellectual capital, notthrough the eroding of it (EM-1).

In contrast to the previous year, the views of the director-general were now shared byexecutive managers and practice managers, who also saw benefits in producing ICtexts through informing future governments of the importance of LandsNSW’sfunctions and helping to justify its existence as a public agency:

Enrollingdiscourse

consumers

903

I think the whole approach to intellectual capital will help us manage the whole organisationbetter. But I see it as convincing people outside the agency who haven’t had interest in theorganisation, whether it be the government, whether it be treasury, the ones that makedecisions about us. It might broaden their decision making to look at some of the functionsthat we do, rather than arbitrarily say you know X amount of dollars has got to be cut out thisyear, and X amount of people. Because there is not much scientific [method] about the waythat that’s done from central Government (EM-6).

And that will . . . allow us to tell that story to the public, which is critical to maintaining thelegitimacy, if you like, around the whole system (PM-2).

Thus, along with the translation of IC into specific user needs and the emergence of adiversity of activities connected to IC discourse, IC had become more prominent inrelationships within LandsNSW and also possibly between LandsNSW and itsexternal constituents. Accounts of performance were now “multiple”, combiningdiverse narratives and numbers and less constructed through codified accrualaccounting discourse alone. Indeed, an alternative accounting for IC had taken hold,articulated in terms of a “looser” and more ambiguous IC discourse.

Importantly, these did not mean that IC had permanently taken hold. Enrolling amultitude of actors and discourse consumers (and making them co-producers) acrossdifferent levels of management in the network through which IC discourse flowed wasan ongoing and precarious process[16]. The practice manager who had been an internalproducer of IC discourse on behalf of the director-general explained:

Some of our managers have progressed fairly quickly and understood concepts very quickly,and others have come back to me and said “I thought I had that idea last week, but now Ithink about it this week I’ve lost that focus again”. And that’s been fairly consistent over theyear (EM-7).

Here, the flexibility of IC discourse that enabled connections to the interests ofdiscourse consumers was relevant. Its fluid “core” meant that the links to some users’interests needed to be stabilised repeatedly. One executive manager commented on thedifficulties he was having and the link back to the lack of codification in IC discourse:

I mean one of the things I’ve been having difficulty with in all of this is exactly what we mean. . . And I understand at some stages where we’re going and exactly what we’re doing, andthen at other times I go hang on now, I’m lost again . . . (EM-3).

The research team’s final encounter with the organisation took place during an OCIGcommittee meeting on 30 April 2007, in which the deputy director-general announcedthat central funding agencies had approved 30 additional staff positions forLandsNSW. This was attributed to the risk posed by the ageing workforce to thesustainability of the organisation and linked to its IC reporting activities.

In summary, by the conclusion of the field study, a number of executive and practicemanagers had become enlisted and enrolled into the LandsNSW actor-networkthrough which IC discourse was performed. New texts had been produced thatreproduced IC discourse, and changes in management practices were observed as theorganisation sought to account for and retain its IC, secure funding from centralagencies and re-create its identity and image to the public eye. However, the“durability” and extent of these effects was contingent on the ongoing efforts of IC

AAAJ20,6

904

discourse producers to mobilise the interest of more actors and enrol more discourseconsumers to become “active” co-producers of IC discourse.

6. Discussion and conclusionsThe motivation of this study was to explicate the relations between discourse andpractice. Its focus was on the effects of ambiguity and flexibility in discourse, and thecontext for this investigation was the relatively recent and still fluid discourse of IC.Through presenting a case study over four years on the production of IC discourse,tracing the actual practices of a multitude of discourse producers and consumerswithin LandsNSW, several effects on organisational practices were observed. Inpresenting this narrative, a number of contributions are made to the extant literature.

First, in relation to the organisational discourse literature, prior studies on discourseand practice relations have highlighted aspects of codification and the consequentability to prescribe practice (see Hardy et al., 2000; Phillips et al., 2004). Concepts thathave “meaning”, a coherent and unified structure, all combine to ensure practice that isdirected towards the outcomes of the discourse producer. The corollary position to thisis that low levels of codification in discourse reduce the ability to prescribe practice.While we do not argue with this, we highlight how ambiguity in discourse allows itsproducers greater flexibility in connecting to the interests of discourse consumers suchthat the material practice is affected.

At LandsNSW, IC discourse had at its heart a loose “core” rather than beingrelatively rigid and codified from previous practice. However, this did not limit itspossibilities at LandsNSW. Rather, it was this very fluidity and “looseness” thatenabled its translation and take-up by a variety of actors who previously had notengaged in this form of discourse. We thus argue, in contrast to prior studies, thatambiguity and flexibility may be “preferred” attributes for discourse producers asthese may enable, rather than constrain, their ability to interest others and “succeed” inshaping material practice.

Second, drawing on actor-network theory and specifically Callon’s (1986) momentsof translation, the paper highlights the important role of discourse consumers, theiragency and the role they play in influencing how discourse affects practices. Whilefactors such as the characteristics of the discourse itself and the position and attributesof the discourse producer have been identified as important influencing factors in thediscourse-practice relationship, discourse consumers and their interests have hithertobeen ignored. At LandsNSW, executive and practice managers were not passive inacting or not acting according to the director-general’s discursive statements. Rather,they connected the discourse to problems that were perceived relevant to theirmanagement activities. Resonance and relevance was thus co-generated by both thedirector-general and the LandsNSW executive and practice managers throughinstances of problematisation and interessement, with the subsequent enrolment andstabilisation resulting in changes to material practices (Callon, 1986). We thus call for agreater consideration and investigation of discourse consumers and their agency infuture research on organisational discourse and discourse-practice relations inparticular, specifically examining how this might vary across discourses of differentlevels of codification.

Finally, we highlight the “codification-ambiguity” paradox for discourse producers.Codification of discourse provides specific prescriptions for practice. While this

Enrollingdiscourse

consumers

905

reduces the need for sense-making amongst potential discourse consumers, it alsolimits the opportunities the discourse producer has to “interest” and “enrol” them.Thus, limited take-up of the discourse may eventuate. In contrast, ambiguity indicatesthat the producer can make sense of the discourse in such a way that it connects to theinterests of potential consumers and the problems that they perceive themselvesfacing. However, the same flexibility also allows a degree of sense-making by theconsumer, leading potentially to effects on practice that are other than those intendedby the producer of the discourse. Indeed, at LandsNSW, interesting discourseconsumers in IC was an ongoing and precarious process as they often got “lost again”.

Hence, on the one hand, codification allows prescription, and potentially theachievement, of the intended strategic consequences by the producer. However, it mayconstrain the ability to interest and enrol consumers, especially where their interestsdiverge. On the other hand, ambiguity enhances problematisation and interessementpossibilities. However, it too allows greater interpretation of discourse and intendedeffects by the consumers. The management of this tension by discourse producers willinfluence the extent to which discourse is able to influence practice and how thismanifests. As such, we propose this as another avenue that further research onorganisational discourse should examine.

In addition to the above, we contribute to the accounting literature on IC byobserving specific implications of IC discourse for accounting. At LandsNSW,practices emerged as part of its accounting for its IC. IC discourse became evident as alanguage and calculus for managing the business that was somehow consistent with“organisational sustainability” and less “skewed towards short-term materialisticgains”. However, IC discourse complemented rather than replaced traditionalaccounting practices as a means of influencing management practice. We did notobserve a curtailment of accounting practice as has been observed elsewhere (Vaivio,1999; Ezzamel et al., 2004) or, as might be suggested within the IC literature.Traditional practices had not been sidelined by narrative, performance measures andimagery but had been translated into a language that together with existingperformance accounts would be used to exemplify the director-general’s “quadruplebottom line”.

In addition, in contrast to much of the literature on IC that is concerned with its lackof specific prescription and unitary structures, this paper observes that “strength” mayderive from flexibility and diversity in IC practices (see, Mouritsen and Flagstad, 2005;Morgan, 2006). IC discourse may indeed travel and influence practice across diverseorganisational sites due to its flexibility, being connected and made relevant to localconcerns as it does so. Future research might investigate how IC discourse is mobilisedand performed in unique ways by actors in local settings, how IC “mutates” when usedacross different organisational sites, and how discourse consumers play an active rolein IC translation and fact fabrication (Mouritsen, 2006).

In closing, it is important to acknowledge the limitations of the paper. In addition tothe use of the case study method, we acknowledge that external factors that comprisedIC discourse outside the organisation influenced our observations within, and that onlylimited attention was given to these in the study. We also acknowledge that discourseconsumers extend beyond the practice manager level to also include employees inlower level operational positions, and thus opportunities exist to further observe theplethora of agents involved in discourse co-production and fact fabrication.

AAAJ20,6

906

Notes

1. For our purposes, we are interested in how management discourse produces objects such asideas, concepts and policies and shapes management practices within organisations as a result.

2. Phillips et al. (2004) do hypothesise that texts which are novel and require greatersense-making may receive wider dissemination and consumption. However, as discussedabove, any associated lack of codification is simultaneously seen as detracting from theproduction of institutions.

3. While Callon (1986) presents four moments in the sociology of translation, he notes theiroverlapping nature. For ease of empirical exposition, we combine his first and secondmoments.

4. For example, in relation to human capital in a research and development department, onemight measure the resource itself (the number of employees with relevant qualifications), anenhancement activity (the amount of training dollars spent per employee) and the effects ofthe resource or training (the number of successful new projects). See also Mouritsen et al.(2003) who suggest that IC statements include measures of: the attributes of the IC resource;the activities performed to enhance the resource; the effects of the resource and/or theenhancement activity for the business; or some combination thereof.

5. Examples of structural elements include the firm’s management philosophy, organisationalstructure, management processes and information systems. Relational elements are itsimage, brands, alliances, partnerships, licensing and franchising arrangements, distributionchannels and customer/supplier relations to name a few. Examples of human capital involveattributes of the firm’s workforce such as its diversity, education, training, demographics,and industrial relations work-related qualifications (see SKE, 2005).

6. Importantly, we do not argue here that more recommendations or prescriptions are required.We simply wish to characterise its low level of codification and standardisation thus far.

7. LPI operates as a NSW Government Business Enterprise providing land, property andvaluation information and services. Crown Lands Division manages and administers Crownlands held under lease, licence or permit for a vast array of public, private andcommunity-based uses. Soil Services Division is a specialist conservation soil consultancybusiness.

8. While the phased ordering suggests discrete time periods, we acknowledge that theseoverlap in practice. However, the phases were constructed for ease of exposition.

9. In one instance, the interviewees did not consent to the interview being tape-recorded. In thiscase, detailed hand-written notes were taken by two interviewers and typed up shortly afterthe interview was conducted.

10. Refer to Tregidga and Milne (2006) for an example of “discourse analysis” studies where themeaning of language in use and the discourse itself is the primary focus of attention.

11. We acknowledge the potential for multiple influences here, but focus on those that weredemonstrated empirically to be more important.

12. The objectives of this study were as follows (see, Boedker et al., 2004, 2005):† IC Management: How does the organisation prioritise, enact, manage and develop its

knowledge resources?† IC Measurement: How does the organisation measure the composition and performance of

its knowledge resources and KM activities (or does it?)?† IC Reporting: What is the type and level of IC reported in the organisation’s internal

business management and strategy documents and annual reports?During the IC project, the researchers gave two presentations to senior and practicemanagers from the various divisions. These presentations provided examples of IC

Enrollingdiscourse

consumers

907

measurement and reporting from other organisations, especially those in Europe andnotably Denmark (Denmark was at that time well on the way with the reporting of ICthrough IC statements and the Danish Guideline on Intellectual Capital Reporting had alsorecently been issued (see, Mouritsen et al., 2003). Various definitions of IC and relevant priorworks in the area were also “talked” about by the researchers. The initial phase of theresearch study concluded with a presentation by the researchers to the LandsNSW executiveteam on July 21, 2004, summarising, among others, the knowledge resources “talked about”in the organisation’s business documents and “voiced” as important by the intervieweesduring this initial phase, and also discussing LandsNSW existing measurement andreporting practices (see Boedker et al., 2004, 2005).

IC was thus not the creation of the organisation alone. The experiences of IC from otherorganisations including the work of organisations such as the Australian GovernmentConsultative Committee on Knowledge Capital and members thereof influenced activitiesand events at LandsNSW. Given our focus on explicating how “consumers of IC discourse”became interested in enacting it, we eschew a further and more detailed discussion of theseexternal considerations, although it is important to note that knowledge about IC came intothe organisation via a wider network of Australian and international actors with an interestin and expertise of IC management.

13. Prior to introducing this framework, the IC statement also attempted defining IC (p.7, LandsNSW 2004-05 IC Statement): “What is intellectual capital? Intellectual capital been defined byThomas Stewart as “the sum of everything everybody in an organization knows that gives ita competitive edge... Intellectual Capital is intellectual material, knowledge, experience,intellectual property, information... that can be put to use to create wealth (or value)”.Intellectual capital is described as having three aspects: Human capital – the knowledge,motivation, abilities and skills of the employees with the organisation. External capital –also generally known as relational capital, which reflects the value of external relationshipswith the Department. Typically this would include stakeholders, customers, suppliers andother government and non-government agencies. Internal capital – knowledge which hasbecome embedded in the organisational structure such as commonly held values, culture,processes, digital data systems, policies, procedures and organisational structures. Thevalue of internal relationships between employees and with management is also relevant tothis aspect.”

14. It should be noted that these problems did not surface during Phase III but were also voicedby interviewees as issues within Phase I, as mentioned previously. Indeed, the intent of thedirector-general in initiating the IC project is evidence of this. Of interest here is how IC in2006 becomes (re)connected to these pre-existing “problems”.

15. Source: Vision 2013: A Seven Year Business and Workforce Plan for LPI (Douse, 2006). This60-page document used a combination of performance measures and narrative to define theageing workforce issue, explain the forces driving it and proposing solutions for addressingit.

16. A concurrent study of LandsNSW provides further evidence of this, observing in late 2006that not all organisational participants were equally persuaded by the translations of ICdiscourse and the production of the IC statement (for more detail, refer to Morgan, 2006).

References

Alvesson, M. and Karreman, D. (2000), “Varieties of discourse: on the study of organisationsthrough discourse analysis”, Human Relations, Vol. 53 No. 9, pp. 1125-49.

Andriessen, D. (2004), “IC valuation and measurement: classifying the state of the art”, Journal ofIntellectual Capital, Vol. 5 No. 2, pp. 230-42.

AAAJ20,6

908

Boedker, C., Guthrie, J. and Cuganesan, S. (2004), “The strategic significance of human capitalinformation in annual reporting”, Journal of Human Resources Costing and Accounting,Vol. 8 No. 2, pp. 7-22.

Boedker, C., Guthrie, J. and Cuganesan, S. (2005), “An integrated framework for visualisingintellectual capital”, Journal of Intellectual Capital, Vol. 6 No. 4, pp. 510-27.

Boje, D.M., Oswick, C. and Ford, J.D. (2004), “Language and organisation: the doing of discourse”,Academy of Management Review, Vol. 29 No. 4, pp. 571-7.

Bonfour, A. (2003), The Management of Intangibles: The Organization’s Most Valuable Assets,Routledge, London.

Bukh, N., Nielsen, C., Gormsen, P. and Mouritsen, J. (2005), “Disclosure of information onintellectual capital in Danish IPO prospectuses”, Accounting, Auditing & AccountabilityJournal, Vol. 18 No. 6, pp. 713-32.

Callon, M. (1986), “Some elements of a sociology of translation: domestication of the scallops andthe fisherman of St Brieuc Bay”, in Law, J. (Ed.), Power, Action and Belief: A New Sociologyof Knowledge, Routledge, London, pp. 196-223.

Chia, R. (2000), “Discourse analysis as organisational analysis”, Organisation, Vol. 7 No. 3,pp. 513-18.

Cuganesan, S. (2005), “Intellectual capital-in-action and value creation”, Journal of IntellectualCapital, Vol. 6 No. 3, pp. 357-73.

Douse, B. (2006), Vision 2013: A Seven Year Business and Workforce Plan for LPI, Version 4.0,Draft, NSW Department of Lands, Lands and Property Information Consultation, Sydney,July.

Edvinsson, L. and Malone, M.S. (1997), Intellectual Capital, Piatkus, London.

English, L., Guthrie, J. and Parker, L. (2005), “Recent public-sector financial management changein Australia: implementing the market model”, in Guthrie, J., Humphrey, C., Olson, O. andJones, L. (Eds), International Public Financial Management Reform: Progress,Contradictions and Challenges, Information Age Press, Greenwich, CT, pp. 23-54.

European Commission (EC) (2006), “Reporting intellectual capital to augment research,development and innovation in SMEs”, available at: http://ec.europa.eu/invest-in-research/pdf/download_en/2006-2977_web1.pdf

Ezzamel, M., Willmott, H. and Worthington, F. (2004), “Accounting and management-labourrelations: the politics of production in the factory with a problem”, Accounting,Organizations and Society, Vol. 29 Nos 3/4, pp. 269-302.

Fincham, R. and Roslender, R. (2003), The Management of Intellectual Capital and Its Implicationsfor Business Reporting, The Institute of Chartered Accountants of Scotland, Edinburgh.

Guthrie, J., Olson, O. and Humphrey, C. (1998), “International experiences with new publicfinancial management (NPFM) reforms: new world?”, in Olson, O., Guthrie, J. andHumphrey, C. (Eds), Global Warning: Debating International Developments in New PublicFinancial Management, Cappelen Akademisk Forlag, Bergen, pp. 17-48.

Guthrie, J., Petty, R. and Johanson, U. (2001), “Sunrise in the knowledge economy”, Accounting,Auditing & Accountability Journal, Vol. 14 No. 4, pp. 365-82.

Guthrie, J., Petty, R. and Ricceri, F. (2007), Intellectual Capital Reporting: Lessons from HongKong and Australia: Research Monograph, The Institute of Chartered Accountants ofScotland, Edinburgh.

Habersam, M. and Piber, M. (2003), “Exploring intellectual capital in hospitals: two qualitativecase studies in Italy and Austria”, European Accounting Review, Vol. 12 No. 4, pp. 753-79.

Enrollingdiscourse

consumers

909

Hardy, C. (2001), “Researching organisational disclosure”, International Studies of Managementand Organisation, Vol. 31 No. 3, pp. 25-47.

Hardy, C., Palmer, I. and Phillips, N. (2000), “Discourse as a strategic resource”, Human Relations,Vol. 53 No. 9, pp. 1227-48.

Keenoy, T., Oswick, C. and Grant, D. (1997), “Organisational discourses: text and context”,Organisation, Vol. 4 No. 2, pp. 147-57.

Latour, B. (1987), Science in Action, Open University Press, Milton Keynes.

Latour, B. (1999), “On recalling ANT”, in Law, J. and Hassard, J. (Eds), Actor Network Theory andafter, Blackwell, Oxford, pp. 1-14.

Latour, B. (2005), Reassembling the Social: An Introduction to Actor-Network-Theory, OxfordUniversity Press, Oxford.

Law, J. (1992), “Notes on the theory of the actor network: ordering, strategy and heterogeneity”,Systems Practice, Vol. 5 No. 4, pp. 379-93.

Law, J. (1999), “After ANT: complexity, naming and topology”, in Law, J. and Hassard, J. (Eds),Actor Network Theory and after, Blackwell, Oxford, pp. 1-14.

Law, J. and Callon, M. (1988), “Engineering and sociology in a military aircraft project: a networkanalysis of technological change”, Social Problems, Vol. 35 No. 3, pp. 284-97.

Leitner, K.-H. and Warden, C. (2004), “Managing and reporting knowledge-based resources andprocesses in research organisations: specifics, lessons learned and perspectives”,Management Accounting Research, Vol. 15 No. 1, pp. 33-51.

Markham, A. (1996), “Designing discourse: a critical analysis of strategic ambiguity andworkplace control”, Management Communication Quarterly, Vol. 9 No. 4, pp. 389-421.

Marr, B., Gray, D. and Neely, A.D. (2003), “Why do firms measure their intellectual capital?”,Journal of Intellectual Capital, Vol. 4 No. 4, pp. 441-64.

MERITUM (2002), Guidelines for Managing and Reporting on Intangibles – Intellectual CapitalReport, Fundacion Airtel Movil, Madrid.

Ministry of Economy, Trade and Industry, Japan (METI) (2004), Reference Guideline forIntellectual Property Information Disclosure: In the Pursuit of Mutual Understandingbetween Companies and Capital Markets through Voluntary Disclosures of Information onPatent and Technology, METI, Tokyo.

Ministry of Economy Trade and Industry, Japan (METI) (2005), Guidelines for Disclosure ofIntellectual Assets Based Management, METI, Tokyo, October.

Morgan, J. (2006), “Weak technologies and strong objects at the New South Wales Department ofLands”, Honours thesis, UNSW, Sydney.

Mouritsen, J. (2006), “Problematising intellectual capital research: ostensive versus performativeIC”, Accounting, Auditing & Accountability Journal, Vol. 19 No. 6, pp. 820-41.

Mouritsen, J. and Flagstad, K. (2005), “Intellectual capital and paradoxes of managingknowledge”, in Czarniawska, H. and Hermes, T. (Eds), Actor-network Theory andOrganising, Liber and Copenhagen Business School Press, Malmo, pp. 208-29.

Mouritsen, J., Larsen, H.T. and Bukh, P.N. (2001a), “Intellectual capital and the capable firm:narrating, visualising and numbering for managing knowledge”, Accounting,Organizations and Society, Vol. 26 Nos 7-8, pp. 735-62.

Mouritsen, J., Larsen, H.T., Bukh, P.N. and Johansen, M.R. (2001b), “Reading an intellectualcapital statement”, Journal of Intellectual Capital, Vol. 2 No. 4, pp. 359-83.

Mouritsen, J., Bukh, P.N., Flagstad, K., Thorbjørnsen, S., Rosenkrands Johansen, M., Kotnis, S.,Larsen, H.T., Nielsen, C., Kjærgaard Jensen, I., Krag, L., Jeppesen, G., Haisler, J. and

AAAJ20,6

910

Stakemann, B. (2003), Intellectual Capital Statements – The New Guideline, DanishMinistry of Science, Technology and Innovation, Copenhagen, available at: www.vtu.dk/icaccounts

(The) Nordic Industrial Fund (NIF) (2003), Nordic Harmonized Knowledge Indicators –Harmonized Guidelines for IC Reporting in the Nordic IT Industry, NIF, Copenhagen.

Organisation for Economic Co-operation and Development (OECD) (1999), “Guidelines andinstructions for OECD symposium”, International Symposium on Measuring andReporting Intellectual Capital: Experiences, Issues, and Prospects, OECD, Paris, June.

Oswick, C., Keenoy, T.W. and Grant, D. (2000), “Discourse, organisations and organising:concepts, objects and subjects”, Human Relations, Vol. 53 No. 9, pp. 1115-23.

Petty, R. and Guthrie, J. (2000), “Intellectual capital literature review”, Journal of IntellectualCapital, Vol. 1 No. 2, pp. 155-76.

Phillips, N., Lawrence, T.B. and Hardy, C. (2004), “Discourse and institutions”, Academy ofManagement Review, Vol. 29 No. 4, pp. 635-52.

Roos, G., Pike, S. and Fernstrom, L. (2005), Managing Intellectual Capital in Practice,Butterworth-Heinemann, Oxford.

Roslender, R. and Fincham, R. (2004), “Intellectual capital accounting in the UK: a field studyperspective”, Accounting, Auditing & Accountability Journal, Vol. 17 No. 2, pp. 178-209.

Society for Knowledge Economics (SKE) (2005), “Australian guiding principles on extendedperformance management – a guide to better managing, measuring and reportingknowledge intensive organisational resources”, Draft, SKE, Sydney.

Stewart, T.A. (1997), Intellectual Capital: The New Wealth of Organisation, Doubleday/Currency,New York, NY.

Sveiby, K.E. (1997), The New Organisational Wealth: Managing and Measuring Knowledge-basedAssets, Berrett-Kohler, San Francisco, CA.

Sveiby, K.E. (2006), “Methods for measuring intangible assets”, available at: www.sveiby.com/Portals/0/articles/ IntangibleMethods.htm (accessed 28 January 2007).

Tregidga, H. and Milne, M.J. (2006), “From sustainable management to sustainable development:a longitudinal analysis of a leading New Zealand environmental reporter”, BusinessStrategy and the Environment, Vol. 15 No. 4, pp. 219-41.

Unerman, J., Guthrie, J. and Striukova, L. (2007), United Kingdom Reporting of IntellectualCapital, Research Monograph for ICAEW Intellectual Capital Reporting Project, ICAEW,London.

Vaivio, J. (1999), “Examining the quantified customer”, Accounting, Organizations and Society,Vol. 24 No. 8, pp. 689-715.

Corresponding authorJames Guthrie can be contacted at: [email protected]

Enrollingdiscourse

consumers

911


Analysing accounting discourse:avoiding the “fallacy of

internalism”John Ferguson

School of Accounting & Finance, University of Dundee, Dundee, UK

Abstract

Purpose – The purpose of this paper is to elaborate on John B. Thompson’s “tripartite approach” forthe analysis of mass media communication, highlighting how this methodological framework can helpaddress some of the shortcomings apparent in extant studies on accounting which purport to analyseaccounting “texts”.

Design/methodology/approach – By way of example, the paper develops a critique of an existingstudy in accounting that adopts a “textually-oriented” approach to discourse analysis by Gallhofer,Haslam and Roper. This study, which is informed by Fairclough’s version of critical discourse analysis(CDA), undertakes an analysis of the letters of submission of two business lobby groups regardingproposed takeovers legislation in New Zealand. A two-stage strategy is developed: first, to review theextant literature which is critical of CDA, and second, to consider whether these criticisms apply toGallhofer et al. Whilst acknowledging that Gallhofer et al.’s (2001) study is perhaps one of the morecomprehensive in the accounting literature, the critique developed in the present paper neverthelesshighlights a number of limitations. Based upon this critique, an alternative framework is proposedwhich allows for a more comprehensive analysis of accounting texts.

Findings – The critique of Gallhofer et al.’s study highlights what is arguably an overemphasis onthe internal characteristics of text: this is referred to by Thompson as the “fallacy of internalism”. Inother words, Gallhofer et al. draw inferences regarding the production of the letters of submission fromthe texts themselves, and make implicit assumptions about the likely effects of these texts withoutundertaking any formal analysis of their production or reception, or without paying sufficientattention to the social and historical context of their production or reception.

Originality/value – Drawing on Thompson’s theory of mass communication and his explication ofthe hermeneutical conditions of social-historical enquiry, the paper outlines a range of theoreticalconsiderations which are pertinent to researchers interested in studying accounting texts. Moreover,building on these theoretical considerations, the paper delineates a coherent and flexiblemethodological framework, which, it is hoped, may guide accounting researchers in this area.

Keywords Accounting, Discourse, Text, Hermeneutics

Paper type Conceptual paper

IntroductionInterest in language and discourse, and in particular, in how language is linked towider social processes, has spread across a range of social science disciplines overrecent years (Fairclough, 1992). However, whilst interest in discourse has become“fashionable”, the term is often used “indiscriminately” without being defined orclearly explained (Phillips and Jorgensen, 2002, p. 1). As Fairclough (1992, p. 3) notes,“discourse” is a difficult and contested concept, with many “conflicting andoverlapping definitions formulated from various theoretical and disciplinarystandpoints” (see also, Phillips and Jorgensen, 2002). For example, in linguistics the



AAAJ20,6

912

Received December 2005Revised August 2006,March 2007Accepted March 2007

Accounting, Auditing &Accountability JournalVol. 20 No. 6, 2007pp. 912-934q Emerald Group Publishing Limited0951-3574DOI 10.1108/09513570710830290

term discourse is most commonly taken to refer to instances of written and spokendialogue, although it is sometimes used exclusively to refer to spoken dialogue asopposed to written text (Fairclough, 1992). Another use of the term within linguistics isto refer to the various types of language employed in different social situations; forexample, newspaper discourse, medical consultation discourse (Fairclough, 1989, 1992,Van Dijk, 1998; Wodak and Meyer, 2001). Outside of linguistics, the term discourse hasbeen predominantly associated with the work of Michel Foucault. Foucault’s work ondiscourse is more abstract than the textually orientated approaches associated withlinguistics. In other words, Foucault is not concerned with the analysis of spoken andwritten language texts, but with the “rules which determine which statements areaccepted as meaningful and true in a particular historical epoch” (Phillips andJorgensen, 2002, p. 12; see also, Fairclough, 1992).

Whilst the studies of discourse outlined in the literature may be different in terms oftheir approach and focus of analysis, most share the assumption that our ways oftalking (and writing) about the world, “do not neutrally reflect our world, identities andsocial relations but, rather, play an active role in creating and changing them” (Phillipsand Jorgensen, 2002, p. 1). In this sense, these approaches to discourse analysis arepremised on, to a greater or lesser extent, social constructionism[1]; for example,Phillips and Hardy (2002, p. 2) state, “the things that make up the social world –including our very identities – appear out of discourse . . . without discourse, there isno social reality, and without discourse, we cannot understand social reality” (see also,Grant et al., 2004; Heracleous, 2004).

The increasing interest in language and discourse throughout the social scienceshas had a notable impact on accounting research: numerous studies in accountingreflect the different approaches to analysing discourse and language that dominate thearea. As Gallhofer et al. (2001) point out, many of these studies may not necessarilydraw on explicit methods associated with discourse analysis, but they all share aninterest in examining aspects of accounting language or language used in relation toaccounting. These wide ranging analyses are predominantly “textually oriented”,focusing on specific “accounting texts” such as annual reports (Abeysekera andGuthrie, 2005; Beattie et al., 2004; Freedman and Stagliano, 2002), social andenvironmental reports (Buhr and Freedman, 2001; Freedmanm and Jaggi, 2005; Laine,2005; Livesey, 2002; Livesey and Kearins, 2002; Tregidga and Milne, 2006) andtextbooks (Davidson, 2005; Ferguson et al., 2005). In keeping with its prevalent use inthe accounting literature, the term discourse will be employed in the current study torefer to instances of written or spoken language. In other words, the majority of studiesin accounting use the term “discourse” in the same sense in which it is most commonlyemployed in linguistics: i.e. to refer to instances of written or spoken text (Fairclough,2003). In this respect, the terms “discourse” and “text” are often usedinterchangeably[2] and can be taken, as they are in this paper, to broadly refer towritten text, but may also include transcripts of interviews, web-pages and visualimages (Fairclough, 2003).

While there is much which is commendable in extant studies of accountingdiscourse and language, this paper argues, drawing on Thompson (1990), that theyhave one major limitation: they assume, or speculate upon, the likely effects ofaccounting texts, without thoroughly investigating how these texts are interpreted bythe individuals who encounter them in their everyday lives, or considering, in any

Analysingaccounting

discourse

913

specific detail, the social-historical contexts of text production, transmission andreception. Thompson (1990, p. 105) describes any attempt to “read off” issues regardingthe production or reception of texts by attending to the text alone as the “fallacy ofinternalism”[3]. For example, he states:

It is a fallacy because it cannot be assumed that the characteristics which the analyst discernsin a particular cultural product will have a given effect when the product is received andappropriated by individuals in the course of their everyday lives. The reception andappropriation of cultural products is a complex social process which involves an ongoingactivity of interpretation and the assimilation of meaningful content to the socially structuredbackground characteristics of particular individuals and groups. To attempt to read off theconsequences of cultural products from the products themselves is to neglect these ongoingactivities of interpretation and assimilation; it is to speculate about the impact of theseproducts on the attitudes and behavior of individuals without examining this impact in asystematic way (Thompson, 1990, emphasis added)[4].

The theoretical considerations advanced by Thompson (1990), and the conjoiningmethodological framework he develops, have found advocates in the accountingliterature (for example, Arnold, 1998; Oakes et al., 1994)[5]. Most notably, Oakes et al.(1994) examine cost benefit studies in the medical literature, drawing on Thompson’s(1990) “depth-hermeneutical” framework. Their study emphasises the importance of notonly focusing on the text (i.e. the cost-benefit study) but expanding the focus “beyond theaccounting context of individual studies to look at the production and distribution of costbenefit studies in health care . . . [and] the reception and appropriation of these studies”(Oakes et al., 1994, p. 20). Consideration of both the reception and appropriation of text is,according to Oakes et al. (1994) of fundamental importance in an accounting contextgiven the (codified) nature of accounting discourse. They state:

Others may protest that the author is not responsible for the reception or use of the message,and the message stands apart from the receiver of the message . . . This argument may makemore sense to those who consider themselves artists than to accountants who representthemselves as being explicitly concerned with the users of accounting numbers. However, therelationship between the text, the author and the reader presents problems that we do notoften think about (Oakes et al., 1994, p. 22, emphasis added).

In this respect, Thompson’s framework for analysis requires a shift in emphasis; not onlyis the text or discursive event the focus of analysis – but also the institutions andstructures surrounding their production and reception, and the understanding ofindividuals involved in their production and reception (Arnold, 1998; Oakes et al., 1994).

This paper focuses on Thompson’s framework for the analysis of mass mediacommunication. It proceeds as follows: the next section outlines some theoreticalconsiderations applicable to the study of accounting texts. In particular, this sectiondraws attention to important aspects of culture and social enquiry that highlight thesignificance of considering aspects of production and reception when analysingdiscourse. Drawing on these theoretical concerns, the subsequent section develops acritique of an existing study in accounting, Gallhofer et al. (2001), which undertakes atextual analysis of the written submissions made by the New Zealand BusinessRoundtable and the Institute of Directors regarding a proposed takeovers Code.Gallhofer et al.’s (2001) analysis is informed by Norman Fairclough’s version of criticaldiscourse analysis (CDA): a review of the extant literature which is critical of CDA and,in particular, Fairclough’s version of it, is presented, and followed by a critique of

AAAJ20,6

914

Gallhofer et al.’s (2001) study. This section is then followed by a delineation ofThompson’s tripartite approach for the analysis of mass communication, highlightinghow this methodological framework addresses a number of the limitations apparent inGallhofer et al.’s study, and moreover, in the extant accounting literature in general.The final section concludes.

Analysing accounting texts: some theoretical considerationsWhen analysing various forms of discourse, such as annual reports, social andenvironmental reports or accounting textbooks, a range of theoretical concerns relatingto the nature of culture, communication and social enquiry should be considered. Theseconcerns are addressed in this section under the sub-headings, “Culture” and “Thenature of mass communication”. This section therefore serves two related purposes:firstly, it will form the basis for developing a critique of existing studies of accountingtexts; secondly, the theoretical issues outlined here have extremely importantmethodological implications, which will be further developed in the penultimatesection of the paper.

CultureDrawing on anthropological concepts of culture, Thompson (1990, p. 123) distinguishesbetween what he describes as descriptive and symbolic conceptions of culture. Adescriptive concept of culture refers to the “army of beliefs, customs, laws, forms ofknowledge and art etc. which are acquired by individuals as members of a particularsociety and which can be studied scientifically” (Thompson, 1990, p. 128). This conceptis associated with, in particular, the work of E.B. Taylor, who stipulated that theculmination of a society’s different beliefs and customs formed a complex whole whichcould be studied as the “object of a systematic scientific enquiry” (Thompson, 1990, p.128). In this regard, a descriptive conception of culture is concerned with theclassification of different elements of a culture, which would enable comparisons withother cultures and the formulation of laws, often with the view to “re-assembling thesteps that led from savagery to civilized life” (Thompson, 1990, p. 129).

By contrast, the symbolic conception of culture takes the view that culture is ashared system of symbols and signs. Underpinning this concept of culture is the ideathat human beings “not only produce and receive meaningful linguistic expressions,but also bestow meaning on non-linguistic constructions – on actions, works of art,material objects of various kinds” (Thompson, 1990, p. 130). Thus, it is through the“ordered clusters of significant symbols that man makes sense of the events throughwhich he lives” (Geertz, 1973, p. 363). In this sense, a symbolic conception of culturerequires a shift in analysis from the classification and comparison associated with thedescriptive concept, to a focus on the interpretation of meaning ascribed to symbolicforms[6]. According to Thompson (1990, p. 138), “symbolic forms are expressions of asubject . . . for a subject (or subjects)” and may include images or written text as well as“actions and utterances”. In this respect, accounting reports may be conceived of assymbolic forms, and a cultural analysis of accounting may focus on the interpretationand meaning ascribed to such reports. As Thompson (1990, pp. 131-2, emphasis added)states, a symbolic conception of culture “has little to do with the formulation of lawsand predictions . . . it is more like interpreting a literary text.”

Analysingaccounting

discourse

915

In formulating his own conception of culture, Thompson (1990) takes a symbolicapproach, drawing in particular on the work of anthropologist Clifford Geertz. In awidely quoted passage, Geertz (1973, p. 5) argues that:

[. . .] man is an animal suspended in webs of significance he himself has spun. I take culture tobe those webs, and the analysis of it to be therefore not an experimental science in search oflaw, but an interpretative one in search of meaning.

Accordingly, the role of the researcher is to unravel “layers of meaning, describingactions and expressions which are already meaningful for the very individuals who areproducing, perceiving and interpreting these actions” (Thompson, 1990, p.131,emphasis in original). However, Thompson (1990) outlines a number of difficulties withGeertz’s conception, in particular, his failure to give sufficient consideration to issues ofpower and conflict, or to the social context within which cultural phenomena areproduced, transmitted and received. In building on Geertz’s symbolic conception,Thompson (1990, p.136, emphasis in original) develops what he calls a “structuralconception”, which stresses the “symbolic character of cultural phenomena and the factthat such phenomena are always embedded in structured social contexts”. In otherwords, cultural phenomena are produced, transmitted and received within particularsocial contexts which may be characterised by “asymmetrical relations of power [or]by different access to resources and opportunities” (Thompson, 1990, p. 136).

Two key issues emerge from Thompson’s (1990) structural conception of culture,which are important for researchers interested in engaging in the analysis of symbolicforms (such as accounting “texts”). First, symbolic forms already have meaning for actorsinvolved in their production, transmission and reception; i.e. such cultural phenomena willbe routinely interpreted by actors in the course of their everyday lives. Therefore, tounderstand the meaning of symbolic forms, or to interpret their significance, the analystmust consider what these forms mean to the actors who encounter them. Second, thehistorically specific and socially structured contexts in which the symbolic forms areproduced, transmitted and received should not be neglected – i.e. the relations of power,institutions, available resources and forms of authority.

The nature of mass communicationModern culture, according to Thompson (1990) has emerged from, and is closelyinterwoven with, the development of mass communication. Hence, Thompson’s (1990)view of the development of the modern state is markedly different from the “grandnarrative of cultural transformation” which stems from the work of Marx, in particular,and which underpins much contemporary social theory. According to this “grandnarrative”, the rise of industrial capitalism in Europe is attributed to the decline ofreligious beliefs and the emergence of secular belief systems. While Thompson (1990,p. 11) acknowledges the important insights this “grand-narrative” has provided, heargues that such theories have “mis-identified the major cultural transformationassociated with the development of modern societies”; i.e. the proliferation ofinstitutions of mass communication (a process which Thompson(1990) refers to as the“mediazation of modern culture”.

Given the importance Thompson (1990) ascribes to the emergence of masscommunication in modern culture, he outlines a number of characteristics of thisphenomenon that are important for researchers to consider when analysing symbolic

AAAJ20,6

916

forms (such as accounting texts). First, the term “mass communication” can bemisleading in some respects; especially since it “conjures up the image of a vast audiencecomprising many thousands, even millions of individuals” (Thompson, 1995, p. 24).While in some sections of the media industry (for example, mass circulation newspapers)audiences are large, in other sectors, such as some book and magazine publishing, theaudience can be relatively quite small and specialised (Thompson, 1990, 1995). In thisrespect, the term “mass communication” should not be “construed in narrowlyquantitative terms” but more broadly taken to refer to media messages produced for a“plurality of recipients” (Thompson, 1995, p. 24; see also, Thompson, 1990). In otherwords, mass communication refers to messages which are “available in principle” to anumber of recipients (Thompson, 1995, p. 24). Given that most accounting texts (forexample, annual reports or social and environmental reports), tend to be explicitlycommunicated to a range of users (Oakes et al., 1994), one could argue that suchexamples of accounting communication accord with Thompson’s (1990, 1995) definitionof mass communication – i.e. available in principal to a number of recipients.

The term mass communication can be misleading in another respect, in that itsuggests the recipients of media messages “constitute a vast sea of passive,undifferentiated individuals who fail to question, or engage critically with masscommunication” (Thompson, 1995, p.24). However, such a view fails to consider thecomplex ways in which symbolic forms are appropriated by individuals. Furthermore,the term “communication” can also be potentially ambiguous, since it can be taken torefer to a dialogical situation like a conversation. However, the “communication” in“mass communication” refers to a “one way flow of messages from the transmitter to thereceiver” (Thompson, 1990, p. 220). Therefore, Thompson (1990) suggests that the terms“transmission” or “diffusion” are more appropriate terms. In this respect, mass media“institutes a fundamental break between the producers and receivers” (Thompson, 1990,p. 220, emphasis in original); i.e. mass media messages are produced for recipients whoare absent from the site of production, and therefore have a limited capacity to contributeto the communicative process. Again, this structured break is a feature of mostaccounting communication, whereby reports (for example, annual reports or social andenvironmental reports) are produced in the absence of the users of such reports.

As a consequence of this break Thompson (1990, p. 220, emphasis in original) statesthat the process of transmission is characterised by a “distinctive form ofindeterminacy”, whereby audience responses are largely absent. In this respect,producers employ a range of strategies to secure the effectiveness of symbolic forms,for example, by conducting market research, monitoring audiences or by using“well-tried formulas which have a predictable audience appeal” (Thompson, 1990, p.221). In the context of accounting, such tried and tested formulas may be employed inthe production of symbolic forms such as the annual report; for example, the“abstractions articulated in accounting language” which are often a feature of thechairman’s statement (Amernic and Craig, 2006, p. 81). Similarly, companies may seekto reduce indeterminacy by undertaking “stakeholder engagement” as part of theirsocial, ethical and environmental reporting activities. By “canvassing stakeholderopinions”, companies are then able to appropriate the information they disclose in thepublic domain (Cummings, 2001, p. 45; Owen et al., 2001). However, what is keyregarding these techniques and strategies employed by producers to reduceindeterminacy is that they are “institutional mechanisms” and employed in a way

Analysingaccounting

discourse

917

which “concurs with the overall aims of the institutions concerned” (Thompson, 1990,p. 221). This structured break between producer and recipient has importantmethodological implications for the analysis of symbolic forms that will be discussedfurther in the third section of this paper.

Drawing on the theoretical considerations outlined above, we can discern two keyissues that are relevant to the study of mass mediated symbolic forms (such as annualreports or social and environmental reports). These are:

(1) According to Thompson’s “structural” conception of culture, culture ischaracterised by the production and reception of symbolic forms. Therefore, theanalysis of “symbolic forms” requires consideration of their production,transmission and reception, as well as the social and historical contexts of thisactivity.

(2) Mass communication institutes a structured “break” between producer andrecipient. Therefore, consideration should be given to the institutionalmechanisms of production and diffusions as well as the nature of theaudience and their appropriation of symbolic forms.

Therefore, while discourse or formal analysis will shed light on the “patterns anddevices which structure” texts, it is not possible to “read off” the characteristics ofproduction or the consequences of such texts by recourse to this form of analysis alone(Thompson, 1990, p. 291; see also, Thompson, 1984). This failure to consider theprocesses of both production and reception, and the social historical conditions of theseactivities is referred to by Thompson (1990, p. 291) as “the fallacy of internalism”.

The following section critiques a study in the accounting literature whichundertakes a textually orientated approach to the analysis of accounting discourse:Gallhofer et al. (2001); by drawing on the theoretical concerns outlined above, thiscritique will argue that Gallhofer et al. (2001) overemphasise the internal characteristicsof the text, and pay insufficient attention to issues of production and reception as wellas to the social and historical conditions in which they are embedded. In this sense, anddespite the merits of the work, Gallhofer et al.’s (2001) analysis falls into the “fallacy ofinternalism”.

Prior research into aspects of accounting discourse – Gallhofer et al.(2001)The extant literature on accounting discourse and language is extremely diverse,covering many different foci of analyses (for example, annual reports, social andenvironmental reports, Chairmen’s statements, etc), and considering many differentaspects of language and approaches to text analysis (for example, content, rhetoric,narrative, metaphor, etc.). While the present paper restricts its critique to one suchstudy (Gallhofer et al., 2001) the criticisms that are advanced are applicable to thewide-range of research that purports to undertake a textually oriented approach to theanalysis of accounting discourse. While any one of these studies could have beensubjected to a more developed critique, Gallhofer et al. (2001) was selected because theframework from which they draw (Fairclough’s version of critical discourse analysis)explicitly considers the production and reception of texts. In this respect, Gallhoferet al.’s (2001) study could be considered to be more comprehensive than other textuallyorientated approaches in the accounting literature, and less likely to fall foul of the

AAAJ20,6

918

“fallacy of internalism”. However, as I seek to argue, there are serious problems withFairclough’s framework which prevents a full consideration of issues of productionand reception; problems which also apply to Gallhoffer et al. (2001).

The following section provides an overview of CDA and is followed by a synopsis ofGallhoffer et al.’s (2001) paper. A two-stage argumentative strategy is then developed:first, to review the extent literature which is critical of CDA, and second, to considerwhether these criticisms apply to Gallhofer et al. (2001).

CDACDA has emerged as a major field of research over the last 20 years, reaching a “maturestage of incorporation” into academic journals (McKenna, 2004, p.9). CDA draws ontraditions within linguistics, such as classical rhetoric, text linguistics, pragmatics andsociolinguistics, and can be viewed as a continuation of the work carried out in the 1970sand 1980s at the University of East Anglia by Fowler, Trew and Kress: the work of thesepioneering authors laid the foundations for critical linguistics (Fowler et al., 1979;Wodak, 2001). The principle aim of CDA is to highlight the relationship betweenlanguage use and unequal relations of power (Fairclough, 1989).

There exist a number of approaches within CDA, which, like approaches todiscourse in general, range from textually orientated research to more abstract work,drawing on social theory (Fairclough, 1992; Meyer, 2001). However, as Blommaert(2005) notes, the use of Hallidayan systemic functional linguistics is prominent across anumber of approaches. In fact, the pervasiveness of Halliday’s influence in CDA has ledWodak (2001, p. 8) to stipulate that “an understanding of the basic claims of Halliday’sgrammar and his approach to linguistic analysis is essential for a properunderstanding of CDA.”[7].

As mentioned previously, Gallhofer et al. (2001) take an approach to CDA which drawson the work of Norman Fairclough, whose version of CDA is often considered to fallbetween textually orientated and social theory approaches to discourse (referred to byMeyer (2001, p. 22) as a “middle-range theory position”). Fairclough’s version of CDA aimsto develop an approach to language analysis which combines methods from linguisticswith insights from social and political theory. In this regard, Fairclough cites Halliday’ssystemic functional linguistics as being influential regarding the former, and a range ofsocial theorists, including, “Antonio Gramsci, Loius Althusser, Michel Foucault, JurgenHabermass and Anthony Giddens” with regard to the latter (Fairclough, 1992, p. 1).

In sketching his social theory of discourse, Fairclough (2003, p. 205) emphasises the“dialectical relationship between discourse (including language but also other forms ofsemiosis, e.g. body language or visual images) and other elements of social practice”. Inthis sense, Fairclough (1992, p. 64) views discursive practice as being “shaped andconstrained by social structure” such as class, institutions, norms and conventions, aswell as contributing “to the constitution of all those dimensions of social structurewhich directly or indirectly shape and constrain it”. In conceptualising the norms andconventions that underlie discourse practice, Fairclough adopts the Foucauldian term“order of discourse”. For Fairclough (1993, p. 135) the order of discourse of a socialdomain is the:

[. . .] totality of its discourse practices, and the relationships (of complementarity,inclusion/exclusion, opposition) between them- for instance in schools, the discursivepractices of the classroom, of assessed written work, of the playground, and of the staff room.

Analysingaccounting

discourse

919

And the order of discourse of a society is the set of these more “local” orders of discourse, andrelationships between them (e.g. the relationship between the order of discourse of the schooland those of the home or the neighbourhood).

In categorising types of discourse practice, Fairclough (1993, p. 135) distinguishesbetween “discourses (discourse as a count noun)”, which refer to areas of experiencefrom a particular perspective (for example, “patriarchal versus feminist discourses ofsexuality”) and genres, which refer to the uses of language associated with a particularsocial activity such as a job interview.

In order to explore the relationships between discursive events, Fairclough (1992,p. 72) develops a three-dimensional framework, each dimension of which is“indispensable” for discourse analysis:

(1) discourse as text;

(2) discourse as discourse practice; and

(3) discourse as social practice (see also, Fairclough, 1989; 1995).

Each aspect of this framework is briefly summarised below.At the level of analysis of discourse as text, the focus of analysis is on written or

transcribed text. As mentioned, Fairclough’s analysis of the structural features of textis influenced by Halliday’s systemic functional linguistics, although the work in otherfields linguistics also plays a role. Broadly speaking, Fairclough (1992, 1995) organiseshis analysis according to vocabulary, grammar, cohesion and text structure. At thelevel of analysis of discourse as discourse practice, the focus is on the production,distribution and consumption of text, in particular, socio-cognitive aspects of textproduction and interpretation. Discourse practice, according to Fairclough (1992, p. 80)is constrained by members’ resources “which are effectively internalised socialstructures, norms and conventions, including orders of discourse, and conventions forthe production, distribution and consumption of texts” (see also, Fairclough, 1989,1993, 1995). Drawing on the work of Bakhtin and Kristeva, the concept of“intertextuality” plays a prominent role in the consideration of aspects of production,transmission and reception. This concept and its application by Fairclough will beconsidered in more detail below in the section that discusses existing criticisms ofCDA. At the level of discourse as social practice, analysis is concerned with context,including the institutional context and the wider societal context. Of particular concernto Fairclough (1989, 1992, 1993, 1995) is the relationship between power and discourseand, more specifically, how control of discursive practice can be viewed as hegemonicstruggles over orders of discourse.

Gallhofer et al. (2001) – takeovers legislation in New ZealandGallhofer et al. (2001, p. 130) explain that New Zealand’s western economy and societyhas followed other countries by moving in the direction of neo-liberalist economicpolity. The New Zealand National Party’s pursued an agenda of updating companylaw (including regulation, financial institutions and takeovers) in light of updateswhich had occurred in other Anglo-American countries. However no definitelegislative regulatory agenda was pursued by the National Party – just a generalincreased openness to neo-liberal economic policy (Gallhofer et al., 2001). With regardto takeovers, a Bill was drafted which proposed a Takeovers Code and Takeovers

AAAJ20,6

920

Panel. A Takeovers Panel Advisory Committee was charged with drawing up the Codethat was to be used in governing the conduct of takeovers. Submissions were sent tothe committee so that the views of interested parties could be considered. Thesubmissions sent to the committee “evidenced significant differences” (Gallhofer et al.,2001, p. 132); in particular, the New Zealand Business Roundtable (NZBR) opposed thecode, and the Institute of Directors (IOD), supported it. The analysis undertaken byGallhofer et al. (2001) concerns the letters of submission sent by “prominentspokespersons” from these two organisations. Gallhofer et al. (2001) point out that,although both groups are free market advocates, analysis shows the IOD to be moretraditional and the NZBR to be pushing for a response to demands of internationalcapitalism.

At the level of textual analysis, Gallhofer et al. (2001) focus on the vocabulary of thetexts and the use of keywords such as “regulation” and “code” which differed markedlybetween the two submissions. For example, in the NZBR texts, takeovers are presentedas “value creating” whilst the IOD denies that the legislation poses any threat totakeover activity, stating that the code, “does not prevent takeovers”. The NZBR textdenotes that takeover activity engenders “economic efficiency” and “economic welfare”and that the takeovers code is therefore a threat to these perceived benefits. The IOD onthe other hand, emphasises that takeover activity can be “unfair” to minorityshareholders, and that the code is a “welcome increase in fairness” (Gallhofer et al.,2001, p. 134).

At the level of discourse practice, Gallhofer et al. (2001) place emphasis on theproduction of texts, where significant differences are found. In particular, the IODemphasise practical experience, whereas the NZBR emphasise the support of experts.Therefore, it was the “type of support that [each group] deemed appropriate to mobilizetheir case” which was the marked difference between the two submissions (Gallhoferet al., 2001, p. 136). For example, the NZBR evidences expert research (which theycommissioned), whilst the IOD submission details “past abuses” in takeovers (drawingon a supporting letter from the Securities Comission). Gallhofer et al. (2001, p. 137) addthat “the type of research mobilised to buttress the NZBR case is US mainstreamfinance research”, which is presented in a manner which appears “scientific” and“neutral”.

At the level of analysis of discourse as social practice, Gallhofer et al. (2001, p. 138)analyse the texts in terms of hegemonic struggle, stating that discourse “can be locatedin a hegemonic struggle to effect a subtle shift in hegemony further towardsneo-liberalist polity”. According to Gallhofer et al. (2001, p. 139), this is apparent in the“perspectival differences” in the submissions made by both the IOD and the NZBR; inparticular, while the IOR reflected New Zealand traditional values the NZBRemphasised international capitalism. Whilst these perspectives may reflect theself-interests of both organisations, Gallhofer et al. (2001) maintain that they also reflectwider social struggle. Gallhofer et al. (2001) also point out that, in mobilising their case,the NZBR closely aligned themselves with other sympathetic groups (for example, theCentre for Independent Studies (CIS) who sponsored a lot of the academic research usedin the NZBR’s submission).

In their concluding remarks Gallhofer et al. (2001) suggest that the IOD could havedone more to win the battle over “research resources”, as a means of taking advantageof language and discourse in the struggle over polity.

Analysingaccounting

discourse

921

Criticisms of CDAIn order to adequately assess Gallhofer et al.’s (2001) study it is first of all imperative toconsider the extant literature which is critical of CDA and, in particular, Fairclough’sversion of it. Criticisms of CDA are wide ranging: for example, commentators havenoted that the interpretations offered by CDA tend to be politically motivated asopposed to linguistically motivated (Stubbs, 1997); rely on a “naıve sociological model”based on a “macro-sociological theory in which there only two parties - the oppressorsand the oppressed” (Hammersley, 1997, p. 245; see also, Hammersley, 2003); offer littlejustification or rational regarding the texts which are selected for analysis(Widdowson, 2004) and; do not consider any sense of history (Blommaert, 2005).However, one criticism is notable for its pervasiveness: that CDA “does not analysehow a text can be read in many ways, or under what social circumstances it isproduced and consumed” (Blommaert, 2005, p. 31).

Perhaps the most “resonant” of these critiques comes from Henry Widdowson,whose expertise lies in applied linguistics (Haig, 2004). For Widdowson (2004) thecentral problem with CDA is that it fails to make a distinction between text anddiscourse, and the two terms tend to be used synonymously in the field. Widdowson(2004, p. 8) draws a clear distinction between the two terms: text is the “overt linguistictrace of a discourse process” and thus, the product of discourse, whereas discourserefers to the process of communication and interpretation whereby language is used to“engage our extralinguistic reality”. Therefore, while discourse is the pragmaticprocess of meaning negotiation, text is the product (Widdowson, 2004). Blommaert(2005, p. 32) also comments on this issue, stating that “CDA collapses semantics andpragmatics: pragmatics is, in fact, reduced to semantics.” This becomes a problemwhen one considers the “structured break” which Thompson (1990) refers to. Indeed,Widdowson (2004, p. 12) also anticipates these difficulties, where he notes that in thecase of written texts, the participants in the discourse process are separated, giving riseto the following:

[. . .] discourse which the writer intends the text to record as output . . . [which is] always likelyto be different from the discourse which the reader derives from it. In other words, what awriter means by a text is not the same as what a text means to a reader.

Despite the explicit consideration of the production and reception of texts inFairclough’s three dimensional framework, it has been widely observed that thisroutinely fails to play a part in Fairclough’s analysis of text (Blommaert, 2005;Pennycook, 2003; Stubbs, 1997; Widdowson, 2000, 2004). In Fairclough’s work we findthe insistence that:

[. . .] analysis of a particular discourse as a piece of discursive practice focuses on processes oftext production, distribution and consumption. All the processes are social and requirereference to the particular economic, political and institutional settings within whichdiscourse is generated (Fairclough, 1992, p. 71; see also, Fairclough, 1989, 1993, 1995).

This leads to the necessary questions: “Why is it important to focus on text productionand reception?”, and “How does one approach this in analysis?”. According to Stubbs(1997), despite having been asked these questions in respect of CDA for a long time,answers are not forthcoming. One reason was proffered by a leading proponent ofcritical linguistics (and to whom Fairclough acknowledges an intellectual debt) –Fowler (1996, p. 7), who notes that “the reader simply is not theorized.

AAAJ20,6

922

By Fairclough’s (1992, p. 72) own admission, “one can [not] reconstruct the productionprocess purely by reference to texts”. Fairclough (1992, p. 72) attempts to get round thisproblem by suggesting that one way of “linking this emphasis on discursive practice andprocesses of text production, distribution and consumption of the text itself is to focus onthe intertextuality of the latter” (see also, Fairclough, 1989, 1993, 1995) According toFairclough (1992, p. 84) “intertexuality is basically the property of texts having snatchesof other texts.” Fairclough outlines three features of intertexuality to correspond with theprocesses of production, distribution and reception. For production, intertexuality refersto the “historicity” of texts, and how they consist of remnants of prior texts. In terms ofdistribution, intertextuality explores the networks that texts move along and thetransformations they undertake as they move from “one text type to another”, forexample, a political speech to a news report (Fairclough, 1992, p. 84; see also, Fairclough,1989, 1993, 1995). In terms of interpretation, an intertextual perspective implies thatinterpreters bring a range of texts to the interpretative process which will shape theirunderstanding of a text. It seems clear that intertextuality represents only a very partialstep towards the analysis of the process whose importance Fairclough repeatedlyemphasises – the production, distribution and reception of texts. What is more,Fairclough does not make it clear how the analyst is to explore such intertextual features(beyond the use of conjecture and speculation).

Again, Fairclough (1992, p. 86) is quick to acknowledge the limitations of his work,stating, “how people interpret texts in various circumstances is a question requiringseparate investigation”, although he also notes that such empirical work does not appearin his own book. Such qualifications are familiar features of Fairclough’s work; forexample, Fairclough (1993) sets out to illustrate his three dimensional model with samplesof discourse from higher education (including advertisements for a lectureship, coursematerials and a CV). Again, while emphasising the need to apply all three analyticalelements of his framework, Fairclough (1993) himself, “for reasons of space” onlyundertakes a “systematic” analysis (i.e. applying all three levels) to one of the threeexamples: the advertisement. However, this illustration tells us very little aboutproduction, distribution or consumption. In fact, only one small paragraph is devoted tothe discussion of discourse practice (drawing primarily on intertextuality), which tells usthat the advertisements are “interdiscursively complex, articulating a variety of genresand discourses, including elements of advertising and other promotional genres”(Fairclough, 1993, p. 146). It seems hardly surprising that an advertisement for a jobshould draw on elements of advertising genres – moreover, beyond mere speculation,Fairclough (1993) offers no formal analysis of how this is so, what an advertising genrelooks like, and what features of such a genre are explicit in each advertisement. In short,not only is Fairclough’s application of intertextuality remarkably unconvincing, it tells usvirtually nothing about aspects of the production, distribution and consumption of text.

In a more recent work (Fairclough, 2003), the reader again is told that the causaleffects of texts and the ideological effects of texts can not be “got at” by recourse to textanalysis alone. In this sense, Fairclough (2003, p. 15) suggests that “one needs to look atinterpretations of texts as well as texts themselves . . . which suggests that textualanalysis is best framed within ethnography”. However, no examples of this ethnographicresearch are offered in his text, neither is there a clear exposition of what it might entailnor the theoretical justification for its need. As Haig (2004, p. 16) points out: “here againwe find a gap between the talk of CDA and the walk: lip service is paid to the importance

Analysingaccounting

discourse

923

of such matters but the sleeves rolled-up, dirty handed business of actually producingthe work is severely lacking”. Similarly, speaking specifically of Fairclough’s version ofCDA, Widdowson (1998, p. 143) vehemently stresses that the intentions of producers andconsumers of texts “are vicariously inferred from the analysis itself, by reference to whatthe analyst assumes in advance to be the writer’s ideological position”. Therefore, despiteFairclough’s explication of a three dimensional framework, where the second dimension(discourse as discourse practice) claims to consider the production, distribution andconsumption of a text and how it is interpreted by individuals, as Widdowson (1998, p.143) argues, the “producers and consumers of texts are never consulted [and] no attemptis ever made to establish, empirically what writers might have intended by their texts”(see also, Pennycook, 2003).

Extending the critique – Gallhofer et al. (2001)Despite CDA’s emergence as a distinct field of study which has become widely adoptedin a range of social science disciplines, it has received little attention in the accountingliterature. In this respect, as well as others, Gallhofer et al.’s (2001) paper ispraiseworthy. Whilst there have been a few studies in the general area of business,management and accounting which have adopted a CDA approach, these studies haveoften amounted to little more than a close critical reading of text (Laine, 2005) or haverestricted their analysis to one aspect of CDA, such as recontextualisation (see Thomas,2003)[8]. In this respect, Gallhofer et al. (2001) represents the first (and only – of whichthe author is aware) real attempt to fully apply CDA in an analysis of accountingdiscourse. In doing so, as mentioned previously, Gallhofer et al. (2001) utilise all threedimensions of Fairclough’s framework for analysis.

The critique of Gallhofer et al. (2001) developed in this section will focus on onespecific aspect of their analysis - the level of discourse practice. This level in Fairclough’sframework is the one which explicitly addresses the production, transmission andreception of text. However, as noted in the preceding section, a number of commentatorshave highlighted a range of problems associated with the adoption of this analysis- inparticular, the lack of consultation with the actors involved in the production,transmission and reception of texts. Drawing on these criticisms, the present paper willassess the extent to which they apply to Gallhofer et al.’s (2001) study.

As discussed above, at this level of analysis, Gallhofer et al. (2001, p. 136) focus onthe “credibility of argumentation” employed by the two lobby groups and, inparticular, “the mode of argumentation of those engaged in the debate”. In terms ofproduction, Gallhofer et al.’s (2001) analysis focuses on the “other” texts on which bothsubmissions draw in constructing their arguments – i.e. the intertextuality ofthe submissions. It is both interesting and important to note the intertextual aspects ofthe submission letters; in particular, that we are informed that the IOD’s submissionemphasises practical experience (for example, by attaching to their submission aSecurities Commission letter detailing past abuses) and the NZBR draw on mainstreamfinance research which they commissioned, is both informative and illuminating.However, this aspect of text production is inferred entirely from the text itself, andtherefore, tells us little of the opinions, beliefs and understandings of the individualsinvolved in the production process, and only a limited amount about thesocial-historical conditions of production. Furthermore, Gallhofer et al. (2001, p. 139)note that the NZBR submission constitutes “a more powerful discourse” and that the

AAAJ20,6

924

IOD’s submission was weak in terms of its position in the hegemonic struggle. In otherwords, while Gallhofer et al. (2001) do not explicitly speculate on the consequences ofthe submissions, there is an implicit assumption that the NZBR submission would bemore effective, even though no formal analysis of the reception of the letters ofsubmission were undertaken.

In terms of the social-historical aspects of production, there are a range of issuesthat seem pertinent to the analysis which are not considered due to the limited focus onaspects of intertextuality; for example, whether the two organisations are characterisedby definite hierarchies, whether or not membership is limited, what their status is inrelation to other lobby groups, what their resources are like in comparison to each otherand other lobby groups, etc. In terms of the everyday understanding of individualsinvolved in the production process, again, pertinent issues are neglected due to a focuson intertextuality – for example, How do they perceive their role within theorganisation? How do they perceive the role of the organisation? What is it they hope toachieve? As Thompson (1990) stresses, a fundamental feature of social enquiry is thatthe object domain (the letters of submission) are a pre-interpreted subject domain and,therefore, their analysis should attempt to interpret the understanding of theindividuals involved in the production process. By engaging with the actors involvedin the process of production the researcher is not simply trying to understand theintentions of the authors/producers; as Thompson (1990, p. 138) reminds us,intentionality should not be taken as the “touchstone of interpretation”. Consideringtoo the understanding of actors involved in production may “help illuminate the rulesand assumptions implicit in the production process, including assumptions about theaudience and its needs, interests and abilities” (Thompson, 1990, p. 305). Therefore, byconsulting with those involved in text production, Gallhofer et al. (2001) would haveperhaps gained insights into the assumptions held by producers regarding theTakeovers Panel Advisory Committee, and why NZBR felt that commissionedempirical research was so important and how commissioning decisions were made.

However, and to their credit, Gallhofer et al.’s (2001) analysis is not completelyrestricted to intertextual features of production. We find, tucked away as an endnote tothe paper, that the analysis of the submissions “was supported by interviews of theChief Executive of the NZBR, the Chairman of the Security Commission and theExecutive Director of the IOD” (Gallhofer et al., 2001, p. 147). But what of theseinterviews? It is not clear from the body of the paper what insights these interviewsprovided, or what light they shed on the analysis of discourse practice. Unfortunatelyonly snippets of insights are provided in a couple of endnotes. For example, we are toldthat a senior director of the IOD “mentioned that the IOD argued for takeoverslegislation of moral and ethical grounds” (Gallhofer et al., 2001, p. 150). But on whatethical grounds? Was the director’s judgement informed by the ethical perspective ofwhat Gray et al. (1994) refer to as “financial utilitarianism”, whereby a society as awhole benefits from individuals pursuing their own financial self interest- and if so,what does this inform us about the hegemonic relations of production?

In another endnote, we are told that an NZBR representative believed that the workwhich they commissioned was “heavy duty research” and that the submission of theiropponents was not “based on good research or good professional analysis”. Thisappears to be quite a telling quote, and one wonders why these issues were not morefully developed in the body of the paper. However, as stated, we only get a couple of

Analysingaccounting

discourse

925

snippets of such insights as opposed to any real attempt to develop the perspectivesand understanding of the producers of the texts. Given the criticisms outlined in theprevious section of the paper regarding Fairclough’s version of CDA, at least Gallhoferet al. (2001) make some attempt to consult with the producers of texts- which is more, itcould be noted, than could be said for Fairclough’s own analysis.

Despite Gallhofer et al.’s (2001) brief attempt to take on board the understanding ofthe producers, this consideration is not extended to the recipients of the texts. Inanother endnote, Gallhofer et al. (2001, p. 150) inform the reader that the consumptionof texts “is not explicitly analysed in the case study as it is deemed to extend theanalysis beyond what is appropriate within the confines of the study”.

While it could be argued that Gallhofer et al. (2001) pay insufficient attention to therole of production and reception of the texts they analysed, it should be noted thatcompared to other textually orientated approaches to the analysis of discourse in theaccounting literature, Gallhofer et al.’s (2001) study is much more comprehensive, andrepresents an attempt to acknowledge, and to some extent, incorporate issues ofproduction and reception which are severely lacking in other papers.

The following section outlines Thompson’s (1990) depth-hermeneutical framework,which he describes as “the tripartite approach”, illustrating how this framework canhelp address the shortfalls identified above.

The tripartite approachIn order to address the implications of the theoretical considerations outlined earlier inthis paper, Thompson (1990) proposes a methodological framework for the analysis ofmass communication which he refers to as the “tripartite approach”[9] (see Figure 1).The three “object domains” to be considered in this approach are:

1. The production and transmission or diffusion of symbolic forms.2. The construction of the media message.3. The reception and appropriation of media messages (Thompson, 1990, emphasis in

original).

Figure 1.The methodologicaldevelopment of thetripartite approach

AAAJ20,6

926

As Thompson (1990, p. 304) states, a “comprehensive approach to the study of masscommunication requires the capacity to relate the results of these differing analyses toone another, showing how the various aspects feed into and shed light on one another”.According to Thompson, the first stage of analysis, the production and transmission ordiffusion of symbolic forms, is most appropriately carried out by combiningsocial-historical analysis with an interpretation of doxa[10] (ethnographic research). Inexploring the social-historical dimension of production or diffusion, the researcher mayconsider the characteristics of the institution within which the media message isproduced, the patterns of ownership and control within the institution, the relationshipbetween media and non-media institutions, the technologies employed in productionand the procedures carried out by individuals (such as marketing, promotion, etc.).

When discussing the social-historical dimensions of production, Thompson (1990,1995, 2005) usefully draws on Bourdieu’s concept of “fields of interaction”. Bourdieuuses the concept of “field” to highlight how actions are carried out in structured socialcontexts; i.e. in pursuing aims and objectives, individuals “act within sets ofcircumstances which are given in advance, and which provide different individualswith different inclinations and opportunities” (Thompson, 1995, p. 12). In other words,individuals are differently positioned within fields according to the “quantities ofresources or ‘capital’ available to them” (Thompson, 1990, p. 282). With reference to thecapital available to individuals, (Thompson, 1990, p. 282) notes:

These schemata are not so much explicit and well-formulated precepts as implicitunformulated guidelines. They exist in the form of practical knowledge, gradually inculcatedand continuously reproduced in the mundane activities of everyday life.

According to what Thompson (1990) describes as the “hermeneutic conditions of socialenquiry”, the object domain of analysis (for example, accounting texts) is also apre-interpreted subject domain. Given this condition, it is imperative that any analysisof symbolic forms must consider how they are “interpreted by the subjects whocomprise the subject-object domain” (Thompson, 1990, p. 279). Such an approach isreferred to by Thompson (1990) as an interpretation of doxa: i.e. an interpretation of the“opinions, beliefs and understandings which are held and shared by the individualswho comprise the social world” (Thompson, 1990, p. 279). Interpretation of doxa isessentially ethnographic in nature, and may be undertaken through “interviews,participant observation and other kinds of ethnographic research” (Thompson, 1990,p. 279).

An interpretation of doxa, with regard to production and transmission of symbolicforms, requires an interpretive approach that seeks “to elucidate the understanding ofthe individuals involved in producing and transmitting media messages . . . the waysin which they understand what they are doing, what they are producing and what theyare trying to achieve” (Thompson, 1995, p. 305). Such an approach helps to illuminatethe “rules and assumptions implicit in the production process, including assumptionsabout the audience and its needs, interests and abilities” (Thompson, 1995, p. 305). Bycombining both aspects of production (the social-historical context and theunderstandings of the individuals involved in the production process), theresearcher is in a stronger position to interpret how the media message is producedas a “meaningful symbolic construction” (Thompson, 1995, p. 305).

Analysingaccounting

discourse

927

Whilst Thompson (1990, p.280) stresses that it is important for researchers to payattention to the production and reception of symbolic forms, he acknowledges too thatsymbolic forms are “also meaningful constructs which are structured in definite ways”.Accordingly, for the second object domain, “internal structure of text”, Thompson(1990, p. 305) views the media message as a “complex symbolic construction whichdisplays an articulated structure”. In order to analyse the “articulated structure”,Thompson (1990, p. 305) recommends “formal or discursive analysis”, acknowledgingthat there are various ways this can be carried out, depending upon the objects andcircumstances of enquiry. Thompson (1990) alludes to several methods of enquiry thatmay be applied to this domain, including: semiotic analysis; conversation analysis;syntactic analysis; narrative structure; and argumentation analysis.

The third object domain, the reception and appropriation of media messages, issimilar to the first, in so far as both social-historical analysis and an interpretation ofdoxa are undertaken. In this case, the interpretation of the doxa considers howrecipients, as opposed to producers, of symbolic forms interpret and appropriate them.This aspect of analysis draws attention to the “specific circumstances and sociallydifferentiated conditions within which media messages are received by particularindividuals” (Thompson, 1990, p. 305). For example, analysis may consider thecontexts within which messages are received, the degree of attention accorded to theirreception, whether reception varies according to gender, class or race, etc. WhileThompson (1990, p. 313) acknowledges that there has been a significant amount ofresearch on the size of audiences or which consider the “gratifications which theyderive from [media messages]”, he argues that such research gives scant attention tothe social-historical context of reception. In considering the social-historical aspects ofappropriation, Thompson (1990) draws attention to a number of criteria that may beusefully explored by researchers. These include: the typical modes of appropriation;the social-historical conditions of reception; the meaning of messages as interpreted byrecipients; and the discursive elaboration of messages.

The typical modes of appropriation will often be “circumscribed” by the technicalnature of transmission. For example, novels will most likely be read alone, whereas atelevision soap opera may be watched amongst friends and family. However,Thompson (1990, p. 315, emphasis added) warns that:

[. . .] the technical media of transmission do not determine the typical modes of appropriation,as these modes are also dependent on the conditions, conventions and competencies whichcharacterize the contexts of reception and the recipients. It is only by analysing the technicalmedia of transmission in relation to the actual circumstances in which mass-mediatedproducts are received and taken-up that we can attempt to elucidate the typical modes ofappropriation of these products.

The social and historical characteristics of reception refer to the fact that reception andappropriation are “situated practices”; i.e. activities which take place in particulartimes and places. Analysis may consider: the “spatial and temporal” features ofreception (where the activity takes place and for how long); the relations of power (whocontrols the media message or has the technical means of reception); the rules andconventions which govern reception; and, the social institutions within which receptiveactivity takes place. For example, the reception of a social and environmental report byan environmental NGO is likely to differ from that of an analyst in a financial advisingfirm (Deegan and Rankin, 1997). Alternatively, the reception of accounting textbooks

AAAJ20,6

928

on undergraduate courses is determined by an “institutionalised” aspect of the highereducation field: namely, the adoption system (Thompson, 2005). In this sense, the use ofa recommended accounting textbook by students will most likely depend on whetherthe text has been recommended for a course by the lecturer. In other words, there aredistinct relations of power that will determine the particular accounting textbook usedby students. Furthermore, the textbook may be used by the course lecturer to structurelectures and tutorial activity, and may therefore have direct implications for where andhow the textbook is used (Ferguson et al., in press).

The meaning of messages as interpreted by recipients may be considered an aspectof the interpretation of doxa, and is concerned with the ways in which symbolic formsare interpreted and understood by individuals who receive them. This aspect ofanalysis will consider whether individuals accept or reject media messages, and aimsto make explicit the implicit conventions which they employ when “decoding”messages. For example, financial analysts who have studied a particular industry willtypically be able to interpret quite terse company announcements in light of thebackground knowledge they already posses. When linked to the social-historicalcharacteristics of appropriation, it is possible for the researcher to establish whetherunderstanding differs systematically in relation to, for example, class, gender, race, etc.(Thompson, 1990).

The discursive elaboration of media messages recognises that as well as beingtransmitted and received by individuals in particular settings messages are “alsocommonly discussed by recipients in the course of reception or subsequent to it, andare thereby elaborated discursively and shared with a wider circle of individuals whomay or may not have experienced the process of reception” (Thompson, 1990, p. 317).In other words the appropriation of a media message may not necessarily coincide withthe initial reception of the message. This process may have implications in terms ofhow individuals understand and appropriate messages.

ConclusionsThis paper has argued, by referring to Gallhofer et al. (2001) as an exemplar, that the“formal” analyses of textual discourse reported in the accounting literature are limitedto the extent that they only focus on the internal structure of texts. That is not to saythat such analysis is misplaced, but rather that it could be used in conjunction withother methods of investigation which consider the everyday understanding of theindividuals involved in the production and reception of accounting texts, as well as thesocial and historical conditions of the production and reception processes. As outlined,there are several important theoretical and methodological reasons for this.

These key issues are often unacknowledged in extant studies of accounting texts;they are usually not considered as a potential area of analysis, or as a limitation to thestudies. Even where they are mentioned, the analysis tends to ignore the issue raised.One reason for this neglect might be a lack of awareness on behalf of the researcher. Inthis respect, the current paper makes a contribution to the accounting literature byincreasing awareness of important methodological issues associated with the analysisof accounting texts. The current paper makes a further contribution, by outliningThompson’s (1990) “tripartite” framework which addresses each of the theoreticalconcerns discussed in the second section of the paper.

Analysingaccounting

discourse

929

A more comprehensive analysis of accounting texts is not without challenges; forexample, access to organisations, the authors/producers, or stakeholders/intendedaudiences of accounting texts may not always be possible. Nevertheless, this shouldnot prevent a consideration of the social-historical aspects of the production or theappropriation of texts. A further limitation of the “tripartite” framework is that bywidening the scope of research to include individuals and social-historical context, itwould be difficult to undertake large scale studies which included numerous samplesof accounting texts (for example, Unerman, 2000)[11]. Other pragmatic issues may alsobe relevant here; in addition to managing such large-scale studies, the sizeable outputmay prove difficult to publish given the necessary space constraints in academicjournals. However, the output does not necessarily have to be published in a singlearticle; each strand of the research could be published separately – with referencemade to each of the other components. Furthermore, since there is much less materialin the literature that considers the use of, or the motives for producing, accountingtexts, perhaps large-scale studies into the internal structure of texts should not be apriority for accounting researchers.

Despite these limitations, the approach outlined in this paper has value for a numberof reasons; in particular, by increasing understanding of production and use, as well associal historical conditions, we can develop a more comprehensive understanding ofhow relations of power are manifest in accounting texts and, about how the use of“symbolic forms” may be utilised to serve the interests of certain constituents to thedetriment of others. Furthermore, by illuminating relations of power this researchapproach may hold emancipatory potential; for example, the interpretation of symbolicforms using the tripartite approach may be different from the interpretations ofindividuals who are already enmeshed in the processes of production or reception. Thismay provide the opportunity for them to “question or revise their prior understanding. . . [and] to alter the horizons of their understandings of themselves and others”(Thompson, 1990, p. 333).

Notes

1. For example, Fairclough (2003, p. 8) differentiates between “construction” and “construal”,arguing that though “we may textually construe the social world. . . whether ourrepresentations or construals have the affect of changing its construction depends uponvarious contextual factors”. In this sense, Fairclough accepts a “moderate” view of socialconstructionism as opposed to an extreme version.

2. However, see Widdowson (2004) for an objection to the synonymous use of these two terms.

3. It is the author’s view that the term “fallacy of internalism” may often be inappropriate, andthe less pejorative term “limitation” be more applicable in some circumstances. Thompson’s(1990) term will be used in this study to encompass both interpretations.

4. The Derridean counterpoint “Il n’y a pas de hors texte” (There is nothing outside the text),might appear to refute Thompson’s statement. However, as Derrida (1988, p. 148) hashimself noted with regard to this statement: “that does not mean that all referents aresuspended, denied, or enclosed in a book, as people have claimed, or have been naıve enoughto believe and to have accused me of believing. But it does mean that every referent, allreality has the structure of a differential trace, and that one cannot refer to this ‘real’ except inan interpretive experience. The latter neither yields meaning or assumes it except in amovement of differential reading. That’s all”.

AAAJ20,6

930

5. There are a wide range of studies in accounting which draw on particular aspects ofThompson’s framework without necessarily incorporating the framework in its entirety. Forexample, Arnold (1999) and Ferguson et al. (2005) employ Thompson’s concept of ideology,whilst Harrison and McKinnon (1999) draw on his “structured” concept of culture.

6. Thompson (1990, p. 59) uses the term “symbolic forms” to refer to a “broad range of actionsand utterances, images and texts, which are produced by subjects and recognised by themand others as meaningful constructs”. These may include linguistic utterances, either spokenor inscribed, as well as visual images: hence, written accounting “texts” are a symbolic form.In this respect, the definition of discourse provided in the present study, as written or spokentext which may include web pages, visual images, etc, equates with Thompson’s use of theterm “symbolic form”. Culture then consists of symbolic forms, actions, utterances, etc. – orin other words – discourse.

7. Halliday’s work is characterised by his emphasis on the relationship between “thegrammatical system and the social and personal needs that language is required to serve”(Wodak, 2001, p. 8).

8. Other studies have employed the use of CDA to analyse accounting texts, although thisresearch tends to stand outside the literature normally classified within accounting. Forexample, Livesey (2002), and Livesey and Kearins (2002) employ CDA in the analysis ofsustainability reports (Royal Dutch Shell and the Body Shop) and are published in thecommunication and in the environmental literature respectively.

9. This is an extension of Thompson’s (1990) “depth-hermeneutics” methodological frameworkfor the cultural analysis of symbolic forms. Whilst the depth-hermeneutics framework isconcerned with symbolic forms in general, the tripartite approach considers mass-mediaforms in particular. Since the tripartite approach is derived from the depth-hermeneuticsframework, both approaches share a number of features in common (for example, bothframeworks emphasise the need to combine social-historical analysis, an interoperation ofindividuals’ everyday understanding of the social world, and formal/discursive analysis).The tripartite approach differs in terms of the emphasis accorded to the production andreception of symbolic forms - due to the institutionalised “break” between producer andrecipient in mass communication.

10. The word doxa derives from the Greek language and refers to the opinions or beliefs anindividual may hold. Doxa is most often contrasted with episteme, which is taken to refer totruths or genuine knowledge. Whereas episteme can only be achieved through reason, doxamay be the result of persuasion.

11. Although they do not explicitly apply Thompson’s tripartite approach (or Fairclough’sthree-dimensional framework), Tregidga and Milne (2006) undertake a large-scale analysisof the environmental/sustainability reports of one organisation over a ten year period,drawing attention to the social-historical issues which have a bearing on their production.

References

Abeysekera, I. and Guthrie, J. (2005), “An empirical investigation of annual reporting trends ofintellectual capital in Sri Lanka”, Critical Perspectives on Accounting, Vol. 16 No. 3,pp. 151-63.

Amernic, J. and Craig, R. (2006), CEO Speak: The Language of Corporate Leadership,McGill-Queen’s University Press, Montreal.

Arnold, P. (1998), “The limits of postmodernism in accounting history: the Decatur experience”,Accounting, Organizations and Society, Vol. 23 No. 7, pp. 665-84.

Arnold, P. (1999), “From the union hall: a labour critique of the new manufacturing andaccounting regimes”, Critical Perspectives on Accounting, Vol. 10 No. 4, pp. 399-423.

Analysingaccounting

discourse

931

Beattie, V., McInnes, B. and Fearnley, S. (2004), “A methodology for analysing and evaluatingnarratives in annual reports: a comprehensive description profile and metrics fordisclosure quality attributes”, Accounting Forum, Vol. 28 No. 3, pp. 205-36.

Blommaert, J. (2005), Discourse: A Critical Introduction, Cambridge University Press, Cambridge.

Buhr, N. and Freedman, M. (2001), “Culture, institutional factors and differences inenvironmental disclosure between Canada and the United States”, Critical Perspectiveson Accounting, Vol. 12 No. 3, pp. 293-322.

Cummings, J. (2001), “Engaging stakeholders in corporate accountability programmes: a crosssectional analysis of UK and transnational experience”, Business Ethics: A EuropeanReview, Vol. 10 No. 1, pp. 45-52.

Davidson, R. (2005), “Analysis of the complexity of writing used in accounting textbooks overthe past 100 years”, Accounting Education: An International Journal, Vol. 14 No. 1,pp. 53-74.

Deegan, C. and Rankin, M. (1997), “The materiality of environmental information to users ofARs”, Accounting, Auditing & Accountability Journal, Vol. 10 No. 4, pp. 562-83.

Derrida, J. (1988), Limited Inc., Northwestern University Press, Evanston, IL.

Fairclough, N. (1989), Language and Power, Longman, London.

Fairclough, N. (1992), Discourse and Social Change, Polity, Cambridge.

Fairclough, N. (1993), “Critical discourse analysis and the marketization of public discourse:the universities”, Discourse and Society, Vol. 4 No. 3, pp. 133-68.

Fairclough, N. (1995), Critical Discourse Analysis, Longman, London.

Fairclough, N. (2003), Analysing Discourse: Textual Analysis for Social Research, Routledge,London.

Ferguson, J., Collison, D.J., Power, D.M. and Stevenson, L.A. (2005), “What are recommendedaccounting textbooks teaching students about corporate stakeholders?”, BritishAccounting Review, Vol. 37 No. 1, pp. 23-46.

Ferguson, J., Collison, D.J., Power, D.M. and Stevenson, L.A. (in press), “Exploring accountingeducators’ perceptions of the emphasis given to different stakeholders in introductorytextbooks”, Accounting.

Fowler, R. (1996), “On critical linguistics”, in Caldas-Coulthard, C.R. and Couthard, M. (Eds),Texts and Practices: Readings in Critical Discourse Analysis, Routledge, London.

Fowler, R., Hodge, B., Kress, G. and Trew, T. (1979), Language and Control, Routledge & KeganPaul, London.

Freedman, M. and Jaggi, B. (2005), “Global warming, commitment to the Kyoto protocol andaccounting disclosures by the largest global public firms from publishing industries”,The International Journal of Accounting, Vol. 40 No. 3, pp. 215-32.

Freedman, M. and Stagliano, A.J. (2002), “Environmental disclosure by companies involved ininitial public offerings”, Accounting, Auditing & Accountability Journal, Vol. 15 No. 1,pp. 94-105.


Geertz, C. (1973), The Interpretation of Cultures, Hutchinson & Co., London.

Grant, D., Hardy, C., Oswick, C. and Putnam, L. (2004), “Organizational discourse: exploring thefield”, in Grant, D., Hardy, C., Oswick, C. and Putnam, L. (Eds), The Sage Handbook ofOrganizational Discourse, Sage, London.

AAAJ20,6

932

Gray, R.H., Bebbington, J. and McPhail, K. (1994), “Teaching ethics and the ethics of teaching:educating for immorality and a possible case for social and environmental accounting”,Accounting Education, Vol. 3 No. 1, pp. 51-75.

Haig, E. (2004), “Some observations on the critique of critical discourse analysis”, available at:http;//lang.nagoya-u.ac.jp (accessed April 2006).

Hammersley, M. (1997), “On the foundations of critical discourse analysis”, Language andCommunication, Vol. 17 No. 3, pp. 237-48.

Hammersley, M. (2003), “Conversation analysis and discourse analysis: methods or paradigms?”,Discourse and Society, Vol. 14 No. 6, pp. 751-81.

Harrison, G.L. and McKinnon, J.L. (1999), “Cross-cultural research in management controlsystems design: a review of the current state”, Accounting, Organizations and Society,Vol. 24 Nos 5-6, pp. 483-506.

Heracleous, L.T. (2004), “Interpretivist approaches to organizational discourse”, in Grant, D.,Hardy, C., Oswick, C. and Putnam, L. (Eds), The Sage Handbook of OrganizationalDiscourse, Sage, London.

Laine, M. (2005), “Meanings of the term ‘sustainable development’ in Finnish corporatedisclosures”, Accounting Forum, Vol. 29, pp. 395-413.

Livesey, S. (2002), “The discourse of the middle ground: Citizen Shell commits to sustainabledevelopment”, Management Communication Quarterly, Vol. 15 No. 3, pp. 313-49.

Livesey, S. and Kearins, K. (2002), “Transparent and caring corporations? A study ofsustainability reports by The Body Shop and Royal Dutch/Shell”, Organization& Environment, Vol. 15 No. 3, pp. 233-58.

McKenna, B. (2004), “Critical discourse studies: where to from here?”, Critical Discourse Studies,Vol. 1 No. 1, pp. 9-39.

Meyer, M. (2001), “Between theory, method, and politics: positioning of the approaches to CDA”,in Wodak, R. and Meyer, M. (Eds), Methods of Critical Discourse Analysis, Sage, London.

Oakes, L.S., Considine, J. and Gould, S. (1994), “Counting health care costs in the United States:a hermeneutical study of cost benefit research”, Accounting, Auditing & AccountabilityJournal, Vol. 7 No. 3, pp. 18-49.

Owen, D.L., Swift, T. and Hunt, K. (2001), “Questioning the role of stakeholder engagement insocial and ethical accounting, auditing and reporting”, Accounting Forum, Vol. 25 No. 3,pp. 264-82.

Pennycook, A. (2003), “Critical applied linguistics”, in Davies, A. and Elder, C. (Eds),The Handbook of Applied Linguistics, Blackwell, Oxford.

Phillips, L. and Jorgensen, M.W. (2002), Discourse Analysis as Theory and Method, Sage, London.

Phillips, N. and Hardy, C. (2002), Discourse Analysis: Investigating Processes of SocialConstruction, Sage, London.

Stubbs, M. (1997), “Whorf’s children: critical comments on critical discourse analysis”, in Ryan, A.and Wray, A. (Eds), Evolving Models of Language, Multilingual Matters, Clevedon.

Thomas, P. (2003), “The recontextualization of management: a discourse-based approach toanalysing the development of management thinking”, Journal of Management Studies,Vol. 40 No. 4, pp. 775-801.

Thompson, J.B. (1984), Studies in the Theory of Ideology, Polity Press, Cambridge.


Analysingaccounting

discourse

933

Thompson, J.B. (1995), The Media and Modernity: A Social Theory of the Media, Polity,Cambridge.

Thompson, J.B. (2005), Books in the Digital Age, Polity, Cambridge.

Tregidga, H. and Milne, M. (2006), “From sustainable management to sustainable development:a longitudinal analysis of a leading New Zealand environmental reporter”, BusinessStrategy and the Environment, Vol. 5, pp. 219-41.

Unerman, J. (2000), “Methodological issues: reflections on quantification in corporate socialreporting content analysis”, Accounting, Auditing & Accountability Journal, Vol. 13 No. 5,pp. 667-80.

Van Dijk, T. (1998), “Critical discourse analysis”, in Tannen, D., Schiffrin, D. and Hamilton, H.(Eds), Handbook of Discourse Analysis, Blackwell, London.

Widdowson, H.G. (1998), “The theory and practice of critical discourse analysis”, AppliedLinguistics, Vol. 19 No. 1, pp. 136-51.

Widdowson, H.G. (2000), “On the limitations of linguistics applied”, Applied Linguistics, Vol. 21No. 1, pp. 3-25.

Widdowson, H.G. (2004), Text Context, Pretext: Critical Issues in Discourse Analysis, Blackwell,Oxford.

Wodak, R. (2001), “What CDA is about: a summary of its history, important concepts and itsdevelopments”, in Wodak, R. and Meyer, M. (Eds), Methods of Critical Discourse Analysis,Sage, London.

Wodak, R. and Meyer, M. (2001), Methods of Critical Discourse Analysis, Sage, London.

Further reading

Cresswell, J.W. (1998), Qualitative Inquiry and Research Design: Choosing among Five Traditions,Sage, London.

Fowler, R. (1991), Discourse and Ideology in the Press, Routledge, London.

Llewellyn, S. (1999), “Methodological themes: narratives in accounting and managementresearch”, Accounting, Auditing & Accountability, Vol. 12 No. 2, pp. 220-36.

Parker, L.D. (2002), “Twentieth-century textbook budgetary discourse: a formalization,normalization and rebuttal in an Anglo-Saxon environment”, The European AccountingReview, Vol. 11 No. 2, p. 30.

Corresponding authorJohn Ferguson can be contacted at: [email protected]

AAAJ20,6

934


Reply to: “Analysing accountingdiscourse: avoiding the ‘fallacy of

internalism’”Sonja Gallhofer and Jim Haslam

School of Accounting & Finance, University of Dundee, Dundee, UK, and

Juliet RoperSchool of Management, University of Waikato, Hamilton, New Zealand

Abstract

Purpose – The purpose of this paper is to provide a response to “Analysing accounting discourse:avoiding the ‘fallacy of internalism’”, an article by Ferguson in which a work by Gallhofer et al. iscritiqued.

Design/methodology/approach – The paper responds to critique by Ferguson that one of theirpapers does not consider the “social-historical contexts of text production, transmission andreception”. It also looks at Ferguson’s challenge of critical discourse analysis (CDA) and its politicalmotivation.

Findings – The paper defends Gallhofer et al. in that they chose to “promote critical discourseanalysis respecting the focus of accounting and finance” and that the aim of their work waspedagogical. They chose to focus on the production of the texts rather than their reception because thework wanted to gain insights into how accounting texts are read and mobilised by radical activists inpursuance of their emancipatory goals, especially through CDA.

Originality/value – The paper provides a defence of a previous paper of the authors, which wasconcerned with emancipatory change, evident in Fairclough’s version of CDA.

Keywords Lauguage, Accounting

Paper type Viewpoint

In “Analysing accounting discourse: avoiding the ‘fallacy of internalism’”, Ferguson(2007) elaborates a critique of critical discourse analysis (CDA) focusing especially on thework of Norman Fairclough and, as an example of the application of this method to theanalysis of accounting text, on our paper “Applying critical discourse analysis: strugglesover takeovers legislation in New Zealand” (Gallhofer et al., 2001). Drawing from areading of Thompson’s (1995) book Ideology and Modern Culture: Critical Social Theoryin the Era of Mass Communication, Ferguson points to two limitations of studies ofaccounting discourse and language: first, these studies “assume, or speculate upon, thelikely effects of accounting texts, without thoroughly investigating how these texts areinterpreted by the individuals who encounter them in their everyday lives”, and, second,these texts do not consider “the social-historical contexts of text production, transmissionand reception” (Ferguson, 2007). In addition to these general points of critique, he alsooffers some specific points of critique of Gallhofer et al. (2001), which he understands tobe an example of such accounting studies. Here, with reference to our own paper, we firstrespond to the general points of critique and then turn to consideration of the specificpoints of critique made with regard to Gallhofer et al. (2001). Beyond CDA in respect of



Reply to:“Analysing

accounting. . .”

935

Received May 2007Accepted June 2007


Vol. 20 No. 6, 2007pp. 935-940


DOI 10.1108/09513570710830308

the accounting focus, Ferguson also challenges CDA more generally with particularstress on its political motivation. We also briefly respond to this point of critique.

Thompson (1995) stressed the need to gain insights into the reception of texts in hiswork on ideology and culture in the era of mass communication. Thompson put anespecially strong emphasis on the reception of texts because of what he saw to be a“fundamental break between the production and reception of symbolic forms” instigatedthrough the emergence of mass communication (Thompson, 1995, p. 23). He proposes a“tripartite approach” to the analysis of mass communication, which reflects the generalframework of production-message-reception that underpins theories of communicationmore generally (Thompson, 1995, p. 304). Ferguson argues that Fairclough, ourselvesand many other studies fail to attend to all parts of the tripartite approach in analysis infocusing on the production of texts. There are several ways of responding to this critique.For instance, we could simply point out that one cannot do everything in one academicpaper, which is an argument that interestingly both Thompson and Ferguson actuallymake explicitly in their own work (Thompson, 1995; Ferguson, 2007). Another responsewould be to point to the motivation for our paper as this frames the analysis in terms ofits focus, content and form. It is important to note that a substantive dimension of themotivation for writing Gallhofer et al. (2001, p. 271) was pedagogical, in that the paper isconcerned to “promote critical discourse analysis respecting the focus of accounting andfinance”. We sought to realise the pedagogical objective through providing both asummary of our interpretation of Fairclough’s method and an illustration thereof. Thishad to be done within the typical constraint of limited journal space. There still remainsthe question why we chose to focus on the production of the texts we analysed ratherthan their reception. Consistent with Fairclough’s (1992) recommendation that, while allthree dimensions (text, discourse practices, social practices) must be analysed, theprimary focus of analysis of discourse should be at the level, or levels, most relevant tothe research or research questions, an elaboration of our research interest providesinsights here. Our initial choice of text and the subsequent focus of analysis wereinfluenced by what Habermas has called an emancipatory research interest (Gallhoferand Haslam, 2003). Through an analysis of submissions letters, which constitute animportant part of the consultative process of accounting regulation in New Zealand, weaimed to gain insights into how various constituencies developed and articulated theirpositions in relation to proposed takeovers legislation and the way in which they formedallegiances in the context of prevalent power structures. Such understanding mayarguably inform the lobbying process of other constituencies, such as not-for-profitorganisations (NGOs), in their pursuance of enabling emancipatory goals; hence, ourchoice to focus on the production of accounting texts. Gallhofer and Haslam (1991, 2003,2006) elsewhere focus on the reception of accounting texts, this again reflecting a specificaim in this case to gain insights into how accounting texts are read and mobilised byradical activists in pursuance of their emancipatory goals. Our choice to focus on theproduction of text – that is one specific element of the tripartite approach – points toanother relevant question for any researcher: namely, how should one engage withapproaches, frameworks and methods developed to facilitate the analysis of texts? Forus, Thompson’s tripartite approach and Fairclough’s CDA are both broad frameworksfor analysis that in principle cover the entirety of the communicative/discursive processof which texts are part. We do not, however, see the need to address in depth all theelements of such a broad framework in one analysis. In focusing on any specific part(s) of

AAAJ20,6

936

this framework, within the context of the more holistic approach, researchers may thusadvance theoretical appreciation guided by their prevalent research interests. ThatFairclough accepts this is evident from his own analysis. Thompson alludes to such anapproach when he explains that “my aim is not so much to prescribe or proscribeparticular methods of research, but rather to outline a broad methodological framework”(Thompson, 1995, p. 20). In our view, Gallhofer et al. (2001), in focusing on one particularaspect within the broader framework (i.e. the production of texts), reflect the spirit ofThompson’s theoretical and methodological argumentation. That all elements ofThompson’s tripartite approach are not analysed in depth does not render an analysisworthless and is consistent with Thompson’s outline approach. In response toFerguson’s concern that studies of accounting discourse and language do not consider“the socio-historical contexts of text production, transmission and reception”, we wouldagree, of course, with the view that a historical analysis of the economic, social andcultural contexts of accounting discourse and language is an indispensable part of anysocial analysis of accounting and/or finance. It is possible that some examples of CDA inaccounting are restricted by space constraints or fail to amount to substantive contextualanalysis. At the same time, we would submit that substantive and relevant contextualinsights are elaborated in Gallhofer et al.

Having responded to Ferguson’s more generic points of critique vis-a-vis CDA inaccounting, we can now turn to a consideration of the specific concerns that he has raisedin relation to Gallhofer et al. It is of note that Ferguson in his critique only focuses on oneof the levels in Fairclough’s version of CDA, namely the level of discourse as practice.This choice reflects Ferguson’s (2007) reliance on Thompson’s tripartite approach as thelevel of discourse practice “addresses the production, transmission and reception of text”.This raises the interesting question whether Thompson is the appropriate framework fora critique of CDA as – in the reading of Ferguson – it draws the critic’s attention to onlyone level of analysis whereas CDA highlights the interconnectedness of all levels inanalysis[1]. On our delineation whereby the IOD’s submission is understoodsubstantively as reflecting practical experience and the NZBR’s submissioncommissioned finance research, Ferguson (2007) comments as follows:

[. . .] this aspect of text production is inferred entirely from the text itself, and therefore, tellsus little of the opinions, beliefs and understandings of the individuals involved in theproduction process [. . .].

On the specific point, Gallhofer et al. (2001, p. 147) indicate that:

[a]nalysis of discursive and institutional practices of the IOD and the NZBR was supportedand supplemented by interviews of the Chief Executive of the NZBR, the Chair of theSecurities Commission and the Executive Director of the IOD.

These interview insights were elsewhere elaborated in detail (Lowe and Roper, 2000).Again, there was the need to constrain the length of the analysis and the concern tofocus constituted important factors in the production of Gallhofer et al. (2001).Ferguson (2007) also questions the way in which we identified differences between themode of argument of the IOD and the NZBR:

[. . .] Gallhofer et al. (2001, p. 139) note that the NZBR submission constitutes “a more powerfuldiscourse” and that the IOD’s submission was weak in terms of its position in the hegemonicstruggle . . . In other words, while Gallhofer et al. (2001) do not explicitly speculate on the


accounting. . .”

937

consequences of the submissions, there is an implicit assumption that the NZBR submissionwould be more effective, even though no formal analysis of the reception of the letters ofsubmission were undertaken (Gallhofer et al., 2001, p. 26).

Yet the argument we constructed – again supported by the interviews – namely that theNZBR’s submission, which consisted of a letter, an academic report and CVs, alljuxtaposed alongside each other, constituted the more powerful discourse, transformingprevious conventions (Gallhofer et al., 2001, p. 139), does not negate the further explorationof text reception. We did not focus on this in our analysis although it should be pointed outthat outcomes of the processes were delineated and were consistent with ourargumentation[2]. Much of the remainder of Ferguson’s critique is an extension of theabove in listing issues that we omitted or underplayed in our analyses. These issues reflectwhat Thompson (1995) calls for in his book on mass communication. A general counterhere would stress the need for a reflexive approach to theory, methodology and method,which properly interacts and is to some extent shaped by research interests, researchquestion and empirics. Related to this, it is legitimate in our view for particular analyses togive focuses to particular aspects of the communication in process in context, albeit thatwe acknowledge the need not to lose sight of the more holistic perspective. A more specificcounter is integral to our critical reflections upon Ferguson’s choice of Thompson’s (1995)mass communication model to critique our work to which we now turn.

We were surprised that Ferguson substantively made use of Thompson’s (1995)framework, which was developed for the analysis of mass communication, for his critiqueof Gallhofer et al. (2001), which focuses on communication within quite restricted circles aspart of a consultative process in the context of law-making. We would hold that there aresignificant differences between mass communication as outlined by Thompson[3] and thetype of communication we focused upon in Gallhofer et al. (2001), differences whichproperly and significantly impact upon the analysis of such types of communication. Animportant difference in this respect is in the way in which messages are transmitted. Inthe case of mass communication, messages are “transmitted by the media industries”(Thompson, 1995, p. 218). In the case of the submission letters which we analysed, themessages were transmitted by the representatives of the constituencies who made thesubmission (i.e. The New Zealand Business Round Table and the Institute of Directors).Thompson’s 1995 framework emerged out of what he perceived to be generalmisconceptions of the processes involved in mass communication. Most notably in thisrespect is that “the term ‘mass’ is misleading in so far as it suggests that the audiences arelike inert, undifferentiated heaps” (Thompson, 1995, p. 218). Based on this critique,Thompson then puts a strong emphasis on the need to analyse the reception of messagestransmitted by the media industries:

[. . .] the messages transmitted by the media industries are received by specific individualssituated in particular socio-historical contexts. These individuals attend to media messageswith varying degrees of concentration, actively interpret and make sense of these messagesand relate them to other aspects of their lives. Rather than viewing these individuals as partof an inert and undifferentiated mass, we should leave open the possibility that the receptionof media messages is an inactive, inherently critical and socially differentiated process [. . .](Thompson, 1995, p. 218).

The quote indicates specificities of mass communication that do not transfer well to thecase of submission letters. This is not to suggest that there is no more general

AAAJ20,6

938

relevance in Thompson in relation to the analysis of communication. Not withstandingdifferences, both types of messages here are social communicative processes and thusshare general characteristics such as production-message-reception. Indeed, one mightargue that all communication is located in a context where mass communication hastaken on an enormous significance. As well as attend to the general characteristics, thetask for (accounting) researchers, however, is to carefully consider the type ofcommunication and the particular type(s) of message(s)/text(s) which are the focus oftheir analyses and then, influenced by their research interests, to choose appropriateemphases for analysis.

Having engaged with Ferguson’s critique of work on accounting discourse andlanguage and Gallhofer et al. (2001), we now turn to his more general critique of CDA.Although Thompson (1995) is the main basis for Ferguson’s critique of Fairclough’sversion of CDA, other writers who have offered critiques of CDA are also referred to.We would argue that some of the more specific points of critique of CDA referred to byFerguson are questionable. For example, Blommaert’s (2005) suggestions that CDAdoes not analyse the social circumstances of its production or “consider any sense ofhistory” are simply wrong – unless the examples referred to are not actually CDA.Further, Widdowson’s (2004) reported suggestion that CDA “fails to make a distinctionbetween text and discourse” does not resonate with Fairclough’s approach. Faircloughwould agree that the text is the “overt linguistic trace of a discourse process” – it is inthe text that we find evidence of the wider elements of discourse practices and socialpractices. This is why we analyse the text. Ferguson’s suggestion that Fairclough doesnot explain how to analyse the intertextual features of the text is not reasonable in thatthese are a key element of the analysis and clearly evident in the example provided byFairclough and they also feature in our own analysis. Finally, we would like to brieflyelaborate on one specific point of critique that has variously been made of CDA andthat Ferguson (2007, see also Stubbs, 1997) highlights, namely that it is “politicallymotivated as opposed to linguistically motivated”. This interpretation of CDA reflectsthe enduring differences between linguistics and socio-linguistics. CDA is definitely inthe latter camp. It is important to appreciate that Fairclough’s explication of CDAreflects an emancipatory research interest. CDA is understood to be both a mode ofresearch and a weapon in social struggle (Fairclough, 1993, p. 134; Gallhofer et al., 2001,p. 123). Fairclough is thus particularly concerned that discourse, which for him is notonly a site of power struggle but at the same time a stake therein, should be seized andchanged. Fairclough thus suggests that one can better intervene if one criticallyunderstands discourse (Fairclough, 1992, pp. 67, 90; Gallhofer et al., 2001, p. 123). It isprecisely this concern with emancipatory change, evident in Fairclough’s version ofCDA, which makes this method so important and relevant for the analysis ofaccounting texts. Of course, methods may be improved and further developed as newtheoretical insights are made and this has already happened in the case of CDA. Whatis important, however, is that CDA keep its radical orientation.

Notes

1. The three levels of analysis advocated by Fairclough, namely textual analysis, discoursepractice analysis and social practice analysis, are interconnected and integral to CDA(Gallhofer et al., 2001).


accounting. . .”

939

2. Moreover, nowhere in our analysis of the level of discourse practice do we, however, claimthat ‘the IOD’s submission was weak in terms of its position in the hegemonic struggle’(Ferguson, 2007).

3. Thompson (1995, p. 219) offers the following definition of mass communication: “. . . theinstitutionalized production and generalized diffusion of symbolic goods via thetransmission and storage of information/communication”.

References

Blommaert, J. (2005), Discourse: A Critical Introduction, Cambridge University Press, Cambridge.

Fairclough, N. (1992), Discourse and Social Change, Polity Press, Cambridge.

Fairclough, N. (1993), “Critical discourse analysis and the marketization of public discourse:the universities”, Discourse and Society, Vol. 4 No. 2, pp. 133-68.

Ferguson, J. (2007), “Analysing accounting discourse: avoiding the ‘fallacy of internalism’”,Accounting, Auditing & Accountability Journal, Vol. 20 No. 6, pp. 912-34.

Gallhofer, S. and Haslam, J. (1991), “The aura of accounting in the context of a crisis: Germanyand the First World War”, Accounting, Organizations and Society, Vol. 16 Nos 5/6,pp. 487-520.

Gallhofer, S. and Haslam, J. (2003), Accounting and Emancipation: Some Critical Interventions,Routledge, London and New York, NY.

Gallhofer, S. and Haslam, J. (2006), “Mobilising accounting in the radical media during the FirstWorld War and its aftermath: the case of forward in the context of Red Clydeside”, CriticalPerspectives on Accounting, Vol. 17 Nos 2/3, pp. 224-52.


Lowe, A. and Roper, J. (2000), “Share-market regulation in New Zealand: the problematisation oftakeovers legislation”, Policy Studies, Vol. 21 No. 2, pp. 115-32.

Stubbs, M. (1997), “Whorf’s children: critical comments on critical discourse analysis”, in Ryan, A.and Wray, A. (Eds), Evolving Models of Language, Multilingual Matters, Clevedon.


Widdowson, H.G. (2004), Text, Context, Pretext: Critical Issues in Discourse Analysis, Blackwell,Oxford.

Further reading

Gallhofer, S., Haslam, J., Monk, E. and Roberts, C. (2006), “The emancipatory potential of onlinereporting: the case of counter accounting”, Accounting, Auditing & Accountability Journal,Vol. 19 No. 5, pp. 681-718.

Corresponding authorSonja Gallhofer can be contacted at: [email protected]

AAAJ20,6

940


First EIASM Workshop on Imagining Business

Reflecting on the visual power of management, organising andgoverning practices

Saıd Business School, University of Oxford, UK26-27 June 2008

Keynote speakers: Paolo Fabbri, Donald Mackenzie and Nigel Thrift

Organizations are saturated with images, pictures, andsigns that impact on many different aspects of everydayorganizational life. A moment of reflection can produce along list of examples relating to: budgets and accountingtools, advertising literature, design specifications, publicrelations leaflets, standard operating procedures,schedules, reports, graphs, charts, organizationalhierarchies, and maps, to name but a few. This raises thequestion of how we study the role of images inperforming all kinds of activities that keep us busy andattentive? Do we focus on images as signs andinscriptions that can be viewed as mediators makingothers do things (Latour, 2005)? How does this relate toideas of intensities, affect, engagement, beliefs andpassions? Can we explore the difference and multiplicitythat underlie such performances in terms of techniquesand practices of managing and organizing, and how doimages relate to various issues of agency, accountabilityand responsibility? Furthermore, imagination asrepresentation is not the focus of this call. Rather thanlimiting the debate to the role that images have inrepresenting ‘‘businesses’’ of all sorts, we need toexplore the role of images as forces in performingbusiness, and enabling possibilities in terms of thinkingabout and enacting particular orderings.

While images, signs and visualization have been studiedfrom a wide range of perspectives and fields of study

(e.g. history, religious iconography, art and visualstudies, literature and communication studies,philosophy, sociology, geography, visual anthropology,semiotics, architecture, science and technology studies),within the areas of business, management andorganization studies the level of interest has been lessevident. A particular focus of this workshop thereforeinvolves bringing together an eclectic assembly ofscholars to enable an imaginative forum for discussionand debate in this area of enquiry. We welcome papersand extended abstracts (2,500-4,000 words) fromscholars from a wide range of disciplines that seek toexplore theoretical and empirical issues from a diverseset of themes.

Submission deadline: 28 February 2008

For more information go to: www.eiasm.org/frontoffice/event_announcement.asp?event_id=555 or contact theorganising committee:Lucy Kimbell ([email protected])Christine McLean ([email protected])Francois-Regis Puyou ([email protected])Paolo Quattrone ([email protected])

For practicalities contact:[email protected]

Call for papers

Academy of Accounting Historians

Margit F. Schoenfeld and Hanns Martin W.Schoenfeld Scholarship in Accounting History

The Academy of Accounting Historians invitesapplications for the inaugural Margit F. Schoenfeld andHanns Martin W. Schoenfeld Scholarship in AccountingHistory, 2008.

The purpose of the scholarship is to encourage andsupport research on the history of accounting by doctoralstudents and recently appointed accounting faculty.The scholarship was initiated by the generous gift ofDr Hanns Martin Schoenfeld and the lateDr Margit Schoenfeld in recognition of their belief in theimportance of historical scholarship to accountingeducation and research.

In 2008 an award of $3,000 is available to supportresearch on a doctoral dissertation, or developpublications proceeding therefrom by a recent PhDgraduate. Qualifying research topics should address thehistory of accounting. Projects of an international natureand those pursued by scholars whose first language isnot English are particularly invited.

The recipient(s) of the scholarship will be determined bythe Schoenfeld Award Committee, comprising thePresident of the Academy of Accounting Historians

(Chair), the Editor of The Accounting Historians Journaland Dr Hanns Martin W. Schoenfeld. The Committee hasthe capacity to share the award equally between twoworthy candidates or to make no award in any one year.

Applicants must be currently enrolled for a PhD byresearch, or have completed a PhD by research within thelast five years. Applicants should submit a full curriculumvitae and a statement (containing a maximum of 1,000words) which discusses the doctoral researchundertaken on the history of accounting, the stagereached and how the award would prove beneficial to theapplicant. A short statement from a supervisor shouldalso be submitted in the case of applicants currentlyenrolled for a PhD.

Applications should be submitted to: Stephen Walker,President, Academy of Accounting Historians, CardiffBusiness School, Cardiff University, AberconwayBuilding, Colum Drive, Cardiff CF10 3EU, Wales, UK.E-mail: [email protected]

The closing date for the receipt of applications is31 December 2007.

Call for papers

Journal accounting and auditing

Documents

Transcript of Journal accounting and auditing