Topic 10 Crma

8/3/2019 Topic 10 Crma

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Behavioral Accounting:

CulturalRelativism in Management

Accounting

Reference: Ahmed Riahi-Belkauoi, 2002:

Behavioral Management Accounting


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CULTURAL RELATIVISM IN

MANAGEMENT ACCOUNTING

Cultural relativism in management accountingimplies that people from different culturesconstruct and use management accounting

concepts and practices differently. Culturethrough its components, elements anddimensions, determine the organizationalstructure adopted, micro organizational behavior,

management accounting environment, andcognitive functioning of individuals faced with thephenomenon of accounting.


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Cultural Relativism in Management

Accounting

HISTORY OF THE THEORIES OF CULTURE

CONCEPTS OF CULTURE

CULTURAL RELATIVISM IN MANAGEMENT

ACCOUNTING The Cultural Relativism Model

Operationalization of Culture

Cultural and Organizational Structure

Microorganizational Behavior and Culture Cognitive Functioning

Culture and Management Accounting EnvironmentVariables


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HISTORY OF THE THEORIES OF

CULTURE

The middle of the eighteenth century

Cultural differences

The nineteenth century

Cultural evolution

The early twentieth century

The emergence of various challenges to the

evolutionism theory of culture.

More recently


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Cultural Differences

In the mid-eighteenth century variousattempts have been made to develop theories

about cultural differences. Cultural differences

associated with different degrees ofintellectual and moral progress achieveddifferent society. Scholars like Adam Smith,Adam Ferguson, Denis Diderot and Jean

Turgot was the view that cultural differencesare determined by the intellectual and moralprogress of society.


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The Evolution of Culture

Scholars such as Auguste Comte, Georg WilhelmFriedrich Hegel, and Lewis Henry Morgan held thisview of progression of cultures from one state toanother.

In the case of Comte they included theological,metaphysical, and positivistic modes of thought. In allthese schemes culture was viewed as evolving inconjunction with the evolution of human biological

types and races, an idea started with socialphilosophers such as Thomas Malthus and HerbertSpencer and espoused by Charles Darwin.


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The resulting movement, called social Darwinism,postulates that cultural and biological progressresults from the free play of competitive forces inthe struggle of individual against individual,

nation against nation, and race against race. Karl Marx also espoused the nineteenth-century

evolution-and-progress paradigm of culture.13 Inhis case the stages were primitive capitalism,

slave society, feudalism, capitalism, andcommunism. The idea was also expressed byFriedrich Engels.


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One challenge, introduced by Franz Boas:

historical particularism.

Diffusionism

British challenges to evolutionism were

functionalism and structural functionalism.


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Particularism

Boas viewed each culture as having a long and

unique history that offers the best way to

understand it. In addition, cultural relativism

holds that there are no higher or lower forms

of culture and that the stages proposed by the

evolutionists merely reflect their

ethnocentrism.


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Diffusionism

Cultural differences and similarities are merely

the result of people imitating and borrowing

from other cultures. However, diffusionism

fails to recognize that similarities between

societies may be caused by the effects of

similar environments.


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Functionalism

Functionalism advocates the descriptions of

recurrent functions of customs and

institutions rather than the origin of cultural

differences and similarities.


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The Challanges

All attempts to study the origin of cultural

differences were viewed as speculative

history. This new opposition, coupled with

Freuds interpretation of cultures in

psychological terms, shifted the emphasis to

culture and personality theories, where

cultural beliefs and practices were related toindividual personality.


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More Recently Issues

dissatisfaction with antievolutionism has led to a returnto some of the evolutionary theories of culture, aphenomenon spurred by Leslie Whites linking ofenergy to the evolution of culture. His basic law

governing the evolution of culture is as follows: Otherfactors remaining constant, culture evolves as theamount of energy harnessed per year is increased, oras the efficiency of the means of putting energy towork is increased. This new evolutionism movement

gave rise to the cultural ecology approach, advocatedby Julian Steward, who identified the causes of culturaldifferences and similarities as the interaction of naturalconditions with cultural factors.


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Cultural Differences

Finally, despite the overwhelming evidencethat culture is encoded in the brain ratherthan the genes, the units of biological

heredity, there are still some racialdeterminism theories being offered to explaincultural differences. With the realization thatmost intelligence tests are culture-bound, and

with increasing evidence of environmentalinfluences, these theories do not constitute adominant paradigm.


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CONCEPTS OF CULTURE


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The concept of culture has been

subjected to various interpretations

Anthropologists approach culture in at least threedifferent ways: (1) the cultural universals approach, (2)the value systems approach, and (3) the systemsapproach.

The cultural universals approach focuses on identifyingcertain universals common to all cultures, which doesallow an examination of cultures in terms of how theycontribute to these variables.

The value systems approach focuses on classifying

cultures according to value systems. The systems approach focuses on the systems that

make up a given culture.


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Various concepts of culture exist in anthropology

suggesting different themes

for accounting research

1. Following Malinowskis functionalism,40 culture may be

viewed as an instrument serving biological and psychological

needs. Applying this definition to accounting research

suggests the perception of accounting in each culture as a

specific social instrument for task accomplishment and theanalysis of cross-cultural or comparative accounting.

2. Following Radcliffe-Browns structural functionalism,41

culture may be viewed as an adaptive regulatory mechanism

that unites individuals with social structures. Applying thisdefinition to accounting research suggests the perception of

accounting in each culture as an adaptive instrument

existing by process of exchange with the environment and

the analysis of an accounting culture.


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continued3. Following Good enoughs ethnoscience,42 culture may be viewed as

a system of shared cognitions. The human mind thus generatesculture by means of a finite number of rules. Applying this definition

to accounting suggests that accounting may be viewed as a system of

knowledge that members of each culture share to varying degrees

and the analysis of accounting as cognition.

4. Following Geertzs symbolic anthropology,43 culture may be viewedas a system of shared symbols and meanings. Applying this definition

to accounting research suggests that accounting may be viewed as a

pattern of symbolic discourse or language and the analysis of

accounting as language.

5. Following Levi-Strausss structuralism,44 culture may be viewed as aprojection of the minds universal unconscious infrastructure.

Applying this definition to accounting suggests that accounting may

be viewed in each culture as the manifestation of unconscious

processes and the analysis of unconscious processes in accounting.


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CULTURAL RELATIVISM IN MANAGEMENT

ACCOUNTING


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Cultural Relativism in Accounting

Element of Cultural

Environtment

Dimension of

Culture

Organizational

Structure

Cognitive Functioning

Micro Organization

behavior

Accounting

Environment

Judgement Decision

Process in

ManagementAccounting


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Element of Culture

Language

Religion

Values and Attitudes Law

Education

Politics Techonology and Material Culture


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Dimension of Culture

Cultural Dimension I

Variability, complexity, hostility, heterogenity,

interindependence

Cultural Dimension II

Power distance, uncertainty avoidance,

individualism-collectivism, Masculinity-Feminity


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Organizational Structure

Hierarchy

Monitoring system

Evaluation system Reward system


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Object representation

Classification

Hegemony

Conservation

Special representation

Intelligence


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Micro Organization Behavior

Cognitive style

Psichological differentiation

Individual modernity

Managerial attitude and country clustering

Work motivation

Job satisfaction


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Accounting Evironment

Performance measure and resources expenditurechoices, in a teamwork environment

Negotiation mixed motives and transfer pricingoutcomes

Long term strategic orientation versusshorttermism

Compensation practices

Manufacturing Performance Formal and informal information sharing

Budgeting pratices


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Operationalisation of Culture

This model avoids the two main problems thathad beset earlier operationalisation and use ofculture: the equating of culture with nations andthe ad hoc use of culture as a residual factor in

explaining the variations that had not beenexplained by other factors.46 Culture is viewed ascollective mental programming,47 that is, anideological system forming the backdrop for

human activity and providing people with atheory of reality.48 This backdrop is composed ofdistinct elements and includes definitedimensions.


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Cultural and Organizational Structure

The cultural relativism model assumes that culture,through its elements and dimensions, dictates the typeof organizational structure. The idea was first advancedby J. Child, who stated that culture affects the design of

organizational structure, refuting the culture freecontingency theory of organizational structureproposed by D.J. Hickson and colleagues. In fact, A.Sorge argued that all facts that bear uponorganizational practices do so in the form of cultural

constructs, and that organizations develop through anonrational process ofexperimentation that iswholly cultured.


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Microorganizational Behavior and Culture

Research on cognitive style focuses on cultural differences in thestructural aspects of an individuals cognitive system.

Research on attitudes and values focuses on cultural differencesrather than similarities in personal, work-related, and ancestralvalues and attitudes.

Research on work motivation examines cross-cultural differences inmotivation using one of the following theoretical bases: Atkinsons

expectancy theory, McClellands achievement motivational theory,vocation- and achievement-related motivation, and Adams equitytheory.

Research onjob satisfaction focuses on cross-cultural differences inthe relationships between satisfaction and other variables ofinterest, such as absenteeism or productivity.


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Two general hypotheses have been proposed. Onemaintains that cognitive processes are similar inindividuals in different cultures; the other thatcognitive processes are subject to cultural differences.

Evidence has been presented in support of bothpositions. A third situationist hypothesis argues thatcultural differences depend on the particular situationin the sense that cultural differences in cognitionreside more in the situations in which particular

cognitive processes are applied than in the existence ofa process in one cultural group and its absence inanother.


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Culture and Management Accounting

Environment Variables

1. One study examined the effects of a keyattribute of national cultureindividualism/collectivismon employee preference for

individual versus team-based performancemeasures and pay in a team-based worksetting and examined employee resourceexpenditure decisions under different

degrees of team-based performancemeasures and pay, when faced with a selfversus team interest tradeoff.


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2. One study relied on the predictions of the

Dual Concern Model on negotiator mixed

motives to empirically examine the effects of

accountability and performance evaluationschemes on transfer pricing negotiation

behavior and outcome in two cultural

settings.107 The Dual Concern Modelpredicts that two elements are available in a

negotiating setting


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3. The evidence there provides powerful

support for those who point to the impact of

national context and culture in establishing

strategic management styles and financialapproaches. In the absence of such

understanding of context and culture, the

U.S. styles cannot be assumed to translateappropriately to context as different as

Germany and Japan.


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4. Labor cost is a major determinant of the

competitiveness of firms in the global

economy. Research to date reveals a wide

range of compensation practices in differentcountries within the same industries.


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5. Manufacturing performance has been linked

to culture. One school of thought maintains

that the Asian firms superior manufacturing

performance was primarily attributable tothe national culture of their employees and

the design of management control based on

that culture.


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6. The conduct of planning and control curtailsinformation processing and informationsharing. Such open sharing of information is

crucial to the process of:a. benchmarketing

b. managing the value chain

c. networking

d. total quality management

e. organizational learning


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7. Various studies examined the impact of

culture in budgeting practices. Hawkins

reported that U.S. firms encouraged greater

participation from a larger percentage ofdivision heads while preparing operational

budgets, resorted to less long-range

planning, and attached more importance tothe use of accounting data in performance

evaluation than their Japanese counterparts.


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CONCLUSION

The essence of cultural relativism in managementaccounting is the presence of a cultural processthat is assumed to guide the judgement/decisionprocess in management accounting. The model in

this chapter postulates that culture, through itscomponents, elements, and dimensions, dictatesthe organizational structures adopted, themicroorganizational behavior, the management

accounting environment, and the cognitivefunctioning of individuals faced with amanagement accounting phenomenon.

Topic 10 Crma

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