58 ACCOUNTING FOR MANAGERS
environments select organizations for survival on the basis of the fit between the
organizational form and the characteristics of the environment.Resource dependence
theoryemphasizes adaptation as organizations act to improve their opportunity
to survive, particularly through the relationships of power that exist.Institutional
theory(see Chapter 7) stresses the rules that are imposed by external parties,
especially by government; the values and norms that are internalized in roles as
part of socialization processes; and the cultural controls that underpin the belief
systems that are supported by the professions.
In their categorization of the nature of knowledge, Burrell and Morgan (1979)
proposed four paradigms – functionalist, interpretive, radical humanist and rad-
ical structuralist – based on two dimensions – one subjective – objective, the other
regulation – radical change. Figure 5.2 shows a representation of rational, interpre-
tive and radical (or critical) paradigms.
In his classification of the types of management control, Hofstede (1981)
separated cybernetic (rational) models from non-cybernetic ones, which were
dependent on values and rituals. The cybernetic model of control systems is located
in the functional paradigm. Non-cybernetic systems are located in interpretive or
critical paradigms.
Functional Interpretive Radical/Critical
Objectively knowable
world
Subjectively created
reality that is ‘socially
constructed’
Power and conflict
are central to how
organizations work
Aims to find the ‘one best way’
to achieve shareholder value
Aims to explain how
accounting is used in
the unique circumstances
of the organization
Aims to highlight the role of
the state, distribution of the
surplus and class issues
Accounting is rational and based on
economic principles emphasizing
planning and control mechanisms
Accounting as symbol
Accounting reflects values
and beliefs. Control through
culture
Role of accounting in maintaining
existing structures of power
Uses an understanding of accounting
to engage in changes in accounting
practices and processes
Cybernetic systems of control
Routine, expert and trial-and-error
(Chapter 4)
Non-cybernetic control systems
Intuition, judgement, ‘garbage can’, values based, political
Figure 5.2 Paradigms of understanding