Commonsense and practice variation in management control:
A joint regulation perspective
Yann QUEMENERª
Brittany Business School, Brest, France
and
Ines CRUZ
Nova School of Business and Economics, Lisbon, Portugal
ª Corresponding author. Email: yann.quemener@esc-bretagne-brest.com
This is a preliminary version. Please do not quote without permission
1
Commonsense and practice variation in management control: a joint
regulation perspective
Abstract:
This study aims to contribute to the literature on practice variation in management
accounting and control. In this respect, a theoretical framework is proposed where the
concept of commonsensical practice (CP), understood as the creation/constitution of
knowledge in the course of action by modifying, on the basis of commonsense, the
application of a pre-existing set of rules and practices, is introduced. Such framework is
drawn upon to interpret the findings of a case study on the use of a management control
system by the business units of an agro-food company where we sought to better
understand the role of commonsense in practice variation processes. Like Cruz et al.
(2009), we also found that local accountants create their own rules in the course of action.
But because we draw on Social Regulation Theory (SRT) we argue that such local
regulation, which is based on the knowledge constituted in the daily activities of those
local accountants and is autonomous (i.e., CP), confronts with control regulations coming
from higher management levels. From this confrontation process, several forms of
compromise or joint regulations can emerge and this is what SRT sees as a social learning
process. An important implication from this study is that commonsense has an impact on
practice and should be considered a major element shaping practice variation.
Keywords: Practice variation, commonsense, commonsensical practice, multiple logics,
Social Regulation Theory, management control, case study
Introduction
Some scholars from the fields of accounting and organizational studies have
acknowledged that much is still to be known about change (see among others Quattrone
and Hopper, 2001; Scapens, 2006; Greenwood and Suddaby, 2006; Battilana, et al., 2009;
Sharma et al., 2010). Particularly in accounting, the nature of accounting change has been
questioned as “what constitutes change is often taken for granted” (Quattrone and
Hopper, 2001, p. 403).
Until the 90’s of the XX century, the studies of change in the field of organizational
studies were mainly informed by the convergent change perspective, where change is
2
mostly seen as isomorphic and the result of pressures coming from the external
institutional environment. The focus was, therefore, on new structures that had to be
adopted but, once put in place, were not subject to further modification (Scott, 2001).
However, lately, the convergent change perspective has been criticized. For example in
the accounting literature, such perspective is said to largely overlook issues related to the
dynamics of accounting rules and routines as it considers that routines are part of social
structure. This means that they are drawn upon to produce and reproduce action but are
not action per se (see among others Van der Steen, 2010). As such, this perspective tends
to explain stability rather than change (Scott, 2001; Van der Steen, 2010; Busco et al.,
2007).
In reaction, a divergent change perspective was developed (Battilana et al., 2009;
Dillard et al., 2004; Hopper and Major, 2007; Sharma et al., 2010). Here, change is said
to encompass all situations where there is a break with existing institutions1, which are
transformed or new ones created. For this perspective, routines are a set of recurrent,
situated practices that differ from social structure (Van der Steen, 2010). As well,
divergent change processes are said to emerge from the resistance of actors in front of
existing institutions that involve dialectical tensions and contradictions. This view led
some accounting researchers to draw on new concepts such as “change agent” (Granlund
and Lukka, 1998; Burns and Baldvinsdottir, 2005) or “institutional entrepreneur”
(Sharma et al., 2010) to address processes of accounting change. Others developed
theoretical frameworks to explicate situations of resistance to the institutionalization of
imposed accounting practices (Dillard et al., 2004, and Hopper and Major, 2007).
Yet, a third perspective on change can be said to be emerging in accounting with
Quattrone and Hopper (2001) observing that accounting change can also happen within
1
Defined as taken-for-granted rules and routines.
3
the accounting practices and Cruz et al. (2009)’s arguing that practice variation can exist
without entailing a break with existing institutions (see also Van der Steen, 2010). This
so-called new perspective draws either on the notion of accounting drift developed by
Quattrone and Hopper (2001)2 and extended by Andon et al. (2007), or on Lounsbury
(2008)’s idea of practice variation3. This renewed approach of accounting change raises,
however, an issue that has not been explicitly addressed so far: users’ commonsense.
Our work aims at addressing this issue by answering the following research question:
what role does users’ commonsense play in practice variation? For this purpose we
examine how and why practice variation occurred in 5 business units of an agro-food
company, after a new management control system was imposed by the corporate (group)
management. In so doing, we draw upon the concept of Commonsensical Practice (CP),
which we have developed by building particularly on Giddens’ (1984) ideas on
commonsense and social regulation theory (SRT) (Reynaud, 1999, 2003, 2004)and. Thus,
the originality of this paper lies in the theoretical framework that we develop to interpret
our findings. In it, CP is seen as an autonomous regulation, which is a concept derived
from SRT. We believe that this theory is particularly suited to complement the recent
developments of institutional theory on organizational heterogeneity and address our
research question.
The main contribution of our paper is to extend the literature on accounting practice
variation and accounting drift, such as Cruz et al. (2009) and Quattrone and Hopper
(2001), by developing a theoretical framework through which we examine the role of
commonsense and CP in the regulation process that shapes management control
practices.
They defined accounting drift as an “incomplete attempt at organizing”, and based on a messy perspective
of change where collectives are a-centered because initiatives and rationalities are shaping and reshaping
these very collectives.
3
Meaning different responses to the same practice.
2
4
The following section reviews the concept of commonsense and shows how it and
CP can complement recent institutional work on practice variation. In section 3, we
highlight the possible contributions of SRT to explicate the role of commonsense in the
construction of a collective or institutional rationality and its impact on practice variation.
In section 4, we depict the research method. Then, in section 5 the research field and the
main empirical findings are presented, followed by section 6 where we discuss them and
conclude.
2 – Commonsense, practice and organizational heterogeneity
Social theorists4 have questioned the role of expert knowledge in
day-to-day
activities of lay actors as the practical sense of action developed in particular
communities can confront those external expert forms of knowledge. But what is the
nature of this practical sense of action?
2.1 – Commonsense and Commonsensical Practice (CP)
For Berger and Luckmann (1967, p.27): “[t]he sociology of knowledge must first of
all concern itself with what people know as reality in their everyday, non- or pretheoretical lives”. This “non- or pre-theoretical” knowledge of reality has often been
referred to as commonsense by social theorists (Schütz 1982; Bourdieu and Wacquant,
1992; Giddens, 1984). Commonsense has been alternatively considered an enabling or
limiting factor5. For instance for Schütz (1982), commonsense results from the daily life
practical activities of an “in-group” (Schutz, 1982, p.39) and is a legitimate resource for
4
Schütz, 1982; Bourdieu and Wacquant, 1992; Giddens, 1984, among others.
“Sometimes common sense is that plain feet-on-the ground sense of reality available to any clear-thinking
person, which can emerge when all the fancy talk of the so-called experts is swept away. Alternatively,
common sense is quite the opposite: that collection of provincial, conventional wisdom, superstition, and
false consciousness that can be recognized as such and overcome through rigorous thought, rationality and
science” (Holton, 1997, p.38).
5
5
action. Bourdieu was critical of this conception of commonsense as, for him it relied too
much on agent’s interpretive abilities (e.g. Holton, 1997; Mesny, 1998).
Midway between the limiting and the enabling perceptions of commonsense,
Giddens (1984, p.337) defined it as “propositional beliefs” hold by lay actors and which
are involved in the carrying on of their day-to-day activities. He distinguished
commonsense from what he called mutual knowledge, i.e., the beliefs that are
discursively formulated and which also conduct the daily social life. For Giddens, social
actors can, based on their experiences, change the theories or “knowledge” they apply to
perform their activities and, as such, commonsense must be considered more as a “fallible
belief” than “knowledge” in itself (Giddens, 1984, p.337). Later on he argued that the
tensions between commonsense and expert knowledge can be solved through “dialectics
of control” (Giddens, 1991, p.138) i.e. the reciprocal influence of lay actors’ pretheoretical knowledge and expert knowledge on day-to-day practices.
The creation of knowledge in the realm of action has been also addressed in the
knowledge literature (Cook and Brown, 1999; Orlikowski, 2002; Brown and Duguid,
2001; Nonaka, 1994; Lave and Wenger, 1991). For instance, Orlikowski, who drew on
Giddens’ (1984) sociological work, as well as on Schön’s (1983), argued that “knowing
is constituted and reconstituted every day in practice” (2002, p.269). This implies that
knowledge is part of action and not only a support of it. Cook and Brown (1999) also
developed the concept of “epistemic work” to emphasize that looking at what
practitioners do is as important as looking at what they possess in terms of pre-acquired
knowledge.
As well, in the artificial intelligence literature particularly involved with questions of
sense-making, some authors (McCarthy, 1986; Shanahan, 2004; Liu and Singh, 2004
among others) support Giddens’ (1991) view of the relationship between commonsense
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and expert systems as “dialectics of control”. For these authors, in some occasions,
commonsense decisions taken by anyone can prove to be more relevant to handle a given
situation than decisions suggested by expert systems. This approach acknowledges the
influence of propositional beliefs emanating from inside a group, when confronted to
external expert/scientific knowledge. In-group actors have the ability to, based on their
commonsense, “make things fit” i.e., 1) to decide when and how to use the pre-existing
set of rules and their associated practices; or 2) to modify the application of these preexisting rules and practices when they are not relevant to handle/solve a given
situation/problem.
By drawing on the previously depicted ideas, we develop the concept of CP, which
we define as the creation/constitution of knowledge in the course of action by modifying,
on the basis of commonsense, the application of a pre-existing set of rules and practices.
This definition is in line with Giddens’ view that “[a]ll social actors, it can properly be
said, are social theorists, who alter their theories in the light of their experiences” as they
are “generally concerned above all with the practical utility of the ‘knowledge’ that they
apply in their daily activities” (1984, p.335). Consequently, CP has to do with the process
through which commonsense, i.e., propositional beliefs, are transformed in “discursively
formulated beliefs” or “mutual knowledge” (as termed by Giddens, 1984), which may
lead to organizational heterogeneity.
2.2 - CP and the issue of organizational heterogeneity
The issue of organizational heterogeneity has been tackled in the institutional and
organizational decision-making literatures by the development of concepts, such as
“institutional entrepreneurship” (DiMaggio, 1988), “dialectical analysis” (Benson, 1977;
Seo and Creed, 2002) and “loose coupling” (Orton and Weick, 1990). These concepts,
7
which were also drawn upon in the accounting literature (see for example, Sharma et al.,
2010; Hopper and Major, 2007; Lukka, 2007; Siti-Nabiha and Scapens, 2005), build on
the ideas of dialectics, contradictions and agency and are used to demonstrate how
practice variations can stem from the resistance of actors in front of various institutions.
In so doing, the actors question existing institutions and possibly diverge from them. This
represents the divergent institutional change perspective.
But a so-called new perspective on accounting practice variation recently emerged
(see Cruz et al., 2009; Quattrone and Hopper, 2001). While the divergent change
perspective identifies contradictions, conflicts and resistance to change as sources of
practice variation, the new perspective considers that practice variation can also stem
from non-conflicting logics (see Cruz et al., 2009). Consequently, practice variations can
occur without resistance of the actors towards the institutionalization of practices.
By acknowledging the existence of diversity in practices through modification of
pre-existing ones and of their related rules, the concept of CP joins this more recent
concern in the accounting literature about practice variation. In addition, the modification
of pre-existing rules and practices (i.e., CP) presupposes the construction of a collective
rationality, i.e., that action is socially, rather than individually and more instrumentally,
constructed. This implies an “institutional notion of rationality” (see Lounsbury, 2008),
where multiple logics or beliefs co-exist in organizations and create space for diversity in
practices.
In the following section we examine how SRT also contributed to our
conceptualization of CP and for the understanding of the role of commonsense on
practice variation.
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3 - The contributions of SRT for the role of commonsense in practice variation
Born from the study of industrial relations, SRT (Reynaud, 1999; 2003; 2004)
became a "general sociological theory" (Terssac, 2003, p.16) before spreading gradually
to the area of general management6. Thus,
3.1 – What are the tenets of SRT?
SRT focuses on the processes through which rules can be created, modified and/or
removed by any organizational actor, and sees social exchange as a learning process
leading to innovation (Reynaud, 2004). This theory distinguishes control regulations from
autonomous regulations, and advocates that both pursue, in the context of an
organization, specific results which are, however, coherent with the purposes of that
organization. As such, each regulation is viewed as a logic in itself that seeks to be
legitimized (Reynaud, 2004). Control regulation in an organization encompasses the rules
issued outside of a particular social group. Such regulation imposes constraints to the
group it intends to coordinate and control and is, then, likely to encounter an autonomous
regulation produced by that same group to organize its own operations. About
autonomous regulation, Reynaud (2004, p.113) argued that "[s]cience that a worker has
of his/her work does not have the prestige of erudite techniques, but it is well founded, it
is essential. Behind the tasks defined from above [meaning from higher levels of
management in the organization], in very simple terms a complex and real competence is
hidden"7. Therefore, this autonomous regulation is translating a different logic from the
one of the control regulation. The former is built on the experience resulting from the
6
In their study about the introduction of French theory into English language accounting research,
Chiapello and Baker (2011) also included Jean-Daniel Reynaud in their list of the 39 French social
theorists.
7
Translated from French by the authors, as all the other subsequent transcriptions from the work of this
French social theorist included in this paper.
9
daily activities including a savoir-faire related to technical constraints, but is also
concerned with the communication, cooperation and power relations inside the group
(i.e., social constraints). The logic inherent to a control regulation translates prescriptions
built on a more abstract knowledge. However, each regulation cannot be defined only by
its own interests and rationalities. They also pursue, as previously said, a common
objective based on the purposes of the organization.
These control and autonomous regulations may merge into a joint regulation, as SRT
suggests that regulations imposed from outside (i.e., of control) are likely to be
interpreted and eventually changed/deviated by those who have to execute them in their
everyday activities. Thus, “the practice might vary: it might be closer to the control
regulation when the monitoring is stricter and it might deviate more from the control
regulation when the monitoring is more relaxed” (Reynaud, 2004, p.113). These
adjustments are not necessarily degradations of the rules prescribed by the control
regulations, but specific arrangements to solve problems. Thus, operational actors might
create practices which their superiors cannot systematically break and even may find
beneficial to preserve (Terssac, 2003; Reynaud, 1999). But self interest and power
relations cannot be excluded from the interplay between control and autonomous
regulations as this interplay can be diverse and complex. Yet, for SRT, collective action
cannot be explained only by power relations that structure the organizational fields.
According to Reynaud (2004), an actor does not play solely in the system but also with
the system in order to pursue the organization’s purposes. Therefore, the regulation of
change can be said to be driven by actors’ own interest, but also by actors’ commonsense,
i.e. propositional beliefs emerging from everyday life experience.
Building on SRT, Vaujany and Fomin (2006) associated the notion of “design in
making" with the concept of autonomous regulation, and the notion of "design in use"
10
with control regulation. They also proposed four different archetypical forms of interplay
between these different sources of regulations: 1) Dominating design in use; 2)
Dominating design in making; 3) Disarticulated design in use-design in making; and 4)
Balanced design in use-design in making.
Thus, the notions of control and autonomous regulation are helpful to better
understand the role of commonsense in practice variation. Commonsense, through CP8,
generates a particular form of regulation which can be seen as autonomous as it resides in
the interpretations/beliefs and initiatives of the social actors when they perform their
daily activities. CP is important for the regulation of practices, such as those of
accounting, because “[w]ithout practical knowledge, even if it is empirical and poorly
explained or theorized, the powerful machine does not work, modern technology cannot
be transmitted efficiently, the equipment perfectly worked out is stuck in breakdowns and
unforeseen problems. (…) Behind the task defined from above, in very simple terms lies
a complex and real competence” (Reynaud, 2004, p. 112).
3.2 - How does SRT deal with practice variation?
Admittedly, certain “inherited” rules and practices are taken for granted as they are
inscribed in the material and symbolic objects (such as accounting) that structure a social
group (Reynaud, 2004). As SRT aims at studying action, it deals with the issue of
embedded agency while, at the same time, acknowledging the constraints imposed on it
by those material and symbolic objects. In other words, organizations are composed of
men, material and symbolic objects, and, if the constraints of material and symbolic
objects are strong, “what responds, is a social learning” (Reynaud, 1999, p.202).
8
Commonsense, as well as CP, are not explicit concepts of SRT.
11
Social learning is founded on the actors’ initiatives derived from their knowledge
created in acting (practical knowledge in Reynaud’s terms), in addition to their theoretical
knowledge (Reynaud, 2004). To ignore this practical knowledge poses a risk of
authoritarianism which might lead an organization into a vicious circle of bureaucracy.
The ability to take into account practical knowledge, on the contrary, opens up to
collective rationality. It is the construction process of this social learning that is important
to unfold.
Some accounting literature drew on Orton and Weick’s (1990) concept of loose
coupling to analyze the role of practitioners in practice variation (see among others,
Covaleski and Dirsmith, 1983; Lukka, 2007; Cruz et al., 2009). Cruz et al. (2009) used
that concept to explicate how an accounting system imposed by a global parent to its JV
could be institutionalized, as well as adapted by the local (JV’s) actors. This implies that
local practices can be made responsive to the rules and associated practices coming from
above, but also distinctive from them so that the multiple logics co-existing within the
organizations are met (Cruz et al., 2009). Therefore, these authors concluded that practice
variations can result from multiple logics or beliefs which are not necessarily conflicting.
But SRT can be useful to complement this approach, by helping to clarify and develop
the forms/processes of interplay between local actors’ own (autonomous) regulations and
control regulations. These interplays or confrontations can take different paths and result
in different forms of compromises or joint regulations (i.e., a set of rules and practices
acceptable by all parties) leading to social (rather than individual and merely
instrumental) learning. Through it a collective rationality and action is constructed. A
new regulation is always a learning process because “it is an invention of new modes of
cooperation” (Reynaud, 1999, p.212). It is also a social process because, whatever the
12
importance of individual contributions, a new regulation aims at inventing shared rules
and practices (Reynaud, 1999).
Drawing on SRT (Reynaud, 1999; 2003; 2004) and on Vaujany and Fomin (2006),
we develop a theoretical framework where we identify 4 archetypical types of
confrontations (interplays) between control and autonomous regulations, thereby leading
to 4 categories of practice regulation (see figure 1).
Disarticulated regulation
of practice
ANOMIE
Dominating control
regulation of practice
&
Dominating autonomous
regulation of practice
Balanced regulation of
practice
JOINT REGULATION
Figure 1 - Archetypical types of confrontation between different sources of regulation
In the dominating control regulation of practice, the regulation created by the local
actors (i.e., CP) is particularly low as the rules to be put in practice are hierarchically
imposed. As such, in this category, control regulation is the main source of regulation and
the monitoring of its local application is very tight. In contrast, in the dominating
autonomous regulation of practice, local actors have a strong influence on practice. In
disarticulated regulations of practice, the different sources that produce rules are
disconnected from each other. This category depicts situations of anomie in which a lack
of regulation makes it difficult to develop a collective action. Finally, a balanced
regulation of practice results from articulations of autonomous and control regulations
where they mix up and produce new practices through joint regulation. Reynaud (2004,
p.325) defines joint regulation in a broad sense as for him it is “any regulation that is the
result of a confrontation between different legitimacies”. But the boundary between joint
13
regulation and anomie is fussy as compromises or agreements conveyed by regulations
are always provisional or unstable (Reynaud, 2004). Dominating control regulation and
dominating autonomous regulation span different situations with various temporary
degrees of compromise/arrangement. Thus, as our theoretical framework considers, they
can represent different degrees of joint regulation or anomie (see fig.1).
We now proceed to depict the research method followed by this research.
4 - Research method
A case study strategy (Yin, 2009) was followed to better understand and explain the
role played by commonsense on practice variation. The study is based upon empirical
material that was collected in a French agro-food company (henceforth named EVEN)
managed not as a holding company (portfolio management) but as a group (cooperative)
with a clear industrial project. Four of the group business units are involved in industrial
activities (production of milk, production of meat, animal feeding and health) and one in
commercial activities (retailing). The later hosts a number of fully owned subsidiaries
which result from takeovers of external firms. A non-fully-owned subsidiary (hereafter
called shared company) is involved in the production of milk activity. The CEOs of the
different business units are in charge of the development and management of their
business. Their strategic plan is revised each year by the group Management9. As just
mentioned, EVEN is composed of a corporate level, business units and subsidiaries.
Therefore, the study of the accounting practice within this group was considered
interesting as “corporate management has objectives and needs for a system which can be
different to those experienced at the local level” (Malmi, 1997, p. 467). Moreover, Cruz
9
Corresponds to the Management at the corporate level (headquarters) in a large corporation.
14
et al. (2009), who studied the implementation of corporate management control systems
in a joint venture, called for more qualitative studies on local practice variations.
This study focused on space rather than on time (cf Quattrone and Hopper, 2005) as
our aim was to observe potential practice variations in the five different business units of
EVEN. The interviews were carried out between March and August 2006. The data
collection phase brought clear evidence of local varied practices in the use of the new
management control system - GIGA - imposed by the group Management since 1999.
The empirical material collected focused on CP and on the reactions of the group
Management in front of it. Eighteen semi-structured interviews were held among
members of the group Management, local accountants and CEOs in BUs, as well as in the
shared company and with accountants in the subsidiaries of BU5, who were involved in
the design and use of GIGA (see Table 1 below).
Business entity
Local accountant
Local accountant
Local accountant
Local accountant
Local accountant1
Local accountant2
Local accountant1
Local accountant 2
Local accountant
CFO
CEO
CEO
CEO
CFO
Consolidation manager
Head of cellule GIGA
Information Systems coordinator
BU1
BU2
BU3
BU4
BU5
BU5
Subsidiary1/BU5
Subsidiary2/BU5
Shared company
Shared company
BU1
BU2
BU3
Group
Group
Group
Group
Number of interviews
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
Tableau 1 - Interviews
All the research material, including transcripts and other documents, were scrutinized
in order to identify emerging themes and patterns related to the theoretical framework
15
from which the research questions emerged (Scapens, 2004). Three main themes were
identified:
(1) CP with positive engagement of the group Management10
(2) CP with no real engagement of the group Management11
(3) CP with negative engagement of the group Management12
On average, each interview lasted two hours and ten minutes. All interviews were
fully recorded and transcribed, and then the information collected was coded and
analysed based on the following five points which guided them: first, the strategy of the
business unit and its relationship with the environment; second, the management control
system of each business unit; third, the issues related to the design and use of GIGA;
fourth, how the group Management and the users organized their discussions about
GIGA; and fifth, claims for changes in GIGA. Our fieldwork also involved examination
of internal documents, emails, spreadsheets and reporting screens.
5 - Research field and main findings
EVEN was founded in 1930. In the 1980’s, it started to diversify after the
introduction of the milk quotas in the EU. The group CFO summarized this strategic turn
stating that "we tried to develop a coherent group”. In 1995, this manager began to talk, at
the corporate level, about his desire to implement a new management control system to
support EVEN’s multi-business strategy. Reflections about this new system
(subsequently named GIGA) effectively started in 1996, concomitantly with the Euro and
Year 2000 projects. The first version of GIGA was launched in January 1999.
10
Meaning the situations where the group Management tolerates, accepts and even sometimes expects CP.
Meaning the situations where CP regulates accounting practice without the consent of the group
Management, because counter-reactions from the group Management are whether too weak or absent.
12
Meaning the situations where counter-reactions from the group Management oppose CP.
11
16
The design and implementation of GIGA was the responsibility of the so-called
“GIGA team” which was composed by:
- The group CFO who was also in charge of the information systems for the group, as
well as of its management control.
- The Head of cellule GIGA who coordinated a team of SW developers at the group
level.
- The Consolidation manager in charge of the group reporting and also responsible
for monitoring GIGA since 1999 in conjunction with the Head of cellule GIGA, as
noted:
“We work together, in partnership. He rather provides technical and IT operations”
(Consolidation manager)
- The Information systems (IS) coordinator13 who used to work for the deployment of
GIGA in the different business units before joining one of them.
But, as noted by the group CFO, the GIGA project “was not just a management control
project as it was included in a more comprehensive 'development plan' of the group”. This
"development plan" was a multi-year operational plan prepared each year at both the
group and business unit levels. The purpose of the GIGA project was to develop a
management tool for financial accounting and reporting, as well as for management
accounting and budgeting, to support the following six objectives outlined in the 1996
Development Plan prepared by the group Management:
To develop scorecards
To implement budget management
To assure the reliability and confidentiality of information
To reduce reporting delays
To consolidate information at the group level
To allow performance comparison (i.e., internal benchmarking)
13
Reporting to the CFO of the group
17
The implementation of GIGA notably streamlined the financial reporting process,
reducing its length in twenty days. GIGA made also possible to use analytical
codifications for the development of management control practices. Within each business
unit, GIGA fitted into an information system composed of specific business applications
(CAPM, phone order systems, CRM, payroll applications, inventory management
applications, etc.) as shown in the following figure:
Business
applications
GIGA
BO
queries
Business
applications
Business
applications
Business
applications
Figure 2 - Information system
The Business Object application (BO) was also implemented as a complement of GIGA
to help users analyze data and prepare reports.
The group Management stated that GIGA had to be integrally adopted as information
had to be unique/homogeneous in order to be shared throughout the group, not being,
thus, the property of any particular person working on his/her own. To avoid this, the
group Management regularly had to show determination and conviction, as noted by the
group CFO:
"We have been determined in setting up this tool. We have been united and did not
let go when difficulties and objections emerged. (…) This project, beyond the
informational dimension, was a unifying factor and helped develop a corporate
culture. We now speak the same language which is a huge win in terms of time and
reliability for data consolidation at the group level".
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But local accountants needed to cope with the information requirements resulting
from the local specificities of their business unit’s operations, as well as with the
homogeneity and the coherence of information pursued by the group, as referred by one
of them:
“It is not a question of bad will, but it is not enough to say 'GO GO GO'. When in
front of documents, this becomes more complicated!” (Local accountant, BU2).
The usage of GIGA within the business units was shaped by the way local accountants
believed they could make their practices fit the concerns of the group and those more
local (i.e., of their BU). In other words, such usage depended on the knowledge
created/constituted by local actors when they were acting (the practical knowledge in
Reynaud’s, 2004, terms) or “doing things” (Quattrone and Hopper, 2001). This means the
emergence of CP, as stated:
“It happened that we had ... not some pressure, but let say some incentives
to use GIGA in a certain way. (...) OK to stick to the system, but I think we
must be pragmatic too” (Local accountant, BU2).
As such, in the course of action, local accountants developed new (practical) knowledge
that proved to be particularly useful for them to articulate the data coherence requested by
the group with their local concerns. However, the CP (autonomous regulation) that
emerged had to face different intensities of control regulation which led to different forms
of compromises. As previously mentioned, we found that the group Management had not
always the same type of reaction in front of CP. Such reaction involved a positive, weak
and negative engagement. We proceed by describing the first type.
5.1 - CP with positive engagement of the group Management
Not all the developments of GIGA were attributable to initiatives coming from the
corporate level. For example, the transition to IFRS was imposed by the legal context
which pushed the group Management to initiate it. However, other developments resulted
from limitations (inconsistencies) and opportunities of GIGA that were discovered by the
19
local accountants. In this subsection we depict some local developments which were
tolerated/accepted by the group Management. The later intended to be open to the users’
expectations as it needed their expertise. In other words, if there was no commitment and
initiative from them, the implementation of the new management control system was
considered to remain superficial, as noted by the Head of cellule GIGA:
“There are many things which I do not know in fact. I enrich my knowledge by
meeting with the users and observing their practice”.
The group Management needed initiative from local accountants for putting GIGA into
daily use in the BU’s as the GIGA Team could not anticipate all their needs:
"The user is able to stimulate the necessary developments. In my opinion, a SW
developer cannot anticipate everything. It is impossible. It's really a question of
practice” (Local accountant 1, BU5).
Thus, the GIGA team expected active users as some developments of GIGA could only
come from their initiative. If the local accountants often showed involvement by
reporting some issues or suggesting possible developments of GIGA, they could also be
silent in other occasions. For the Head of cellule GIGA, occasional passivity from the
users was always considered bad news:
“I am sometimes surprised to find out certain things and quite blindsided by the
users’ passivity. (…) It happens sometimes and it is only thanks to personnel
turnover or take-over of firms that we realize that the users have hard time
implementing some tasks”.
This positive attitude of the GIGA team towards local accountant’s initiatives was
attributable to the fact that GIGA prescribed rules and practices which did not always
match the skills, aspirations or interpretations of all users, in other words, local actors’
commonsense or “propositional beliefs” (Giddens, 1984, p.337). The gap between local
accountants’ commonsense and the standard rules and practices contained in GIGA
emphasized the importance of these users’ initiatives. For example, GIGA proved to be
more suited to commercial/merchandising activities than to industrial ones, as explained
by the Consolidation manager of the group:
20
"GIGA was designed for commercial activities rather than for production activities.
It is a bit more complicated for businesses such as BU1 or BU2 that are quite
complex industrial activities, to use GIGA than for a company that buys for resale”.
As such, operational actors might create practices which their superiors can find
beneficial to preserve (Terssac, 2003; Reynaud, 1999).
Example 1: Management accounting and Excel add on tools in BU1 and BU2
The group Management was seeking for local accountants’ initiatives as it realized
that a complete mastering with the specificities and constraints of the different businesses
in which it was operating was very difficult to be achieved. Even, sometimes, the group
Management did not perfectly understand the practices performed within these
businesses. For example, regarding BU1 and BU2, the Head of cellule GIGA said:
“When I have X [referring to the local accountant of BU1] in front of me talking
about the management accounting needs of this business unit, I feel completely lost
after a while. It is so complicated! (…)Processes are so complex in the milk
business. (...) Every time I want to think about it, I am quickly lost, as well as Y
[referring to the person in charge of the consolidation of BU1]. The same happens
with BU2”.
We found that the local accountants of the industrial oriented business units (BU 1,
2, 3, 4), while using GIGA, also resorted to add-on tools (Excel) to produce management
accounting information. Albeit the formal rule imposed by the group Management was to
exclusively use GIGA for financial and management accounting purposes, the local
accountant of BU2 developed a complex template system on Excel in order to run what
he called “a spare management accounting tool”. This template system included numerous
formulas and links between tables and spreadsheets. It aimed at supporting the cost
allocations and monthly accruals calculations. The local accountant of BU2 developed
these spreadsheets while acknowledging the initial expectation of the group Management
to avoid them:
21
“The spreadsheet offers flexibilities. It is true that the group CFO wanted to
make the most out of GIGA and BO in order to avoid
spreadsheets”(Accountant, BU2).
The situation was approximately the same in BU1 where its operational processes
were so complex that the local accountant could not solely rely on GIGA’s
functionalities. Particularly, the monitoring of materials, cornerstone of the management
control in BU1, was not sufficiently handled by GIGA. The latter was not designed to
deal with such a complex flow of materials from the collected milk to the different
intermediate and final products extracted and produced from it. This justified departing
from the initial (formal) practices. Thus, such adjustment was driven not by the actors’
own interest to gain power, but by their practical experience or commonsense. But what
we found was that this usage of Excel, which “in theory” was forbidden to run financial
and management accounting, was “in practice” tolerated by the group Management as it
was in EVEN’s interest.
As far as the subsidiaries (results of takeovers) were concerned, there was a need to
homogenize, while respecting certain features of the information systems of the firms
acquired. Periodically, certain of these features were integrated in GIGA, which allowed,
firstly, to avoid disturbing the newcomers too much, and secondly, to improve GIGA, as
expressed by the Head of cellule GIGA:
"When there is a takeover, we get in touch with their previous IT provider. We must
understand how their data is structured as well as the specifics of how they work.
(…). Generally, in order to avoid too much disruption, we try to keep their
specificities if I see that these features bring something to our product".
The local accountants admitted that the members of the cellule GIGA were openminded when difficulties appeared, as the Accountant 1 of BU5 mentioned:
“We have discussions. This is what's interesting with people like Z [referring to the
Head of cellule GIGA]. It is important to talk to them on the phone because we can
expose our needs. This is interesting because there is a real collaboration”.
The Head of cellule GIGA added the following:
22
"I think that the richness of GIGA is also because people are relatively cool. I have
very rarely seen the tone up. Nevertheless, users are our goodwill. We must have
irreproachable behavior even when they are disturbing. We should have, somehow,
an attitude of service provider”.
But, as said before, we also identified weak engagement from the group
Management in front of CP.
5.2 - CP with weak engagement of the group Management
Albeit they sometimes complained about particular aspects of GIGA, local
accountants were putting little pressure on the GIGA team to change GIGA’s rules and
related practices. Besides, the CEOs of the different business units were very little
involved with GIGA, as mentioned by the Head of cellule GIGA:
"I have no such pressures. (...) I think that's because it is accounting. It is not in the
accountant’s mentality. (…) And then we must admit that the CEOs are very far from
it all”.
This led the users to often shape GIGA in the course of action, i.e., by doing or in making
(Vaujany and Fomin, 2006). Even if local accountants could find a sympathetic ear from
the GIGA team when difficulties arose, their requests/complaints were not automatically
fulfilled/dealt with, and were sometimes postponed or delayed. So, when the GIGA team
was not reactive enough, in other words, was showing lack of engagement with the
complaints of local accountants, after some time, deviant practices were created by them.
But, by their relative autonomy in practice, local accountants exerted a real pressure on
the group Management and on the design of specific parts of GIGA. Some local practices
became so pervasively present and so ingrained that they had to be taken into account as
a rule by the GIGA team:
"I can find myself prisoner of their practices. (...) In fact, one day a local accountant
asked me to develop a control functionality (...) and that is when I discovered this
variation. I sat, listened and watched if the practice was the same in other business
units and subsidiaries. But it's something that I avoid" (Head of Cellule GIGA).
23
However, these variations in GIGA’s rules were somehow expected by the Group
Management as noted by the Head of cellule GIGA:
"There is always a gap between what we [together with the Consolidation manager]
think and the real practices in the business units”
Thus, the practices were enacted and coordinated not only by the rules prescribed by
GIGA of how to do things and by the group Management. The local accountants were
learning with GIGA but creating their own rules and practices based on their
commonsense. A social learning process was, therefore, taking place and contributing to
the construction of a collective rationality (Reynaud, 2004). The users also participated in
this process as they were not limited to the binary alternative: accept or reject GIGA, but
by acting they could shape GIGA. In so doing, they contributed to what we call the
"regulation of practices” (e.g. Reynaud, 1999; 2003; 2004). That same manager added
that:
“At some point, we develop the systems, we understand the logic; afterwards we are
far. Therefore local accountants do lots of things that I ignore. But usually, I am
aware of problems and deficiencies. So I consider that GIGA is used and that it
responds correctly. It is always more comfortable to think this way (…) During the
meeting on budgeting functionalities, they had fun together as they evoked diversions
of the system. As if it was something common …”(Head of Cellule GIGA).
The weak engagement of the group Management was often justified by a lack of
resources (e.g. time). Some requests for developments of GIGA by the users were
sometimes delayed. The argument of the GIGA team consisted of saying that the request
was not a priority or that the agenda of the SW developers was overloaded, as explained
by the local accountant of BU3:
"The GIGA team has development priorities. Z [referring to the Head of the cellule
GIGA] has a lot of work. So, trade-offs had to be made and priorities had to be
fixed. GIGA cannot be developed in all directions. Today’s configuration of GIGA is
the result of past priorities”
24
Example 2: Practices related to cost allocation functionalities in GIGA
Although the original intention was to make GIGA a management accounting tool,
its developments focused on financial accounting in the first place, as the following
comments refer:
"We always wanted this tool to be focused on management accounting. (...) I think
we are putting the final stage of the rocket. It lacks all the management accounting
aspects. (...) These last two or three years have been spent on improvements in
financial accounting, accounts receivable, suppliers, corporate consolidation and
cash management. Management accounting was a little left out. I admit it. We know
that it needs developments” (Head of cellule GIGA).
"So far, developments mainly focused on financial accounting, consolidation and
cash management, more than management accounting (Local accountant, BU 1).
For example, we found that the GIGA functionalities for indirect cost allocation to
cost centers did not satisfy the needs of the users of the business units engaged in
industrial productions, particularly BU1 and BU2, as these functionalities did not meet
the complexity of BU1 and BU2’s activities. Faced with this difficulty, the accountants of
these two business units “hijacked” GIGA accrual functionalities and used them, rather
than GIGA cost allocation functionalities, to allocate indirect costs to cost centers. On the
basis of the data produced by the Excel spreadsheets designed locally to support cost
allocation (see Example 1), local accountants of BU1 and BU2 used the accrual
functionalities to implement the allocation of costs in GIGA.
“They succeeded in making cost allocations from accrual functionalities (…).
Therefore faced with inconsistencies of GIGA concerning cost allocations they
changed the system to meet their requirements!”(Head of Cellule GIGA).
As the allocation of costs was done differently from what was ruled by the system, local
accountants wanted to find a way to integrate it back in. If the support of Excel add-ons
were tolerated (example 1) for the purpose of cost allocations, the use of accrual
functionalities was considered by the group Management as a “deviant usage of accruals”
(Head of cellule GIGA). However, nothing was done by the group Management to
25
improve the cost allocation functionalities of GIGA. Based on their commonsense (or
propositional beliefs), local accountants, in the course of action, contributed to the
development of “mutual knowledge” by modifying a pre-existing set of rules and
practices prescribed by GIGA and the group Management. This gave rise to practice
variation initiated by the local accountants of BU1 and BU2, which, then, became itself
institutionalized. The motive behind such adaptation was again to produce information to
meet the local business specificities. The new practice was considered by the group
Management a deviancy, against which it could not do anything:
“Considering the cost allocation practice implemented through deviant usage of
accruals, I must say that there is no way around it. I cannot change it regardless of
these deviant practices. So, at the end of the day, deviant usage can, somehow, turn
against me when I want to change things (...) I can find myself a prisoner of their
practices” (Head of Cellule GIGA).
In addition, local accountants of BU1 and BU2 also mentioned another “not by the
book” usage of GIGA’s cost allocation functionalities. They used these allocation
functionalities to record non financial data to enable the calculation of ratios and
indicators:
“Without considering it an abuse, we can assert that some features of GIGA can be
used for different purposes. The allocation accounts [referring to parameters
normally used to allocate costs but finally used for other purposes] have been
established in GIGA to allocate costs from one section to another. Some accountants
enter non-financial data as the mileage in these allocation accounts. Then, they can
use this data in BO and create ratios and indicators” (Accountant 2, BU5).
To use the accrual functionalities of GIGA to allocate indirect costs to cost centers in
BU1 and BU2, as well as its cost allocation functionalities to calculate non-financial
indicators, required a sharp knowledge of this management control system. The
modification of the application of its rules by local accountants, i.e., CP, or autonomous
regulation in Reynaud’s (1999; 2003; 2004) terms, were developed by “accountants that
have been using GIGA for a while” (Accountant 2, BU5).
26
Example 3: Practices related to the budget module
The case of the budget module was a particular one, as regulation from both parts
(GIGA team and local accountants) was weak until 2006. No real CP and control
regulations (Reynaud, 1999; 2003; 2004) made the budget module to be implemented
more than in a very partial way. Aware of several limitations in this module, the group
Management took no initiative, until 2006, to adapt and improve the design of such
module. At the launch of GIGA, local accountants tried to use the budget module, but
realized that, albeit they could prepare their budget through this module, neither GIGA
nor extractions via BO were able to provide a budgetary monitoring and variance
calculations:
“There are no comparative statements of actual versus budget. This gap induces the
use of Excel in parallel” (Accountant 2, BU5).
Thus, the preparation of budgets in GIGA was also abandoned:
"I have never prepared my whole budget. I realized we had no comparative
statements so I only use the budget module to deal with accruals. We are really
pressed by the time (...). But this is not a rebellion. It is just that we need
effectiveness” (Local accountant, BU3).
In 2006, and at the initiative of the GIGA team, a working group was formed to
understand the needs of the local accountants in terms of budgeting, as well as to
organize an open exchange and prepare a joint action plan to develop the budget module.
We now turn to our findings concerning the third type of reaction of the group
Management in front of CP.
5.3 - CP with negative engagement of the group Management
The elements composing the group Management were still unknown to most of the
local accountants. So, for the group CFO, GIGA was more than an information system. It
27
was an integration system as it represented one of the first contacts of any acquired
company with the group:
"When a new company is taken over, GIGA is implemented. So there is a
preparatory work to switch to GIGA. The whole team follows a training program at
headquarters. (…) Then a support team is affected to the company to help its
accountants in the early stages. The example of this integration process of new
companies shows that GIGA is more than an information system. It is a system of
values and an integration system” (CFO).
The group Management had sometimes, not only to express its disagreement, but
also to firmly explain and take some initiatives to impose its will. In a weak engagement
situation (see, for instance example 2), a disagreement of the group Management would
not be sufficiently supported by acts/initiatives that would allow the control regulation to
be effective. Yet, this time, the refusals were not attributable to matters of agenda but to
firm oppositions from the group Management to specific BU’s requests:
“We must avoid that everyone spends time on an issue that will only serve one
company. But I think it can be felt as an injustice” (local accountant 2, BU5).
So, in some cases, CP was not perceived as innovation by the group Management but
as an “autonomous regulation” which could go against the need for global information
coherence in the group. In other words, the demands of the GIGA team and of the local
accountants did not make possible to find a modus vivendi and this could provoke, in
some occasions, tense exchanges between these actors:
“No, we shall not do this. The CFO said no because it is a group procedure, you see.
The developers had their own constraints too. Nevertheless, we had to deal with
them” (Accountant 1, BU5).
The increase in the number of users obliged the cellule GIGA “to industrialize” its
action and set up a framework concerning its relations with the users. This rigor was
made necessary by the scale taken by GIGA:
“There are things which are not debatable. The more companies we have, the
tougher I am. It is difficult to become tough and to impose to others to become tough
28
as well. When I refuse something, I observe that some users try to get a yes from
other members of my team. It is not in my nature but I had to become like that and
ask the members of the team to do so. There are things which are not negotiable”
(Head of Cellule GIGA).
Example 4: Enforcement of monthly reporting in the subsidiaries
Whenever there was the integration of a new company in the group (becoming, then,
a subsidiary) a new implementation process of GIGA occurred. This was particularly
obvious in BU5 which hosts a number of subsidiaries. These companies often had a
strong identity rooted in local traditions. EVEN’s strategy was to preserve this local
image in terms of marketing. But, at the same time, the group Management wanted to
enforce monthly reporting procedures in these subsidiaries:
"The problem with twelve subsidiaries is to have twelve different adaptations. So we
must try and understand how each has adapted to GIGA. It is, sometimes, a bit
complicated” (Local accountant 2, BU5).
It is often difficult for the employees of small companies to be absorbed by a group.
In other words, the passage from the status of independent company to that of a group
subsidiary is often a painful moment for them. As such, the imposition of monthly
reporting processes was difficult to be accepted by the subsidiaries of EVEN’s BU5:
"I think what bothers them [meaning the subsidiaries] most is the monthly reporting.
They are not used to follow a logic of monthly reporting. We mostly deal with exfamily owned companies. Often takeovers are due to the lack of an internal
successor as owners are in their fifties. There's nobody to take-over, so they choose
to sell. But everything remains in place. Former CEO remains in place. The hardest
part is that they become accountable to the group and switch to management
procedures, such as monthly reporting. It's the biggest change in mindset” (Local
accountant 2, BU5).
This psychological difficulty of abandoning high autonomy and replace it with highly
controlled processes, such as monthly reporting, aroused some mistrust from the new
comers vis-à-vis GIGA, and led sometimes to its poorly application. Local accountant 2
in BU5 mentioned a systematic denigration of GIGA, as well as unflattering comparisons
with the old system, by the accountants of the newly integrated companies in BU5:
29
"At first, reactions are guided by psychological factors because they do not trust
GIGA; they try to find errors".
"They often refer to previous tools, mentioning features that they could use which
are not provided by GIGA. (...) Then there is resistance vis-à-vis the latter because
they often move from one desktop tool for Windows which is a bit friendlier than our
black screen. But I think that initially, it's a bit daunting for them”.
This same interviewee also referred to, often, low motivation:
"I do not recall major problems, but I know that we balked at first (...). We did not
agree, it's not how it's done. (...) I did not see right away what it could bring to me.
It's only over the closings that we discovered all the ease it brings. (...) But we had to
push ourselves sometimes and say to ourselves 'Well no! That's how we do now!
That’s all!” (Local accountant 2, BU5).
Thus, in the newly incorporated companies, there was not always the desire to
implement the rules prescribed by the new owner. This was motivated by self-interest and
power relations but also by a lack of training of the newcomers:
"We do not always have the time during training programs to explain everything”
(Local accountant 2, BU5).
However, monthly reporting practices were enforced by the group Management,
which firmly explained to the managers of the subsidiaries the constraints of managing a
diversified group like EVEN. The local accountant of subsidiary 1 at BU5, who, initially,
opposed the deployment of GIGA, finally understood this enforcement:
"We have to adapt. I do not want to take their defense, but that's normal considering
the number of companies they are dealing with. Given the group's development, they
cannot listen to the demands of everyone.... They have to impose something. They
need information that comes from the same source. It is obviously different for
different activities, but it comes from the same source. They know how information is
made. If everyone starts to fiddle a bit on that, they cannot cope” (local accountant
in subsidiary 1, BU5)
Time usually played in favor of this enforcement undertaken by the group
Management because the members of the acquired companies needed an adjustment
period to understand that their situation had changed, and that new rules were in place, in
other words, to get used to the reporting requirements. The fact that those members
30
realized that their jobs depended on their compliance with these new rules contributed to
the adoption of the imposed reporting processes:
"But after three months, it was like that and that's it. We adapted to the new system.
We understood that it safeguarded our jobs, so we thought we would make an effort
... "(Local accountant in subsidiary 1, BU5).
They also needed time to discover if GIGA met their needs and demands:
"GIGA finally gave us the means to provide the information we were asked for fast
enough. From the moment we reorganized ourselves we were able to provide
reliable information while working normally, that is to say, without 80 or 90 hours
per week” (Local accountant subsidiary 1, BU5).
So, it took time to the members of the acquired companies to discover what made sense
and, if necessary, to construct what we previously called a joint regulation. In other
words, those actors, finally, played not only in the system but also with the system in
order to pursue the organization’s purposes (Reynaud, 2004).
Yet, inflexibility from the group Management forced local accountants to find,
sometimes, unexplored ways of action (i.e., CP) as the following example illustrates.
Example 5: The monthly statement of account
Even the strong control regulation on monthly reporting did not hinder CP at the
business units’ level. That is what occurred when the local accountant 1 at BU5 wanted to
cancel an automatic monthly accrual because the account concerned was not the good
one. The group Management refused because automatic monthly accruals based on
budgets were considered irreversible:
“We asked if we could modify some accruals. (…) An accountant made a mistake
and used a wrong account (…) We wanted to make a correction. The Head of cellule
GIGA understood the argument and rather agreed. Answer of the IS coordinator: '
no, no, no and no '. As she blocked, we fiddled [meaning that an accounting
operation they did allowed to neutralize the wrong automatic monthly accrual]!”.
This is an example of an initiative of local accountants which emerged due to a
confrontation with a control regulation. Because of the negative engagement of the group
31
Management, a creative solution had to be found by the local accountants. In so doing,
they developed a joint regulation.
We are now able to discuss our findings based on the theoretical framework
previously presented.
6 – Discussion and conclusions
Our previous findings show that GIGA, the management control system imposed by
EVEN’s group Management to its business unities, could not set up some practices with
the details required by local action. In other words, the practices at the business units
could not be narrowed down to standardized applications of GIGA prescriptions, and this
led, in some situations, to practices variations. Control regulations are very often general
and abstract, not allowing those that have to execute them – the operational actors - to
solve specific problems by only drawing on them. As such, those regulations are likely to
be changed and the resulting practice might vary more or less depending on the degree of
monitoring of the control regulation (Reynaud, 2004). This occurred at EVEN where
local accountants had sometimes to adapt GIGA’s rules in doing and on the basis of their
knowledge or experience about the everyday life at the BU’s (e.g. McCarthy, 1986;
Giddens, 1984). Thus, commonsense played a major role in the shaping of practice
variation which happened at EVEN. We return, now, to our research question.
What role does users’ commonsense play in practice variation?
As mentioned before, we found that in the course of action, the expert knowledge
carried by GIGA was confronted to everyday life situations at the BU’s of EVEN, which
required some interaction between such “abstract” knowledge and the knowing
32
constituted in practice (e.g. Giddens, 1984, 1991; Orlikowski, 2002; Cook and Brown,
1999). Whenever local accountants had to adapt certain GIGA’s rules (functionalities) to
their local needs, such as the monitoring of materials in the milk and meat production
businesses, as well as the indirect cost allocation to cost centers, they modified such rules
drawing on their commonsense i.e., on the science they had of their work (Reynaud,
2004). Or in other words, such modification was based on the propositional beliefs they
hold to guide the conduct of their day-to-day activities (e.g. Giddens, 1984). In so doing,
local accountants created some knowledge, which means that they were able to invent
their own rules and practices (i.e., CP). But these modifications were not necessarily a
degradation of the formal (in our case GIGA) rules and practices (e.g. Terssac, 2003;
Reynaud, 2004). Through their interpretations, their intentions, their “bricolages” which
were influenced by their practical experience or propositional beliefs, users adapted
GIGA to their local context without questioning GIGA itself. Although CP was pursuing
specific purposes it was also pursuing EVEN’s interest. In their study of externally
imposed practices in a joint venture, Cruz et al. (2009) also observed that practice
variations can occur even when there is little resistance from local actors to imposed
practices.
This diversity in practice resulted from the coexistence of multiple logics inherent to
the different regulations at EVEN. These were challenging for the group Management, as
well as for the local accountants, as they rendered more complex the construction of an
institutional rationality (e.g. Lounsbury, 2008). CP met different forms of regulation from
the group Management (positive engagement, negative engagement or no engagement at
all). An institutional rationality was constructed through the interplay/adjustment of all
the different regulations. Consequently, local accountants and the group Management
were both contributing to the regulation of accounting practices, thereby resulting in re-
33
designed practices. This meant to go beyond the alternatives of adopting or not the rules
and related practices GIGA was prescribing, as the four types of regulations which
characterize our theoretical framework were present at EVEN:
1.
2.
3.
4.
Dominating control regulation of practice
Dominating autonomous regulation of practice
Disarticulated regulation of practice
Balanced regulation of practice
The dominating control regulation was illustrated by the situations where CP was
rejected by EVEN’s group Management, such as the non compliance with the monthly
reporting processes by the subsidiaries. Despite their reluctance due to self-interest/power
relations, they were enforced by EVEN’s group Management to put into their practices
the standard monthly reporting procedures to ensure information coherence throughout
the group. This will was translated in a control regulation that opposed the autonomous
regulations of the subsidiaries’ local accountants but resulted in joint regulation as the
group management’s call for legitimacy was finally understood and accepted. Although
regulations (or logics in themselves) are different from each other, they all seek to be
legitimized (Reynaud, 2004).
The dominating autonomous regulation existed when the group Management at
EVEN had no choice but to accept the adaptations done by the local accountants in BU1
and BU2 concerning indirect costs allocation. This was due to the fact that GIGA did not
respond to the complexity of such allocation process in these two BUs and CP faced
weak reaction against it from the group Management. This CP was so pervasive and
institutionalized locally that the Head of cellule GIGA found himself “a prisoner of their
[referring to those local accountants] practices”. Such confrontation between different
regulations seeking legitimacy where CP was dominant also resulted in a joint regulation
in Reynaud (2004)’s terms or in “mutual knowledge” in Giddens (1984)’s words. As a
result, it contributed for diversity in the local action or to practice variation.
34
An example of disarticulated regulation at EVEN was the budget module, which was
left virtually abandoned by local accountants who continued to use local tools. The group
Management did not seek to develop this module from 1999 to 2006 due to resource
constraints (trade-offs in favor of financial accounting). As the budget module was left
aside by both parties, no joint regulation was possible. In June 2006 the group
Management initiated a series of meetings in order to identify possible developments of
the module.
Finally, we could also find balanced regulations at EVEN (i.e., balanced articulations
of autonomous and control regulations where regulations mix up and produce new
practices through joint regulation). This was the case of add-on tools, which were
tolerated by the group Management and integrated in GIGA, albeit its enforced adoption
in the business units and in the subsidiaries. And such tolerance was due to the need to
really answer to complex specificities of business units’ activities which only locals
knew. Thus, elements of the different regulations (control and autonomous, i.e., CP) were
incorporated into an innovative jointly regulated practice or practice variation.
Table 2 illustrates what we have just discussed:
Dominating control
regulation of practice
Example 4:
Enforcement of
monthly reporting in the
subsidiaries
Dominating autonomous
regulation of practice
Disarticulated
regulation of practice
Example 2: Practices
related to cost allocation
functionalities in GIGA
(BU1 and BU2)
Example 3: Practices
related to the budget
module
Balanced regulation
of practice
Example 1:
Management
accounting and Excel
add on tools in BU1
and BU2
Figure 3 - GIGA sources of regulation
35
In sum, CP can face different intensities of control regulations which provoke
contrasted compromises between these different sources of regulation. As a consequence,
CP is less likely to happen when control regulations are dominating as it is more difficult
to modify pre-existing rules and practices (example 4 in table 2). Yet, based on our
findings, the engagement of corporate management in front of CP is not systematically
negative. It can also be positive (example 1) or weak (example 2), especially if the
motives behind CP pursue the organizations’ purposes. In this case, CP contributes
substantially in modifying pre-existing practices. No collective learning though, is
observed, when regulations are disarticulated (example 3).
The case under examination indicates that SRT provides an approach for
understanding how accounting practice can emerge from control regulations, autonomous
regulations or from both of them. SRT is of help to extend other studies (see for example
Cruz et al., 2009; Hopper and Major, 2007; Quattrone and Hopper, 2001) which found
that the imposition of accounting systems from higher hierarchical levels does not hinder
practice variation. By focusing, not only on the multiple logics, but also on the conditions
of interaction between the different regulations that translate such logics, as well as on the
role of commonsense, our study contributes to the literature on practice variation in
accounting by suggesting a way of understanding the regulation process of accounting
change. We, therefore, conclude that the confrontation between control regulations and
autonomous regulations leads to a learning process (i.e., construction of an institutional
rationality) between the higher and the lower (local) levels of management in the
organizations. In particular, we argue that commonsense, through CP, creates knowledge,
which emerges by the doing of things (Quattrone and Hopper, 2001) and contributes to
the regulation process of accounting practices.
36
A number of implications for future research on practice variation may be outlined
from our study. First, an important implication lies in the finding that commonsense
should be considered a major element shaping collective action and practice variation.
Then, if the concept of CP proved to be useful in our research context, further studies
should explore CP in other contexts. Another important implication concerns SRT. While
this theoretical framework has not been drawn upon in the accounting field, our empirical
findings showed that it could prove to be useful to interpret issues, such as ours
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