Trust for accounting and accounting for (1)
When crisis arises and the need for change confronts individuals: Trust for Accounting and Accounting for Trust
Cristiano Busco
University of Manchester, UK Manchester School of Accounting and Finance
Crawford House, Booth Street East Manchester, M13 9PL, UK
Angelo Riccaboni
University of Siena, Italy
Robert W. Scapens
University of Manchester, UK and University of Groningen, Netherlands
1) Introduction
In focusing on individual learning, the objective of this paper is to illustrate a theoretical framework for interpreting the role of management accounting systems within processes of transition and, importantly, their intertwined constitution with the emergence of feelings of trust/distrust for change. The paper starts from a position which conceptualises accounting practices as a set of organisational rules, roles and routines. It is argued that when crisis arises, and the need for change confronts individuals, processes of individual learning encompasses a tension between habitual and intentional patterns of interaction. This requires a multi-levelled conception of human consciousness to interpret the way in which accounting practices interplay with feelings of trust for change in managing such tension. Thus, by exploring the recursive relationship which links cognitive schemes and behavioural practices in the inherent stability and change of organisational and individual life, we make use of insights from sociology of knowledge and cognitive psychology for extending and further refining the institutional framework of accounting change developed by Burns and Scapens (2000).
Although the focus of the analysis is placed at the level of individual, the process of agent construction need to be continuously explored in the light of a wider social context in which agency operates. Humans constitution represents a social enterprise, “homo sapiens is always, and in the same measure, homo socius” (Berger and Luckmann, 1966, p. 69; emphasis in the original). Such consideration seems particularly appropriate in times of global and intense competition, where organisations are constantly required to redefine their identity and adapt their structures to the shifting requirements and features of the market environment. Although continuous in its nature, the need to change is particularly intense in specific critical circumstances, where individuals are increasingly asked for a prompt re- definition of their existing knowledge end expertise. In particular, the need to face the complexity and uncertainty which follows disturbance episodes often requires organizational Although the focus of the analysis is placed at the level of individual, the process of agent construction need to be continuously explored in the light of a wider social context in which agency operates. Humans constitution represents a social enterprise, “homo sapiens is always, and in the same measure, homo socius” (Berger and Luckmann, 1966, p. 69; emphasis in the original). Such consideration seems particularly appropriate in times of global and intense competition, where organisations are constantly required to redefine their identity and adapt their structures to the shifting requirements and features of the market environment. Although continuous in its nature, the need to change is particularly intense in specific critical circumstances, where individuals are increasingly asked for a prompt re- definition of their existing knowledge end expertise. In particular, the need to face the complexity and uncertainty which follows disturbance episodes often requires organizational
The role of accounting and control systems within processes of organisational learning and transformation has been widely debated in the literature (Hopwood, 1987; Argyris, 1990; Dent, 1990; Gray, 1990; Cobb et.al., 1995; Otley and Berry, 1994; Coad, 1995; Kloot, 1997). Multiple contributions have illustrated the potential to rely on accounting for visualising, analysing and measuring the current “health” of a business, questioning the operational and managerial strategies implemented and, eventually, justifying new paths of ‘action’ (Hopwood, 1990; Ezzamel et al., 1998). In particular, there is a general agreement on the argument that systems of measurement and accountability display the potential for making the visible reality calculable (or accountable) by translating stock market driven ‘pressures’ into a specific set of quantifiable financial targets that are linked to production processes and business practices (Ezzamel et al., 1999), promoting employee identification with and commitment to specific values and operative philosophies (Jazayeri and Hopper, 1999), improving intra-organisational communication by infusing managers and ‘non-accountants’ with a common financial vocabulary for ‘reading’ the state of the business (Roberts and Scapens, 1990, Busco et al., 2000).
When crisis arises, and organisations face the need for a rapid transformation, accounting practices, along with other organisational systems, are likely to play an important role in favouring individual’s responses to change, which may be either guided by routinised behaviour and habits of thought or by the intervention of rational deliberation. Management accounting systems act as repositories and carriers of organisational and individual memory (Nelson and Winter, 1982; Busco et al., 2000). Such systems can be proactive towards processes of change by promoting searching and experimentation, as well as they may prevent the questioning of existing knowledge and cultural assumptions (Hopwood, 1987; Dent, 1990; Argyris, 1990). The intertwined relationship which links management control practices and organisational learning has been explored by Kloot (1997, p. 69), who argues that “management control systems affect the understanding of what those changes mean, how and what solutions might be generated, and a perception of whether the time has come to uncouple the organization from old structures and operating paradigms to move to new structures and paradigms”. Even though knowledge is then “transferred” to organisation, learning is a process which originally concerns the individual sphere. However, the way in which individual processes of learning occur between tacit (i.e., unconscious) and purposeful (i.e., conscious) behaviour is still far from being clear and deserves further investigation.
In entering such a debate, the emphasis of this contribution is placed on trust. The intention is to explore whether and, eventually, how the emergence of accounting-driven feelings of trust for change have the potential to challenge those activities which are generally governed by habitual ways of thinking, while opening possibility for conscious or rational deliberation. Being strictly linked with the constitution of agent’s personality, trust as a phenomenon generally refers to the expectations that people have for the others’ behaviour: “to be able to trust another person is to be able to rely upon that person to produce a range of anticipated responses” (Giddens, 1987, p. 136). Although focused on an individual level of analysis, this paper does not lose sight that trust is a socially constructed psychological condition. “People work collectively to form this bond we call trust” argue Weber and Carter, who continue by claiming that “[trust] is not an innate facet of a pre-ordained personality; it is a product of human social relationship … [trust] acknowledges the interactional basis of the emergent relationship, a relationship in which we both act and are acted upon” (1998, p. 21). Thus, far from having sole cognitive or individual grounds, we conceptualise trust as a phenomenon built (or not) in practices, within ongoing processes of learning and interaction.
Portrayed as an individual’s expectations of order, safety and stability in the realm of social interaction (see Garfinkel, 1967), trust is built on and carried in practices, by which agents Portrayed as an individual’s expectations of order, safety and stability in the realm of social interaction (see Garfinkel, 1967), trust is built on and carried in practices, by which agents
2) Coping with learning and change: accounting practices as organisational routines
During the 1990s, a growing number of scholars have described accounting systems as organisational routines (see, among others, Roberts and Scapens, 1990; Dent, 1991; Scapens, 1994; Mouritsen, 1994; Burns and Scapens, 2000; Burns, 2000). Either directly or indirectly, such contributions seem to be deeply influenced by the notable work of Nelson and Winter (1982) on evolutionary economics. By portraying the routinization of activity as the most important form of storage of the organizational knowledge, Nelson and Winter describe routines as the means through which ‘organisational memory’ is produced and reproduced in practice; they continuously synthesise action and thought in the enactment of social life. Significantly, according to these authors, “one area of firm behaviour that plainly is governed by a highly structured set of routines is accounting” (1982, p. 410; emphasis added).
Routines represent the behavioural-level manifestation of an institutionalised cultural order. For this reason, they assist individuals to cope with the uncertainties that characterise their 1 social experience . Habits of thought and routinised patterns of behaviour generally store and carry an innate sense of stability and predictability through time and space. Indeed, they provide individuals with a practical background necessary to assess the complexity of specific situations and, subsequently, make the appropriate decisions. When shared organisationally, their strength is reinforced by the ability to reduce those conflicts which tend to emerge in social settings. As stressed by Nelson and Winter, “routine operation involves a comprehensive truce in interorganizational conflict … (and) the fear of breaking the truce is, in general, a powerful force tending to hold organizations on the path of relatively inflexible routine” (1982, p. 110-112; emphasis added).
However, although embedded and established in individuals’ memories, routines do change over time. There is always the possibility for a breakdown of behavioural regularities. As suggested by Lawson, “there will be moments of crisis situations or structural breaks when existing conventions or social practices are disrupted” (1985, p. 920). Recently, the ‘cognitive’ extent of such transformations, as addressed in the distinction between evolutionary/revolutionary change (see Nelson and Winter, 1982), first-order and second- order change (Bartunek and Moch, 1987), reorientation and colonization (Laughlin, 1991), has been widely debated in the accounting literature (see Laughlin, 1991; Burns and Scapens, 2000; Busco et al.,2000).
Aiming to extend this debate, our contribution focuses on the learning conditions involved in agents’ processes of behavioural and cognitive redefinition. In these situations, the emergence of feelings of ‘trust for change’ seems to play a pivotal role. Per se, the individual- level of analysis implies an accurate interpretation of the psychological conditions needed for
1 For an extensive analysis of human personality and need for routinisation, refer on section three of the paper.
breaking the behavioural and cognitive truce sustained by organisational routines. Purposively designed by the management and consciously/unconsciously drawn upon by organisational members, accounting systems display the potential to act as devices within the search for stability or change. For these reasons, accounting systems as set of practices and trust/distrust for change as a phenomenon seem to be recursively linked. In particular, whereas the cognitive realm encompasses accounting meanings within mental schemes, the behavioural realm embodies feelings of trust/distrust within organisational practices and activities. As suggested below, when organisations face a crisis and, consequently, members experience the pressure for a prompt “cultural” re-orientation, the outcome of such a process is far from being obvious and needs to be explored, within the specific organisational context, as a result of the tension between individuals’ perception of processes of change and their existing stocks of knowledge.
Accounting ‘routinisation’ and processes of change – When accounting is constructed and embedded within those “trustworthy” rationales which sustain organisational routine, it is likely to be employed to confront environmental disturbances or organisational crises, and to reconstitute the previous conditions of ‘safety’. In such situations, a sort of ‘trust for accounting’ arises, and accounting/accountants are welcome in the search for a solution. Conversely, when used as ad hoc measures detached from any rationales or deep common understanding, accounting systems can be marginalised and/or perceived as the focus of conflict. A fascinating point of departure for enquiring about the role played by accounting routines within the ongoing process of organisational learning and change is the case of Ferac International, a UK-based multinational, multi-divisional company. The case was first described by Roberts and Scapens (1990) and, then, further expanded by Scapens and Burns (1996). Jointly analysed, the overall picture presents a comparison and interpretation of two contrasting situations within Ferac International, which concern the Plastics and Chemicals divisions.
Within the Plastics division, accounting meanings were deeply involved in the constitution of organisational reality. Thus, although managers did not understand their business exclusively in accounting terms, they manifested a high degree of financial literacy, which revealed management accounting to be one of the major internal sources of information. Although challenged and debated, accounting represented a commonly-accepted way of understanding organisational activities and making sense of the business conditions and events. Such a ‘position’ had important implications for accounting language. Eventually, accounting terms and concepts were embedded in the deeply-rooted assumptions and knowledge displayed by organisational members, who were then able to routinise their employment to learn about and make sense of their own actions, the actions of others and, importantly, the contingencies of the market. Differently, within Chemicals, the understanding of accounting routines was constrained inside the financial department. This division of Ferac International used different types of routines, which were more production-oriented. Among the other factors, this situation resulted from the Administration Director’s powerful role and strategic policies, which by controlling the production planning process, drove managers’ attention towards the concerns of production.
The acknowledgement of the heterogeneous constitution of management accounting between the two divisions becomes crucial to explore the role played by these systems in coping with a specific critical situation which threatened the financial stability of the company. Thus, when Ferac International as a whole had to confront cash flow problems as well as pressure from customers for increased competitiveness on price and delivery, the different meanings associated to accounting, within the rationales that sustain organisational routines, caused two contrasting responses in the two divisions. In particular, within the Chemicals division the Administration Director decided to abandon his production-oriented management and began to use management accounting, but as a mere tactic for ‘bullying’ other managers into cutting their costs and improving their cash inflows. This resulted in a clash between two The acknowledgement of the heterogeneous constitution of management accounting between the two divisions becomes crucial to explore the role played by these systems in coping with a specific critical situation which threatened the financial stability of the company. Thus, when Ferac International as a whole had to confront cash flow problems as well as pressure from customers for increased competitiveness on price and delivery, the different meanings associated to accounting, within the rationales that sustain organisational routines, caused two contrasting responses in the two divisions. In particular, within the Chemicals division the Administration Director decided to abandon his production-oriented management and began to use management accounting, but as a mere tactic for ‘bullying’ other managers into cutting their costs and improving their cash inflows. This resulted in a clash between two
Perhaps not surprisingly, the conflict emerged in Chemicals, was not experienced in Plastics. In fact, when Ferac International’s crisis put pressure on the cash flow of Plastics, the managers and accountants worked in concert to find the least painful ways of facing the mutual problems. Indeed, such co-operation was favoured by a shared financial knowledge. In particular, the accounting-driven imprinting of the managers and, crucially, its routinised enactment through time, enabled those terms and practices to be employed within processes of learning and organisational transformation. Thus, whereas in Chemicals, the financial crisis made accounting systems the focus of conflict and the source of the problems, in Plastics, accounting language and key tools represented an important means for dealing with the crisis and for seeking stability, i.e., a common and trust-worthy ground for reaching a possible solution to the problems identified.
A detailed explanation of the contingent reasons which caused such differences in the conceptualisation and use of management accounting systems within Ferac International are beyond the objectives of this contribution. Indeed, they are grounded in the specific contexts, histories and individuals involved in the two divisions (see Roberts and Scapens, 1990 and Scapens and Burns, 1996). However, additional to the emergence of two distinct sub- cultures within the company, in view of the purposes of this paper, the insights of the case are helpful to highlight how accounting routines, as well as other sets of organisational practices, have the potential to play a different role according to the extent to which they are perceived and institutionalised within individuals’ interpretative schemes. This seems particularly relevant when individuals are involved in rapid and uncomfortable changes, which challenge existing convention and behavioural regularities.
By providing a mental framework able to inform routinised patterns of behaviour, taken-for- granted assumptions (i.e., institutions) reduce the complexity which individuals have to cope with on a day-to-day basis. As suggested by studies on cognitive psychology and cultural anthropology, agents rely on concepts and cognitive frames to recall their past experiences and make sense of the stimuli which they face in contexts of social interaction (Douglas, 1987; Lloyd, 1972). Generally, these processes involve an evolutionary or path-dependent route where existing routines and habits of thought are reinforced over time (see Burns and Scapens, 2000). However, when crisis arises, such a “cumulative” process of change may be disrupted by specific environmental disturbances or endogenous shocks, which lead to a breakdown of the former courses of action and cause developments along different paths. In these situations, processes of learning encompasses a tension between the securities and safety of the past, as encoded in organisational routines and behavioural regularities, and the opportunities and threats of the future, as manifested by/through the new “stimuli” experienced.
In this paper, we place the emergence of feeling of trust/distrust for change at the base of the psychological and cognitive tension that characterises processes of individual learning. Furthermore, we propose management accounting systems as organisational devices implicated in the “management” of conflicts between tacit (i.e., unconscious) and purposeful (i.e., rational) behaviour. Although continuous in its nature, the engagement of accounting practices in the implementation of processes of learning seem particularly significant when crises arise, and rapid changes are required both at the individual and organisational level. For these reasons, by illustrating the recursive relationship which links cognitive schemes and behavioural practices within the unfolding process of learning and change, we draw on insights from sociology of knowledge and cognitive psychology for extending and further In this paper, we place the emergence of feeling of trust/distrust for change at the base of the psychological and cognitive tension that characterises processes of individual learning. Furthermore, we propose management accounting systems as organisational devices implicated in the “management” of conflicts between tacit (i.e., unconscious) and purposeful (i.e., rational) behaviour. Although continuous in its nature, the engagement of accounting practices in the implementation of processes of learning seem particularly significant when crises arise, and rapid changes are required both at the individual and organisational level. For these reasons, by illustrating the recursive relationship which links cognitive schemes and behavioural practices within the unfolding process of learning and change, we draw on insights from sociology of knowledge and cognitive psychology for extending and further
The structure of the paper follows. Section 3 discusses the psychological strength of routinised patterns of behaviour within processes of learning. We begin by exploring agents’ biological need for habitualization, and then we stress the tension that may arise between repeated and purposeful behaviour. Next, section 4 outlines the theoretical framework developed for interpreting the linkages between accounting systems and feelings of trust for change. In particular, we illustrate the constitution of accounting between those processes of knowledge recall and anxieties management which characterise phases of individual learning. Then, section 5 describes how the framework can be employed to interpret the role of management accounting systems within processes of rapid organisational change, which imply a profound cognitive and behavioural redefinition of the individual. For this purpose, we draw on the insights of two case studies for explaining the use of the model. Finally, section
6 ends this work by summarizing the key features of the framework illustrated and the implications for future research.
3) The strength of routines within processes of learning: exploring agency
constitution between habitualized and purposeful behaviour
The issue of learning has increasingly gained attention within the organisational context. The uncertainty and turbulence that characterise the current business environment have enhanced the need for flexible organisations, which are required to cope and adapt to a series of heterogeneous social, cultural and economic factors at an increasingly faster rate. This ongoing process of adaptation and transformation, in which contemporary organisations must engage, is dependent upon their ability to learn and regenerate themselves. Interpreting such
a process, where the values and the assumptions embedded in existing culture play a key role, implies to explore the psychological strength of institutionalised stocks of knowledge over the process of learning. Moreover, since organisations learn through their members, an interdisciplinary perspective is required to explore how individual learning occurs (see Hedberg, 1981; Cohen, 1991; Huber, 1991; Kim, 1993). In particular, we argue that it is crucial to understand where the tension between routinized and purposeful behaviour come from, and why it lie at the very heart of processes of change. Thus, while combining sociological, psychological and organisation theory insights, we start our discussion by linking processes of “routinization” to the intrinsic characteristics and needs of agency.
Interpreting agents’ biological need for routinization – For the purposes of our paper it is fundamental to interpret the motivational aspects which lie behind the routinisation of social practices. Berger and Luckmann (1966) ground on Gehlen’s philosophical anthropology (1956), Schütz’ phenomenological approach (1972) and Mead’s social psychology contribution (1934) to explore the mechanisms through which a shared cultural order is continually produced and reproduced in light of the “biological” qualities of individuals. Significantly, they portray the formative causes of social experience as anthropological in nature: ‘the human organism lacks the necessary biological means to provide stability for human conduct’ (1966, p. 69). Thus, Berger and Luckmann conceptualise social order as emerging from the need to compensate and support human nature, by providing it with those stabilising cognitive and normative structures which are biologically absent. This is achieved through processes of routinization, through which agents are able to retain the knowledge acquired during their social experiences, and cope with reality of every day life without questioning all the time its traits and characteristics.
“All human activity is subject to habitualization. Any action that is repeated frequently becomes cast into a pattern, which can then be reproduced with an economy of effort and which, ipso facto, is apprehended by its performer as that pattern”(Berger and Luckmann, 1966, p. 70-71; emphasis in the original)
According to Berger and Luckmann, the cultural order of any society or organisation can be described as a never-ending “social product” which combines both stability, through the enactment of repeated patterns of behaviour, and potential for change. The latter is guaranteed by the “world-openness” which characterises agents’ relationship to their environment (Berger and Luckmann, 1966, p. 65). By showing pragmatic formative causes, “routinization” provides individuals with a sense of relief that is needed for coping with the anxieties which characterise the contexts of interaction. As the authors illustrate:
“Habitualization carries with it the important psychological gain that choices are narrowed … This frees the individual from the burden of ‘all those decisions’, providing a psychological relief that has its basis in man’s undirected instinctual structure. Habitualization provides the direction and the specialization of activity that is lacking in man’s biological equipment, thus relieving the accumulation of tensions that result from undirected drives” (Berger and Luckmann, 1966, p. 71, emphasis added).
Following the lines traced by Berger and Luckmann, Giddens (1984) stresses the importance of routinised patterns of behaviour in the continuity and ordering of social life. In particular, he relies on the Freudian perspective of personality and on Erikson’s ego-psychology (1963) to illustrate his “theory of the subject” as grounded on the interplay between the development of personality, processes of routinisation and the reflexive monitoring of action. Giddens’ perspective is strongly focussed on the development of human personality between situations of autonomy and trust, and on their struggle with “anxieties management”. As sustained by the author, “the motivational components of the infantile and adult personality derive from a generalized orientation to the avoidance of anxiety and the preservation of self- esteem against the ‘flooding through’ of shame and guilt” (1984, p. 57). In such a perspective, humans’ fundamental need for ontological security is portrayed to be at the base of the unconscious or “basic security system”.
Ontological security, which is presented as being found in basic anxiety-controlling mechanisms, is grounded in the methods developed during the infant’s pre-linguistic stage to cope with anxiety and, later, sustained through the enactment of predictable routines in social interaction. Thus, the deepest layer of ontological security is to be found in trust. As Giddens suggests, “the generation of feelings of trust in others, as the deepest-lying element of the basic security system, depends substantially upon predictable and caring routines” (1984, p. 53). Following the lines proposed by Erikson, Giddens argues how the formation of the subject between conditions of trust and mistrust, autonomy and doubt, initiative and guilt, which individuals experience during processes of growth and personality development, encompasses a management of tensions. Such tensions are experienced to fulfil the organic (i.e., biologically-based) needs of the subject. Ultimately, the search for a sense of trust in continuity and sameness “explains, to a large extent, why agents routinely reproduce social terms, even those which they might readily recognize as excessively coercive” (Macintosh and Scapens, 1990, p. 459).
Human behaviour is not exclusively dependent upon psychological mechanisms embedded within the personality of the individuals. Rather, the existence of agency is “mediated by the social relations which individuals sustain in the routine practices of their daily lives” (Giddens, 1984, p. 50). In particular, as emphasised by Giddens (1984, p.60), “if the subject cannot be grasped save through the reflexive constitution of daily activities in social practices, we cannot understand the mechanics of personality apart from the routines of day-to-day life through which the body passes and which the agent produces and reproduces”. This illustrates the twofold storage of knowledge which is maintained both as memory traces and within routinised patterns of behaviour. Thus, by performing taken-for-granted activities/practices, individuals satisfy their need for ontological security while structuring, in situations of co-presence, wider organisational or societal orders.
On the other hand, besides their self-reproduction through social interaction, routines as well as their level of certainty and predictability are radically disrupted in ‘critical situations’. When such episodes occur, anxiety swamps the behavioural rituals habitually performed within the organisation. In so doing, by creating “circumstances of radical disjuncture of an unpredictable kind which affect substantial numbers of individuals”, these events “threaten or destroy the certitudes of institutionalised routines” and unlock possibilities for change (Giddens, 1984, p. 61, emphasis added). In this sense, change and learning needs to be interpreted as an ongoing re-examination, although at different levels of consciousness, of the stored knowledge which provides ‘position-practice’ incumbents with a sense of ontological security. Indeed, for learning to happen, individuals seem to require a sort of “trust for change” which enable them to question the sense of safety carried by existing routines. Within the next section, the espoused “theory of the subject” and the process of routinization are linked to the issue of individual learning by means of Schein’s anxiety-driven perspective on change.
The processes of learning between routinized and purposeful behaviour: on managing individual anxieties – Considering the objectives of this paper, the question of learning is central. When individuals ‘meet’ a need for change, they face a request for learning which inevitably accompanies such a process. In a different contribution, we define change as “the ongoing process of cognitive and behavioural definition and re-definition which influences agents’ motivation for action” (see Busco et al., 2000). At the same time as linking processes of transformation to the agents’ motivation for action, this definition conveys the two different levels at which learning and change may occur: cognitive and behavioural. This is also consistent with the interpretation of organisational culture, which is conceptualised as a set of common understandings and assumptions, stored both as memory traces and within routinised pattern of behaviour.
Clearly, it would be difficult to inquire about the way in which accounting practices and feelings of trust for change are linked within phases of transformation, without interpreting the process of learning itself. In that respect, a description of what has been referred to as ‘Experiential Learning theory’ follows. By distinguishing two levels of learning, Kim (1993, p.
38) shows how learning encompasses “(1) the acquisition of skill or know-how, which implies the physical ability to produce some action, and (2) the acquisition of know-why, which implies the ability to articulate a conceptual understanding of an experience” (see Figure 1). In line with the contribution of Argyris and Schon (1978/1985), Kolb (1984) and Senge (1990), Kim describes such dimensions as involving both thought and action, the ‘conceptual’ and the ‘operational’ realm. Further, relying on the contribution of Lewin, he suggests how in learning “a person continually cycles through a process of having a concrete experience, making observations and reflections on that experience, forming abstract concepts and generalizations based on those reflections, and testing those ideas in new situations, which leads to another concrete experience” (1993, p.38). Similarly, such a process has been portrayed by Schein (1987) as the observation-emotional reaction-judgement-intervention cycle of learning.
[Insert Figure 1 about here]
As for the contents of processes of learning, two basic types are generally distinguished by Argyris (1977): single-loop learning, which involves only minor adjustments to the present knowledge, policies and understanding, and double-loop learning, where underlying assumptions and values are deeply challenged, questioned and, eventually, modified. Likewise, Senge (1990) differentiates between adaptive learning, which encompasses a series of steps that will enable the organisation to survive within a redefined environment, and generative learning, which concerns the ability to change the existent modes of thinking, conceptualised as mental models or paradigms. Although learning is undoubtedly acquired As for the contents of processes of learning, two basic types are generally distinguished by Argyris (1977): single-loop learning, which involves only minor adjustments to the present knowledge, policies and understanding, and double-loop learning, where underlying assumptions and values are deeply challenged, questioned and, eventually, modified. Likewise, Senge (1990) differentiates between adaptive learning, which encompasses a series of steps that will enable the organisation to survive within a redefined environment, and generative learning, which concerns the ability to change the existent modes of thinking, conceptualised as mental models or paradigms. Although learning is undoubtedly acquired
However, memory is not involved exclusively with storing. Thus, in interpreting the process of individual learning, Kim relies on Senge’s contribution to point out the importance of ‘mental models’ as active structures, able to influence what an individual sees and does. Mental models include explicit and implicit understanding which, consciously or unconsciously, provide an ontological construction to interpret new situations in light of the existent stocks of knowledge. Finally, mental models embody two components which refer to the possible different levels of learning. Thus, ‘operational learning’, which concerns the know-how acquired at the procedural level, is captured and stored within mental routines, while ‘conceptual learning’, which involves the deep-rooted assumptions and values characterising the individual knowledge, informs the existing mental frameworks.
Within his description of individual learning, Schein emphasises the key role of “anxieties”. According to Schein (1992/1993), in order to cope with the anxiety which arises in contexts of social interaction, agents are constantly looking for some degree of psychological safety and security. Once such levels are achieved, since unlearning processes are “uncomfortable and anxiety-producing” (1999, p.115), this sense of safety is generally maintained through the enactment of a number of repeated behavioural routines through which people tend to avoid cognitive and behavioural changes. For these reasons, processes of learning and change occur when a series of unfreezing and re-freezing forces perform in an appropriate balance. Such forces are represented by (1) mechanisms of disconfirmation, (2) induction of guilt or survival anxiety, (3) creation of psychological safety and the overcoming of learning anxiety 2 and finally, once new solutions have been successfully experienced and validated, by a (4) cognitive redefinition and sedimentation of the key concepts.
The perspective developed by Schein considers “disconfirmation” as a key psychological element in interpreting (and promoting) episodes of change. In particular, mechanisms of disconfirmation lie at the very heart of processes of learning and transformation since they involve a form of frustration and apprehension generated by data or situations that threaten human predictions or expectations. However, disconfirming information are not enough for change to occur. Thus, in order to take such psychological threats seriously and motivate individuals to change, this process must stimulate what Schein calls survival anxiety, i.e. “the fear, shame or guilt associated with not learning anything new” (1993, p. 88). Although survival anxiety or guilt arises when disconfirming data are considered valid and relevant, what typically obstacle agents to develop such a feeling, and causes defensive reaction, is a second kind of anxiety which Schein calls learning anxiety, i.e. “the feeling that is associated with an inhability or unwillingness to learn something new because it appears too difficult or disruptive” (1993, p. 86). The latter type of anxiety is connected to the psychological make-up of individuals as conceptualised by Berger and Luckmann, and Giddens, and refers to the sustainability of a sense of ‘ontological security’ or ‘psychological safety’ which characterise individuals’ biological structure and needs. In fact, according to Schein, “ … human systems seek homeostasis and equilibrium. We prefer a predictable stable world, and we do not let our creative energies out unless our psychological world is reasonably stable” (1993, p. 88).
Learning pathways are closely linked to the “strength” of the existent organisational culture 3 . “It is the history of past success and our human need to have a stable and predictable
2 In earlier works Schein (1993) calls survival anxiety as “Anxiety 1” and learning anxiety as “Anxiety 2”. 3 Schein defines organisational culture as “a pattern of shared basic assumptions, invented, discovered, or
developed by a given group, as it learns to cope with its problems of external adaptation and internal integration, that has worked well enough to be considered valid, and, therefore, is to be taught to new members of the group as the correct way to perceive, think, and feel in relation to those problems” (1991, p. 247). For an extensive discussion on Schein’s view of culture see Busco and Scapens (2001).
environment that gives culture such a force. Culture is the accumulation of past learning and thus reflects past successes, but some cultural assumptions and behavioural rituals can become so stable that they are difficult to unlearn even when they become dysfunctional” (Schein, 1993, p. 87). Thus, processes of unlearning are emotionally difficult because doing things the old and shared way can make life easier. Poor adaptation or insufficiency in fulfilling other expectations often looks less dangerous than risking failure in the learning processes. Schein portrays learning anxiety as the fundamental restraining force which, by arising in direct proportion to the amount of disconfirmation episodes, might enable the maintenance of the equilibrium embedded in defensive routines. Eventually, in interpreting the processes of transformation and change, he proposes the twofold and, to a certain extent, paradoxical role of anxiety, which although “prevents learning, … is necessary to start learning as well” (Schein, 1993, p. 89, emphasis added).
The enquiry that informs the contents of this paper has purposely been framed within a ‘precise’ time-space context. The objective is to interpret the intertwined constitution of accounting systems and feeling of trust for change, when critical situations arise and routines-driven individuals face the need for rapid re-orientation. Furthermore, since we build on the literature that conceptualises management accounting systems as a set of organisational routines, it is argued that an interdisciplinary perspective of study is needed. Thus, by drawing on a series of disciplines, which range from ego-psychology to sociology of knowledge, from organisation theory to cognitive sciences, the argument is developed through an approach which emphasises the strength of habitualized behaviour within the constitution of agency and, consequently, recognises the cognitive tension which the individual has to face during processes of learning. As illustrated in the next section, for interpreting the role of accounting systems in these phases of cognitive and behavioural change, it is necessary to explore their constitution and impact within the process of knowledge recall experienced by the individuals.
4) Accounting systems and feeling of trust for change within processes of learning: towards an interpretative framework
The conceptualisation of “trust for change” – Together with organisational rules and roles, the enactment of routines enables individuals to attain a status of cognitive and behavioural stability which they are biologically missing (see Busco et al.2000). Routines embody an ontological status of security that allows the actors to actively participate in the production and reproduction of their knowledge and of the wider setting wherein they live. Additionally, by providing individuals with a motivation for action, they represent important means for coping with survival anxiety. As suggested by Schein, “behavioural rituals can become so stable that they are difficult to unlearn even when they become dysfunctional” (1993, p. 87). Giddens’ theory of the subject has been criticised by Wilmott (1997), who maintains that anxiety does not accompany individuals’ experience per se but, rather, it emerges when an attachment to routines is severed. “Far from providing any deep sense of ontological security”, argues the author, “seeking to contain anxiety through immersion in routine can offer only a fitful and ultimately illusory resolution of the existential contradiction of human life” (Willmott, 1997, p.177). However, as argued else were (see Busco et al., 2000), by introducing the concurrent presence of two types of anxieties, the perspective portrayed by Schein enables one to cope with Willmott’s criticisms.
While threatening the certitudes of institutionalized routines, critical situations or crises display the potential to unfreeze the knowledge carried by habitualized behaviour and open possibilities for ‘conceptual’ and ‘operational’ learning. Within this paper, change has been described as an ongoing process of cognitive and behavioural definition and re-definition which influences agents’ motivation for action. Such a description enables an interpretation While threatening the certitudes of institutionalized routines, critical situations or crises display the potential to unfreeze the knowledge carried by habitualized behaviour and open possibilities for ‘conceptual’ and ‘operational’ learning. Within this paper, change has been described as an ongoing process of cognitive and behavioural definition and re-definition which influences agents’ motivation for action. Such a description enables an interpretation
Accounting and Trust for change: exploring their intertwined constitution within processes of learning – By relying on recent contributions on organisational (Laughlin, 1991; Barley and Tolbert, 1997) and management accounting change (Burns and Scapens,2000; Busco et al., 2000), this paper seek to interpret the way in which accounting practices, along with other organisational systems, participate in the process of individual learning and change. In so doing, although the linkages between organisational culture and the individual’s stocks of knowledge are acknowledged, as well as between organisational and individual learning, they are not made explicit in this analysis. Although debated else were (see March and Olsen, 1975; Daft and Weick, 1984; Kim, 1993), the existence of these linkages is taken-for- granted in this paper, were the focus is primarily placed on the realm of the single individual. In particular, a framework is developed for exploring the intertwined constitution of accounting practices with feelings of trust for change during processes of individual learning
and knowledge recalling (see Figure 2) 4 . [Insert Figure 2 about here]
The model combines the individual’s twofold storage of knowledge with the corresponding level at which learning occurs. During its ongoing production and reproduction, knowledge is stored and carried both within agents’ mental models, as memory traces, and by means of specific ‘position-practice’ in which individuals find themselves. Importantly, ‘position- practice’ enables individual’s knowledge to descend the cognitive ladder of abstraction, and to be enacted in specific patterns of behaviour (since memory traces are more abstract than the rules, roles and routines in which they are stored and carried, dotted lines are used for the box and for the arrows a and d). Along with other organisational systems, management accounting roles, rules and routines are likely to play a pivotal role for linking the existing stocks of knowledge within the uninterrupted flow of day-to-day interaction. As stated by Archer (1995), the twofold storage of knowledge proposed by Giddens is rather static, i.e., it does not recognise the different moments in time in which it occurs. Conversely, it needs to
be acknowledged that, whereas the cognitive contents which characterise mental models enable and constrain situated interaction synchronically (i.e., at a specific point in time), the ongoing enactment of specific patterns of behaviour allows ‘position-practice’ incumbents to produce and reproduce those stocks of knowledge diachronically (i.e., through their cumulative influence over time).
The process of individual learning comes alongside the ongoing production and reproduction of knowledge. Although continuous and uninterrupted in its daily development, such a process can be purposely fragmented for diagnostic purposes. At a specific point in time, any individual is characterised by a particular stock of knowledge which arises from her/his judgment and abstract generalisation of the social experiences ‘lived’ in the past. In order to balance the biological deficiencies of individuals, the cognitive assumptions which sustain agent’s sense of security/stability are then encoded within specific behavioural stores and carriers, among which are management accounting rules, role and routines (arrow a). Subsequently, in testing the knowledge gained, the process of learning entails the enactment of those practices in which it has been embedded (arrows b). In this respect, the individual goes through a continuous process of observation and implementation which, being grounded on the cumulative experience acquired, enables the reproduction of the ‘position-
4 However, a recognition of the linkages between organisational culture and individual stocks of knowledge, along with their ongoing and cumulative evolutionary path is given by Figure 2 through their
shading and progressively denser background.
practice’ implemented (arrows c). Simultaneously, after having been encoded within the agent’s patterns of behaviour, mental models are potentially open to change or, alternatively, to be confirmed. This happens within a diachronic process of institutionalisation where individuals assess and react to the experience provided by the field (arrow d). Along with the phase of encoding, the validation and institutionalisation of knowledge consist of an ongoing process, rather than single identifiable movements (this explains the broad lines used for arrows a and d).