Profitability calculations under trial of strength

Abstract

Purpose The purpose of this paper is to examine the organizational construction of profit at the responsibility-centre level, how underlying cost calculations are challenged, and the role of accountants therein. Design/methodology/approach This paper analyses profit calculation in a public social housing organization that experienced New Public Management (NPM). Participant observations, archives and interviews inform the study over three years, enabling access to day-to-day practices. Findings This study examines a trial of strength that revisited long-existing profitability and cost calculations. Accountants held competing views of how to treat labour costs. Some were anti-programme during a trial of incompatibility, while others were programme defenders. The authors also provide evidence of the stability of an established network and its resistance to the claims of an adversary spokesperson in a trial of strength. The concept of trial of incompatibility proved helpful in showing how the actor networks within OMEGA played out the tension between profit orientation and the social mission of offering affordable dwellings. Research limitations/implications The paper provides rare qualitative data on the significant and complex role of calculative costing choices in determining intra-organizational profitability and its interference with the inherent social mission of the organization. Practical implications The authors suggest that profitability calculations are influenced not only by economic context but also by different views of organizational actors regarding how to calculate profit. These calculations would benefit from a more detailed and explicit documentation of reasons for choices made, given the potential for different and, in principle, equally valid approaches. The authors provide further evidence of the complexity of the public social housing sector. Social implications This research points to a departure from the mission of public social housing in the face of NPM reforms and further questions the compatibility of a profit orientation with the provision of affordable dwellings. Originality/value The findings show intra-accounting variation regarding a specific element of profit calculation (labour costs) relating to the organization’s wider mission and status.

Politics of accounting evidence in privatising telecommunications in Sri Lanka

“…However, this sense-making was subject to their limited observations, experiences and personal interests regarding the structures of the Department (Justesen and Mouritsen, 2011;Latour, 2005;Myrick et al, 2013;Rowlinson et al, 2014;Walker, 2016). Specifically, perceptions among the other actor-networks of the non-existence of accounting before privatisation empowered the proponents and enabled them to make comparisons between the two incompatible alternatives (Christensen et al, 2019;Laguecir et al, 2020).…”

“…Second, the spokespeople used their roles, the names of their organisations and their designations to imply that they were experts in specific fields. This empowered them to define boundaries, attaching meanings or criticising the actions of rival networks (Alcadipani and Hassard, 2010;Altheide, 2008;Callon, 1986;Laguecir, 2020;Latour, 1987;Llewellyn and Northcott, 2005;Myrick et al, 2013). Especially, claims made by actors who could be perceived as politically motivated were always backed by actors with technical expertise, and so whose claims seemed more credible and appropriate for promoting acceptable norms.…”

“…However, the ways in which the actor-networks read and interpreted the accounts produced by other actors, and their constructed memories about the past, produced multiple histories, heterogeneous meanings and fragile identities. The variety and fragility were despite the implied objectivity of accounting representations, the power possessed by the actors who retrospectively produced them, and the context in which they were produced (Andon et al, 2007;Busco and Quattrone, 2018;Cooper et al, 2017;Dechow and Mouritsen, 2005;Laguecir et al, 2020;Lowe and Koh, 2007).…”

“…Despite the implied objectivity in accounting representations, they are also fragile realities. As shown in extant studies on privatisation (e.g., Craig and Amernic, 2006;Jacobs, 2009), accounting representations have played a major role in problematising the existence of stateowned enterprises by letting powerful actants establish knowledge objects about their poor performance and close contradicting views from the past (Laguecir et al, 2020;Llewellyn and Northcott, 2005). Orally communicated accounting information allows managers to adapt accounting information to suit a particular situation and set the context for further discussion on meanings and implications (Hall, 2010).…”

“…Equally important are how a spokesperson defines and marks boundaries of networks; defines and attaches meanings to the evidence produced; criticises actions of rival actor-networks, including the accounts they mobilise; and uses evidence to close controversies (Callon, 1986;Latour, 2005;Laguecir et al, 2020;Preston et al, 1992). A spokesperson exercises control over dissenters by letting them see and hear only what the spokesperson wants to convey (Latour, 1987).…”