The interplay between global accounting firms and national institutional contexts: The establishment of the Big Four in China from 1978 to 2007

Abstract

This paper provides an analysis of the establishment of global accounting firms (the ‘Big Four’) in China between 1978 and 2007. Drawing on the extant literature on professional service firms, and the work of Faulconbridge and Muzio (2015) , this paper examines how the Big Four entered China following the country's ‘Reform and Opening-up’ and evolved from tentative representative offices to established accounting firms in the Chinese audit market. Based on an extensive analysis of archival materials and interviews, the findings of this paper show that the Big Four's establishment in China has been deeply intertwined with the country's socio-political and economic transition. It reveals important conjunctural moments in history that have provided the Big Four with important windows of opportunity to actively shape local institutional change to their own interests. This paper contributes to the extant accounting literature on the expansion of the Big Four in China by highlighting the interplay between their surrounding institutional context and their capacity for agency.

Public Accounting in China: The Role of Occupational Community within a Globalized Profession*

“…This structure helped build domestic technical competence and investor confidence in audit work (Jiang 2010; Xu et al 2018), while the state maintained control of the field. Wen and Sonnerfeldt (2022) analyze the expansion of the Big 4 in China during 1978–2007 and show such expansion was intertwined with the social, political, and economic development in China.…”

Unsettling West-centrism in the study of professional service firms

“…Comparative studies venturing beyond the West are extremely rare (for notable examples, see Spence et al, 2017;Wen and Sonnerfeldt, 2022).…”

“…Moreover, much research on PSFs has been conducted by scholars working outside the ‘PSF domain’ and indeed often outside the field of management more broadly. For instance, many PSF studies are available in separate disciplines such as accounting (e.g., Spence et al, 2017; Wen and Sonnerfeldt, 2022) business history (e.g., McKenna, 2006), international political economy (e.g., Christensen and Seabrooke, 2022) and socio-legal research (e.g., Flood, 2017; Garth, 2016; Silver et al, 2009). A considerable body of sociologically oriented work focused on ‘professionals’ rather than ‘PSFs’ also frequently interacts with the PSF subfield (e.g., Harrington, 2015; Sako, 2013; Seabrooke and Henriksen, 2017).…”

“…In their introduction to the Oxford Handbook of Professional Service firms , Empson et al (2015: 16) note that ‘most of what we know [in the PSF subfield] derives from studies of large firms, usually in law or accountancy and [conducted] overwhelmingly in Western if not Anglo-Saxon contexts’ My own reading of the literature confirms that, although I would argue Scandinavia has also been a major source of PSF knowledge, not least through the research of Mats Alvesson and colleagues in the management/IT consulting sector in Sweden and that of Norway-based scholars, most notably Bente Løwendahl. In recent years, the number of studies in non-Western contexts has grown but these remain relatively rare and mostly limited to China and India (e.g., Ballakrishnen, 2019; Li, 2019; Wen and Sonnerfeldt, 2022; Zhu et al, 2020).…”

“…8 That said, such studies are few and far between and mostly focused on intra-West comparisons (see also Barrett et al, 2005; Klimkeit and Reihlen, 2016), thereby also reducing the study of PSFs to a study of Western professional milieux. Comparative studies venturing beyond the West are extremely rare (for notable examples, see Spence et al, 2017; Wen and Sonnerfeldt, 2022).…”