Smaller business governance: Exploring accountability and enterprise from the margins

Available online at http://www.idealibrary.com ondoi: 10.1006/mare.2000.0144Management Accounting Research, 2000, 11, 451–474

Smaller business governance: Exploringaccountability and enterprise from the margins

John Ritchie* and Sue Richardson†

Smaller businesses now rank higher upon the corporate governance agenda. This agendaplaces their accountability and ‘enterprise’ particularly at issue. It is only put at issuebecause of just one possible problematization however. That problematization firstlyassumes judicious accountability to be the crux of good governance with accountingat its hub. It secondly assumes that smaller businesses are the very seedbed of any‘enterprise economy’, virtually irrespective of what form they take, or ‘enterprise’ theydisplay. By then combining these assumptions together, this finally reproblematizesany relationship between accountability and ‘enterprise’, so that ‘de-regulation’ anddecoupled accountability liberates smaller business ‘enterprise’ further. Others mightquestion and challenge the very basis, as well as particular formulation, of thisproblematization however. A better grasp of the greater fluidity and complexity ofsmaller businesses would make the boundaries of their accountability and ‘enterprise’more clear and leave their respective margins more suitably exposed. As a key potentialinstrument for that purpose managerial accounting research might then better inform thedebate by specifically rendering these boundaries more visible while also identifying theprecise scope for manoeuvre at/across their margins as well. To that end this paper usescertain enabling frameworks to construct and interpret the particular case of manageriallyaccounting for a grown smaller business working across exactly those margins from theperspective of a ‘reflective practitioner’ acting as a field researcher for these purposes. Aswell as offering fresh insights into how far the boundaries of accountability and enterprisemight legitimately stretch, this case calls for more critical thinking about how they mightchange.

c© 2000 Academic Press

Key words: smaller business governance; the role of managerial accounting; accountability;enterprise; marginality.

*University of Durham Business School, Mill-Hill Lane, Durham, DH1 3LB.†Author to whom correspondence should be addressed: Sheffield University Management School,9 Mappin Street, Sheffield S1 4DT.

Accepted 30 August 2000.

1044–5005/00/040451+24/$35.00/0 c© 2000 Academic Press

452 J. Ritchie and S. Richardson

1. Introduction

Corporate governance is in flux. A range of further developments has beenproposed. Some provoke notably lively debate. Those concerning smaller businessesparticularly so. Few issues challenge associated UK Company Law and its accountingand audit mandate more. To their respective ‘deregulationist’ critics such codespresently appear too excessive, inflexible, burdensome impositions for any would-be‘enterprise economy’ to bear. However, these same codes faced different criticismsbefore. For example, certain leading texts acknowledge that UK Company Law’sad hoc growth, relative permissiveness and extensive concessions over limitedliability status, not least to smaller businesses, have often been problematic (Cheffins,1997; Davies, 1997). Currently such codes are officially under review with widerconsultations in process (Department of Trade and Industry, 1998, 1999), oftenbearing other European and International codes in mind (Centre for Law andBusiness, 1999). In view of companies, a major White Paper is expected by 2001.Since it has been estimated that nearly 70% of all businesses are sole traders orpartnerships, this may limit the import for smaller businesses, despite an increasingnumber of incorporations generally (Hicks, 1997; Griffiths, 1999; Prime, 1999).However, the particular claims of smaller businesses currently attract vigorousacademic debate (Milman, 1999; Rider and Andenas, 1999). Even the core constructof limited liability has thereby received intense scrutiny (Grantham and Ricketts,1998). While arguably never originally intended for such (Ireland, 1984), manysmaller businesses cannot necessarily grasp what incorporation implies, or deployit to desired effect (Freedman, 1994; Hicks op. cit.). In pursuit of such issues thestudy of law and accounting are thus brought closer together (Freedman and Power,1991; Freedman and Godwin, 1993). How well informed this underlying convergencetowards smaller businesses will eventually prove is still potentially at issue however.

This flurry of debate itself poses problems. In particular it makes it difficult todecipher what direction these changes might take. Short et al. (1999) neverthelessconsider where reform might redress any imbalance between accountability andenterprise in corporate governance now. In so doing they distinguish accountabilityfrom enterprise like these were two distinct pillars of governance so fundamentallydifferent that they could even potentially conflict with each other. However, any suchtriangulation of governance, accountability and enterprise can be problematic inprinciple, whatever mutual balance prevails. Governance is an almost perennial ob-ject for reform whereas accountability has only recently been placed at its very crux(Power, 1997; Bovens, 1998). Likewise enterprise has rarely been fully satisfactorily—or even officially—agreed, defined, and measured up to (Burrows, 1991; Keat andAbercrombie, 1991; Gray, 1998). Hence there is a clear risk that, with such individ-ually different shades of meaning, their mutual triangulation might confuse mattersfurther, unless steps are taken to instil greater conceptual clarity from the outset.

Accountability and enterprise thus first need this greater conceptual clarity andunderstanding if they are to be such distinguishing pillars for corporate governanceahead. Although Short et al. constitute such governance more widely, enterprisewas originally closely associated with smaller businesses, at least until morediffuse meanings took hold (Ritchie, 1991). Thus, with the objective of impartinggreater conceptual clarity into debate about smaller business governance, thispaper first reviews the basic constructs of accountability and smaller business

Smaller business governance 453

enterprise themselves; second, explores their managerial accounting implicationsand consequences, using a particular case study of a smaller business enterprisein its accountability network to make these clearer; third, in conjunction with theoriginal framework, the paper questions just how far the boundaries of smallerbusiness governance, accountability and enterprise can legitimately stretch, and howthis implicates the performance of the managerial accounting role, at a time whenreform remains publicly debatable.

2. Prefiguring accountability and enterprise in smaller business governance

As pillars for refocusing corporate governance generally, and smaller businessgovernance particularly, the constructs of accountability and enterprise first need tobe individually refigured, then better related together. This requires capturing whatlies at the heart of the two fields of knowledge concerned, recognizing how looselycoupled they have been before.

AccountabilityFor itself accountability otherwise underscores much social life, albeit in anincreasing variety of ways (Douglas, 1980). While consistently difficult to define (Dayand Klein, 1987), and currently theoretically loaded (Munro and Mouritsen, 1996),it can take plural forms, their exact configuration varying across organizations andsociety at large. For these particular purposes accountability may take any of the fourideal-typical forms shown in Figure 1.

This typology draws upon basic grid/group (Douglas, 1982) and related cultural(Thompson et al., 1990) and information space (Boisot, 1995) theories, specificallyextended towards so-called enterprise culture (Hargreaves-Heap, 1992), and moregenerally replicated elsewhere (Caulkins, 1999). This specifically distinguishesvertical/hierarchical ‘rule’- from horizontal ‘relational’-based accountabilities whilerecognizing that certain hybrid forms variously combine both. In principle Type 1 istherefore strongly rule-based; Type 2 strongly combines both; Type 3 combines themweakly; and Type 4 relies upon the strength of mutual ties and relations instead.In addition, differing individual Types must specifically reconfigure together beforetrue multi-way accountability networks develop as a result. As a leading subset ofsuch accountabilities in general (Ijiri, 1975), forms of accounting should likewise vary,as corresponding contingency theories would imply.

Type 1 is the most formal and extant of all the accountabilities outlined here and, tomost individual actors, its most prescribed and least discretionary form. Outwardlyclear and intelligible, the process itself appears highly determinate, being enclosedaround recognized rules, and conducted impersonally against its own set agenda.Should that process become overformalized compliance may appear more effectedthan real and maybe create scope for ‘creative compliance’ instead. Thus, Type 3accountability so lacks formal rules and relational commitment in principle that itcan take very divergent forms in practice. If it is seen as the potential ‘hidden side’of Type 1 accountability it may act as cover for its shortfalls and/or supplant someaspects of this instead. Under certain circumstances it indeed appears more likeaccepted custom-and-practice. In that case it can be so taken-for-granted that, forexample, without being legally obliged to do so, many organizations customarily


StrongAccountability

V

E TYPE 1 TYPE 2Mandatory/ Contingent/

R Codified Bounded

T

I

C TYPE 3 TYPE 4Compliant/ Collateral/

A Assumed Reciprocal

L

Weak H O R I Z O N T A L StrongAccountability Accountability

Figure 1. Ideal-typical forms of accountability.

assume they ‘owe’ some kind of accountability to customers and suppliers as partof their ‘normal’ conduct, and simply comply accordingly. Should they departfrom accepted practice any resulting sanctions may not then extend much beyondtampering with rules and relations at the margins and disengaging accordingly. Anysimilar tradeoffs at the margins are much less likely under Type 4 accountability. In itscase mutual ties and relations perform like collateral for enabling exchange and/orreciprocity to develop. As a result of its particularistic, rather than universalistic,nature Type 4 accountability evolves more around persons, groups and situationsthan impersonal rules and regulations. Simply because relations are conducted intheir own terms, and each party has its own end in view, does not imply this formof accountability will necessarily enhance congenial mutuality however (Rainnie,1989). Rival collateral (or, alternatively, ‘social capital’) might indeed negate potentialreciprocity and promote dysfunctionality instead. The main difference for Type 2forms of accountability is that, while Type 4 also relies upon situated relationships,this type combines these with more impersonal rules as well. The strong multi-wayaccountability which then results, makes this less singularly directed than eitherType 1 or Type 4, while Type 3 remains weakest overall.

Like accountability itself, smaller businesses (and their enterprising nature) arenow studied from an increasing range of theoretical angles compared with before(D’Amboise and Muldowney, 1988; Julien, 1998). As businesses these typically workthrough accountability networks activated both inside and outside individual firmboundaries. Many customarily valued ‘relational’- over ‘rule’-based accountabilitiesin this respect. A concern with the balance of such accountabilities lay at the heartof the classic public/private company dilemma which is still at issue in the presentcorporate governance reform debate.


NewerMicro-Firms

FirstOrder Mature Founder Growing FounderFirms Firms Firms

SecondOrder Family Firms Entrepreneurial FirmsFirms

ThirdOrder Co-operatives Professional/Firms & Community Partnership Firms

Firms

Network/Franchise Firms

Figure 2. Smaller business typology.

Smaller business enterpriseJust how enterprising smaller businesses really are cannot be made clear until theyare better mutually differentiated from each other instead of being considered to bevery much alike and equally enterprising regardless. Such differentiation shouldbetter distinguish different types of smaller businesses from each other, and theparticular organizational forms individual businesses can choose over their specificlife cycle. Otherwise, stereotypical contrasts between smaller and larger businesseswill persist, as if each type were very much alike, obscuring vital differencesbetween/within smaller businesses in the process. In this respect smaller businessescould potentially take the different organizational forms shown in Figure 2, possiblyshifting between types, with some proprietors progressing through successes andfailures in the process.

In view of the individual forms here identified, the many self-employed workingon the fringes of this so-called ‘sector’ pose certain distinct problems. In particularit is difficult to disentangle the person from any abstract entity which can be called‘the business’ in this respect, with important accounting consequences (Boden, 1999).Similar problems can occur with many micro-firms as well. These are classicallyconsidered to be by far the most numerous, not always incorporated, most personallymanaged, widely scattered, individually minute employers. More particularly theyremain liable to relatively short-term and/or vulnerable independent existences,although they can also make their founders sufficiently resilient to restart themas well (Gibb and Ritchie, 1982; Rosa and Scott op. cit.; Scott and Ritchie, 1984;Scott and Rosa op. cit.). While many micro-firms remain preoccupied with their own


survival and reproduction as they stand, potentially becoming mature founder firms,others consider transforming their basic organizational character through furthergrowth to potentially become growing founder firms. However, only a notably smallpercentage of all foundings both actively pursue, and subsequently attain andsustain, such growth, although more potential support has since become available(Storey, 1994). Moreover, even these might only grow episodically, in particularbursts and phases, with various additional risks attached, and then encounterother plateaus, crises and/or breakpoints at specific intervals between. For thatreason, genuinely sustainable ‘entrepreneurial’ breakthroughs associated with theentrepreneurial firm can be considered relatively rare, if not entirely against-the-oddsoccurrences, which an increasing range of interventions seeks to accelerate (Hendry,1995). Thus, the enterprising nature of smaller businesses varies between types,changes over time, while its intensity fluctuates likewise.

Naturally sell-offs, mergers, acquisitions, joint ventures/alliances and buy-outsand buy-ins, cut across individual firm boundaries and complicate organizationalmanagement processes, although organic growth has not necessarily provedstraightforward either. Storey (op. cit.) found that relatively few micro-firms grewmuch beyond their original founding state. Indeed some alternatively choose notto grow despite plateauing as a result. Even when they overcome their doubts, asignificant number do not then grow much, or for very long, in any proven sustain-able way, especially among younger turbulent business sectors. The very fear thatgrowth might compromise their founding character, and then leave their ownershipand management exposed, can prove notably constraining, even among stable familyfirms (Kets De Vries, 1996a), where some developmental paralysis could result. Anymismatch between business growth and organizational character can also impingeupon co-operative/community firm, professional partnership and emerging network-franchise firm development likewise. Such differing dispositions towards organicgrowth make it important to distinguish studies which approach this from inter-pretive (i.e. growth ‘neutral’) rather than normative (i.e. growth seeking/enabling)standpoints in recent accounting related research particularly (Chittenden et al.,1990; Romano and Ratnatunga, 1994; Kirby and King, 1997; Kirby et al., 1998).

Standard organizational theories may not yet fully grasp what these particulardifferences imply for governance, accountability and enterprise (Aldrich, 1999),along with certain informational and accounting life cycle theories likewise (Holmeset al., 1991). No one particular organizational form every fully dominates the smallerbusiness ‘sector’, although their respective frequency and durability naturally vary,and newer forms of network and alliance which cut across them may yet arise.Moreover, even forms of ownership can vary and fluctuate over time. Thus,habitual/portfolio multi-firm founders (Scott and Rosa, 1997; Rosa and Scott, 1999);differential partnership arrangements (Freedman and Finch, 1997); evolving familyrelationships (Gersick et al., 1997); and other emerging networks, alliances andcorporate/venture capital tie-ins necessarily complicate the picture.

Governance implicationsSimply questioning whether and how smaller businesses grow raises issues abouthow enterprising they really are, considering what some suppose them to be.Their changeable organizational form alone poses problems for any would-bestandardizing corporate governance and accountability regime. Thus, any search


for one single uniform legal (and related accounting) code which will cover allsuch likely contingencies has been considered misplaced, if not actively misleadingunder these circumstances (Freedman, 1999; Hicks, 1999). At its present stage, muchabout smaller business constitutes a shifting, diverse, but also value-laden field ofstudy, which was classically difficult to define and capture, even for official purposesalone (Bolton, 1971; Stanworth and Gray, 1991; Ritchie, 1992). Their very distinctivegovernance and enterprise should therefore specifically imprint itself upon forms ofaccountability and accounting research accordingly.

Such research often proceeds from very baseline assumptions. In particular itassumes that smaller firms and their proprietors are separate and different fromsmaller accounting practices and practitioners, just as ‘business’ and ‘profession’in general were once considered to be. That distinction becomes increasinglychallengeable once smaller professional accounting practices are also regarded asanother type of smaller business however. As a result, smaller business accountingcan be seen as part of an accountability network enjoining different businesses often,though not entirely, of a similar nature. Thus, for example, Types 1/2 accountabilityrelationships, as between smaller businesses and powerful state/official/corporateagencies and hierarchies outside, are performed differently from those where Types3/4 prevail, as between certain smaller businesses and their smaller suppliersand customers, where more ‘peer group’ relationships prevail. What is reallyimportant is how different accountabilities configure and individually balance outbecause, while certain fluid configurations enable smaller businesses to develop,gridlock could undermine this instead. This has important implications for boththe problematization of issues for further accounting research and the selection anddevelopment of methodologies appropriate for their study, now considered further.

3. Researching smaller businesses and the managerial accounting role

Smaller business and accounting are often considered to be separate fields of studywhich exert different perspectives upon each other. In future, with reform underway, research may depend less upon their distinction, and the replication of existingstudies constructed along corresponding lines (Ram, 1999). However necessary thismight be, both these subject fields might increasingly co-evolve together, therebyextending existing lines of enquiry and yielding fresh topics for study, the pursuitof which may require more diverse methodologies. Hereafter this paper seeksto advance the understanding of smaller business governance, accountability andenterprise by using frameworks evolved for that purpose to inform a particular casestudy of managerially accounting for a mature founder firm, of the type identifiedin Figure 2, which emerged from evolving family relationships (Gersick et al. op.cit.) and other networks. In so doing it seeks to determine how far the boundariesof accountability and enterprise may legitimately extend, and what occurs whenthey overextend, thereby overreaching their legitimate capabilities. This correspondswith what Miller (1998) considered to be the study of ‘accounting at the margins’which can yield fresh insights which, though valuable themselves, can also lead intorenewed understanding about more central issues and also problems.

A particular type of case study and methodology have been selected for thesepurposes. To preserve their essential anonymity both the company name and those


of the key individual actor-respondents have been deliberately disguised, but nottreated so impersonally as to make it difficult to capture the very ‘personalism’which typifies many small business workplaces. This case study is both unusual,and unusually sensitive, in the character of smaller business governance andorganizational character it reveals, along with the range of consequences this gaverise to. Such consequences could not necessarily have been anticipated when thestudy began and were only rendered fully apparent some time later, as a resultof sustained in-depth investigation up to the point where both the research itselfand researcher also bore their further effects too. The very account offered here isunusual in that it was originally researched from inside, as it were, by an in situmanagement accountant, thereby acting as ‘reflective practitioner’ for these purposes(Schon, 1991).

Case study research takes several forms (Cresswell, 1998). It both differs from, yetcan also complement, other accounting research methodologies (Otley and Berry,1994; Humphrey and Scapens, 1996). However, their actual researching first dependsupon the particular type of case intended. In this instance that intention can be clearlystated from the outset. MIS Limited represents a particular type of smaller business,a mature founder firm, at a particular stage of development. Its breakpoint revealsmuch about its underlying organizational character and accountability network,variously implicating managerial accounting in the process and revoking standardtheories about governance, accountability and enterprise. Given that the boundariesof governance, accountability and enterprise are already subject to wider debate,the case will deliberately render these boundaries more visible and track theconsequences of their being variously overreached, transgressed, or else redrawn inthe process. Thus, with respect to enterprise, the case raises questions concerningsuccess and failure; with respect to accountability, it raises questions concerninghow particular networks implicate managerial accounting; and with respect togovernance, it raises questions concerning legitimacy and regulation.

In being drawn towards these boundaries, and raising these questions, it couldbe argued that this is a case at the margins of both accounting and smallerbusiness research alike. While the value of studying ‘accounting at the margins’has already been underlined, it is important to recognize that certain approaches toentrepreneurship and smaller business often emphasized their relative marginalitybefore. For example, the pathbreaking study of ‘The Enterprising Man’ by Collinsand Moore (1964, 100fn) boldly asserted that:

‘Between the leaving of formal life and formal schooling and the time at which thesemen had firmly established themselves in their own businesses falls a period of trialsand training. It is this period that is the true school for entrepreneurs. The curriculum isrough, and those who successfully graduate from it are men of unusual courage and ability.Credits are counted by lost jobs, broken partnerships, exploited sponsors, and times in thebankruptcy courts. As in all schools, men are not required to take work in all subjects.Candidates may specialize in bankruptcy or in insecure employment. Their major workmay be in the exploitation of sponsors or partners, or it may be in the accumulation of broadwork experience.

There are some exceptions, but in the vast majority of cases men who become successfulentrepreneurs spend considerable time in this school. Many of our men took longerthan 20 years to graduate . . . a successful course in entrepreneurship involves thoroughgrounding in the finding of support outside legitimate channels, or in convincing legitimatefinancial agencies that theirs is an enterprise in which risk is not present. Such skills arelearned only in the school for entrepreneurs.’


Others like Kets De Vries (1996b, 1977) have since taken this psychodynamicallygrounded ‘marginal man’ approach towards entrepreneurship still further withoutnecessarily equating this with smaller businesses per se. Although not without its crit-ics, and other ways for conceptualizing this problem (Jacques, 1976), this approachtypically explores how far the boundaries of the subjects under study extend, andhow they perform under unusual testing (rather than simply average) circumstances.In pursuing this issue from different angles, others currently emphasize how fre-quent, and thus arguably ‘normal’, supposed ‘organizational misbehaviour’ mightbe (Ackroyd and Thompson, 1999). Although certain ‘misbehaviour’ might entail, oreven beget, creativity and improvization, rival thinking about business and organiza-tional deviance contends disturbances might result (Punch, 1996; Haines, 1997; Slap-per and Tombs, 1999), including ‘networks of collusion’ among smaller businessesthemselves (Barlow, 1993). While theoretical approaches towards dysfunctionalityand deviance are still evolving, and remain potentially contentious, crises could playan important role as organizations change and develop (Miller, 1990). Any accom-panying breakpoints have likewise been considered unusually revealing as well asdecisive for their future working (Strebel, 1992).

The study of expressly ‘marginal’ organizations, phases, episodes, and leaders stillposes difficult dilemmas and problems for researchers (Punch, 1994). The very issuesand processes which might yield such exceptional insights paradoxically createprecisely those conditions which make research not just different but difficult tosustain. Under these circumstances research access alone may prove unusual, if notunusually sensitive, and further events could potentially threaten both researcherand researched alike (Renzetti and Lee, 1993), while Baker and Bettner (1997) furthercontend that such challenging knowledge cannot readily enter the mainstream.

Not only are the substantive issues raised by the MIS case itself similarlyunusual in these respects, just as importantly for developing understanding ofmanagerial accounting performance, both the researcher’s own role and actualresearch process itself reflect this as well. Most unusually, from an accountingand smaller business viewpoint, the case was researched full time, from within,by a managerial accountant (one of the authors), who combined ‘live’ situationalexperience with further academic study outside, acting as ‘reflective practitioner’ forthese purposes. Although Dalton (1959, 1964) pioneered similar ‘insider’ researchusing unobtrusive/covert methods some time before, here both the research role andprocess, as well as the resulting findings, need prior consideration.

The matrix shown in Figure 3 identifies the character of this research process itself.In principle it differentiates whether the field situation is firstly approached as if fromthe inside or outside, and whether the intention is to be interpretive or critical of it,as Baker and Bettner (op. cit.) described.

Coming from inside, Mode 1 involves researching as if part of the situationitself, whereas Mode 2 calls for greater realization of, and mutual engagement over,changing that situation as well. By comparison, by starting from outside instead,Mode 3 seeks diagnoses which could facilitate deliberate interventions, whereasMode 4 remains non-interventionist and only seeks to abstract data for outsideanalysis. Researchers may well switch modes while situations themselves evolvehowever. Each individual mode has particular strengths and limitations that needcareful consideration. Thus Mode 1 balances insight against partiality; Mode 2balances being implicated in change with growing detachment about it; Mode 3


Inside

Enactment-Actualization Realization-Engagement

1 2

Interpretive Critical

Abstraction-Analysis Diagnostic-Interventionist

4 3

Outside

Figure 3. The research process.

balances the desire to finesse diagnoses with the need to act upon them; and Mode 4weighs how accurate abstract representations can actually be.

This research began in Mode 1. The researcher began as a management accountantin March 1990 without fully realizing how MIS had evolved before. The proprietor’screation of this role had already caused staff such concern beforehand that somesuspicion and resistance was present from the outset. At the same time fewappeared to understand what any managerial accounting might actually involve.Not surprisingly the entry process alone made it clear that more such ‘role making’was essential before managerial accounting could itself develop further. Continuingintrigue over how MIS was actually managed made this difficult however. ‘Informalinformation systems’ competed for attention throughout this time. The proprietorand his relationships were particular objects for ‘behind the scenes’ speculationand gossip. The underdevelopment of accounting systems and procedures alsomeant that chance discoveries were relatively frequent. Any further transitioninto Mode 2 research therefore depended upon developing relationships withwhat Dalton (op. cit.) termed ‘intimates’ and ‘informants’. This made it possibleto realize more accounting problems while engaging others about dealing withthem. In the process certain informants resocialized the researcher with varyingstories about how MIS was ‘really’ managed and accounted for. Other staffchanges then enabled further progressing of accounting systems and proceduresthemselves. The proprietor’s relationships and intimacies nevertheless continuallyintruded upon this developmental process with the result that additional accountinginformation was simply ignored and/or bypassed instead. At the time the basicperformance of any managerial accounting role was still notably problematic.Following Dalton, the researcher accordingly noted the changing feelings andemotions associated with that performance, as well as issues of a more professional


accounting nature. Such issues included the ready interchangeability of assetssuch as property where the personal and business interests of the proprietorwere concerned. The transition towards Mode 3 researching brought differentproblems. It entailed interfacing with increasingly concerned customer/clients, bankmanagers, VAT inspectors, and auditors outside, as well as other staff, all mediatedby the proprietor before. Some simply sought further accounting information forjudging where they stood should MIS become paralysed through further crises.Since few could actually stop the proprietor making further transgressions, theaccounting role became increasingly fraught and conflicted, bringing the possibilityof ‘whistleblowing’ into consideration. The transition into Mode 4 researchingtherefore posed different dilemmas. Although certain intimates were aware of herresearch, the proprietor was not. As well as other detailed accounting records, theresearcher had maintained working notes throughout the entire period, at times inthe manner of a forensic investigator at work. In effect she switched between insideand outside perspectives once she judged the situation so untenable as to leavewithout alternative employment in September 1992.

In summary, this experience suggests that neither the understanding nor perfor-mance of even basic managerial accounting among grown and/or growing smallerbusinesses should simply be taken for granted. Rather, both may need to be contin-ually made and remade as a deliberate ploy before matters really progress. Givenits particular incongruities, managerial accounting became notably personalized, aswell as professionally conflict prone. In view of the latter, other studies of ‘organiza-tional entry’ have similarly questioned where so-called ‘professionals’ true identifica-tions and affiliations lie under other self-marginalizing situations like this (Wanous,1992). Such core dilemmas also permeated the research process itself when the valueof any extra insights gained into smaller business accounting at the margins neededto be weighed against the dilemmas and conflicts their researching gave rise to. Thesubstantive findings about MIS now described will underline these problems further.

4. The MIS limited case

MIS was originally established in 1979 by its proprietor and a brother. A youngerbrother joined as a Director in 1981. By 1988, it was trading as three distinct divisions,each run by a brother, until they decided to break it up. It kept the original companyname and the proprietor took over as sole director and manager of his aspect ofits original business. This provided inspection services to much larger internationalcompany client sites, run from a small head office and administration centre, basedwithin rented premises (see Figure 4). MIS had few fixed assets, apart from theDirector’s car, office furniture and equipment. A bank overdraft provided its mainsource of funding, while turnover was first predicted to be £2.4 million by thefinancial year ending 1990.

MIS’s constant liquidity problem, closely associated with appropriation of fundsfor personal use, resulted in its proprietor seeking increased overdraft facilities inMarch 1990. This was negotiated with a newly appointed bank manager without pastexperience of its workings. The facility was renegotiated from £30 000 up to £100 000with additional conditions attached: Philip had to provide additional security inthe form of the equity in his home plus a charge on the company’s debtors, in


ArnoldI Overseas Manager I

N Operations Manager NSimon

S Philip SOWNER/MANAGER

P Jenny Mary PSecretary

Bookkeeper

Clerical AssistantE E

C Helen C

T T Jim

O External OAccountant &

R Company Secretary R

S External Auditor Bank Manager S A major accounting firm Various role players

Figure 4. Key actors at March 1990 (before the new accountant was introduced).

addition to an existing unlimited personal guarantee, while also supplying bettermanagement information. He was encouraged to recruit a full-time managerialaccountant to replace Jim, his external accountant and personal friend, who onlyprepared management accounts intermittently.

ChangeA female management accountant was duly recruited to improve managementinformation systems. In the event this highlighted poor pricing and rate settingpractices, as judged by their adverse impacts upon profitability and liquidity. Furthercashflow forecasts and controls likewise highlighted the impact of continual cashdrawings for personal use. However, the proprietor still pursued an expensivelifestyle which included buying holidays abroad as well as gifts for female friends,all charged to the company credit card and deciphered by the new accountant tobe ‘personal’ spending, while also transferring funds to a personal bank account tocover personal debts. His ‘debt’ to MIS grew, with apparently insufficient personalresources to cover the loan accumulated to it, as evidenced by his declarations thathe needed to sell his current home to raise cash to pay off this loan, along withhis borrowings from associates to pay wages. With its proprietor’s debts rising,MIS was drained of cash resources, and employees, creditors and state agenciesall sought payments and/or explanations, while outside clients lost faith. The newaccountant was the first target for increasingly acrimonious accountability demandsand struggled in framing accounts to various different parties, feeling caught up inthe conflicting affiliations of being employee, professional and colleague. Figure 5shows the new actors now in situ after the introduction of the new accountant.


OWNER/MANAGER Female friend & Philip Company Secretary

Tracy

Overseas Manager New AccountantArnold

Secretary Bookkeeper AccountsZoe Helen Assistant

Laura

Inspectors

External Accountant External Auditor Bank ManagerJim Sole Practitioner Various role players

Cast Changes:Simon Left and not replacedMary Replaced by Laura as Accounts AssistantJenny Replaced by Zoe as Secretary (who also

played Philip's female friend until replaced by Tracy)

Jim Displaced by New AccountantDisplaced by Tracy (Philip's new female friend)as Company Secretary

A major accounting firm Replaced by a sole practitioner asCompany Auditor

Figure 5. The changing ‘cast’.

In January 1991, a further drama unfolded, since liquidity had not improved,despite the increased overdraft facility and improved information systems. Theoverdraft balance was well beyond its limit, after a number of warnings from thebank manager, which employees clearly appreciated but felt incapable of actingupon. As unaudited year end accounts then showed trading losses, the bankwithdrew support and reduced its overdraft facility by £5000 per month indefinitely.In addition, the proprietor was told to take expert advice as, in its estimation, MISwas trading insolvent, and needed new capital to eliminate the loss and compensatefor his adverse loan account, while also constantly updating the bank on MIS’scashflow. This was in stark contrast to the impression the proprietor had given thenew accountant about the bank’s continuing support after out-of-work socializingwith its latest bank manager.

The bank then instigated controls which, combined with the new internal systems,addressed the proprietor’s cash-draining activities, but only for a short time. Itcontinued to reduce the facility monthly to £80 000, at which stage it consideredMIS turned around, and thereafter maintained financial support at that level. Theproprietor’s changed behaviour proved only temporary for, as soon as the bankloosened control, he immediately reverted back to managing as before. He and


Tracy began house-hunting, while his current property remained unsold. The firstintimations of this, sent via the contents of a fax revealed by Zoe to the newaccountant and others, certainly stirred MIS administration staff. For example, Helencommented, ‘Do you think we shall still be here at Christmas?’, whilst Zoe suggested, ‘Hemight fold the business to pay for it’, although it appeared impossible to raise the money,and hence the deal would fall through, in which case Helen suggested, ‘Then Tracywill leave him—we hope’. The proprietor intended to finance the house deal throughcompany sources, but this did not materialize, in spite of recruiting both the externalaccountant and the new company auditor in support. The new accountant was askedto produce a number of ‘accounts’ of the potential impact of this venture on thecompany balance sheet. The proprietor was optimistic about raising the funds, sinceMIS’s financial performance had improved, with recorded end of year profits for 1991of £85 000 before taxation and audit adjustments. The bank blocked this attempt atcreating ‘illusory’ company assets and he was forced to reconsider. In addition, keystaff were becoming increasingly concerned about the confusion of his personal andbusiness affairs, which had long been just a matter of rumour and intrigue certainlybefore the new accountant joined.

By May 1992 Philip had purchased a £200 000 property (purporting to bethe ‘Southern Office’, located close to his female friend’s mother’s home) byraising a personal mortgage on the basis of forward profit predictions. Companysourced funds of over £40 000 financed the necessary deposit, refurbishments andfurniture. The cash thus appropriated was ‘accounted for’ as an addition to theproprietor’s loan account. Without any formal agreement, MIS was then chargeda ‘rent’ for the ‘southern office’ which covered the proprietor’s personal mortgagerepayments, despite the new accountant’s protestations. Helen had forewarned thenew accountant of this move after suggestions that Philip had reneged on hispromise to share the South American joint venture profits with Arnold and alsomake him a director of MIS. This episode, coupled with excessive personal spending,created further liquidity problems and MIS could not then pay outstanding VATcommitments of more than £70 000. Having again breached an agreement to pay,Customs and Excise officials duly threatened to wind up MIS, and the proprietorwas forced to give assurances and negotiate a payment schedule. At this stage thenew accountant felt angry and increasingly demoralized, aware of being bypassedwhenever she might disapprove, or make the consequences of transactions morevisible.

The new accountant suspected that the proprietor was siphoning off cashfrom overseas joint ventures not formally accounted for. There were sensitiverumours of dollars being deposited in his personal account and of mysterious packagesarriving from abroad and innuendoes about their illicit contents now arising fromeveryday conversations. Zoe revealed that when she and Philip ‘were very close’, sheaccompanied him to deposit ‘a wad’ of dollars (over $80,000) in his personal accountin London and that ‘he said (the South American joint venture partner) gave it to himwhen they met in London’. Her only means of gathering formal information about suchissues was through explicit recording systems. A long-outstanding debtor balanceof over £54 000 on the account of a joint venture partner provided the potentialmechanism to hold the proprietor accountable. After much debate between theproprietor and the overseas manager, £32 000 was to be accounted for by the purchaseof an overseas flat for MIS and expenses incurred by the partner on MIS’s behalf. The


proprietor affirmed that the remaining £22 000 was an irrecoverable bad debt. Theauditor appeared to accept this and wrote off £10 000 of this ‘bad debt’ in the accountsfor 1991. The flat did not appear on the audited balance sheet amid suggestions thatit was actually registered in Arnold’s name.

In August 1992, the bank sought to meet Philip, the auditor and the new accountantto discuss, in particular, why the audited accounts for 1991 did not identifysubstantial loans made to the director. The auditor refused to attend and resigned atthe same time as the new accountant planned to withdraw. As accountant she couldhave whistleblown to outsiders like the bank manager, yet the end result was likelyto be the same since, if the bank withdrew its support, the creditors would still not getpaid. She chose instead to simply provide whatever information the bank managerasked for. In the event, the bank manager requested very little and the auditor wasblamed for not disclosing the proprietor’s loan. As the new accountant, she found itdifficult to reconcile this, since the bank had received monthly management accountswhich recorded the increasing level of loan. The proprietor also agreed to appointauditors recommended by the bank. Since the bank also required him to repay hiscompany loan account, he suggested taking out a personal loan as cover. The bankmanager appeared dubious, since he had recently taken out a house mortgage (thebank manager did not appreciate that MIS was paying rent on this property, sufficientto cover the mortgage). To ease cashflow problems debt factoring was advised butdismissed by the proprietor who complained of ‘losing face’ with customers.

In September 1992, the new accountant resigned without sharing her ‘inside’knowledge, except with intimates. In March 1993 she was contacted by the InquiryBranch of the Inland Revenue to meet their representatives. Having sought informallegal and professional advice beforehand, she had to decide what exactly shewas willing to divulge and duly kept her answers simple, using only verifiableinformation. Their questions themselves implied that Revenue officials had kept theproprietor’s activities under review for some time. Among the issues raised werehow the overseas joint venture and bad debts were written off, the villa and thecabriolet on the Mediterranean coast accounted for, and how many different bankaccounts existed. In October 1993 MIS went into liquidation and in November 1993the proprietor began trading again with a newly registered company in the samebusiness.

5. Exploring proprietorial accountability

This section uses the accountability matrix introduced in Figure 1 to explore theperformance of proprietorial accountability at MIS acted out by the key players andidentified in Figure 6. Using the matrix in Figure 6, it then provides additional datato illustrate each type of accountability performed.

Female friend and staffDuring the existence of MIS a number of younger female friends were (or became)‘employed’ by the company, and accessed various expensive holidays, gifts, meals,accommodation, transport and entertainment through company funds. He talkedand appeared increasingly detached from the company, except when he wasobliged to be involved, as if he valued his outside lifestyle more. To his staff he


StrongAccountability

V

E Inland Revenue Bank managerCustoms and Excise Sole Practitioner

R [DTI, etc] Auditor

TExternal Accountant

I JIM

C Key customersInspectors

A Suppliers StaffOther customers Girlfriend

L Employed newaccountant

Weak H O R I Z O N T A L StrongAccountability Accountability

Figure 6. The proprietor’s accountability matrix.

became increasingly unpredictable and even hostile when questioned. However, hispersistent relationship with one younger female friend, Tracy, led to inclusion on thepayroll, while MIS also financed her car, which was eventually located at his formerMediterranean villa, itself ‘accounted for’ as MIS property. His accountability to herwas of a Type 4 nature, where she could command strong relational accountabilityand apply powerful personal sanctions if her requests were not met, while other stafffelt they had much weaker Type 4 sanctions.

New accountantThe new accountant did not anticipate a rising need to detect and control his lessresponsible behaviour and, in effect, represent and defend other staff interests.The unrelenting liquidity problem was a major source of concern to contain iratecreditors and clients and ensure payments were received when due, while alsoproviding constant bank updates. As a relative newcomer being socialized into thesituation she could increasingly identify problems without having the power to actupon them. Once the bank’s controlling influence lifted enough for the proprietorto revert back, this action paralysis effectively intensified. In different interfaceswith the bank, the Inland Revenue and Customs and Excise, the auditor, creditors,employees and clients, there were possible opportunities to verbally account for hisbehaviour. However, she refrained, and let others infer the story from the formal‘accounts’ prepared for the bank and the auditor, which clearly identified the rootcause of the liquidity problem. For example, between November 1990 and September1991, a period in which the company’s survival was seriously threatened by close


bank monitoring and reduced support, the proprietor withdrew £56 000 for personaluse. By September 1992, he withdrew a further £100 000, yet all these other actorseither failed to detect this, or chose not to, and did not ask the new accountant to‘account’ for this either. The new accountant used her role in the proprietor’s Type 2accountability processes to try to effect real accountability from him to the bank andauditor. The alternative was to ‘whistleblow’. However, the Type 4 sanctions uponher within MIS, the ‘profession’ and society at large were apparently too strong.

Auditor succession and the bank manager roleThe relationship between Philip and Jim was of a long-standing, combined personal-cum-working nature, stemming originally from when the former was first in businesswith his brothers. After the creation of MIS, the proprietor retained selected staff,appointed Jim as Company Secretary and used his services, whilst they socializedtogether regularly. Jim ran a small practice and advised the proprietor on businessissues and prepared monthly management accounts for MIS, based on informationvariously provided by Mary, Helen and Philip himself. These accounts were intendedprimarily to satisfy the bank’s monitoring of ongoing performance and were notusually timely. In addition, he loaned MIS £20 000 during the financial year of 1988/9,for which no interest had either been accrued or paid. After the arrival of the newaccountant, they both decided to convert this into a personal loan to the proprietor,reducing his liability for drawings which were recorded as a current asset (director’sloan) in the management accounts.

When the new accountant first joined, the proprietor had Jim prepare head officestaff salaries to establish out-of-office confidentiality. He also continued to preparemanagement accounts for a further nine months. Despite only token support from theproprietor, she challenged this and, in December 1990, informed Jim that she wouldbe ‘taking over’. Nevertheless, the proprietor had him prepare final accounts for theyear end September 1990, ready for audit by the new auditor. Having judged thecurrent auditors’ (one of the then ‘Big Six’) too expensive, the proprietor appointedBob, a sole practitioner, to conduct the audit for a set fee of £2000, having beenintroduced by a friend and business associate. He informed the new accountantthat he intended to appoint the external accountant as the company auditor forthe following year, once distanced from MIS. To this end, Jim then retired from hisrole of Company Secretary, and the new accountant was asked to replace him, butrefused, counter-suggesting his new female friend, who was then duly appointed.The appointment of another auditor (Type 2) changed the nature of the accountabilityrelationship between the proprietor and the audit function. Although the newauditor was still influenced by professional rules, the relational aspects appear tohave been grasped by the proprietor. Thus, his decisions may have been more greatlyinfluenced by the proprietor’s assertions than by accepted accounting practice andaccounting records.

In addition, the company auditor had either failed to recognize or ignored theproprietor’s dubious ‘accounts’ provided about the joint venture and adopted aninferior role in the purchase of the new property known as the ‘southern office’, aswell as not pushing annual audit investigations through. (Type 2).

During this period, MIS’s bank managers changed. On each changeover theproprietor had a ‘get to know each other’ session, which promoted particularout-of-work socializing. The proprietor accordingly told the new accountant that


meetings with the bank manager were mostly favourable. After Jim left, the newaccountant provided further information to the bank manager and constructedforecasts of expected performance and cashflows, sometimes at daily, even hourly,intervals. This required rescheduling payments to suppliers and employees andconsiderable interaction with clients to assure cash would be forthcoming. Thistime-consuming routine was closely related to the company’s accountability to thebank. As the accountant, she was continuously embarrassed and compromisedby the proprietor’s unpredictable cash withdrawals, which both undermined herprojections and reflected back on the bank manager’s view of her accountingability. Nevertheless, when asked for explanations, (which offered opportunities forrevealing the ‘truth’) she avoided detailed comment (Type 2), while the proprietorlikewise avoided direct contact with the bank at difficult times, saying ‘I don’t knowwhy they want to speak to me. I haven’t got any information. You know all about it’.

The proprietor’s accountability to the bank manager and auditor was of a Type 2nature. It was strongly rule-based through an obligation to produce formal ‘accounts’for legal, taxation and bank funding purposes, and strongly relational where‘accounts’ through internal management information and social contact providedfurther detail. Interestingly, the relational ‘accounts’ appeared to be most influentialin both the bank manager’s and the auditor’s decision-making processes.

A further issue between Jim, the proprietor and the new accountant concerned the£20 000 loan. Jim began to pressure the proprietor for repayment plus interest. Sincehe apparently lacked personal resources, the proprietor siphoned off payments tohim from MIS’s account, side-stepping the cashflow projections and creating furtherproblems. The proprietor’s relationship with Jim changed. Prior to the introductionof the new accountant, Jim, as company secretary and ‘investor’ was an insider,commanding strong mutual ties with the proprietor of a Type 4 nature. Once heresigned as Company Secretary to stand ‘in the wings’ until an ‘auditor’ role could betaken up, this became a Type 2 relationship, Jim outside MIS pressing the proprietorto be accountable for his loan (now a personal liability) whilst still maintaining strongsocial and professional ties and acting as intermediary in accounting for the newproperty. Jim, as insider/outsider, had sufficient information and opportunity towhistleblow, but considered himself embroiled in the situation.

State agenciesThe new accountant’s role as gatekeeper and transmitter of formal informationto government departments (Type 1) created less problems than the uncertaintysurrounding the proprietor’s activities. Any negotiations for delay in paymentswere always tenuous, since the reason for delaying was usually connected with theproprietor’s misuse of company funds, so that any agreements might be revoked byanother unpredicted act, while the proprietor’s adverse loan account clearly had taximplications. The new accountant latterly estimated that the proprietor’s tax liabilitywas sufficient to terminate MIS, assuming the Inland Revenue was suitably alerted bythe new auditors, who had been appointed on the bank’s recommendation (Type 2).Customs and Excise officers had not raised any concerns.

Customers and inspectorsMIS’s customers were major corporations. Contracts gained by tendering consistedof either regular maintenance inspection work (tendered on a yearly basis) or new


construction inspection projects (tendered on an ad hoc basis). The inspectors workedon customers’ sites and organized ‘the job’ from that position, developing closerelationships with their on-site representatives. Consequently, when salaries or sub-contract accounts and site expenses were not paid on time, they alerted customers’representatives. On one such occasion, an inspector informed the new accountant,‘[the representative] says if you don’t pay me on time then he will see to it that you don’t getany more work from them’. Their representatives then regularly intervened in paymentnegotiations and pressured the proprietor to ‘pay up’. This intervention createdfurther problems for cash projections whenever he made unscheduled payments. The‘insider’ information which the customers accessed, was also detrimental to MIS’sreputation and questioned its ability to fulfil contracts. The new accountant wasforced to negotiate with customers to ensure prompt payment, knowing MIS hadlittle leverage in these negotiations, which made relationships with their accountsstaff particularly important. Through these relationships, a degree of reciprocitydeveloped, where assurances of forthcoming payments were reasonably reliedupon. This reliability was essential at critical cashflow periods as the informationwas passed to the bank. In this instance, the new accountant was acting as anintermediary on behalf of the proprietor in establishing stronger relational ties withcustomers of a Type 4 nature, so that contractual terms (Type 3) might be waived tohis advantage.

The new costing system helped negotiate and justify improved rates for regularcontracts. By ‘accounting’ for the proprietor’s past decisions on rate setting, thesystem also imposed reciprocal ‘accountability’ (Type 4) upon him so that, ratherthan quoting ‘off the top of his head’, he used such information in calculations. Theemployed and subcontracted inspectors tended to build relationships with repre-sentatives that made them more ‘accountable’ to the customer than the proprietorper se. Timesheets which recorded site work actually done were authorized on siteby representatives. These formed the basis of salary or invoice payments from MISto the inspectors and MIS sales invoicing back to customers. Site expenses werenegotiated between the proprietor and inspectors, who accounted for their claimsthrough receipts, or by reference to terms of employment, as kept in office files. Onoccasion, the proprietor showed little apparent concern about reneging upon con-tractual obligations to inspectors, except when he was personally (face-to-face or bytelephone) made to ‘account’ to them or, in some cases, customer site representativesacting on their behalf, over late payments (Type 4). Rather than personally accountfor the situation, he would often express surprise, and verbally blame his own staff.These confrontations generally resulted in the inspector being paid, regardless ofthe impact on cashflow, and were usually accompanied by tirades against his staff.Thus, the intermediary roles played by customers and inspectors resulted in strongerrelational accountability of a Type 4 nature being imposed upon the proprietor bykey customers, in spite of their assumed Type 3 weak accountability status, whilsthis accountability to inspectors (Type 4) was also strengthened by their intervention.

Other suppliersOther suppliers to MIS gained little leverage despite a constant stream of written andverbal requests for payment and threats to withdraw equipment (Type 3). Generally,they probed the new accountant in search of reliable information about the releaseof payments. Unfortunately, because the proprietor’s unpredictability resulted in


unforeseen shortages of cash, the new accountant found it difficult to keep promisesabout payments and reciprocal trust soon disappeared.

6. Discussion

Using certain specific constructs developed earlier in the paper about smallerbusiness governance, accountability and enterprise, the MIS case is a vehicle forexploring how far their respective boundaries might legitimately stretch, and forrevealing the consequences of their being overreached and/or transgressed at themargins. Although this case was expressly considered to lie at those marginsdiscussed before, these findings exposed how certain types of accountabilitynetwork ultimately implicate managerial accounting performance. At MIS any suchperformance was so problematic from the outset that it was first necessary to developthe managerial accounting role itself before progressing other matters further. Eventhen its actual performance was not without its ironies and paradoxes however. Inthe event it proved particularly ironic that a mature founder firm with commonlysupposed ‘enterprising’ potential should become so possibly mismanaged, andultimately misgoverned, that the very actors who first conceived this managerialaccounting role then so undermined its actual performance that, however else theymight have benefited, some potential stood virtually liquidated thereafter. Although‘personalism’ has been considered a marked feature of smaller business managementin general, its possible down/darker side had important business implications aswell. Although one particular research tradition from Collins and Moore (op. cit.)through to Kets De Vries (op. cit.) among others, exposes such ‘vicious circles’as leading smaller business (and other) counter-development syndromes, here thiscould point the way for further study of the potential for ‘managerial misaccounting’as well. Indeed, Clarke et al. (1997) suggest that at the margins there is scope forboth ‘creative’ accounting, where ‘a practice entirely within the framework of the law andAccounting Standards, but with intention to defeat the spirit of both’ can be used to ‘offsetotherwise bad news’ (p22) and ‘feral’ accounting, where ‘the use of a specific accountingpractice with the intention to mislead’ (pxiii) underpins managerial action.

The case further demonstrates the importance of shifting casts of actors andinterests among not just grown, but also potentially further conflict-prone, and evenself-marginalizing smaller businesses like MIS. This became most apparent duringits later critical stages when control traversed different organizational boundaries.By then the full extent of its ultimate accountability network had finally revealeditself. This further exposed the working of other ‘collusive networks’ (Barlowop. cit.) which in effect threatened to immobilize rigorous corrective action. Inthe process of interfacing with the range of increasingly concerned actors andinterests outside MIS proper, the managerial accountant came to find the strengthof affective/relational ties, and others’ fear of being publicly exposed over errorsand condonements, could potentially outweigh actual accounting information itself.Given how such smaller businesses become progressively more ‘networked’ intoother firms, alongside family and friends, important features of their accounting arethus likely to be contingently performed within similar contexts, making the marginsof accountability and enterprise more liable to shift and vary, repudiating widelyassumed myths about such businesses’ singular, stereotypical form.


A number of different interests besides those of the proprietor finally mediatedmanagerial accounting at MIS itself. Indeed, his growing loss of control, and resort tomanipulative tactics, marked its eventual downward spiral. To certain staff even thebank’s increasing—at times almost daily—shadowing of events was not necessarilyconsidered intrusive in this respect. However, other (including verbal) ‘accounts’were deliberately ‘passed off’ to inspectors, suppliers, and even state agencies, asboth the number and form of everyday explanations for MIS’s troubled positionincreased. In this case even smaller practitioner auditing became embroiled withthis process, while inability to decipher the significance of the Director’s loan bothimplicated its bank manager and afforded another opportunity for the proprietor totruncate accepted margins of accountability and enterprise once again.

7. Conclusion

A perennial object for reformers, the whole concept of governance stands invigo-rated, giving particular impetus to corporate governance and its reform. With cor-responding formal legal codes, and their accompanying accounting and auditingmandate, thereby rendered more open to question, the balance between accountabil-ity and enterprise in smaller business governance has received particular attention.While any conceptual basis for their very distinction clearly needs thoroughly think-ing through, this paper deliberately explores their respective boundaries with respectto how, if at all, they operate at/across the margins. Until now much accounting andsmaller business research could almost be considered relatively separate and dis-tinct fields. However any further insights yielded through cases like MIS, along withother emerging studies, together suggest that, by rendering certain smaller businessworkings more visible, managerial accounting can also reveal more about smallerbusinesses themselves. In this case some considerable methodological improvizationproved necessary before the researcher, as ‘reflective practitioner’, could eventuallydiscover and reveal more about how MIS worked from the margins, in ways whichthose simply researching from outside could potentially miss, given the more limitedtime and specific methods at their disposal. The limits to this methodological im-provization were themselves revealed during later critical stages however, when thedeeper difficulties of researching such smaller businesses were themselves exposed,their invidiousness making the researcher withdraw from the situation altogether.

The paper has sought greater conceptual clarity about accountability and enter-prise in smaller business governance as it now stands. It has furnished an individualcase study to that particular effect. As a consequence of this, their boundaries havebeen rendered more visible, and margins for manoeuvre exposed, in ways whichmay concern those seeking to redraw them by official, legal, and other means. Byapplying its own particular models of accountability and enterprise, it has demon-strated how differently accountabilities may configure, influence, and implicate theactual role and work of managerial accounting among smaller businesses. It couldtherefore claim further implications for both the problematization of leading issuesfor further research and the selection and development of methodologies appropriateto it. However, by first approaching the study of accountability and enterprise fromthe margins, it may cast some further light upon other centrally grounded issues,but cannot itself determine these alone and needs to be seen alongside other relatedresearch as well.


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Smaller business governance: Exploring accountability and enterprise from the margins

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