ACCOUNTING INNOVATION BEYOND THE ENTERPRISE: PROBLEMATIZING INVESTMENT DECISIONS AND PROGRAMMING...

Abstract It has recently been stated that innovations in management accounting have been the preserve of practitioners, and that these innovations which began in the nineteenth century had more or less halted by 1925 (Johnson, H. T. & Kaplan, R. S., Relevance Lost: The Rise and Fall of Management Accounting (Boston, MA: Harvard Business School Press, 1987)). The most significant exception to this neat model of accounting innovation is held to be the development of discounted cash flow (DCF) procedures as a tool for management in the 1950s. This exception is explained away as an aberration in an otherwise smooth process. It consists, so it is argued, of academics striving for relevance rather than practitioners innovating in the face of practical problems. This paper explores this supposedly aberrant moment of innovation from a different perspective to that of Johnson and Kaplan, and for a particular context. The boundaries of the processes of innovation are drawn differently and more widely, to include various agencies, arguments and mechanisms through which DCF techniques were promoted in the U.K. in the 1960s. The world of the practitioner or the academic is not accorded an a priori explanatory privilege, and the promotion of DCF techniques in the U.K. is interpreted as involving much more than “academics striving for relevance”. Four concepts are suggested as possible ways of posing further questions about the processes of accounting innovation: problematizations, programmes, translation, and action at a distance. The paper seeks to show how concerns about investment decisions within firms came to be posed in terms of a general problematization of economic growth, and how a translatability came to be established between programmes for improving economic growth, and the use of DCF techniques for individual investment decisions. Action at a distance is the term that is used to characterize the possibility of one entity becoming a centre capable of exerting influence over others through such mechanisms. In the context of a political culture which sought economic growth yet wished to avoid direct intervention in the decisions of private enterprise and the nationalized industries, these issues are argued to have attained a particular significance. DCF techniques made it possible for government to seek to act at a distance on the economy without intruding within the private sphere of managerial decisions. Considered together, and for the case of DCF in the U.K. in the 1960s, an examination of these processes is considered to significantly modify the counterposing of practitioners innovating within firms, versus academics striving for relevance. Accounting innovation is argued to occur “beyond the enterprise” as well as within it.