Engaging with organisations in pursuit of improved sustainability accounting and performance

by Carol A. Adams and Carlos Larrinaga‐González 

Published in the Accounting, Auditing and Accountability Journal. At the time of posting this article has been downloaded over 11,000 times since 2013 from the journal website.  It is in the top 50 most cited articles published in the journal’s 30 year history. Citations to article are here

research shutterstock_186878585 (2)Executive Summary/Abstact The purpose of this paper is to present a case for research in ethical, social and environmental (or sustainability) accounting and accountability which engages with those organisations claiming to manage and report their sustainability performance.

The paper provides an analysis and critique of the extent of engagement research in the field of sustainability accounting and accountability. It draws on the fields of management, management accounting and critical accounting to present a case for further research engagement with sustainability accounting and accountability practice.

The paper finds that the extant literature in the field of sustainability accounting and reporting, in contrast to the fields of management accounting and management, has largely ignored practice within organisations. The lack of “engaging research” is found to be due to concerns about increasing the breadth of participants in the social accounting agenda and “managerial capture”. The paper argues that further research engaging with organisations is needed in order to identify how accounting and management systems might reduce their negative sustainability impacts. The paper argues that such research can benefit from the methodological and theoretical insights of other disciplines.

The paper suggests where further contributions might be made by future research endeavours.

Engagement research in sustainability accounting and reporting has the potential to improve theorizing, practice and the sustainability performance of organisations.

Drawing on the methods and theories of other disciplines and the papers in the special issue, the paper presents a way forward for researchers engaging with organisations practicing sustainability accounting and reporting.

This article is © Emerald Group Publishing and permission has been granted for this version to appear here (www.drcaroladams.net). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Article citation: Carol A. Adams and Carlos Larrinaga‐González, (2007) “Engaging with organisations in pursuit of improved sustainability accounting and performance”, Accounting, Auditing & Accountability Journal, Vol. 20 Iss: 3, pp.333 – 355 DOI (Permanent URL) 10.1108/09513570710748535


Much of the research in the field of “sustainability” accounting and accountability[1] has been motivated by a concern for the natural environment (see Milne, 1991; Gray, 1992), the exploitation by rich nations of poor nations or peoples through the activities of multinational corporations (see Arnold and Hammond, 1994), human rights and equity issues (see Adams and Harte, 1998, 2000;Adams and McPhail, 2004). It is not our purpose here to make a case for this research. This has been done (see, for example, Gray, 1992) and that case is overwhelming. What is in doubt is the extent to which the research to date can effect changes which address the concerns of those conducting it.

This concern led some scholars (see, for example, Gray et al., 1987, 1988) to conceive ways in which social and environmental accounting research could be mobilized as a way of encouraging organisational change within the capitalist system. This intent raised severe critiques from a conflict‐based perspective that accounting plays an important role in the perpetuation of exploitative social relations (see, for example, Tinker et al., 1991).

This dispute influenced some to research the process by which a growing body of social and environmental accounting research and practice could be used by companies to pursue their own agendas. The term “managerial capture” (see, for example, Gray et al., 1997) was coined to conceptualise such processes. Though we have in common with those who talk about “capture. a concern with the way sustainability accounting and reporting is being used (see, for example, Larrinaga‐Gonzalez et al., 2001; Adams, 2004), we will argue in this paper that there is a need to study the way in which it is used, in order to understand what factors drive or prevent changes towards improved sustainability and accountability performance.

Adams (2002) argues that social and environmental reporting theories have been developed without engaging organisations that do sustainability reporting despite finding that the reporting process, attitudes of participants and corporate culture play an important part in determining the extent of accountability discharged through corporate disclosures. Parker (2005, p. 849) also notes that:

… the majority of theorising has been deductively derived and that the SEA [social and environmental accounting] field has yet to seriously attempt any significant inductive theorising from field derived data.

Considering the depth of the social and environmental crisis and the pressure to respond (Flannery, 2005), new research avenues need to be opened urgently. While extant literature in the field has primarily focused on why companies report what they do, there is a lack of research on: why and how they fail to be accountable for some aspects of their sustainability performance (Adams, 2004); and, the specificity of the setting that gives rise to this situation (Larrinaga‐Gonzalez and Bebbington, 2001). One of these research avenues might be to engage with organisations to examine processes of ethical, social and environmental (or sustainability) accounting and accountability and the manner in which these processes, the data collected and subsequent reporting impact on performance.

We will argue that the lack of engagement with organisations in social and environmental accountability research might be a consequence of the critiques by and of earlier research in the area. We contend that this has inhibited theoretical and practical development, as Parker (2005, p. 856) also notes:

The risk for SEA [social and environmental accounting] scholars is that preoccupation with SEA capture, may sentence their discourse to be confined to the halls of academe and thereby distance them from any significant influence on whatever institutionalisation of SEA occurs.

This special issue was conceived in the understanding that engagement is a privileged research method to investigate ethical, social and environmental accounting and accountability at the level of the organisation and its impacts on, and interactions with, other organisational processes, organisational structures and other aspects of organisational behaviour, organisational dynamics and institutionalisation processes (Larrinaga‐Gonzalez et al., 2001; Adams, 2002; O’Dwyer, 2002, 2003).

In this article, which introduces the special issue, we will make the case for research which engages with those organisations which practice aspects of sustainability accounting and accountability. In doing so, we will appraise the extant literature in the field, questioning ideas that in our view have prevented the development of engagement research in the area and proposing conceptual frameworks that facilitate engagement research. Section 2 draws parallels between the theme of this AAAJ special issue and the debates in the management and management accounting literatures on the need for research to be more relevant to practice. Then Section 3 discusses the interplay between engagement research and notions, such as managerial capture, that have developed in the area and that, arguably, have prevented the development of engagement research. In Section 4 we consider how to frame research engaging in sustainability accounting and accountability. In section 5 we outline the contribution of the authors of this AAAJ special issue. The final section points to future directions in “engaging research” in sustainability accounting, reporting and accountability.

This article is © Emerald Group Publishing and permission has been granted for this version to appear here (www.drcaroladams.net). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Engagement research in other disciplines

The debate over engagement in (social) accounting could gain insights from similar debates that are taking place in other fields. For example, in management research there is a growing concern[2] over the distance between management research and management practice (Huff, 2000; Grey, 2001; Pettigrew, 2001; Pettigrew et al., 2001; Starkey and Madan, 2001; McKelvey, 2006;Van De Ven and Johnson, 2006). It is argued that research published in top‐level management journals is of little relevance to practice. Gibbons et al.’s (1994) proposal of “mode 2” generation of knowledge has informed this debate in management research and has incited calls for research that, among other features, is more engaged with practice.

More specifically, the elements of “mode 2” generation of knowledge have been described as follows (MacLean et al., 2002). First, under “mode 2”. knowledge is produced in the context of application and, in these circumstances, an imperative to be practically useful drives choice of research questions and methods. This is akin with action research as is described and used in this special issue. Second, “transdisciplinarity” involves the integration of different skills in a “framework of action” in which interwoven empirical elements and theoretical consensus give rise to practical solutions and theory building which cannot be broken into disciplinary parts. Third, the generation of knowledge under “mode 2” requires heterogeneity and organizational diversity, as practical problems require heterogenous teams whose members come and go as the situation organically unfolds. Fourth, “mode 2” involves accountability to participants/subjects and reflexivity. That is, researchers should be empathetic to the standpoint of participants and engage in an ongoing process of negotiation leading to a more reflexive form of research with a deeper understanding of the research process. Finally, quality controls of “mode 2” research need to reflect a broader community interest than research in a single discipline and as such are more multidimensional. The nature of the field of social accounting, reporting and accountability would suggest that its scholars should have the aptitude and skills to adopt the elements of “mode 2”.

In contributing to this debate some management scholars (Huff, 2000; Starkey and Madan, 2001) argue that the lack of relevance of research is causing a loss of legitimacy of business schools. These scholars call for a response to the university’s stakeholders, limited in their conceptions to business and business managers. In this vein, Pettigrew et al. (2001) contend that the aim of research is not just to know “what is”, but also “how to” and this requires a sophisticated and demanding engagement with practice, “a wider and deeper form of engagement between management and researchers and practitioners would entail experimentation with the co funding, co production and co dissemination of knowledge” (Pettigrew et al., 2001, p. 710).

This view of management research is challenged by Grey (2001, p. S30), who criticizes aligned‐with‐business forms of engagement and brings forward issues (e.g. downsizing fads) that need from the researcher a “critical distance from relevance to industry” in order to identify such practices as destructive. While agreeing with the need for more engagement research, Grey raises the question as to the need to define the “terms of the engagement” in management research. This challenge is addressed in this AAAJ special issue: how to engage “inside” the organization to gain knowledge of the internal processes that lead to social, ethical and environmental accountability, while at the same time preserving some “critical distance” from the daily life of business managers and yet having enough empathy with the actors in a given situation to understand their motivations.

The management accounting literature has also examined the ways in which management accounting influences, and is influenced by, organisations and their participants. For example, the contingency theory literature has examined how management accounting and control systems are contingent on organisational structures and characteristics (see Gordon and Miller, 1976; Waterhouse and Tiessen, 1978; Bandury and Nahapiet, 1979; Otley, 1980). In addition, the management accounting literature has examined how accounting has consequences for decision making, change, power structures and the roles of organisational participants (see,Hopwood, 1978; Burchell et al., 1980). The literature has examined management accounting from varied viewpoints (Baxter and Chua, 2003). From an institutional theory perspective, the lack of rationality of management accounting (Meyer, 1983; Ansari and Euske, 1987), its ritual and mythical nature (Meyer, 1986) and its ability to mobilize and legitimise action (Covaleski and Dirsmith, 1986) have been highlighted. From a cultural perspective, the constitutive role of accounting’s symbolic meanings (Dent, 1991) has been stressed. And from a Foucauldian approach, management accounting is conceived as intertwined in broader construction processes of discourses that, through the exertion of control over individuals, enable the preservation of institutional structures (see,Loft, 1986; Miller and O’Leary, 1987).

In the management accounting literature there have also been discussions about methodological approaches. Jönsson and Macintosh (1997, p. 373) argue that ethnographic research studies have been marginalised by critical accounting theory studies despite the superiority of ethnographic studies in gaining knowledge about “situated rationality of the actors’ mundane, every day social practices in order to describe the sense‐assembly equipment they use to construct and to sustain their daily procedures, practices and stock of social knowledge”. This is so because the methodological foundation of the ethnographic perspective is “the reflective recognition of a continuity between mundane and theoretical understanding of the social world” (Power, 1991, p. 339). Conversely, Jönsson and Macintosh (1997, p. 376) characterise critical accounting theory studies as “conducted in the researcher’s office at a comfortable and safe distance from the field” and as bringing the result “before the research starts because the research story is built around a pre‐given theory”. Jönsson and Macintosh (1997) also point out that another advantage of ethnographic research is that it does not assume the existence of a monolithic capitalistic mode of production that works in the same way in different countries (see, for example, Granlund and Lukka, 1998).

We will argue that a similar conclusion could be drawn with respect to the social accounting literature. We suggest that whilst the influence of critical theory has enriched social accounting (also acknowledged by Parker, 2005), it has had pernicious influences on social accounting research with respect to the distance of the researcher from the research field and prevention of the emergence of theories from the field. Further, in contrast to the management accounting literature, the social and environmental accounting literature has paid very little attention to either organisational influences on its practice, nor the impact of the practice of social and environmental accounting on organisations and their participants. Research into social and environmental accounting and management systems has also paid little attention to assessing what types of accounting and management systems are most effective under different circumstances. We contend that social and environmental accounting and reporting scholars will not realise their desire to see organisational change towards greater social and environmental accountability and responsibility unless this gap in the research is filled.

This article is © Emerald Group Publishing and permission has been granted for this version to appear here (www.drcaroladams.net). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Engagement and managerial capture

The way in which sustainability accounting and reporting is being used is of considerable concern among scholars interested in the social and environmental impact of business. The way some companies are defining the term sustainability has cast doubt on their commitment to protecting the planet for future generations. For example, Barry Stickings, President of the Chemical Industries Association and Chairman of BASF contends:

I see the continuing debate over sustainable development as an opportunity for responsible industries such as ours to rehabilitate the word, “profit” and bring the positive role of profits back to the centre‐stage of public debate (Stickings, 2001, p. 27 quoted in Adams, 2004, p. 732).

Companies may use sustainability accounting and reporting to maintain the status quo (Tinker et al., 1991) or pursue their own agendas (see, for example, Adams et al., 1995; Adams and Harte, 1998; Larrinaga‐Gonzalez and Bebbington, 2001; Adams, 2004). Managerial capture could be conceived as the interpretation of corporate social responsibility by managers and the subsequent decision making, “in a constrained fashion consistent with corporate goals of shareholder wealth maximization” (O’Dwyer, 2003, p. 548). O’Dwyer contends that the existence of managerial capture of corporate social responsibility implies that voluntary attempts to broaden corporate social responsibilities of business are unlikely to succeed (see also Gray et al., 1997).

The lack of inductive theorising to which Parker (2005), among others, refer can arguably be explained in part by the concern of many scholars in the field about “managerial capture” (Gray et al., 1997; Tinker and Gray, 2003). These scholars argue that due to managerial capture, engagement with organisations will end up being irrelevant because it will not change practice. We contend here that the paucity of field derived data is perhaps the product of a particular conflict‐based conception of “managerial capture” that confines reason to some academic elite who pin all their hopes on some future revolution:

… the over turn – or at least a massive reinvention – of capitalism is the least that is needed to make much real progress (Tinker and Gray, 2003, p. 750).

We are not optimistic that either an overturn of capitalism nor its massive reinvention will occur any time soon, certainly not in time to save our environment (see Flannery, 2005 for an analysis of the future impact of climate change). Neither do we share the view that the sustainability accounting and reporting (or whatever label we might give it) agenda should be controlled or even developed by academics in isolation from a broader group of participants, particularly those that might need to use it if we are to preserve our planet for future generations. Tinker and Gray (2003) lament that what once belonged to a small group of academics has now been taken over by a much broader group of participants. In observing that it is no longer appropriate to refer to the social accounting project they remark:

There is now such a widespread community [a footnote here refers to the membership of CSEAR, the Centre for Social and Environmental Accounting Research] of scholars, activists, NGOs, and heaven preserve us, companies that any collective sense of project is lost and, for the time‐being at least, shows little sign of being recaptured (Tinker and Gray, 2003, p. 747) (emphasis added).

First, the use of the word “capture” in this context by Tinker and Gray implies that ownership (i.e. reason) belongs to someone or some group and that there is a risk of it being taken away from them, changed and corrupted in some way. Ownership and/or reason would appear to be seen to rest with academics, or perhaps a group of academics, in the field. For example, Tinker and Gray (2003, p. 748) justifiably critique recent corporate led initiatives such as the “abhorrent banality of report attestations” and turn their attention to the push away from environmental reporting towards sustainability reporting led by the Global Reporting Initiative:

By therefore switching to “sustainability reporting” the corporate sector moves attention away from simple and understood ideas to an idea which is not only not well understood, but on which they have a ten‐year head‐start in controlling the agenda. Brilliant! And academe let them do it! (Tinker and Gray, 2003, p. 748) (emphasis added).

This view is questionable if only because early examples of reporting on social issues have been found dating back to at least the early part of the last century and the first world war in the case of reporting on women’s employment (Guthrie and Parker, 1989;Adams and Harte, 1998). This is long before any research in the field that we are aware of raising questions as to whether academe ever did control the agenda. We question whether, in any case, such a state of affairs would be desirable.

We will argue here that, if we want to cause significant changes, there is a compelling necessity for a rethink of “managerial capture” in a way that does not paralyse academic research in the field. In doing so, we need to investigate “managerial capture” in its context, instead of treating it as something external and given, as has been the case in a lot of sustainability accounting and reporting research, with some exceptions, notably (Larrinaga‐Gonzalez and Bebbington, 2001; O’Dwyer, 2003). It is through engagement research, informed by other disciplines as discussed in section 2 above, that we can investigate the nature of “managerial capture”. Given that the aim of engagement research is to enable change, in order to theorise engagement, we have to conceive the possibility of the failure of engagement whether it is labelled inertia (Gray et al., 1995b; Larrinaga‐Gonzalez et al., 2001), managerial capture (O’Dwyer, 2003) or institutional appropriation (Larrinaga‐Gonzalez and Bebbington, 2001).

This article is © Emerald Group Publishing and permission has been granted for this version to appear here (www.drcaroladams.net). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Situating engagement research in organisations that practice sustainability accounting and accountability

This section aims to articulate a conception of research engagement in sustainability accounting and accountability that addresses the concern of many scholars about “managerial capture” and that has the ability to effect changes in the exploitative nature of operations by most organisations with regard to the society and the environment. This section also aims to argue that such research can be theoretically and methodologically sound, make a valuable contribution to the literature and, as such, be worthy of consideration by researchers.

Research which engages with those organisations that practice sustainability accounting and reporting has the twofold aim of drawing from the field the rationales that the actors use to construct sustainability accounting and accountability and, directly or indirectly, enhancing practice. It is important to define what we mean by enhanced practice in this field as much of the extant literature has been concerned with external disclosure and recording the volume of information provided in particular categories (see, for example, Gray et al., 1995a) finding an increase in the volume of disclosure over time. This is not what we mean by enhanced practice. As Adams (2004) indicates, increased sustainability reporting does not necessarily mean improved accountability. We would like to see sustainability reports which reflect performance (i.e. which represent a genuine attempt to be accountable to key stakeholder groups and which are complete as regards material sustainability issues affecting the company and industry). We would like to see sustainability reporting processes which lead to improvements in sustainability performance.

The question that arises is how research can improve sustainability reporting and accountability. In this respect, it is not a contribution anymore in this area to state the lack of rigour of practice in sustainability accounting and accountability, as practiced by the vast majority of organisations. The literature (Adams, 2004; Gray, 2006) has confirmed this fact, but we would argue that this research has not been influential in changing corporate practice. Instead, we propose that the contribution of research engagement lies in its mobilising and enabling potential, which in turn arises from “a more grounded, subtle exploration of the specific circumstances” (Dey, 2007, p. 424) within which accounting interventions may succeed. This section develops various themes that, stemming from the tension between critical and engaged research, help to rationalise research engagement with organisations which practice sustainability accounting and reporting. First, in section 4.1, in discussing the problematic role of theory in engagement research, we will argue that research engagement has a radical agenda and needs to distil a critical approach that leads to the conclusion that engagements are necessary. Section 4.2 argues the benefit of considering notions of institutionalisation and change and discuss, drawing on some elements of neo‐institutional literature, emancipatory possibilities of engagement research.

 “Engaging research” in sustainability accounting and reporting has a radical agenda

The calls for engagement research made along the lines of the debate about “mode 2” research tend to be reductionist in that, when addressing the lack of relevance of research, it only contemplates the needs of a narrow range of stakeholders (managers and shareholders) (Grey, 2001). Similar approaches to this in the social accounting research have been described as managerialist (Owen et al., 2000; Dey, 2007). In contrast, we conceive engagement research as the urgent response to the social and environmental crisis and the exploitative nature of operations by most organisations with regard to society and the environment. The kind of research that is proposed here differs from managerialist case studies in that it is not seeking marginal, but dramatic, changes in sustainability accountability and performance. As such it has a radical agenda. But research engagement as conceived in this special issue tries to avoid the polarisation that according to Dey (2007) has characterised the academic debates over social accounting. Our call for engaging with organisations that practice sustainability accounting and accountability stems from a dissatisfaction, discussed above, with extant ideas that prevented engagement research.

Our call for engaging research also differs from calls for engagements in the public interest in the literature (e.g. Cooper, 2005), which privilege the analysis of macro/external processes. Such engagements may take the form of writing letters to journal in critical accounting (Mitchell et al., 2001) or of publishing shadow accounts in social reporting (Medawar, 1976). Other possible locations for engagements in social and environmental accounting research which privilege macro/external processes are listed in Bebbington et al. (2007) in this issue. These research traditions derive from Marx (1977; 1992) and Gramsci (1971). For example, Gramsci (1971), discussed in Tinker and Gray (2003), develops the notion of “organic intellectuals”, the thinking and organizing element of a particular social movement.

Referring to both types of engagement (public and organisational), Bebbington et al. (2007, p. 361) argue that with respect to social and environmental accounting “these activities do not lead to refereed researcher articles (and in some cases it would be inappropriate for them to do so”. However, Cooper (2005) provided examples of such engagements in critical accounting being published in quality academic journals. But more importantly, Cooper (2005, p. 593) suggests that “it is an academic’s public duty to participate in public debates and to challenge, for want of a better world, ideologies which serve to hide power relations and hold back legitimate social protest”. In her view the role of intellectuals is to provide the protest movements with discourses (ideologies) that challenge the ruling neo‐liberal ideology. For this purpose it is important that academics do not stay in “their ‘ivory towers’ writing academic papers without engaging with the real world” (Cooper, 2005, p. 595), but use their theoretical and research skills to “bring coherence to fledgling movements” (Cooper, 2005, p. 604).

That a radical/critical research engagement with organisations is not an impossible endeavour is evidenced by the papers published in this special issue.

We will develop the notion of critical engagement by reference to Laughlin (1987) and Power (1991). Power (1991) proposed a critical ethnography of accounting education, drawing on Habermas. Power’s critical ethnography is informed by two levels of analysis, which are not exclusive:

  1. a functional critique that illustrates how the lived reality “does not serve the functional ends that are claimed for it” (Power, 1991, p. 347); and
  2. Ideologiekritik, a “penetrating analysis of the ‘systematic distortion’ inherent in the professional education process” (Power, 1991, p. 347).

We find that Power’s (1991) critical ethnography is an appropriate description for critical research engagements that are conveyed in this special issue, involving both more functional (e.g. “mode 2” research) and more radical (e.g. neo‐institutional theory) levels of analysis. At the Ideologiekritik level of analysis, research engagement looks for modes of “systematic distorted communication. in the form of, for example, suppressed views from stakeholders or an emphasis on quantification (see, in this volume, Dey, 2007; O’Dwyer and Unerman, 2007). At a more functional level, the same pieces of research evidence how sustainability reporting serves objectives that are different from accountability.

In a somewhat different operationalisation of Habermas, Laughlin (1987) proposes a critical theory of accounting systems, founded on a social evolutionary process of enlightenment and emancipation, consisting on the three processes of enquiry, enlightenment and strategies for change. First, the process of enquiry starts with an iterative and interpretive activity that leads to the production of “critical theorems” about accounting systems and its “hidden roots which lie behind these technical elements” (p. 491). This stage of research distils a hermeneutic respect for the object of research, which is consistent with an ethnographic “continuity between mundane and theoretical understanding of the social world” (Power, 1991, p. 339). For Ahrens and Chapman (2006, p. 827) the “qualitative study of a field thus requires close engagement rather than objective, distanced capture”. “Engaging research” in sustainability accounting and reporting uses interpretive research methods, including in this special issue: action research (Adams and McNicholas, 2007); ethnographies (Dey, 2007); and, qualitative interviewing (Albelda‐Pérez et al., 2007; Belal and Owen, 2007;O’Dwyer and Unerman, 2007).

Second, the aim at the process of enlightenment is that both the researcher and the researched engage in a dialogue to critically evaluate the conclusions reached in the first stage. Dillard and Ruchala (2005, p. 618) argue that:

Part of the enlightenment stage includes motivating workplace participants to take part in the critical dialogue. As the participants become aware of the possibilities as part of the enquiry stage, they begin to engage in, or are at least motivated to engage in, critical dialogue that leads to the unmasking of administrative evil. Here, we presume the drive for freedom and autonomy to be inherent in the human condition. As such, engaging in critical discourse will occur as human beings are provided with facilitating contexts unless impediments intervene. This process can be retarded or prevented by coercion – physical, economic, or psychological. Within such totalitarian regimes, critical dialogue becomes extremely difficult, if not impossible.

In this vein, Albelda‐Pérez et al. (2007) in this special issue found that environmental management systems provided such a facilitating context resulting in varying degrees of enlightenment at the sites studied. In the organisation studied by Adams and McNicholas (2007), the participants were motivated to engage in critical dialogue through the action research approach.

What is important at this stage is that, in spite of the asymmetric nature of this dialogue, it “should enable the researched not simply to react to the researcher’s thoughts but to actually create new explanatory theories” (Laughlin, 1987, p. 494). In these first two stages of the operationalisation of critical theory, social accounting organisational engagements differ from public engagements in the public interest in that the former show a higher hermeneutic respect for the research object and consider the possibility of the researched providing explanations that are of interest for the researcher.

The third and final stage in Laughlin’s (1987) model “is a process of suggesting, evaluating and acting upon alternative strategies for change given the outcome to the ‘enlightenment’ stage” (Laughlin, 1987, p. 495). Laughlin conceives three mutually exclusive strategies or pathways for change: changing cultural or social roots; changing the technical systems to bring them into line with the cultural system; or cultural adaptation to technical developments (as appeared to occur in Adams and McNicholas, 2007; and Dey, 2007 in this AAAJ special issue). Dillard and Ruchala (2005, p. 626) further identify “accountability based on responsibility for the Other” as a strategy for change.

As regards the implications of the strategies for change, Laughlin (1987) argues that cultural adaptation (i.e. the change that is created from outside the organisation) is the less likely to raise any challenge to societal culture. Conversely, both changing cultural roots and changing the technical systems “where the micro‐organisation, in effect, creates its own development path, can raise questions for both the societal culture and its steering mechanisms” (Laughlin, 1987, p. 497). This proposition suggests that those changes that develop inside organisations promise a higher emancipatory potential. We propose that researchers in the field of social and environmental accounting and accountability and corporate social reporting, by engaging with organisations are best equipped to identify poor accountability processes and lack of accountability (see, for example, Adams, 2004) and can initiate enlightening dialogues and further conceive, suggest, champion and change strategies (see, in this AAAJ special issue Adams and McNicholas, 2007; Albelda‐Pérez et al., 2007; Dey, 2007).

Emancipatory possibilities: institutionalisation and change

The literature on social accounting reports on failures (Bebbington and Gray, 2001; Larrinaga‐Gonzalez and Bebbington, 2001) and unexpected consequences of social accounting interventions (Dey, 2007). The purpose of research engagement is not primarily to improve practice in the particular organization engaged[3], but to generate or test rationales that could help to explain why and how sustainability reporting and accountability processes lead to, or forestall, changes towards improved sustainability performance. By engaging with organisations researchers can investigate the organisational meanings, processes, elements, discourses and values that lead to a lack of accountability on social and environmental issues. This research might indirectly enhance practice even where an engagement is seen as a failure in a particular organization, for example due to some mechanics leading to inertia, but it could indirectly be a success because the researcher uncovered how those mechanics worked enabling stakeholders to challenge those mechanics in other cases. This point was made by Larrinaga‐Gonzalez and Bebbington (2001) which took some time to see the light of day, inter alia, because the authors viewed this case to be a failed attempt to achieve change. The failures, however, often yield insights into organizational operations and the role of accounting within organizations.

Researchers need to consider whether they are change agents or whether they themselves are changed (or captured) by the research process. After all, if we don’t risk being influenced by the cognitive mechanisms of business and if we stay in our ivory towers we risk being irrelevant academics (intellectuals or ineffectuals in Cooper’s (2005) terms).

We have defined that research engagement needs to be critical. All the authors examined (Laughlin, 1987; Power, 1991; Jönsson and Macintosh, 1997) propose a degree of trade‐off between interpretiveness and the necessity of theory. Jönsson and Macintosh (1997, p. 383) argue that critical ethnography should “go beyond merely producing narratives about the ‘natives’ subjectivity to include insights into the way these subjectivities come to be constituted”. Ahrens and Chapman (2006) argue that to generate findings of interest to a wider audience the qualitative researcher needs to draw lines between data and theory in order to evaluate the potential contribution of the field research. Jönsson and Macintosh propose some kind of dialogue to deal with such a tension arising from the “ongoing engaging of research questions, theory and data” (Ahrens and Chapman, 2006, p. 837).

Developing his notion of managerial capture O’Dwyer (2003, p. 548) refers to the “capture of meaning”, “personal perspective” and “structural constraints”, “evolutionary change” and “regulation”. We contend that these notions and, therefore, the concept of managerial capture, find a more potent articulation with the assistance of the literature on institutionalisation and organisational change[4] (see Larrinaga‐González, 2007). Although it is beyond the scope of this introduction to provide a full portrayal of the relevance of institutional theory to social and environmental reporting, we will describe some elements useful to articulate the interplay between engagement and managerial capture.

While the lack of change of business and organisations comes as a surprise and frustration in the social accounting literature, institutional theorists explain how institutions are less likely to change than other structures (Zucker, 1977), devoting a substantial part of their endeavours to characterising institutional stability and inertia. Along these lines, DiMaggio and Powell (1983) contend that institutionalization brings about a homogenization of organizations (isomorphism) and Scott (1995, p. 33) argues that institutions “consist of cognitive, normative, and regulative structures and activities that provide stability and meaning to social behavior”. Institutionalisation is approached differently by scholars emphasizing cognitive, normative and regulative structures. First, traditionally institutional theory focused on the role of governmental regulation and the market (regulative structures) in bringing about institutionalisation. Second, some students cast doubts on utilitarian rationales as the sole explanations of institutionalisation and underline the role of convention, logics of appropriateness, social shared values and coded expectations rooted in roles (normative structures). Together with the later structures, neo-institutionalists (DiMaggio and Powell, 1983) favour also cognitive mechanisms of institutionalisation, (i.e. culturally supported and conceptually correct support of legitimacy that becomes unquestioned). Other social constructions are not possible because cognitively other ideas are unthinkable and other behaviour is unconceivable.

By definition, in institutions there exists an overwhelming pull towards inertia and homogeneity (see, for example, Larrinaga‐González and Bebbington, 2001). How can such inertia remain intact in the face of demanding calls for corporate social responsibility and accountability? How can so many organisations resist the demands of social accounting scholars? How can they resist calls for accountability towards their stakeholders? Meyer and Rowan (1977) propose that because attempts to control and coordinate activities in institutions lead to conflicts and loss of legitimacy, structural elements are decoupled from activities and from each other. The social accounting literature is rich in examples of decoupling structures of accountability from organisational activities: O’Dwyer (2003) named this a constrained interpretation of corporate social responsibility; Adams (2004) found in one case study a lack of accountability to key stakeholders on ethical, social and environmental issues. In this special issue O’Dwyer and Unerman (2007, p. 463) found that a new initiative conceived to broaden social NGDO accountability (MAPS) did little to change accountability relationships that remained focused on control and justification, rather than on partnership and learning as demanded by the social accountability focus of MAPS:

… some simply re‐arranged their projects, labelled them as programmes, and continued their operations and reporting to DCI as before.

Additionally, the conception of accounting as a formal structure that provides symbolic legitimacy to the organization by means of myth and ceremony (Meyer, 1983; Covaleski and Dirsmith, 1986; Meyer, 1986, 1990) could be extended to social accounting. In O’Dwyer and Unerman’s (2007) case some evidence suggests that MAPS is part of a “symbolic shift” that allows development money and aid to flow in spite of growing public scrutiny of the use of this money.

Although one might be tempted to find some elements of legitimacy theory[5] in the above explanation, institutional theory is more potent as an explanation of social and environmental accounting than legitimacy theory (see Larrinaga‐González, 2007), especially if we conceive the project of understanding of this process from the inside through engagement, because institutional theory does explicitly consider process and internal factors and one can draw from richer theoretical developments.

Although institutions are inertial by nature, they do change and Oliver (1991) and Greenwood and Hinings (1996) point to the lack of research of institutional change and propose diverse models of organisational responses to institutional pressures. Although the norm of organisations is stability and homogeneity, these authors have studied the diversity of corporate responses to external pressures or disturbances.

Drawing on Oliver (1991), a public impressions management perspective was developed in the social disclosure literature (Neu et al., 1998) to propose different corporate disclosure strategies as a response to environmental pressure, sophisticating the external analysis accomplished by legitimacy theory. The same theme was developed by O’Dwyer (2002) in a qualitative study. Neu et al.(1998) concluded that, when it comes to disclosure, firms tend to omit the interests of less powerful publics in order to meet the demands of more powerful publics (e.g. shareholders). These authors also concluded that voluntary environmental disclosures were made using a mixture of acquiescence, compromise and defiance strategies. O’Dwyer (2002, p. 425) concluded that minimal and symbolic social disclosures in the Irish context were “aimed at demonstrating minimal appeasement of these external demands”.

Drawing on Greenwood and Hinings (1988; 1993) and Laughlin (1991), several papers (Gray et al., 1995b; Larrinaga‐González et al., 2001) have studied the different responses to the environmental agenda and concluded that environmental disturbances in the nineties did not produce any real change inside organisations. Based on 27 semi‐structured interviews, Gray et al. (1995b) described how environmental accounting was conceived in inertia and other change pathways, concluding that “no change of any significance has occurred” and any form of environmental accounting will involve some trade‐off between visibility and a closing down and constraining of environment to a safe and controllable issue.

Institutional literature is helpful in that it provides a framework in which to study both institutionalization (stability and homogenization) and change, which are central concerns of engagement research. But nonetheless an institutional approach means to open the windows to theorisation that is taking place in management studies.

Neo-institutionalism privileges normative and cognitive structures of institutions. Cognitive structures are made of symbols, meanings, core values or in Greenwood and Hinings’ (1993) terms, interpretive schemes. Greenwood and Hinings (1996, p. 1027) describe how organizations “become infused with a taken‐for‐granted quality, in which actors unwittingly accept the prevailing template as appropriate, right, and the proper way of doing things”. Larrinaga‐Gonzalez and Bebbington (2001) showed in one case study how environmental accounting initiatives were framed, using the prevailing language and rationality of the organisational field, in such a way that the emancipatory possibilities of environmental accounting are seriously hindered. The inertial properties of cognitive structures could explain why it is so difficult to articulate an accountability discourse of sustainability reporting, while at the same time rationales based on the reputation and value creation of sustainability reporting emerge so easily. Larrinaga‐Gonzalez and Bebbington (2001, p. 286) put it as follows: “It may be that an accounting‐based language will only be accepted if it delivers the ‘right’ message and if it does not create an alternative source of accounting‐based discourse that challenges existing power positions”.

However, cognitive structures are not given, but socially constructed: symbols, meanings and rules are social constructions that are created, sustained and changed by social interaction (Berger and Luckmann, 1966). And this is the point in which we could conceive a role for the engagement of researchers, proponents of a society centred conception of social, ethical and environmental accountability. Central to our stand is the proposition that there are different levels of social construction and that research participates in the social construction (Scott, 1995, p. 51). Theories are generated at different levels, from the everyday life, “grounded experience” theories back to the grand theories (Scott, 1995; Llewelyn, 2003). Two conclusions can be inferred from this proposition. First, the researcher participates in the social construction, often unintentionally (see Dey, 2007) but deliberately in action research (see, Adams and McNicholas, 2007). This unfolds the emancipatory possibilities of social accounting. Second, and more importantly, in any intent of researching the dynamics or organisational responses to the pressures raised by social, ethical and environmental public concerns it is basic to bear in mind that theories are also constructed at the research field level and that the researcher is not neutral and cannot be separated from the object. We propose that research that does not engage is at best partial.

This article is © Emerald Group Publishing and permission has been granted for this version to appear here (www.drcaroladams.net). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Contributions of authors in this special issue on engagement

In this section we discuss in more detail than hitherto, the contributions made by the papers in this special issue.

Bebbington et al. (2007) employ a dialogic theoretical perspective to derive principles to inform engagements in social and environmental accounting. They refer to both macro/external process engagements and the micro/internal process engagements, the latter of which we were specifically concerned with in this AAAJ special issue, and they provide examples of each. They argue that the application of dialogic thinking to such engagements and future research design will result in more authentic engagements which are then more likely to contribute to change. They note that:

… it is plausible to start the process with praxis (where one is asked to contribute to or intervene in the life of an organisation), which itself then feeds into re‐examining the problem that the praxis was hoped to address (Bebbington et al., 2007, p. 365).

This was the process used by Adams and McNicholas (2007) in determining the terms of their engagement with a water company. Indeed the dialogic process outlined by Bebbington et al. (2007) is an essential element to action case study research as employed by Adams and McNicholas (2007).

Bebbington et al. (2007) note that a dialogic approach would not only work with marginalised voices, but also with the guardians of capital such as managers and policy makers. They caution researchers to consider a number of interrelated contextual factors in their engagements, including institutional frameworks, human agency and power dynamics.

They see benefits in organisational engagement with stakeholders, whilst acknowledging its limitations, as a means of hearing previously excluded voices and, without which Adams (2004) argued, organisations cannot ensure that their reporting is complete. Indeed, dialogic criteria for meaningful stakeholder engagement including, for example, a requirement that stakeholders are involved in defining the terms of engagement and identifying other stakeholders, that they should be able to express their views without fear of penalty, that it is not a one way information feed, were intended in the AA1000 process standard (AccountAbility, 1999).

Adams and McNicholas (2007) purpose in their action research case study was to increase our understanding of the hurdles faced by organisations in developing a sustainability report and the way in which organisational change toward improved sustainability performance occurs. Their findings in a state‐owned corporation contrast recent findings in shareholder owned companies (Larrinaga‐González et al., 2001; O’Dwyer, 2003) and point to lack of knowledge and experience being more of a source of “resistance to change” than “managerial capture”. Change was analysed using Kurt Lewin’s integrated model of planned change at the group/team, organisational and societal levels. The study identified a number of impediments to and forces for change, the action research approach allowing the researchers to gain a greater understanding of corporate processes and issues faced by organisations than that which could have been achieved through interviews alone. In quoting Lewin (1947, pp. 150‐1) at p. 387:

Research that produces nothing but book will not suffice. This by no means implies that the research needed is in any respect less scientific or “lower” than that would otherwise be required for pure science in the field of social events. I am inclined to hold the opposite is true.

Adams and McNicholas (2007) remind us that calls for “research leading to social action” are not new, albeit, in social and environmental accounting research, to date largely unheeded. Whilst use of Lewin’s work facilitates an understanding of the change process including the impact of group dynamics, the authors note that aspects of institutional theory would also explain findings observed.

Albelda Pérez et al.‘s (2007) research, through a series of interviews with environmental managers at ten sites using the European Community’s Eco‐Management and Audit Scheme (EMAS), explores the potential of environmental management systems to improve environmental performance. They argue that environmental management systems have a number of embedding mechanisms, such as stakeholder engagement, provision of training and organisational learning mechanisms. They find that EMAS is a catalyst for change and that the EMAS sites have developed valuable intangible assets for improving environmental performance. Thus EMAS would appear to have a potential to affect real changes in shareholder owned companies where external reporting alone has been found to fail (Larrinaga‐González et al., 2001; O’Dwyer, 2002, 2003). The key to this appears to be in the embedding mechanisms of EMAS and this is an issue worth exploring in future research, providing opportunities to develop theories about the impact of environmental management systems on environmental performance from the field.

Dey (2007) employs an ethnographic approach and uses Larrinaga‐González and Bebbington (2001), Ball (2005) and Oliver (1992)to analyse the unforeseen and unintended changes which took place in Traidcraft Plc subsequent to his social accounting intervention. Dey argues that the social bookkeeping project contributed to the “de‐institutionalisation” of Traidcraft through the institutional appropriation of social bookkeeping whereby the political struggle between interests within the organisation influenced the development of the bookkeeping system increasing the focus on quantitative financial performance indicators. Dey (2007, p. 442) argues that the social bookkeeping system legitimised the modernisation of Traidcraft to, what organisational participants referred to as “New” Traidcraft and was a:

… powerful weapon in the Board’s attempts to justify a radical strategic shift, away from “behaving like a charity” and towards “commercial Christianity”.

Dey (2007, p. 425) concludes that:

… social and environmental accounting interventions can be influential (if not necessarily desirable) when they are aligned with substantive changes in the organisation itself.

How, why and under what circumstances sustainability accounting interventions can be influential, are questions worthy of further research.

In contrast to the other papers in this special issue, O’Dwyer and Unerman (2007) focus on a social accountability initiative, in this case a funder‐led initiative aimed at embedding a social accountability focus in the Irish NGDO sector. Their study involves interviews with both users and preparers together with document analysis. In addition to interviewing NGDO organisational participants, O’Dwyer and Unerman (2007) interviewed staff from an NGDO primary funder, the Development Cooperation Ireland, and Dóchas, an NGDO umbrella body as well as examining documentary sources. In addition to findings highlighted earlier in this paper, O’Dwyer and Unerman found the initiative’s adoption was seen as superficial and unsatisfactory by the primary funder and was viewed by the NGDOs as ‘just another funding mechanism’. Their paper opens up possibility for further research into accountability relationships.

Belal and Owen (2007) report on interviews with senior managers in 23 Bangladeshi companies representing the multinational, domestic private and public sector companies. The interviews were designed to ascertain: managerial perceptions regarding the need for corporate social reporting, identification of key stakeholders, the relevance of social accounting standards; and, the role of stakeholders in the reporting process. The authors warn that the adoption of codes and standards which have been developed largely for the benefit of stakeholders in western developed nations may in fact have a negative impact on social justice in lesser developed nations and the economic divide between the north and south. For example, the authors argue that the call of western buyers to halt child labour imposes a hardship on companies in lesser‐developed countries who, if they choose to act ethically, are obliged to assist in the costly process of replacing an important source of family income. Indeed it would appear that, in an environment where there are inadequate regulatory controls to ensure that corporations act in the interest of society and the natural environment, it would appear that stakeholders in western developed nations are determining corporate priorities in this regard despite limited understanding of the causes of the problems (often western developed nations and their multinationals) or the means of solving them. In addition to an onus on standard setters to consider the needs of lesser developed countries (which the authors note is problematic due to the underdevelopment of civil society organisations which might otherwise be involved in the process), there surely should be an expectation that multinational corporations consider social, cultural, economic and political context of the countries in which they operate in determining their social responsibility and reporting priorities in those countries. This paper also points to a tension between the role of multinational corporations and local governments in addressing social justice and environmental degradation issues. There is a need for further research exploring these issues. Such further research might involve engagement with both subsidiaries of multinationals operating in lesser developed countries and their corporate headquarters. Future studies might also distinguish the findings for multinational as compared with domestic companies as has the literature on general voluntary disclosures in annual reports in lesser developed countries (Wallace, 1988; Abayo et al., 1993).

In the next section we will summarise the contribution of this special issue and point, more generally than in this section, to future directions for engaging research.

This article is © Emerald Group Publishing and permission has been granted for this version to appear here (www.drcaroladams.net). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Summary and future directions in engaging research

In this AAAJ special issue we have called for a different form of engagement research conducted inside organizations focusing on the micro/internal processes. The contributions use theoretical frames drawn from other literatures: institutional theory (Dey, 2007); dialogic theory (Bebbington et al., 2007); and organisational change theories (Adams and McNicholas, 2007). In engaging with organisations the authors have used: action research (Adams and McNicholas, 2007); an ethnographic approach (Dey, 2007) and interviews with organisational participants (Albelda‐Pérez et al., 2007; Belal and Owen, 2007; O’Dwyer and Unerman, 2007). The O’Dwyer and Unerman (2007) study was concerned with social accountability relationships in the NGDO sector. Other papers in the special issue have studied: issues in the development of a sustainability report, the integration of sustainability issues into decision making and the impact on sustainability performance in a state owned organisation (Adams and McNicholas, 2007); the impact of environmental management systems and, in particular their embedding mechanisms, on sustainability performance (Albelda‐Pérezet al., 2007); issues in the development and implementation of a social accounting system and the consequences of such interventions (Dey, 2007); and, the views of company managers in a lesser developed country, Bangladesh, on corporate social reporting and the appropriateness of following standards developed in the West (Belal and Owen, 2007). In the Section 5 we highlighted the future research possibilities that each of the studies in this AAAJ special issue point to.

The issues studied in the contributions to this AAAJ special issue have received little attention in prior literature. In examining these issues the authors have studied single organisations (Adams and McNicholas, 2007; Albelda‐Pérez et al., 2007; Dey, 2007); a particular sector (O’Dwyer and Unerman, 2007) and a particular lesser developed country (Belal and Owen, 2007). Whilst we hope, together with this paper, they provide a way forward, they barely scratch the surface of the potential of engagement research to identify the potential of sustainability accounting and accountability processes to facilitate positive change and identify how to avoid the negative consequences of our interventions. Our understanding of the links between sustainability accounting and accountability and organisational processes, structures, behaviour and dynamics, including: strategic decision making; risk management; reputation management; corporate governance; stakeholder engagement; performance measurement; internal control; work conditions and employment practices; sustainability performance; corporate rhetoric; reporting processes; and, organisational culture and behaviour; remains limited.

There is a need for further “engaging research” if we are, as scholars, to contribute to change. We must draw on, and learn from, the approaches and theorising in the management and management accounting literature. We must use our research findings to inform the next generation of managers through our teaching.

In presenting this issue, we hope to convince researchers and accounting journal editors that “engaging research” can be theoretically and methodologically sound, make a valuable contribution to the literature and, as such, be worthy of publication in quality refereed journals. If they are not already convinced that sustainability accounting, reporting and accountability is a worthy topic to research and/or include in their journals, they soon will be, if Flannery (2005) and an increasing number of scientists are correct in their predictions for our environment and the future of our world and its inhabitants.


  1. Many organisations have moved away from the separate terms of social and environmental accounting and reporting, in favour of the all embracing, vaguer terms of “sustainability” accounting and reporting. Indeed whilst many academics prefer to use separate labels, often including environmental within social, these are now perhaps somewhat meaningless, or at least less meaningful, to organizational participants and practitioners. In this article we use the term sustainability accounting and reporting to refer to all the issues which might be included in an organisation’s sustainability report.
  2. Particularly in journals like Academy of Management ReviewBritish Journal of Management and Journal of Management Studies.
  3. The aim of engagement research differs thus from consultancies which, meeting the needs of specific organisations, may at best not be of relevance to other organisations, and, at worst, may not have improving sustainability performance as the primary aim.
  4. O’Dwyer articulates elsewhere (2002) a robust challenge to legitimacy theory drawing on this literature.
  5. Legitimacy theory is an explanation that developed in social accounting literature. It is quite hard to find such an explanation, for example, in management journals. Nonetheless, the seminal reference (Lindblom, 1993) cited in this literature is a paper presented to a conference. It is also interesting to note that this reference has been consistently misquoted as “Lindblom (1994)”, for example in Deegan (2002).

This article is © Emerald Group Publishing and permission has been granted for this version to appear here (www.drcaroladams.net). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Article citation: Carol A. Adams and Carlos Larrinaga‐González, (2007) “Engaging with organisations in pursuit of improved sustainability accounting and performance”, Accounting, Auditing & Accountability Journal, Vol. 20 Iss: 3, pp.333 – 355 DOI (Permanent URL) 10.1108/09513570710748535

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Accountants taking a lead on sustainable development


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Article citation: Carol A. Adams and Carlos Larrinaga‐González, (2007) “Engaging with organisations in pursuit of improved sustainability accounting and performance”, Accounting, Auditing & Accountability Journal, Vol. 20 Iss: 3, pp.333 – 355 DOI (Permanent URL) 10.1108/09513570710748535


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  1. […] with real problems and communicating their work to those who can act upon it (more on this in Adams and Larrinaga González, 2007).  Academics also need to be guided by a sense of ‘the right thing to do’ or their moral […]

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