Stakeholder salience and accounting practices in Tanzanian NGOs

1、 autobiographical notestakeholder salience and accounting practices in tanzanian ngosm j assad and a r goddardmussa assad, university of dar es salaam, tanzaniaandrew goddard, school of management, university of southampton, uk address for correspondence: andrew goddard, school of management, univer

2、sity of southampton, highfield, southampton, so17 1bj. e-mail:arg2soton.ac.uk, tel: (0)2380 593067structured abstractstakeholder salience and accounting practices in tanzanian ngospurpose; the paper investigates the influence of stakeholders on accountability relationships and the development of acc

3、ounting practices and processes within two tanzanian ngos. methodology/approach; stakeholder analysis is employed to evaluate the positions of stakeholder groups in terms of mitchell et als (1997) attributes of power, legitimacy and urgency. data analysis was undertaken using a grounded theory appro

4、achfindings; the research found that overseas donors were the stakeholders with the highest salience as a result of which they significantly influenced accountability relationships and accounting processes and practices within ngos. despite the often proclaimed ngos objective of improving welfare of

5、 beneficiary groups there appeared to be little accountability by ngos to beneficiaries. differences in the accounting functions in the ngos were explained by the influence of dominant stakeholders, the credibility of the organisation and its managers and the varied ways through which the organisati

6、ons negotiated and accounted for funding. moreover, accounting was virtually unemployed in internal decision making processes indicating that it was largely a tool for satisfying claims of the highly salient stakeholders.originality/value of paper. this paper makes a contribution to the literatures

7、of both stakeholder theory and ngo accounting. from the grounded theory analysis it is suggested that the stakeholder framework of mitchell et al (1997) could be usefully extended in the three areas of power asymmetries of definitive stakeholders, stakeholder salience asymmetries across organisation

8、al phenomena and asymmetries across time. the paper contributes to the empirical accounting literature by seeking a deeper understanding of how and why accounting and accountability relationships develop within ngos. it sheds light on a type of organisation that has not been extensively studied in t

9、he public sector management literature. paper category:case studykey words: ngo, stakeholder salience, accounting practices. stakeholder salience and accounting practices in tanzanian ngosintroductionthis paper uses stakeholder theory to explore the nature and behaviour of different stakeholders in

10、ngos. the paper also explores the use of a stakeholder analysis to understand accounting practices within these organisations. empirical literature on non-governmental organisations is sparse within accounting and management disciplines. the paper presents an analysis of the interactions between org

11、anisational actors and stakeholders in two case studies. it gives an account of events and analyses the implications of stakeholder salience on accounting practices and processes in the organisations. a substantial literature exists which addresses the question who are stakeholders? and a number of

12、typologies have been suggested. however, the empirical descriptive component of stakeholder theory, that is the description and explanation of to what and how managers pay attention in stakeholder interactions (jones, 1995; donaldson and preston, 1995; mitchell et al., 1997; frooman, 1999) has not r

13、eceived much attention. this paper is a contribution to that research.mitchell et al. (1997) suggest the attributes of power, legitimacy and urgency for ascertaining each stakeholders salience. employing these attributes one is able to classify stakeholders and observe changes in stakeholder salienc

14、e over time. this paper uses mitchell et als typology to profile stakeholders with which the organisations interacted. these comprise the government, donors, boards of trustees, the accounting board, members (constitutional owners of the ngo and similar to the stock holders of a private sector compa

15、ny) and beneficiary communities. stakeholder analysis shows that the government, donors and boards of trustees possessed the three definitive stakeholder attributes of power, legitimate claims, and urgency. however, the salience of the board of trustees was found to be transient and least stable. me

16、mbers and beneficiary communities had legitimate claims that were urgent but they did not have the requisite power to effect their claims. these are identified as dependent stakeholders. the accounting board was a dominant stakeholder with statutory power and a legitimate claim but without urgency.

17、implications of stakeholder salience are evident in organisational actors perceptions of the role of accounting and accountants. the paper begins with a brief review of the literature of accountability and accounting in ngos and of stakeholder theory, followed by a description of the research method

18、s and data sources. next, an outline of the case settings provides a description of the background to the organisations studied and of the key events in the lives of the organisations. there follows the empirical results from the case studies and the mapping of the salience of stakeholders into defi

19、nitive, dominant and dependent stakeholders. the next section provides accounts and narratives of how these positions are acknowledged and a discussion of how stakeholder salience defines and affects accounting practices and processes within the organisations, as well as how organisational actors re

20、spond to stakeholder demands. the paper concludes with a discussion of the results of the case studies, reconciling key results with other research and suggesting ways in which the stakeholder framework of mitchell et al (1997) could be usefully extended.overview of prior literaturethere is a develo

21、ping literature on accountability in ngos. edwards and hulme (1995) have emphasised the importance of accountability and the need to take it much more seriously but also note that, little is known about the changing nature of gro and ngo accountability. smillie (1995) refers to accountability being

22、the achilles heel of the ngo movement. lewis (2001) goes even further and suggests that concerns about ngo accountability and performance remain.an ability to confront these issues may be the key to the survival of the ngo movement. many authors draw attention to various aspects of ngo accountabilit

23、y such as the multiplicity of stakeholders (edwards and hulme 1995, najam 1996); the importance of board structures (tandon 1995) and the importance of ensuring functional and strategic aspects (avina 1993). there is very little prior research into accounting in ngos and much of this is normative ra

24、ther than empirical or theoretical. in recent years a good deal of attention has been made to the applicability of business practices to ngos. some researchers such as bradley et al (2003) advocate the adoption of such practices to improve efficiency. however, others such as simsa (2003) and myers a

25、nd sacks (2003) recognise the complexity of ngos in terms of their different strategies, internal ideologies and management styles. these complexities are likely to confound a simple transference of business practices. westerdahl (2001) undertook one of the few empirical interpretive studies in ngo

26、accounting. he concluded that accounting is intimately bound with organisational identity. moreover accounting in ngos is a central force in establishing legitimacy within and beyond the organisation. edwards and hulme (1995) noted that the need to account transparently was an essential ngo practice

27、 in relation to enhancing legitimacy. they also noted the possibility of donor requirements distorting accountability and a tendency for accountancy rather than accountability. other research has noted the strengthening of accountability resulting from donor demands, without considering the dysfunct

28、ional effects of such demands (bebbington and riddle 1995). there is clearly a need for more empirical research in this area to enhance understanding and ultimately to improve practices. since accountability is closely related to stakeholder perspectives (gray et al., 1997), a tool that enables one

29、to assess salience of stakeholders is essential in understanding the actions of organisational actors and stakeholders as they relate to accountability and accounting practices and processes. the absence of share holding in the non-governmental organisations presents a promising platform for use of

30、stakeholder theory to understand and explain relationships between and within organisations with respect to accounting. a number of typologies exist that suggest classes of stakeholders: primary versus secondary (clarkson, 1995); direct versus indirect (freeman, 1984); and generic versus specific (c

31、arroll, 1989). these typologies attempt to answer the question who are stakeholders? and to identify them. more important however are narratives of interactions between management and stakeholders of different salience. this is referred to as descriptive stakeholder theory (jones, 1995; donaldson an

32、d preston, 1995; mitchell et al., 1997; jones and wicks, 1999). the following analysis makes use of the stakeholder framework of mitchell et al. (1997). in addition to defining who stakeholders are they offer the generic definitional attributes of power, legitimacy and urgency to ascertain each stak

33、eholders salience. employing these attributes one is able to classify stakeholders and observe changes in stakeholder salience over time. first, each attribute is variable, not a steady state, and can change for any particular entity or stakeholder-manager relationship. second, the existence (or deg

34、ree present) of each attribute is a matter of multiple perceptions and is a constructed reality rather than an objective one. third, an individual or entity may not be conscious of possessing the attribute or, if conscious of possession, may not choose to enact any implied behaviours. (mitchell et a

35、l., 1997, p. 868).mitchell et al. (1997) suggest that stakeholders include all who have economic or non-economic interest in an organisation. to these two aspects of power, mitchell et al. (1997) add legitimacy and urgency as a bridging concept and present the three as the main stakeholder defining

36、attributes. other theorists have suggested further categorisations of power and legitimacy which may be relevant to this research. etzioni (1964) categorised power into coercive power, based on resources of force and restraint; utilitarian power based on material or financial resources and normative

37、 power based on symbolic resources. phillips (2003) identifies two conceptions of legitimacy; normative legitimacy based on moral obligation and definitive legitimacy based on power. these two conceptions reflect the intuition in stakeholder theorising that some stakeholders merit greater moral cons

38、ideration in managerial decision making than others, but that theory would be incomplete if it failed to account for other stakeholders who might have a significant effect upon the organisation and the achievement of its goals, (phillips 2003, pp 123-124). these subcategorisations are discussed furt

39、her in the concluding section of this paper.mitchell et als. (1997) framework defines stakeholders who possess one attribute as latent stakeholders comprising dormant, discretionary and demanding types. dormant stakeholders have power but do not have a legitimate nor urgent claim. discretionary stak

40、eholders possess legitimacy but have no power or urgent claim. demanding stakeholders have an urgent claim but have neither the power nor legitimacy to push it through.latent stakeholders become expectant stakeholders when they acquire a second attribute. they are categorised as dominant, dependent

41、or dangerous stakeholders. a dangerous stakeholder has power and an urgent claim but the claim is not legitimate in accordance with the norms, values and beliefs of a social system. a dominant stakeholder has power and legitimacy but does not have an urgent claim. these are dominant because they cou

42、ld adopt a weak stakeholders claim and form a coalition. dependent stakeholders have both legitimacy and an urgent claim but possess no power and must depend on others for, the power necessary to carry out their will (mitchell et al.,1997, p877).definitive stakeholders have and exhibit the highest s

43、alience, as they possess all the three attributes; power, legitimacy and an urgent claim. organisational actors are expected to pay particular attention to their claims. any expectant stakeholder becomes definitive by acquiring a third attribute individually or through forming an alliance.what disti

44、nguishes the model proposed by mitchell et al. (1997) is the dynamic rendition of the three stakeholder attributes of power, legitimacy of claims and urgency. possession of the three attributes influences the saliency of a stakeholder and more attention is paid by organisational actors to the highly

45、 salient stakeholders. the mapping of stakeholder salience provides the initial step in understanding the relationship between stakeholders and accounting practices. research methodsthe methodology used to undertake the research was grounded theory. grounded theory is capable of capturing complex so

46、cial phenomena (strauss, 1987). this is arguably an important consideration when conducting research in an area such as accountability involving complex human interactions in organisational settings. furthermore, the methodology allows the actors own perceptions and meanings to emerge.the extent to

47、which prior theories and preconceived concepts should be used in a grounded theory study is contentious. however, most researchers agree that one cannot go into the field without having any prior structure at all. consequently this study uses stakeholder theory to explore the nature and behaviour of

48、 different stakeholders in ngos. the paper also explores the use of a stakeholder analysis to understand accounting practices within these organisations.fieldwork for the study was undertaken by way of two visits of four months and two and half months spread over a period of sixteen months in two or

49、ganisations in tanzania known as aika and aichi. multiple case studies allow the comparative multiple-case logic of replication that improves theoretical insight (eisenhardt, 1991) while preserving holistic data from specific sites (marshall and rossman, 1995).selection of the target organisations w

50、as not made a priori. in keeping with advice (hammersley and atkinson, 1995; morse, 1998; schatzman and strauss, 1973) potential sites were identified and visited with a view to assessing their suitability. large and established organisations that executed sizeable programs were sought, as these wer

51、e expected to have formal structures. large programs inferred substantial donor funding, aspects that attract government and regulatory authority interest. in these kinds of organisations, a basic and functioning accounting system was anticipated. there was also potential for significant interaction

52、s that have a bearing on accounting and accounting functions, both within the organisations and outside the organisations.data sourcesin depth interviews, observation and documentary analysis were the three methods of data collection for the study. a total of 27 tape-recorded interviews were conduct

53、ed, 20 during the first fieldwork and 7 subsequently. table 1 summarises the number of interviews, interviewee position and organisation. the shortest interview was about thirty minutes the last of three with s bookkeeper and the longest was about one-and-a-half hours the first of three with aichis

54、manager. the remainder of interviews were of about one-hour duration.table 1 : interview detailsinterviewspositionphase iphase iiorganisationngos:director21aikabookkeeper21aikatrustee1-aikamanager21aichiaccountant21aichitreasurer/trustee1-aichiregulatory bodies:director ngo division2-vice presidents

55、 officestate attorney2-registrar of societiesdirector11accounting boarddonors:first officer1-narish embassyprogramme officer1-royal swinish embassyaccountant aid1-anian embassy/ anian aidprojects officer ngo and trusts-1zrosh development corporationothers:chairperson-1umbrella ngo organisationco-ord

56、inator2-ngo training projecttotal207since this research dealt with accounting, a phenomenon embedded in administrative bureaucracy, documentary data offered a major contribution to our understanding of issues. collection, thorough reading and preliminary analysis of documentary material dominated th

57、e initial data collection effort. these not only provided background material but also they informed on the generation of concepts from the early stages of the research. the principal printed documentary data types contributing to the research are listed in table 2.table 2 : documentary sourcesannua

58、l reports and audited accountssemi-annual reportsaccounting and internal control manualod filesexternal evaluation reportsdonor inspection reportorganisational assessment mission reportsod consultants final reportfunding proposalsevaluation and planning retreat reportreports of the controller and auditor generaldraft national policy on ngossummary of stakeholders views on 4th draft of national ngos policyproceedings of zonal workshops on ngos policyproceedings of the consultative workshop