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Local-cosmopolitan and bureaucratic perceptions in public accounting firms
Accounting,
Organizations and Society, Vol. 2, No. 1, pp. 39- 45.
Pergamon Press, 1977. Printed in Great Britain.
LOCAL-COSMOPOLITAN AND BUREAUCRATIC IN PUBLIC ACCOUNTING FIRMS
PERCEPTIONS
RICHARD G. SCHROEDER University of Kentucky
and LEROY F. IMDIEKE Arizona State University
Abstract The growth of the accounting profession has been accompanied by changes in the organizational structure of public accounting firms. Firms vary from one-man offices to large multinational fiims containing thousands of employees. This study attempts to partially assess the impact of firm size and hierarchical position on accountants’ loyalty to the profession and their firms. Additionally, accountants’ perceptions of the “bureaucratic” structure of their firms were surveyed. Differences were found on the loyalty question by position and on the bureaucracy question by firm size.
professional models provide for some mutually exclusive characteristics, and these characteristics may confront the individual CPA with conflicts between organizational loyalty and professional responsibility. For example, the auditing standards of due audit care and sufficient competent evidential material may come in conflict with client pressures to reduce audit fees, or the standard of independence may come in conflict with client pressures to use inappropriate reporting techniques. Where such conflicts exist, it is of primary importance for the maintenance of professional responsibility that they be resolved in favor of the profession rather than the firm. The study of the possible role conflicts engendered by professionals working in organizations has been noted by many authors. For example, Corwin (1972) and Sales (1972) specifically discussed such conflicts in the context of public accounting firms. In addition Sorensen (1967) and Sorensen & Sorensen (1974) studied perceptions of the professional and bureaucratic modes in organizations and found a relationship between position in the firm and professional and bureaucratic orientations. Sorensen (1967, p. 565) concluded:
The growth of the public accounting profession has been accompanied by changes in the of certified public structure organizational accounting firms. These firms vary in size, complexity and characteristics; however, they all have in common a number of persons organized into a unit that has been established for the explicit purpose of achieving certain goals. The practice of public accounting is carried out in an environment which may be described as a formal organization. These formal organizations have some common characteristics such as a formalized purpose with stated goals, striving for continuity and longevity. The formal organization is also typically characterized by hierarchical structures under which individuals are assigned specific functions (Carey, 1965, p. 422). Additionally, certified public accountants may be viewed as professional in that they possess the normal characteristics of a profession such as a body of knowledge, obtained through a formal education process, accompanied by a formal testing of that knowledge, and recognition through a licensing process. They also have a professional organization with an appropriate code of ethics and a public service functions (Montagna, 1974, pp. 59-89). The theoretical formal organizational and 39
40
RICHARD G. SCHROEDER and LEROY F. IMDIEKE
Because he operates in a combined professional and bureaucratic organizational setting, the large fiim CPA’s orientation and behavior are likely to be affected by the contrasts of these two types of organization.
These two studies provide some interesting insights into the attitudes of certified public accountants; however, some problems remain: (1) Other research to support their findings is lacking. (2) Both studies viewed bureaucracy as one dimensional: whereas, more recent studies have indicated that bureaucracy is a composite phenomenon consisting of several dimensions. (3) Neither study measured the effect, if any, of organizational size on such attitudes. Recent research has indicated that other useful methods of examining these problems exist. This study utilized Gouldner’s (1957-58) localcosmopolitan construct, and Hall’s (1963) bureaucratic structure instrument in an attempt to add additional insights into the nature of the accommodation of professional accountants within the public accounting firm.
LOCALISM-COSMOPOLITANISM The local-cosmopolitan construct was first applied to professionals working in an organizational setting by Gouldner (1957-58). He refined Merton’s (1957) broader concept by focussing upon three variables: (1) loyalty to the employing organization, (2) commitment to specialized skills, and (3) reference group orientation. In studying these variables, it was found that two identities were discernible: (1) Cosmopolitans - Those low on loyalty to the employing organization, high on commitment to specialized role skills, and likely to use an outer reference group orientation. (2) Locals - Those high on loyalty to the employing organization, low on commitment to specialized role skills, and likely to use an inner reference group orientation. In the essay reporting his findings, Gouldner (1957-58) states that differences were found between cosmopolitans and locals in terms of influence, participation, acceptance of organizational rules and informal relations. It was also suggested that the two identities might reflect the tension between the organization’s simultaneous need for both loyalty and expertise.
Research aiong similar lines has been variously reported in the journals. Among the most significant contributions were those reported by Reissman (1949), Wilensky (I 956), Caplow (1958), Marcson (1960), and Kornhauser (1962). These studies generally add support to the theory that some professionals tend to assume a local orientation within an organizational context which manifests itself in a lesser commitment to the profession, whereas others concern themselves more with professional goals and the approval of professional colleagues. recently, research on the localMore cosmopolitan construct has reaffirmed its ursefulness as a research tool. For example, Delburg & Elfner (1970) used the construct to examine career strategies and found a low occupational orientation to be associated with a low cosmopolitan orientation, and Berger & Grimes (1973) reversed an earlier conclusion when they stated: There seems . . . to be continuing evidence of the relevance of cosmopolitan-local as a conceptual framework within which other organizational problems can be fruitfully studied . .
BUREAUCRACY Bureaucracy as a form of social organization has received considerable recent attention. Although much of the discussion among laymen has equated bureaucracy with ineptness, social scientists have focused upon the features of bureaucratic structure which differentiate it from other forms of social organization. Hall (1963), in an attempt to provide some additional insights into the nature of bureaucracy, performed an analysis of its attributes as noted by several authors. The most frequently mentioned attributes were: hierarchy of authority, division of labor, system of rules, system of procedures, impersonality, and technical competence. He then devised scales to determine the degree of presence of each of the attributes in a study of various organizations and concluded (1963, p. 33): . . the findings indicate that what is commonly approached as a totality (bureaucracy) is not such an integrated whole in reality. The configurational nature of the degree to which the dimensions are present suggests that organizations are indeed composed of commonly ascribed dimensions, but these dimensions are not necessarily all present to the same degree in actual organizations. The bureaucratic concept would appear to
LOCAL-COSMOPOLITAN
AND BUREAUCRATIC
be more descriptively accurate if it were rephrased in these dimensional terms, with an emphasis on the continual nature of the dimensions. This would allow the over-all discussions of “highly continuity in bureaucratized organizations” but in a more sophisticated manner. It would also allow other organizations to be studied from the bureaucratic perspective with less conjecture as to their degree and type of bureaucratization.
The conclusions of Hall’s research may be summarized as follows: the bureaucratic dimensions are meaningful organizational attributes, the dimensions exist in the form of continua rather than as dichotomies, and the magnitude of the dimensions varied independently in the organizations studied. The research strategy reflected in this paper was designed to determine the nature of individual accountants’ local-cosmopolitan and bureaucratic orientations. The analysis also assesses the impact of firm size and hierarchical position in the firm on attitudes of employees.
METHOD The research was undertaken by means of a Likert-type questionnaire adapted from the Gouldner and Hall methods of analyses.’ The local-cosmopolitan scale contained 21 items and responses were weighted from (5) to (1) with the higher score representing cosmopolitanism and the lower localism. The bureaucratic scales each contained six items and were similarly weighted with the higher score representing a perception of bureaucratic presence in the dimension. Scores were derived from the arithmetic sum of weighted TABLE
1. Questionnaire
PERCEPTIONS
41
responses to each item. The items in the scale included both positively and negatively worded statements and were randomly ordered within each section. The study included sixteen public accounting firms in the Greater Phoenix, Arizona area which were stratified according to the following criteria: (1) large firms - the so-called “Big Eight” public accounting firms; (2) medium firms - other national and regional multi-office firms; (3) small firms - local one office firms employing two or more non-partners. The firms in each strata were selected on the following basis: Large - Randomly selected from the list of “Big Eight” firms. All three of the originally selected firms agreed to participate. Medium - All six firms in the area were asked to participate. Five firms agreed to participate. Small - Eight firms which satisfied the criteria were randomly selected and six agreed to participate. Questionnaires were hand delivered to all of the employees in the firms studied, and the completed questionnaires were mailed directly to the authors. Responses were subsequently stratified by firm size and the usual positions of junior, senior, manager, and partner. Table 1 summarizes the questionnaire requests and responses. An overall usable response rate of 77.4% was achieved.
FINDINGS Localism -cosmopolitanism Table 2 discloses the number and percent of accountants surveyed that were classified as cosmopolitans and as locals, both of which are in requests
Firm size
and responses
Position Junior requests
Senior
responses
requests
Manager
responses
requests
Partner
responses
requests
Total responses
requests
responses
Small
21
17
13
11
4
3
22
17
60
Medium
10
9
13
11
7
6
14
11
44
31
Large
45
30
33
25
22
17
18
15
118
87
Total
76
56
59
47
33
26
54
43
222
172
1 The local-cosmopolitan instruments were published in Gouldner’s (1957-58) his dissertation, and was used with his permission, The length of the instruments which indicated that certain questions were not germane to accountants questionnaire may be obtained from the authors.
48
study. Hall’s instrument is available in was reduced by a preliminary analysis or their firms. Copies of the revised
42
RICHARD TABLE
G. SCHROEDER
2. Local-cosmopolitan Large
Position
local
local
cosmo.
Total
cosmo.
local
cosmo.
11
19
6
3
4
13
21
35
7
18
3
8
3
8
13
34
Manager
7
10
2
4
1
2
10
16
Partner
8
7
7
4
5
12
20
23
33
54
18
19
13
35
64
108
3. Localism-cosmopolitanism firm size and position
by
Firm Size Average score*
Position Large
Medium
Small
Partner
60.80 N = 15
64.88 N= 11
61.91 N= 17
62.68 N=43
Manager
64.18 N= 17
66.00 N= 6
60.33 N= 3
64.15 N= 26
Senior
67.00 N= 25
63.55 N= 11
66.33 N= 11
66.04 N=47
Junior
66.17 N= 30
62.44 N_
68.18 N= 17
66.18 N= 56
Avera e score B
65.10 N=87
63.19 N=37
66.10 N=48
* p <0.05.
p not significant
local
___-
Junior
evidence in the CPA firms studied. The actual range of scores was 47-83, and the theoretical mean score of 63 was used as the basis of the cosmopolitan classification; all below that score were classified as locals. The mean score of the cosmopolitan group was 68.6, while the mean of the local group was 58.9. A “7”’ test for the difference between means indicated that the difference between groups was significant at the 0.01 level of probability. Average scores were then developed by firm size and position and analyzed by use of two separate one-way analyses of variance. Table 3 summarizes this analysis. From these data it can be seen that the results by position reported by Sorensen are confirmed by this study. The average positional scores decrease upward in the hierarchical structure of
t
Small
Medium
cosmo.
F. IMDIEKE
by firm size and position
Senior
Total
TABLE
and LEROY identity
at 0.25.
TABLE structure Bureaucratic Technical
4. Perceived bureaucratic in public accounting firms
attribute
Average
competence
score*
24.28
Impersonality
16.99
Hierarchy
15.87
Procedural Division Behavioral
of authority specifications of labor rules
15.45 12.02 11.10
* A higher score means more perceived bureaucratic structure.
the firm. This may be evidence of a process of socialization in the firms studied where the individuals enter the profession with a particular identity; however, in order to be accommodated within the profession they soon realize that loyalty to the firm is an important requirement for success. In analyzing the firm size differences it should be noted that no particular trend or significance in the data could be detected. The personnel in medium size firms had a lower average score than those in small and large firms. However, differences were not significant and the average scores for all size firms were above the theoretical mean score of 63. Individuals occupying the more senior positions in medium size firms display cosmopolitan characteristics, whereas their large firm and small firm counterparts display more local characteristics. Individuals occupying the more junior positions in large and small firms display more cosmopolitan attitudes than do those in junior positions in medium size firms. Bureaucracy In turning to the analysis of bureaucracy, Table 4 reports the results of the survey of bureaucratic
LOCAL-COSMOPOLITAN
AND BUREAUCRATIC PERCEPTIONS
43
TABLE 5. Perceived bureaucratic structure by fum size Firm size Bureaucratic attribute*
F Test*
Small A’=48
Medium N=31
Large N= 81
Technical competence
24.71
23.76
24.28
1.09t
Impersonality
18.72
16.73
16.15
7.66f
Hierarchy of authority
14.75
14.81
16.93
6.220
Procedural specifications Division of labor
15.15 13.65
15.38 12.19
15.66 11.05
.3411 8.26**
Behavioral rules
11.37
10.27
11.30
1.82tt
* Degree of freedom equal 2, 170. t p insignificant at 0.25. $ p
**p
attributes. These data confirm Hall’s hypothesis that bureaucracy should not be viewed in a present vs absence dychotomy. The average scores for the sub-scales ranged from 11.10 to 24.28. Overall, the individuals surveyed perceive a very high degree of technical competence compared to the other attributes of bureaucracy, reflecting the professional concern for the importance of technical competency. Participants see the attributes of impersonality, hierarchy of authority, and procedural specifications as less structured than technical competency, and division of labor and behavioral rules are considered to contain the least by those surveyed. amount of structure Apparently the accountants surveyed do not view work subdivision to be a very large factor in their organizations, nor do they perceive behavioral rules as being very important relative to other attributes. Of additional interest was the possibility of difference by firm size. Table 5 presents the average scores by firm size of the six bureaucratic attributes. In analyzing the scores by one way analysis of variance, it can be seen that significant differences are found in the dimensions of impersonality, hierarchy of authority and division. of labor. The impersonality dimension scores iridicate that small firm accountants apparently feel the presence of impersonality to a greater degree than their counterparts in other sized firms. The differences in the hierarchy of authority
dimension should not be surprising. The authority structure of large organizations is generally more pronounced, and the previously discussed hierarchical structure (junior, senior, manager, partner) is more structured in large firms with all the authority positions. Finally, when examining the division of labor dimension, it can be seen that small firm accountants view this dimension as more structured than either medium or large firm accountants. These perceptions could be partially explained by the types of assignments available in the smaller firms. Smaller firms may have some individuals performing “write up” work while only certain individuals are assigned audit responsibilities. Where there is a distinction between personnel on the basis of assignments, a more distinct division of labor may be perceived. These results tend to lend some credence to the belief that employees tend to get a wider variety of work assignments in the larger firms. Local-cosmopolitan identity and bureaucratic perceptions In an attempt to determine if localismcosmopolitanism played any apparent role in the formation of attitudes about bureaucratic structure, average scores on each of the attributes were developed for each identity. Table 6 presents the results of this analysis. An analysis of each of the bureaucratic
RICHARD G. SCHROEDER and LEROY F. IMDIEKE
44
TABLE 6. Perceived bureaucratic structure of CPA fums by cosmopolitans and locals* Cosmopolitan N= 108
Bureaucratic attributet
Local N=64
Technical competence
23.69
24.887
Impersonality
17.29
16.77 8
Hierarchy of authority Procedural specifications
16.27
15.1911
15.42
15.45**
Division of labor
12.27
11.70tt
Behavioral rules
11.41
10.68)f
* Two tailed “T’ test with 170 degrees of freedom. t
Higher score means more perceived bureaucratic structure.
+ T= 2.27
II T = 1.67
attributes disclosed that only the technical competence dimension showed any significant degree of difference; however, a pattern of differences did exist. Cosmopolitans perceived less technical competence, more impersonality, more hierarchy of authority, more division of labor and more behavioral rules.2 The difference in the technical competence dimension suggests that those accountants classified as cosmopolitans were significantly less satisfied with the existing technical competence in their firms. The differences found in the other dimensions tend to support the general notion that loyalty to the profession and loyalty to the firm do come in conflict. Those individuals who are more internally oriented (locals) apparently do not perceive bureaucracy to be as great a factor as do those individuals who are relatively more externally oriented (cosmopolitans).
authority. The results of this research indicate that an employee of a public accounting firm is more likely to be organizationally oriented at the higher responsibility levels where decision making is more prevalent. The general notion of role conflict on professionals working in an organizational setting was supported by this study. Internally oriented individuals were less inclined to perceive a structured organizational environment than were the externally oriented. These results suggest the need for further research to determine whether such perceptions actually influence the practice of public accounting, and the nature of the role of internally and externally oriented individuals within the public accounting firm.
SUMMARY AND CONCLUSIONS The individual accountant operates in a combined professional and organizational environment, and his orientations are affected by the relationship between these two sources of ‘A firm by firm analysis detected no significant differences among the general pattern.The apparently possess enough similar characteristics to be considered as a unified whole.
accounting firms studied
LOCAL-COSMOPOLITAN
AND BUREAUCRATIC PERCEPTIONS
BIBLIOGRAPHY Berger, P. K. & Grimes, A.J., Cosmopolitan-Local: A Factor Analysis of the Construct, Administrative Science Quarterly (June, 1973), pp. 223-235. Blau, Peter, Bureaucracy in Modern Society (New York: Random House, 1956). Caplow, Theodore & McGee, Reece, J., 77re Academic Marketplace (New York: Basic Books, 1958). Carey, John L., The CPA Plans for the Future (New York: American Institute of Certified Public Accountants, 1965). Corwin, Ronald G., Comparison of 1965 and 1970 Organizational and Professional Profiles and Migration Plans of Large-Firm CPAs - A Critique, Behavioral Experiments in Accounting, Thomas J. Burns, ed., (Columbus, Ohio: College of Administrative Science, The Ohio State University, 1972) pp. 39-48. Delberg, Andre L. & Elfner, Eliot S., Local-Cosmopolitan Orientations and Career Strategies for Specialists, Academy ofManagement Journal (13), pp. 372-387. Gouldner, Alvin, W., Cosmopolitans and Locals: Toward an Analysis of Latent Social Roles - I and II. Administrative Science Quarterly (December, 1957 and March, 1958), pp. 281-306 and pp. 444-480. Hall, Richard H., The Concept of Bureaucracy: An Empirical Assessment, American Journal of Sociology (June, 1963) pp. 3240. Kornhauser, William, Scientists in Industry (Berkeley: University of California Press, 1962). Marcson, Simon, The Scientist in American Industry (New York: Harper, 1960). Merton, Robert K., So&l Theory and Social Structure, 2nd ed. (Glencoe, Illinois: Free Press, 1957). Montagna, Paul D., CertifZed Public Accounting (Houston, Texas: Scholars Book Co., 1974). Reissman, Leonard, A Study of Role Conceptions in Bureaucracy, Social Forces (1949), p. 309. Sales, Stephen M., Comparison of 1965 and 1970 Organizational and Professional Profiles and Migration Plans of Large-Firm CPAs - A Critique, Behavioral Experiments in Accounting, Thomas J. Burns, ed., (Columbus, Ohio: College of Administrative Science, The Ohio State University, 1972) pp. 49-62. Sorensen, James E., Professional and Bureaucratic Organization in the Public Accounting Firm, The Accounting Review (July, 1967) pp. 553 -571. Sorensen, James E. & Sorensen, Thomas L., The Conflict of Professionals in Bureaucratic Organizations, Administrative Science Quarterly (March 1974), pp. 98-106. Weber, Max., 7’he Theory of Social and Economic Organization, trans. A. M. Henderson and Talcott Parsons (New York: Oxford University Press, 1947). Wilensky, Harold, Zntellectuals in Labor Unions (Glencoe, Illinois: Free Press, 1956), pp. 129-153.
45
Organizations and Society, Vol. 2, No. 1, pp. 39- 45.
Pergamon Press, 1977. Printed in Great Britain.
LOCAL-COSMOPOLITAN AND BUREAUCRATIC IN PUBLIC ACCOUNTING FIRMS
PERCEPTIONS
RICHARD G. SCHROEDER University of Kentucky
and LEROY F. IMDIEKE Arizona State University
Abstract The growth of the accounting profession has been accompanied by changes in the organizational structure of public accounting firms. Firms vary from one-man offices to large multinational fiims containing thousands of employees. This study attempts to partially assess the impact of firm size and hierarchical position on accountants’ loyalty to the profession and their firms. Additionally, accountants’ perceptions of the “bureaucratic” structure of their firms were surveyed. Differences were found on the loyalty question by position and on the bureaucracy question by firm size.
professional models provide for some mutually exclusive characteristics, and these characteristics may confront the individual CPA with conflicts between organizational loyalty and professional responsibility. For example, the auditing standards of due audit care and sufficient competent evidential material may come in conflict with client pressures to reduce audit fees, or the standard of independence may come in conflict with client pressures to use inappropriate reporting techniques. Where such conflicts exist, it is of primary importance for the maintenance of professional responsibility that they be resolved in favor of the profession rather than the firm. The study of the possible role conflicts engendered by professionals working in organizations has been noted by many authors. For example, Corwin (1972) and Sales (1972) specifically discussed such conflicts in the context of public accounting firms. In addition Sorensen (1967) and Sorensen & Sorensen (1974) studied perceptions of the professional and bureaucratic modes in organizations and found a relationship between position in the firm and professional and bureaucratic orientations. Sorensen (1967, p. 565) concluded:
The growth of the public accounting profession has been accompanied by changes in the of certified public structure organizational accounting firms. These firms vary in size, complexity and characteristics; however, they all have in common a number of persons organized into a unit that has been established for the explicit purpose of achieving certain goals. The practice of public accounting is carried out in an environment which may be described as a formal organization. These formal organizations have some common characteristics such as a formalized purpose with stated goals, striving for continuity and longevity. The formal organization is also typically characterized by hierarchical structures under which individuals are assigned specific functions (Carey, 1965, p. 422). Additionally, certified public accountants may be viewed as professional in that they possess the normal characteristics of a profession such as a body of knowledge, obtained through a formal education process, accompanied by a formal testing of that knowledge, and recognition through a licensing process. They also have a professional organization with an appropriate code of ethics and a public service functions (Montagna, 1974, pp. 59-89). The theoretical formal organizational and 39
40
RICHARD G. SCHROEDER and LEROY F. IMDIEKE
Because he operates in a combined professional and bureaucratic organizational setting, the large fiim CPA’s orientation and behavior are likely to be affected by the contrasts of these two types of organization.
These two studies provide some interesting insights into the attitudes of certified public accountants; however, some problems remain: (1) Other research to support their findings is lacking. (2) Both studies viewed bureaucracy as one dimensional: whereas, more recent studies have indicated that bureaucracy is a composite phenomenon consisting of several dimensions. (3) Neither study measured the effect, if any, of organizational size on such attitudes. Recent research has indicated that other useful methods of examining these problems exist. This study utilized Gouldner’s (1957-58) localcosmopolitan construct, and Hall’s (1963) bureaucratic structure instrument in an attempt to add additional insights into the nature of the accommodation of professional accountants within the public accounting firm.
LOCALISM-COSMOPOLITANISM The local-cosmopolitan construct was first applied to professionals working in an organizational setting by Gouldner (1957-58). He refined Merton’s (1957) broader concept by focussing upon three variables: (1) loyalty to the employing organization, (2) commitment to specialized skills, and (3) reference group orientation. In studying these variables, it was found that two identities were discernible: (1) Cosmopolitans - Those low on loyalty to the employing organization, high on commitment to specialized role skills, and likely to use an outer reference group orientation. (2) Locals - Those high on loyalty to the employing organization, low on commitment to specialized role skills, and likely to use an inner reference group orientation. In the essay reporting his findings, Gouldner (1957-58) states that differences were found between cosmopolitans and locals in terms of influence, participation, acceptance of organizational rules and informal relations. It was also suggested that the two identities might reflect the tension between the organization’s simultaneous need for both loyalty and expertise.
Research aiong similar lines has been variously reported in the journals. Among the most significant contributions were those reported by Reissman (1949), Wilensky (I 956), Caplow (1958), Marcson (1960), and Kornhauser (1962). These studies generally add support to the theory that some professionals tend to assume a local orientation within an organizational context which manifests itself in a lesser commitment to the profession, whereas others concern themselves more with professional goals and the approval of professional colleagues. recently, research on the localMore cosmopolitan construct has reaffirmed its ursefulness as a research tool. For example, Delburg & Elfner (1970) used the construct to examine career strategies and found a low occupational orientation to be associated with a low cosmopolitan orientation, and Berger & Grimes (1973) reversed an earlier conclusion when they stated: There seems . . . to be continuing evidence of the relevance of cosmopolitan-local as a conceptual framework within which other organizational problems can be fruitfully studied . .
BUREAUCRACY Bureaucracy as a form of social organization has received considerable recent attention. Although much of the discussion among laymen has equated bureaucracy with ineptness, social scientists have focused upon the features of bureaucratic structure which differentiate it from other forms of social organization. Hall (1963), in an attempt to provide some additional insights into the nature of bureaucracy, performed an analysis of its attributes as noted by several authors. The most frequently mentioned attributes were: hierarchy of authority, division of labor, system of rules, system of procedures, impersonality, and technical competence. He then devised scales to determine the degree of presence of each of the attributes in a study of various organizations and concluded (1963, p. 33): . . the findings indicate that what is commonly approached as a totality (bureaucracy) is not such an integrated whole in reality. The configurational nature of the degree to which the dimensions are present suggests that organizations are indeed composed of commonly ascribed dimensions, but these dimensions are not necessarily all present to the same degree in actual organizations. The bureaucratic concept would appear to
LOCAL-COSMOPOLITAN
AND BUREAUCRATIC
be more descriptively accurate if it were rephrased in these dimensional terms, with an emphasis on the continual nature of the dimensions. This would allow the over-all discussions of “highly continuity in bureaucratized organizations” but in a more sophisticated manner. It would also allow other organizations to be studied from the bureaucratic perspective with less conjecture as to their degree and type of bureaucratization.
The conclusions of Hall’s research may be summarized as follows: the bureaucratic dimensions are meaningful organizational attributes, the dimensions exist in the form of continua rather than as dichotomies, and the magnitude of the dimensions varied independently in the organizations studied. The research strategy reflected in this paper was designed to determine the nature of individual accountants’ local-cosmopolitan and bureaucratic orientations. The analysis also assesses the impact of firm size and hierarchical position in the firm on attitudes of employees.
METHOD The research was undertaken by means of a Likert-type questionnaire adapted from the Gouldner and Hall methods of analyses.’ The local-cosmopolitan scale contained 21 items and responses were weighted from (5) to (1) with the higher score representing cosmopolitanism and the lower localism. The bureaucratic scales each contained six items and were similarly weighted with the higher score representing a perception of bureaucratic presence in the dimension. Scores were derived from the arithmetic sum of weighted TABLE
1. Questionnaire
PERCEPTIONS
41
responses to each item. The items in the scale included both positively and negatively worded statements and were randomly ordered within each section. The study included sixteen public accounting firms in the Greater Phoenix, Arizona area which were stratified according to the following criteria: (1) large firms - the so-called “Big Eight” public accounting firms; (2) medium firms - other national and regional multi-office firms; (3) small firms - local one office firms employing two or more non-partners. The firms in each strata were selected on the following basis: Large - Randomly selected from the list of “Big Eight” firms. All three of the originally selected firms agreed to participate. Medium - All six firms in the area were asked to participate. Five firms agreed to participate. Small - Eight firms which satisfied the criteria were randomly selected and six agreed to participate. Questionnaires were hand delivered to all of the employees in the firms studied, and the completed questionnaires were mailed directly to the authors. Responses were subsequently stratified by firm size and the usual positions of junior, senior, manager, and partner. Table 1 summarizes the questionnaire requests and responses. An overall usable response rate of 77.4% was achieved.
FINDINGS Localism -cosmopolitanism Table 2 discloses the number and percent of accountants surveyed that were classified as cosmopolitans and as locals, both of which are in requests
Firm size
and responses
Position Junior requests
Senior
responses
requests
Manager
responses
requests
Partner
responses
requests
Total responses
requests
responses
Small
21
17
13
11
4
3
22
17
60
Medium
10
9
13
11
7
6
14
11
44
31
Large
45
30
33
25
22
17
18
15
118
87
Total
76
56
59
47
33
26
54
43
222
172
1 The local-cosmopolitan instruments were published in Gouldner’s (1957-58) his dissertation, and was used with his permission, The length of the instruments which indicated that certain questions were not germane to accountants questionnaire may be obtained from the authors.
48
study. Hall’s instrument is available in was reduced by a preliminary analysis or their firms. Copies of the revised
42
RICHARD TABLE
G. SCHROEDER
2. Local-cosmopolitan Large
Position
local
local
cosmo.
Total
cosmo.
local
cosmo.
11
19
6
3
4
13
21
35
7
18
3
8
3
8
13
34
Manager
7
10
2
4
1
2
10
16
Partner
8
7
7
4
5
12
20
23
33
54
18
19
13
35
64
108
3. Localism-cosmopolitanism firm size and position
by
Firm Size Average score*
Position Large
Medium
Small
Partner
60.80 N = 15
64.88 N= 11
61.91 N= 17
62.68 N=43
Manager
64.18 N= 17
66.00 N= 6
60.33 N= 3
64.15 N= 26
Senior
67.00 N= 25
63.55 N= 11
66.33 N= 11
66.04 N=47
Junior
66.17 N= 30
62.44 N_
68.18 N= 17
66.18 N= 56
Avera e score B
65.10 N=87
63.19 N=37
66.10 N=48
* p <0.05.
p not significant
local
___-
Junior
evidence in the CPA firms studied. The actual range of scores was 47-83, and the theoretical mean score of 63 was used as the basis of the cosmopolitan classification; all below that score were classified as locals. The mean score of the cosmopolitan group was 68.6, while the mean of the local group was 58.9. A “7”’ test for the difference between means indicated that the difference between groups was significant at the 0.01 level of probability. Average scores were then developed by firm size and position and analyzed by use of two separate one-way analyses of variance. Table 3 summarizes this analysis. From these data it can be seen that the results by position reported by Sorensen are confirmed by this study. The average positional scores decrease upward in the hierarchical structure of
t
Small
Medium
cosmo.
F. IMDIEKE
by firm size and position
Senior
Total
TABLE
and LEROY identity
at 0.25.
TABLE structure Bureaucratic Technical
4. Perceived bureaucratic in public accounting firms
attribute
Average
competence
score*
24.28
Impersonality
16.99
Hierarchy
15.87
Procedural Division Behavioral
of authority specifications of labor rules
15.45 12.02 11.10
* A higher score means more perceived bureaucratic structure.
the firm. This may be evidence of a process of socialization in the firms studied where the individuals enter the profession with a particular identity; however, in order to be accommodated within the profession they soon realize that loyalty to the firm is an important requirement for success. In analyzing the firm size differences it should be noted that no particular trend or significance in the data could be detected. The personnel in medium size firms had a lower average score than those in small and large firms. However, differences were not significant and the average scores for all size firms were above the theoretical mean score of 63. Individuals occupying the more senior positions in medium size firms display cosmopolitan characteristics, whereas their large firm and small firm counterparts display more local characteristics. Individuals occupying the more junior positions in large and small firms display more cosmopolitan attitudes than do those in junior positions in medium size firms. Bureaucracy In turning to the analysis of bureaucracy, Table 4 reports the results of the survey of bureaucratic
LOCAL-COSMOPOLITAN
AND BUREAUCRATIC PERCEPTIONS
43
TABLE 5. Perceived bureaucratic structure by fum size Firm size Bureaucratic attribute*
F Test*
Small A’=48
Medium N=31
Large N= 81
Technical competence
24.71
23.76
24.28
1.09t
Impersonality
18.72
16.73
16.15
7.66f
Hierarchy of authority
14.75
14.81
16.93
6.220
Procedural specifications Division of labor
15.15 13.65
15.38 12.19
15.66 11.05
.3411 8.26**
Behavioral rules
11.37
10.27
11.30
1.82tt
* Degree of freedom equal 2, 170. t p insignificant at 0.25. $ p
**p
attributes. These data confirm Hall’s hypothesis that bureaucracy should not be viewed in a present vs absence dychotomy. The average scores for the sub-scales ranged from 11.10 to 24.28. Overall, the individuals surveyed perceive a very high degree of technical competence compared to the other attributes of bureaucracy, reflecting the professional concern for the importance of technical competency. Participants see the attributes of impersonality, hierarchy of authority, and procedural specifications as less structured than technical competency, and division of labor and behavioral rules are considered to contain the least by those surveyed. amount of structure Apparently the accountants surveyed do not view work subdivision to be a very large factor in their organizations, nor do they perceive behavioral rules as being very important relative to other attributes. Of additional interest was the possibility of difference by firm size. Table 5 presents the average scores by firm size of the six bureaucratic attributes. In analyzing the scores by one way analysis of variance, it can be seen that significant differences are found in the dimensions of impersonality, hierarchy of authority and division. of labor. The impersonality dimension scores iridicate that small firm accountants apparently feel the presence of impersonality to a greater degree than their counterparts in other sized firms. The differences in the hierarchy of authority
dimension should not be surprising. The authority structure of large organizations is generally more pronounced, and the previously discussed hierarchical structure (junior, senior, manager, partner) is more structured in large firms with all the authority positions. Finally, when examining the division of labor dimension, it can be seen that small firm accountants view this dimension as more structured than either medium or large firm accountants. These perceptions could be partially explained by the types of assignments available in the smaller firms. Smaller firms may have some individuals performing “write up” work while only certain individuals are assigned audit responsibilities. Where there is a distinction between personnel on the basis of assignments, a more distinct division of labor may be perceived. These results tend to lend some credence to the belief that employees tend to get a wider variety of work assignments in the larger firms. Local-cosmopolitan identity and bureaucratic perceptions In an attempt to determine if localismcosmopolitanism played any apparent role in the formation of attitudes about bureaucratic structure, average scores on each of the attributes were developed for each identity. Table 6 presents the results of this analysis. An analysis of each of the bureaucratic
RICHARD G. SCHROEDER and LEROY F. IMDIEKE
44
TABLE 6. Perceived bureaucratic structure of CPA fums by cosmopolitans and locals* Cosmopolitan N= 108
Bureaucratic attributet
Local N=64
Technical competence
23.69
24.887
Impersonality
17.29
16.77 8
Hierarchy of authority Procedural specifications
16.27
15.1911
15.42
15.45**
Division of labor
12.27
11.70tt
Behavioral rules
11.41
10.68)f
* Two tailed “T’ test with 170 degrees of freedom. t
Higher score means more perceived bureaucratic structure.
+ T= 2.27
II T = 1.67
attributes disclosed that only the technical competence dimension showed any significant degree of difference; however, a pattern of differences did exist. Cosmopolitans perceived less technical competence, more impersonality, more hierarchy of authority, more division of labor and more behavioral rules.2 The difference in the technical competence dimension suggests that those accountants classified as cosmopolitans were significantly less satisfied with the existing technical competence in their firms. The differences found in the other dimensions tend to support the general notion that loyalty to the profession and loyalty to the firm do come in conflict. Those individuals who are more internally oriented (locals) apparently do not perceive bureaucracy to be as great a factor as do those individuals who are relatively more externally oriented (cosmopolitans).
authority. The results of this research indicate that an employee of a public accounting firm is more likely to be organizationally oriented at the higher responsibility levels where decision making is more prevalent. The general notion of role conflict on professionals working in an organizational setting was supported by this study. Internally oriented individuals were less inclined to perceive a structured organizational environment than were the externally oriented. These results suggest the need for further research to determine whether such perceptions actually influence the practice of public accounting, and the nature of the role of internally and externally oriented individuals within the public accounting firm.
SUMMARY AND CONCLUSIONS The individual accountant operates in a combined professional and organizational environment, and his orientations are affected by the relationship between these two sources of ‘A firm by firm analysis detected no significant differences among the general pattern.The apparently possess enough similar characteristics to be considered as a unified whole.
accounting firms studied
LOCAL-COSMOPOLITAN
AND BUREAUCRATIC PERCEPTIONS
BIBLIOGRAPHY Berger, P. K. & Grimes, A.J., Cosmopolitan-Local: A Factor Analysis of the Construct, Administrative Science Quarterly (June, 1973), pp. 223-235. Blau, Peter, Bureaucracy in Modern Society (New York: Random House, 1956). Caplow, Theodore & McGee, Reece, J., 77re Academic Marketplace (New York: Basic Books, 1958). Carey, John L., The CPA Plans for the Future (New York: American Institute of Certified Public Accountants, 1965). Corwin, Ronald G., Comparison of 1965 and 1970 Organizational and Professional Profiles and Migration Plans of Large-Firm CPAs - A Critique, Behavioral Experiments in Accounting, Thomas J. Burns, ed., (Columbus, Ohio: College of Administrative Science, The Ohio State University, 1972) pp. 39-48. Delberg, Andre L. & Elfner, Eliot S., Local-Cosmopolitan Orientations and Career Strategies for Specialists, Academy ofManagement Journal (13), pp. 372-387. Gouldner, Alvin, W., Cosmopolitans and Locals: Toward an Analysis of Latent Social Roles - I and II. Administrative Science Quarterly (December, 1957 and March, 1958), pp. 281-306 and pp. 444-480. Hall, Richard H., The Concept of Bureaucracy: An Empirical Assessment, American Journal of Sociology (June, 1963) pp. 3240. Kornhauser, William, Scientists in Industry (Berkeley: University of California Press, 1962). Marcson, Simon, The Scientist in American Industry (New York: Harper, 1960). Merton, Robert K., So&l Theory and Social Structure, 2nd ed. (Glencoe, Illinois: Free Press, 1957). Montagna, Paul D., CertifZed Public Accounting (Houston, Texas: Scholars Book Co., 1974). Reissman, Leonard, A Study of Role Conceptions in Bureaucracy, Social Forces (1949), p. 309. Sales, Stephen M., Comparison of 1965 and 1970 Organizational and Professional Profiles and Migration Plans of Large-Firm CPAs - A Critique, Behavioral Experiments in Accounting, Thomas J. Burns, ed., (Columbus, Ohio: College of Administrative Science, The Ohio State University, 1972) pp. 49-62. Sorensen, James E., Professional and Bureaucratic Organization in the Public Accounting Firm, The Accounting Review (July, 1967) pp. 553 -571. Sorensen, James E. & Sorensen, Thomas L., The Conflict of Professionals in Bureaucratic Organizations, Administrative Science Quarterly (March 1974), pp. 98-106. Weber, Max., 7’he Theory of Social and Economic Organization, trans. A. M. Henderson and Talcott Parsons (New York: Oxford University Press, 1947). Wilensky, Harold, Zntellectuals in Labor Unions (Glencoe, Illinois: Free Press, 1956), pp. 129-153.
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