Page 354 - Cultures and Organizations

Pyramids, Machines, Markets, and Families: Organizing Across Nations 319

is a field in which the technical imperatives are weak: historically based
conventions are more important to it than laws of nature. So, it is logical
for accounting systems and the ways they are used to vary along national
cultural lines.
In large-power-distance countries, accounting systems will be fre-
quently used to justify the decisions of the top power holder(s): they are
seen as the power holder’s tool to present the desired image, and fi gures
will be twisted to this end. The accounting scandals in the United States
in 2002 (of which the Enron Corporation case was the most infamous

example) fit the picture of a shift in U.S. society to larger power distances,
signaled at the end of Chapter 3.
Power distance also affects the degree to which people at lower levels
in organizations will be asked to participate in setting accounting stan-
dards. When three large state enterprises in Thailand tried to introduce
a participative costing system designed in the United States, they met
with strong resistance, because redistribution of power went against Thai
values. 28
In stronger uncertainty- avoidance countries such as Germany and
France, accounting systems not only will be more detailed, as argued pre-
viously, but also will to a larger extent be theoretically based—claiming to
derive from consistent general economic principles. In weak uncertainty-
avoidance countries, systems will be more pragmatic, ad hoc, and folklor-
istic. We already cited the example of the generally accepted accounting
principles (GAAP) in the United States. In Germany and Japan, annual
reports to shareholders are supposed to use the same valuation of the com-
pany’s assets as is used for fiscal purposes; in the Dutch, British, and U.S.

systems, reports to the fiscal authorities are a completely different thing
from reports to shareholders.

In individualist cultures the information in the accounting system
will be taken more seriously and considered more indispensable than in
collectivist ones. The latter—being “high-context,” according to Edward
Hall—possess many other and subtler clues to find out about the well-

being of organizations and the performance of people, so they rely less
on the explicit information produced by the accountants. The accounting
profession in such societies is therefore likely to carry lower status; the
work of accountants is a ritual without practical impact on decisions.
Multinationals, when going abroad, have to impose universal account-
ing rules for consolidation purposes. If, as the research in IBM showed,