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Profitability calculations under trial of strength: Insights into intra-accounting variation in a social housing organization

Aziza Laguecir (IESEG School of Management (LEM-CNRS UMR 9221), Paris La Defense, France)
Christopher S. Chapman (University of Bristol, Bristol, UK)
Anja Kern (Baden-Wuerttemberg Cooperative State University, Mosbach, Germany)

Accounting, Auditing & Accountability Journal

ISSN: 0951-3574

Article publication date: 11 November 2019

Issue publication date: 15 May 2020

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Abstract

Purpose

The purpose of this paper is to examine the organizational construction of profit at the responsibility-centre level, how underlying cost calculations are challenged, and the role of accountants therein.

Design/methodology/approach

This paper analyses profit calculation in a public social housing organization that experienced New Public Management (NPM). Participant observations, archives and interviews inform the study over three years, enabling access to day-to-day practices.

Findings

This study examines a trial of strength that revisited long-existing profitability and cost calculations. Accountants held competing views of how to treat labour costs. Some were anti-programme during a trial of incompatibility, while others were programme defenders. The authors also provide evidence of the stability of an established network and its resistance to the claims of an adversary spokesperson in a trial of strength. The concept of trial of incompatibility proved helpful in showing how the actor networks within OMEGA played out the tension between profit orientation and the social mission of offering affordable dwellings.

Research limitations/implications

The paper provides rare qualitative data on the significant and complex role of calculative costing choices in determining intra-organizational profitability and its interference with the inherent social mission of the organization.

Practical implications

The authors suggest that profitability calculations are influenced not only by economic context but also by different views of organizational actors regarding how to calculate profit. These calculations would benefit from a more detailed and explicit documentation of reasons for choices made, given the potential for different and, in principle, equally valid approaches. The authors provide further evidence of the complexity of the public social housing sector.

Social implications

This research points to a departure from the mission of public social housing in the face of NPM reforms and further questions the compatibility of a profit orientation with the provision of affordable dwellings.

Originality/value

The findings show intra-accounting variation regarding a specific element of profit calculation (labour costs) relating to the organization’s wider mission and status.

Keywords

Acknowledgements

This paper forms part of a special section “Problematizing profit and profitability”, guest edited by Alan Lowe, Yesh Nama and Alexandru Preda.

Citation

Laguecir, A., Chapman, C.S. and Kern, A. (2020), "Profitability calculations under trial of strength: Insights into intra-accounting variation in a social housing organization", Accounting, Auditing & Accountability Journal, Vol. 33 No. 4, pp. 727-751. https://doi.org/10.1108/AAAJ-09-2018-3674

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited