1) The document discusses different approaches to accounting research, including positivistic, naturalistic, and institutional/contextual perspectives. 2) Positivistic research views accounting objectively and aims to identify laws and relationships through statistical analysis. Common theories used include rational choice and agency theory. 3) Naturalistic research assumes multiple interpretations of reality and focuses on interpretation over explanation. Grounded theory is a common approach. 4) Institutional research examines accounting in its social/political context and considers organizational legitimacy important for survival. Legitimacy and institutional theories are discussed.

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Different Approaches in Accounting Researches
PRESENTATION · MAY 2015
DOI: 10.13140/RG.2.1.4401.6723
1 AUTHOR:
Nasrin Azar
University of Malaya
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2. Different Approaches and Theories in Accounting Research
Nasrin Azar
PhD Candidate
Faculty of Business & Accountancy
Department of Financial Accounting & Auditing
University of Malaya
Email: nasrin.azar@siswa.um.edu.my

3. Positivistic Perspectives in Accounting Research
Positivism still seems largely underpin the dominant mode of accounting research.
In this regard, economic is currently the undisputable source of theories & methods for the
mainstream accounting studies. Moreover, accounting journals view the scientific approach is
appropriate to the discovery, explanation and prediction of accounting phenomena.
This approach focuses on the existence of a priori fixed [hypothetical-deductive] relationships
within phenomena which are typically investigated through structured instrumentation (Landry
and Banville, 1992). Indeed, the aim of this approach should be to identify causal explanations and
fundamental laws that explain regularities in human social behavior.
Research using positivistic perspectives or theories see “reality” as a concrete structure and
“people” as adopters, respondents and information processors to achieve efficiency and goals of
the organisation (Morgan and Smircich, 1980).
Advocators of positivistic approach seek primarily to discover law-like regularities, believe that
accounting is objective, and that accounting hypotheses can be statistically tested with empirical
data sets to produce generalizable findings. Finally, there is a tendency in positive research to
discount contrary research findings as anomalous.
Accounting research from this perspectives, views accounting control systems, such as budgeting
as a means to achieving low cost, efficient operations.
By using this approach the researchers normally rely on an arm-length research method-
statistically categories, key variables and then attempts to retrieve meaning by ex post facto
interpretations of tests of significance (Tomkins and Groves, 1983).
Common Theories in Positivistic Perspectives
Table 2 describes common theories utilized in positivism perspectives of social science researches.
Table 2 Common theories in positivistic perspective

4. No Theory Definition
1 Rational
choice
theory
(Hoque,
2010)
• Is a theory of decision making.
• Provide some insight into how and why such choices are made based on
the principle of optimization.
2 The human
relation
theory
(Hopwood,
1979)
• Explain how human factors can influence any organization’s accounting
and control and governance systems.
• Emphasise the relation between individuals and other factors such as
organisations, motivation, supervisory and management leadership, group
dynamic and organizational development.
• This theory is useful to understand accounting in action.
3 Theorizing
and testing
fit in
contingency
research on
management
control
systems
• Concerns with approach in the organizational management.
• Studies in the area of management control systems.
• Suggests that no one best way to manage the organization because it is
contingent upon several factors, which could be internal and external to
the organization.
4 Agency
theory
(Jensen and
Meckling,
1976)
• Provides a framework to understand process in an organization and its
design from principles-agent perspective.
• Auditing and CG research by using this theory focuses on understanding
the association between attributes of CG and FRQ.
5 Positive
accounting
theory
• Shares the same scope of argument with AT.
• Applied in the CSR studies.
• Assumes that individuals act to maximize their own utility, and
consequently management lobbies on accounting standards based on its
own self-interest. (concern regarding management’s wealth: Bonus plan,
debt/equity, size of firm) (Deegan, 2002)

5. 6 Transaction
cost
economics
governance
and control
decision
• A transaction cost will be incurred by a firm in making an economic
exchange or participating in a market.
• Companies with CSR practice may have to bear substantial resources
including time, financial and human resources in identifying a relevant
stakeholders management negotiating with group representatives and
monitoring their satisfaction (King, 2007).
7 Strategic
choice and
management
control
• Centers around the actions that organizational members take to adapt to an
environment as an explanation for any decisions made (Garriga & Mele,
2004).
8 Resource
dependent
theory
• Maintains that the key to a firm’s survival is through acquisition and
maintenance of resources (Pfeffer & Salancik, 1978)
• Organisations that are lacking in resources tend to establish relationship
with others to obtain the needed resources.
Naturalistic Research Approach in Accounting Research
Shift from positivist to subjective thinking in accounting research became apparent in 1970s. There
is a growing of the literature utilise various constructivist approaches (Laughlin 1987). This
approach does not have concern with explanation, but rather with interpretation, and rest with the
notions that accounting information is subjective and socially or politically constructed (Chua,
1986; Bisman, 2010).
Hopper and Powell (1995) suggest by use of scientific or positivistic approaches, the researchers
know little about accounting in actual practices, how it interacts with other organizational
effectiveness and adoptability.
One of the earliest works to draw attention to the potential of improving accounting practice by
using interpretive theories in accounting is that by Tompkins and Groves (1983).They encourage
accounting researcher to explore other research approach beyond pure scientific approach towards
more non formal, naturalistic and interpretive research topic.

6. The terms ‘qualitative methods’ (Covaleski & Dirsmith, 1990), ‘naturalistic methods’ (Tomkins
and Groves, 1983), and ‘interpretive sociology’ (Chua, 1988) are naturalistic orientation.
However, in accounting literature, they commonly utilized the term interpretive approach (Hoque,
2006)
This paradigm assumes that there are multiple interpretations of reality and that the goal of
researchers working within this perspective is to understand how individuals construct their own
reality within their social context.
The key premise of interpretive approach is that the meaning of individual’s actions and those
around them is something the researcher develops. In other words, it is an interpretation and not
something given to the researcher (Boland, 1993) cited in Hoque (2006).
Naturalistic observation is, in contrast to analog observation, a research tool in which a subject is
observed in its natural habitat without any manipulation by the observer. During naturalistic
observation researchers take great care to avoid interfering with the behavior they are observing
by using unobtrusive methods.
The followers of this approach adopt a non-deterministic perspective. They believe that
interpretivist approach provide a better understanding of functioning accounting practices when
actions and events that do not fit the theories or models applied.
Common Theory in Naturalistic Perspectives
Grounded theory research
The purpose of grounded theory research in business and management is to develop new concepts
and theories of business-related phenomena, where these concepts and theories are firmly
grounded in qualitative data. The methodological thrust of grounded theory is toward the
development of theory, without any particular commitment to specific kinds of data, lines of
research, or theoretical interests. Rather it is a style of doing qualitative analysis that includes a
number of distinct features and the use of a coding paradigm to ensure conceptual development
and density (Strauss, 1987). It is also employed in situations where it is perceived as necessary to
go beyond description and generate theory.

7. Additionally, grounded theory can offer interpretive researchers a way of balancing the need to
develop theory, which is grounded in everyday practices, and the recognition that the research
process is inherently subjective. If followed rigorously, will result in a high‐quality research (i.e.
valid, reliable and unbiased). The guidelines provide a way for interpretive management
accounting research, who use GT to improve the quality of their research findings (Elharidy et al,
2008).
Institutional and Contextual Perspectives in Accounting Research
Accounting research also investigates accounting practice from social, cultural and political
standpoints within which it operates (Modell, 2010). This perspective employ qualitative methods
(interviews & case studies).
Research from this perspective explore the concept of organizational legitimacy and considers
organizational legitimacy as an important resource upon which many organizations rely for their
survival.
Common Theories in Institutional and Contextual Perspectives
This perspective consists of some theories are described in table 3.
Table 3 Common theories in institutional and contextual perspectives
No Theory Definition
1 Legitimacy theory • Is defined by Lindblom (1994) as a condition or
status which exists when an entity’s value system
is congruent with the value system of the larger
social system of which the entity is a part.
• Gray et al. (1996) stated that this theory could
offer important explanations of CSR practice.
2 Institutional theory • Argues that organisation’s decisions to adopt ideas
are not primarily based on efficiency goals, but

8. are also influenced by the institutional
environment in which the firm is embedded.
• Is concerned with how organisations interact with
their institutional environment and how
organizational practices reflect social expectations
(Dillard et al., 2004)
3 Stakeholder
theory
• Widens the accountability of managers where the
role of stewardship extends further than the
government (Boyne et al., 2002), which may
include taxpayer, voters, investors, suppliers,
creditors, government, analysts, researchers,
managers, employee and so on.
4 Symbolic interactionism • States the meaning of social object can be
understood by focusing on how people interact in
a particular situation, and how the environment
may influence their perceptions and actions
(Puxty, 1993).
• Has been applied in auditing and accounting
research.
Critical Perspectives in Accounting Research
The blend of qualitative and quantitative research methods that can be applied in studying
accounting through the lens of critical realism also marries well with the mix of economic and
noneconomic theoretical foundations of many accounting research questions. This approach
regards populations and society as consisting of conflicting components that lead to disparity and
separation in all aspects of life of which people need to be aware, and from which they need to be
emancipated. Their concern is to construct understanding of the social and economic world while
criticising the status quo (Hopper and Powell, 1985). They also challenge the belief of this absolute
truth, especially in relation to studying human behaviour in social science. Followers of critical
realism believe in generalisation, but admit that knowledge is a result of social conditioning.
Moreover, they offer the potential to investigate not only the economic consequences of

9. accounting, but also the perceptions and perceptual biases of accountants, managers, decision-
makers and other stakeholders in their use of, and reactions to, accounting information.
According to Habermas, Laughlin (1987) identifies that human beings have developed a capacity
“for coping with the external world, the social world and the world of inner subjectivity”. Human
intention and rationality are accepted, but have to be critically analysed because human potential
is alienated through false consciousness and ideology.
Common Theories in Critical Perspectives
As can be seen in table 4, this perspective consists of some theories are defined as below.
Table 4 Common theories in critical perspectives
No Theory Definition
1 Critical Realism theory • Asserts that real structures and social mechanism
exist in the world and that observers act
independently of their existence (Bashkar, 1978).
• These social mechanisms are real as they have
causal efficacy and influence behavior.
• Profession of accounting is placed within the
social world with its causal mechanisms that the
researcher decides to investigate.

10. 2 Theory of state • Recognise that the state is embedded within and
shaped by domestic and global social structural
forces such as globalization and capitalism
(Hobson & Ramesh, 2002).
• The most important subject with regard to the
state is the role of the dominant and ruling class
(the capitalist) in shaping the local and
international policies regardless of national
boundaries.
3 The labor process • LPT provides an opportunity to recognize the
unique contributions of knowledge workers in the
labor and production processes, moving LPT
beyond its application in the industrial revolution.
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