A survey of behavioral science concepts and

perspectives

Scope and objectives of behavioral science

In their 1971 report, the american accounting association s committee on the
behavioral science content of the accounting curriculum developed the following
definition and scope of behavioral science :

The term behavioral science is of a relatively recent coinage. The cncept is

so broad that it is desirable at the outset to attempt to delineate its scope and
content. Behavioral science encompasses any field of inquiry that studies, by
experimental and observational methods, the behavioral of man in the physical
and social environment.

To be considered a part of behavioral science, research must satisfy two

basic criteria. First, it must ultimately deal with human behavior. The primary aim
of behavioral science is to identify underlying regularities in human behavior
both similarities and differences and to determine what consequences follow
from them. Second, the research must be accomplished in a scientific manner.
This means there must be a systematic attempt to describe, intterrelate, explain,
and hence predict some set of phenomena : that is, the underlying regularities in
human behavior must be observable or lead to observable effects.

The objective of behavioral science is to understand, explain and predict

human behavior...... to establish generalizations about human behavior that are
supported by empirical evidence colected in an impersonal way by preocedures
that are completely open to review and replication and capable of verification by
other interested scholars. Behavioral science, thus, represents the systematic
observation of mans behavior for the purpose of experimentally confirming
specific hypotheses by reference to observable changes in behavior.

A more concise definition of behavioral science was offered by Bernard

Berelson and G.A.Steiner : scientific research that deals directly with human
behavior. This definition captures the essence of the lengthier one above and
describes the two most saiient features of behavioral science : scientific research
and human behavior.

Behavioral science is the human side of social science. Social science

includes the disciplines of anthropology, economics, history, political science,
psychology, and sociology. Behavioral science includes psychology and
sociology, the behavioral aspects of economics and political science (e.g.,
consumer behavior and voter behavior), and the behavioral aspects of
anthropology (areas such as archaeology, technical linguistics, and physical
anthropology would be excluded).

While only a subset of social science, behavioral science is itself quite

broad. Several journals publish articles on behavioral research methods, theory
development, practical applications, and descriptions of human behavior in
various settings. Thousands of research findings are added anually to the store of
behavioral science knowledge. Consequently, professional behavioral scientists
are able to keep abreast of current literature in only a few subareas in their
disciplines. This has resulted in a high degree of specialization among behavioral
scientists. Because behavioral science is so broad, this chapter can present only
an overview of the discipline. The chapter does not contain a complete list of all
behavioral concepts, nor are any of the concepts discussed here presented in all
their completeness or compexity. The purpose of this chapter is to introduce the
behavioral concepts that we believe to the most relevant to behavioral
accounting. These concepts are presented concisely and in nontechnical terms
so that their essence and their applications to behavioral accounting will become
apparent.

Scope and Objective of Behavioral Accounting

In the past, accountants were concerned solely with measuring revenue
and cost and studying a firms past performance in an effort to predict the future.
They ignored the fact that past performance was the result of past human
behavior and that past performance itself is a factor that will influence future
behavior. They overlooked the fact that any meaningful control of an
organization must begin with motivating and controlling the behavior, goals, and
aspirations of the individuals who interact within the organization.

Behavioral accountants focus on the relationship between human behavior

and the accounting system. They realize that the accounting process involves
summarizing huge numbers of economic events that are the result of human
behavior and that accounting measurements themselves are among the factors
that affect behavior, which in turn determines the success of those economic
events. Thus, some would describe accounting as, in essence, a behavioral
process.

Behavioral accountants look beyond the technical reality of company sales

and consider the behavior of clerks who record customer telephone orders ;
beyond construction costs to the structural engineers who review architectural
plans ; beyond manufacturing costs to the factory supervisors who explain the
proper use of machine tools to new employees. Behavioral accountants must
keep in mind that whether or not thise performing the work are aware of it, their
activities are necessary for organizational survival and their behavior at work is
tied in several ways to the accounting system. The results of employees actions
are quantified and translated into monetary terms : Their salaries are considered
costs of doing business, and their accomplishments are necessary steps in the
process of earning revenue. Actual operating results are compared to
predetermined standards for work performance. All of these events are duly
recorded in the accounting system. If accounting reports indicate success in
meeting the established goals, the work force is rewarded. If the reports indicate
failure in meeting standards, the ultimate individual penalty is loss of ones job.
 Behavioral accountants also realize that they can deliberately design
information systems to influence employee motivation, morale, and productivity.
Their responsibility goes beyond simple data measurement and data aggregation
to include the perception and use of accounting reports by others. Behavioral
accountants believe that a major purpose of accounting reports is to influence
behavior in order to motivate desirable actions. For example, a firm may have
been successful in meeting its budget because of good organizational teamwork,
or it may have been unsuccessful because people were working toward
conflicting goals. As a result, the format and content of the budget reports may
have spurred employee productivity and caused people to work together, or they
may have created internal conflict and stifled individual initiative. Recognition of
the interrelationship between accounting measurements and behavior has
resulted in a modification of conventional definitions of accounting. The most
recent definitions of accounting in academic and professional circles include or
imply the measurement and communication of economic data for various
decision making and other behavioral objectives. For example, in his 1986
financial accounting textbook, Professor Belverd E.Needles, Jr. Traces the
evolution of accountings definition from an early focus on recordkeeping to a
modern definition that stresses the communication of economic information to
decision makers. Needles concludes that business activities are the input to the
accounting system, and useful information for decision makers is the output.

The introduction of behavioral science to accounting is an important in the

development of the profession. It has opened a new body of knowledge with
which accounting professionals should be familiar. In turn, the awareness of the
relationship between human behavior and accounting has provided accountants
with yet another tool for assessing and solving organizational problems.

Behavioral Science and Behavioral Accounting : Their Similarities and Differences

Behavioral science is concerned with the explanation and prediction of

human behavior. Behavioral accounting is concerned with the relationship
between human behavior and accounting. Behavioral accountants ask : What
effect does the accounting process have upon individual and collective behavior,
and what effect does human behavior have on the accounting process?
Behavioral accountants are also interested in how these effects can be altered by
changes in the manner in which accounting is carried out and how accounting
reports and procedures can be used most effectively to help individuals and
organizations attain their goals.

While behavioral science is a subset of social science, behavioral

accounting is a subset of both accounting and behavioral science. That is
behavioral scientists may engage in research on any aspect of motivation theory,
social stratification, or attitude information. Behavioral accountants, however,
would apply only the specific elements of these theories or research results that
are relevant to the accounting situation at hand. Behavioral accountants do not
engage in theoretical speculation on interesting but unrelated behavioral issues.
For example, a cultural anthropologist might study differential behavior patterns
of people who live in primitive matriarchal or patriarchal societies. A behavioral
accountant would not study such an issue, simply because it is beyond the
boundaries of accounting. However, should any findings of the anthropolgical
study prove relevant to explaining the relationship between people and the
accounting system, they would surely be taken into consideration by behavioral
accountants.

By its very nature, behavioral accounting, like its parent discipline

accounting is applied and practical. It uses research results from its other
parent behavioral science to explain and predict human behavior. Accounting
has always used concepts, principles, and approaches from other disciplines to
improve its utility. For example, accounting borrows freely from economics,
mathematics, statistics, and information engineering. Therefore, it is not unusual
that accounting also borrows from the behavioral sciences.

A reasonable question at this point would be : Is a behavioral accountant

in reality an applied behavioral scientist? It is true that the work of behavioral
accountants and applied behavioral scientist do overlap in some areas. Both
groups use established sociological or psychological principles to assess and
resolve organizational problems. Certain aspects of the sociology of
organizations, industrial psychology, role theory, or learning theory would attract
the attention of both behavioral accountants and applied behavioral scientists.
However, there are significant distinctions between the two groups in terms of
their objectives, focus, education, expertise, and funtions.

The differences between behavioral accountants and applied behavioral

scientists outweigh their surface similarities. Accounting is a profession, and
those who aspire to become accountants are trained to think and act as
professionals. This training is different from that experienced by those seeking to
become scientists. Some specific differences between behavioral accountants
and applied behavioral scientists that flow from their divergent educational
backgrounds are shown in table 2-1.

Using table 2-1 as a guide, we can see that while behavioral accountants
and applied behavioral scientists might be equally capable of approaching an
accounting-related organizational dilemma, they would play different, yet
complementary, roles in resolving it. The behavioral accountant would best
understand the structure and function of the accounting system and peoples
relationship to it. The behavioral scientist would have greater insight into the
overall organizational dynamics and the development of behavior patterns.
Together, they can define the problem and develop a strategy to gather the
necessary evidence. They could also cooperate in the choice of research
methods, in the analysis of data, and in the writing of reports. The views of the
behavioral scientist should dominate when it comes to research methods. In
addition, the behavioral scientist would be more capable of analyzing technical
social science data. The portion of the data that concerns the accounting system
and the implications for operational efficiency would clearly be in the domain of
the bahavioral accountant. The report to management should generally be
prepared by the accountant, because accountants are more familiar with the
perspective, needs, and jargon of the users of accounting information.

Perspectives on Human Behavior : Psychology,

Sociology, and Social Psychology
The three major contributors to behavioral science knowledge are
psychology, sociology, and social psychology. All seek to describe and explain
human behavior, but they differ in their overall perspective on the human
condition. Psychology is primarily interested in how the individual behaves. The
focus is on the actions of people as they respond to stimuli in their environment,
and human behavior is explained in terms of individual traits, drives, and
motives. The emphasis is on the person as an organism.

Table 2-1

Some differences between Behavioral Accountants and Applied

Behavioral Scientists

Differences Behavioral Accountants Applied Behavioral

Scientists
Area of expertise Primarily accounting, Primarily social science;
basic knowledge of social no knowledge of
science accounting
Ability to design and Not a major element in Key element in training
execute behavior training
research projects
Knowledge and Key element in training Not a major element in
understanding of the training
working of business
organizations in general
and accounting systems
in particular
Orientation Professional Scientific
Approach to problems Practical Theoretical and practical
Function Serve clients; advise Advance science and
management solve problems
Interest in behavioral Limited to accounting- Limited to broad
science related areas subdisciplines in
behavioral science

Sociology and social psychology, on the other hand, focus on group, or

social, behavior. Their emphasis is on the interactions between people, not on
physical stimuli. Behavior is explained in terms of social relations, social
influences, and group dynamics. An attempt is made to understand how a
persons thoughts, feelings, and actions are influenced by the actual, imagined,
or implied presence of others. The emphasis is on the person as part of a social
system.
 There are many complex factors that influence human behavior, including
individual needs, and motivations, group pressures, organizational demands, the
personal histories and unique backgrounds of individuals, conflicting messages
from inside and outside the organization, time demands, personal and social
responsibilities, and so on. These factors may be clustered into three major
categories : character structure, social structure, and group dynamics.

Character structure refers to the personality traits, habits, and behavior

patterns of individuals. Psychologists are generally associated with the study of
character structure. Social structure refers to any system of relationships among
people, including the economic, political, military, and religious institutional
frameworks that define acceptable behavior, control behavior, and perpetuate
social order. This is the domain of sociologists. Group dynamics can be viewed as
a synthesis or combination of character structure and social structure : It refers
to the development of human interaction patterns, the process of social
interaction, and the results of that interaction. Social psychologists engage in the
study of group dynamics.

Sociologists, social psychologists, and psychologists, despite their

differences in perspective, study many of the same topics. For example, in
explaining the behavior of the corporate controller, psychologists would focus on
the individuals personality traits, pressures, anxiety, expectations, and
motivations. In contrast, sociologists and social psychologists would focus on
social structure, socialization, group membership, roles, norms, and
communication patterns.

Sociologists contend that people cannot be taken out of their social

contexts. People learn the most basic skills for example, language or eating
from other people. We respond to stimuli for example, red or green traffic lights
p based on social conditioning, and our responses to these stimuli are usually the
same whether or not other people are present. All human knowledge is passed
from one generation to the next through various social institutions such as the
family, school, church, or peer group. People develop beliefs and opinions based
on ideas and information passed along by others. There are myriad social forces
that act on a person to create a truly social being.

Psychologists would counter that despite social influences, each individual

is unique. Similar social backgrounds may produce people who differ in their
personality traits, their level of conformity to social rules, their outlooks on life, or
their value systems. Some psychologists might argue that the group is a mirage;
action of individuals create a group dynamic.

Thus, it is possible to explain human behavior by adopting either a

psychological or sociological approach, or by some combination of the two.
Within both psychology and sociology, there are additional competing
frameworks with which to explain human behavior. For examole, some
sociologists are symbolic interactionists and explain behavior based on shared
meanings that help people determine how they should act in different situations.
Other sociologists are structuralists and look to social institutions and
established rules of interaction for explaining behavior. Within psychology, there
are psychotherapists, who seek to understand behavior in order to change it,
and behaviorists, who are concerned with finding methods to change behavior
without necessary understanding the cause. Among the psychotherapists, one
may adopt a Freudian, Jungian, Rogerian, or Adlerian perspective (these schools
of thought are based on ideas of their founders). Further, there are orthodox
Freudians and neo-Freudians.

One can also explain behavior in terms if heredity, social environment,

tensign reduction, or rational decision making. There are different opinions on
the relative importance of ideas, economic conditions, or neurological impulses
in shaping behavior. Each of these competing viewpoints has considerable
scientific support.

In this text, we take the position that all of these frameworks contain an
element of truth and that we can learn from each of them. We do not advocate
any single framework, because each explains some aspect of human behavior
but cannot explain everything. For this reason, and because behavioral
accounting is an applied, practical science, we believe that behavioral
accountants should be flexible. If practicing behavioral scientists cannot agree on
a single framework with which to view the human condition, it would be highly
presumptuous for accountants to argue for one best approach. Rather than
adhere to a single model or framework for explaining behavior, behavioral
accountants should use the framework that best explains the peculiarities of the
behavior exhibited in a particular situation. This approach is most compatible
with the function of behavioral accounting.

Organizational Influences On Behavior

People work within the confines of organizations. Their behavior is affected
by many factors, including organizational size and structure. Management
leadership styles or philosophies, authority/responsibility relationships, status
relationships, and group norms also affect behavior and organizational
functioning.

People in the organization exchange infromation through either official or

unofficial channels. The information may be accurate, distorted, or false. Based
on the information that people receive and process, decisions are made and
attitudes are formed. For example, the official information channels may state
that hard work and steady progress ensure job security and promotion. The
unofficial infromation channels may indicate otherwise. Decisions based on
distorted or false information may lead to the formation of work attitudes and
attitudes toward the organization and its leadership that are not conducive to
operational efficiency.

We will discuss some behavioral science concepts by examining a

hypotetical business firm from the point of view of the vice president of finance,
who is in charge of all aspects of financial planning and control.
 The partial organizational chart in figure 2-1 indicates that the vice-
president of finance occupies a particular position, or office, in the organization.
A position in a social hierarchy is called a status, which implies inferior and
superior places on a vertical scale. The term status is often used with respect
to other hierarchies, such as income, education, and prestige.

FIGURE 2-1

Each position in an organization is occupied by a person whose duties and

responsibilities are clearly defined, usually in writing. As such, a clearcut division
of labor exists. Those who occupy the various organizational positions do not
impinge upon the work of others. Every position can be viewed as a set of
specialized duties and responsibilities. Individuals are hired to fill these positions
and to execute the duties, and they are held accountable for meeting
predetermined standards of performance.

The structure of the office, or positions, in the organization follows the

principle of hierarchy. Every subordinate position is under the direction or control
of the one above it. Every lower position is controlled by a higher one. Social
relations within organizations are based to a great extent on power and
authority, or on superior subordinate relationships. Thus, large business
organizations, by their very nature, are not democratic institutions. They are
authoritarian systems that distribute power and authority. The flow of power and
authority is downward, from superior to subordinate offices, and the flow of
responsibility and accountability is upward. The authority inherent in each
position, or status, is clearly prescribed and limited to official operations.
Insubordination, or refusal to be controlled by a higher office, cannot be tolerated
because it would upset the system for achieving organization goals. Thus, based
on the bureaucratic model that governs the structure of most business firms, we
expect the people who occupy particular organizational positions to behave in
particular ways.

This is not say that the people eho occupy high organizational positions
are merciless despots who rule with an iron hand. The manner in which people
exercise their authority varies. Several leadership styles have been identified,
including the democratic leader who encourages participative decision making.
The point is that authority is ultimately vested in a position, and even a
democratic leader may have to overrule the group.

The vice-president of finance is a case in point. The duties of the office are
clearly prescribed, and the vice-presidnets behavior toward others in the
organization should be a ratioal means of fulfilling these responsibilities. We
would not expect this vice-president to berate the advertising director for poor
wording in a brochure or to hire a new factory supervisor. We would, however,
expect behavior to be aimed at coordinating the marketing and production
functions in terms of overall goals, budget limitations, and available staff.