Accounting, Organizations and Society 35 (2010) 184204

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Accounting, Organizations and Society

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Accounting and strategising: A case study from new product development

Brian Jrgensen a,1, Martin Messner b,*
a
Department of Business Studies, Aarhus School of Business, University of Aarhus, Fuglsang All 4, 8210 Aarhus V, Denmark
b
Department of Accounting and Management Control, HEC School of Management, 1, Rue de la Libration, 78351 Jouy en Josas, France

a r t i c l e i n f o a b s t r a c t

This paper explores the relationship between accounting and strategy in a context that is
characterised by pluralistic demands and high uncertainty about outcomes. By way of an
ethnographic eld study in an R&D intensive company, we analyse new product develop-
ment (NPD) projects and the way in which decisions and practices concerning these pro-
jects are accounted for. Building upon a practice theory perspective, we nd that actors
account for the appropriateness of NPD practices not only or primarily on the basis of
accounting information, but also by strategising, i.e. by mobilising different strategic
objectives to which these practices are supposed to contribute. We argue that this has to
do with the ambiguous demands on NPD and the limits of calculability inherent in NPD
design decisions. At the same time, accounting information is not necessarily irrelevant
in such a case; it can enter the picture as a general understanding that guides actors
strategising efforts by reminding them of the ultimate importance of nancial numbers.
2009 Elsevier Ltd. All rights reserved.

Introduction recent developments in strategy literature, in which an in-

The way in which accounting information relates to
strategy is a question that has been repeatedly addressed
in accounting literature (see Langeld-Smith, 1997; Chap-
man, 2005; Henri, 2006). The dominant approach to this is-
sue has been to take the contingency route, i.e. to examine
the t between the type of accounting information and the
type of strategy (see Chapman, 1997). While contingency
studies conceptualise accounting and strategy as static
concepts, a case study approach offers the possibility to ad-
dress the dynamic interactions between accounting and
strategy over time (Langeld-Smith, 1997).
It has recently been suggested that a more detailed
examination of this dynamic relationship between
accounting and strategy is needed (Chapman, 2005; Chua,
2007). Chua (2007, p. 493), for example, calls for a redis-
covery of accounting and strategy as contingent, lived
verbs rather than abstract nouns. This call resonates with
* Corresponding author.
E-mail address: messner@hec.fr (M. Messner).
1
Centre for Industrial Production, Aalborg University, Fibigerstraede 16,
9220 Aalborg, Denmark.
creased concern for the micro-dynamics of strategy-mak-
ing can be observed (see Jarzabkowski, Balogun, & Seidl,
2007; Whittington, 2006). Instead of discussing strategy,
these authors have adopted the notion of strategising as
a shortcut for the various activities through which rather
abstract strategic ideas or objectives are interpreted and
enacted by organisational members who, in turn, shape
and develop these ideas.
Combining this concern for strategising with a concern
for the everyday practice of accounting (see Tomkins &
Groves, 1983) seems promising in many respects. A focus
on strategy-accounting talk (Chua, 2007, p. 492) allows,
for example, discussion of how accounting is weaved into
strategic considerations and debates as well as how
accounting concepts, such as prot or cost, are mobi-
lised when crafting strategy. It also makes it possible to
examine to which extent strategising is, in itself, a form
of accounting (in the broad sense of this term; see Garn-
kel, 1967) that may complement, or even replace, the reli-
ance on accounting representations.
In this paper, we follow this call and seek to bring to the
fore some of the complexities and nuances in this relation-
ship between accounting and strategising by considering

0361-3682/$ - see front matter 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.aos.2009.04.001
 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
an empirical setting that is characterised by pluralistic de-
mands and high uncertainty about outcomes. We examine
new product development (NPD) projects and the way in
which decisions and practices concerning these projects
are accounted for. NPD arguably constitutes an interesting
setting for the study of accounting and strategising be-
cause of the particular characteristics of NPD practices.
NPD practices tend to be rather complex in terms of their
demands and uncertain in terms of their outcomes. Com-
plexity results from pluralistic requirements within the
development process, and it increases with the number
and diversity of organisational members that contribute
to this process in one way or another. Uncertainty results
from the limited controllability of the outcome-input rela-
tionship and tends to increase with the timespace dis-
tance between the actions taken in NPD and the
consequences of these actions.
As a consequence of the complex and uncertain setting,
one can expect a relatively high degree of ambiguity in the
evaluation of NPD practices. Often, there is not one best
way NPD should be performed, but rather a range of pos-
sible options that are acceptable to the relevant parties.
This, in turn, suggests that there may be limits to the use-
fulness and applicability of those forms of accounting that
neatly specify what is right and wrong. The alleged preci-
sion and objectivity of accounting numbers may be of little
value in a setting where a plurality of interpretations is not
only possible but also warranted. Nevertheless, there is
likely to be a need for some form of accounting in such a
case. For, ultimately, decisions need to be made and ac-
tions must be coordinated. Rather than relying only or pri-
marily on accounting representations, organisations may
resort to other types of accounts which allow goals, deci-
sions and actions to be selected and justied (Ahrens,
1996; Garnkel, 1967). The enactment of strategic objec-
tives is a case in point. Strategic objectives may be mobi-
lised together with accounting information to make sense
of particular design choices or action alternatives and to
control the trajectory of the NPD process. How this hap-
pens, and to which extent accounting information is impli-
cated in such processes of strategising, shall be the focus of
this paper.
To this end, we apply a practice theory perspective (Ah-
rens & Chapman, 2007; cf. Schatzki, Knorr Cetina, & von
Savigny, 2001), which is helpful in picturing accounting
practice as forming a nexus with a wider set of NPD prac-
tices. According to such perspective, NPD practices can be
regarded as spaces of intelligibility (Schatzki, 2005, p.
470) against the background of which other practices (such
as accounting) become meaningful. We investigate how
accounting is practised in the context of new product
development by mobilising ndings from an ethnographic
eld study of an R&D intensive manufacturing company.
This company had implemented a number of change pro-
jects, e.g. the SAP project, the Lean project and the
Procurement project, in the recent past. At the time of
our study, another major change initiative was underway:
a switch from integral to modular products. This move to
modularity was a strategic reorientation that considerably
affected the companys NPD practices. What is of particular
interest to us is that modularity was promoted in the name
185
of several different strategic imperatives. The sometimes
competing strategic demands added to the complexity of
the NPD process and increased the ambiguity of evaluating
the appropriateness of NPD solutions. This particular set-
ting not only motivates an inquiry into the role of account-
ing information; it also creates visibility into the way
strategic imperatives were mobilised within the NPD pro-
cess. As such, our case invites a reection upon both
accounting and strategising, and upon the ways in which
these two sets of activities relate to each other in a setting
characterised by pluralistic demands and uncertain
outcomes.
While our paper is not the rst case study to address the
relationship between accounting and strategy (see, e.g.,
Dent, 1991; Roberts, 1990), we contribute to the existing
literature by detailing the continuous process of strategis-
ing and the role of accounting therein. More specically,
we highlight challenges for accounting and strategising
that may emerge in a pluralistic and uncertain setting such
as that of NPD, and we explain how our case company
dealt with these challenges. On the one hand, we demon-
strate how accounting information can be used to frame
the strategising process, both as specic rules that top
management can enact at certain critical points in time
and as a general understanding that helps actors from dif-
ferent functional practices to make competing or even con-
icting ends meet. Accounting is not the only practice that
shapes the strategising process, but when it is enacted as
rules and general understanding (see Schatzki, 1996,
2002), it becomes a powerful means that allows managers
to move forward despite high degrees of complexity and
uncertainty. On the other hand, we also demonstrate
how strategising may become a way to complement reli-
ance on accounting information. The representational lim-
its of accounting in a pluralistic and uncertain context are
less likely to be contested if accounting information can be
combined with a more hands-on approach to control that
relies on mobilising strategic arguments. We show how
such processes of strategising are promoted by top man-
agement but rely upon the local knowledge of managers
and engineers and their efforts to coordinate themselves
horizontally.
By considering the role of accounting in NPD practices,
we also, and more specically, contribute to the existing
accounting literature dedicated to this particular subset
of organisational practices. Most of the existing literature
in this area has taken the contingency route, i.e. it has stud-
ied the t between forms of accounting information and
characteristics of NPD or R&D practices (e.g. Rockness &
Shields, 1984; Abernethy & Brownell, 1997; Davila,
2000). While these contingency studies have drawn atten-
tion to the complexity and uncertainty of NPD projects, as
outlined above, they have studied the use of accounting
information in such a setting mainly from a distance.2 Using
a positivistic methodology (see Ahrens & Chapman, 2006),
they have focused on what kind of accounting information
2
A case study by Nixon (1998) is a notable exception. Nixon argues that
accounting may be seen as the integrating vernacular of project
members. The details of how this is accomplished are left relatively
unexplored, however.
186 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
is used with what effects, while abstracting from the ques-
tion of how accounting is actually practised in the context
of new product development. Hence, while the ndings of
these studies have moved the debate on accounting for
new product development forward, there remains a worry-
ing lack of knowledge of what it actually means to practise
accounting in new product development and how other
types of accounts may complement accounting representa-
tions in such a setting. With our paper, we seek to partly ll
this gap.
To develop our argumentation, we rst lay out the the-
oretical concepts that we mobilise in our case discussion.
Thereafter, we explain the research design and methodol-
ogy. This is followed by the case ndings, which are subse-
quently discussed. The paper concludes with some
implications for further research.
A practice theory approach to accounting
Practice theory
A concern with practice initially appears as an obvious
concern for any social theorist. For it is what people do,
why they do what they do, and what consequences their
doings have that social theorists always have tried to ex-
plain. But it is only with the practice turn in social theory
that the concern with practice has established itself as a
more distinct stream of sociological inquiry (Reckwitz,
2002; Schatzki et al., 2001). This has to do with two differ-
ent meanings of the notion of practice. On the one hand,
there is the more commonsense understanding of practice
as what is being done, i.e. what people do in practice.
Practice theorists share the concern with the details of
everyday practice with cultural theorists more generally
(see Reckwitz, 2002) and, in this respect, often adopt a
methodological approach similar to, for example, ethno-
methodology (Garnkel, 1967) or symbolic interactionism
(Blumer, 1969). On the other hand, the notion of practice
can be used in the more specic sense of an array of activ-
ity (Schatzki, 2001, p. 2) or a routinized type of behav-
iour (Reckwitz, 2002, p. 249) that is constituted and
kept together by several elements, such as human bodies,
things, rules, knowledge or emotions. It is their interest
in social practices as distinct ontological entities that dis-
tinguishes practice theories from other types of cultural
theories (Reckwitz, 2002). In a nutshell, practice theorists
claim that social action and order are best explained with
reference to the existence of social practices that span
across time and space.3
A focus on such practices seems to be particularly rele-
vant for the study of organisations, given that organising is
3 erable emphasis on the elements of intentionality that are
While actor-network theory (see Latour, 2005) is sometimes regarded
as a practice theory, it should be pointed out that most authors writing in
that tradition do not rely on the idea of practice as a distinct ontological
category. Rather, they seek to explain order by looking at how entities
(actants) connect to each other. In other words, they equate practice with
the practising of the actants. We would claim that core practice theories
go beyond this by combining the empirical interest in practising with a
conceptual concern of how practices can be theorized as ontological
phenomena.
to a large extent about the establishment of order among
activities. The social practices that can be found in organi-
sations are varied production practices, strategy prac-
tices, marketing practices, accounting practices, and even
practices of having lunch, meeting with others, taking a
break, or checking e-mails (see Schatzki, 2005). This is re-
ected in a growing interest in practice theory approaches
within the eld of management and organisation studies
(e.g. Ahrens & Chapman, 2007; Jarzabkowski, 2004; Orli-
kowski, 2007; Schatzki, 2005; Whittington, 2006). Practice
theory has been particularly well received in recent strat-
egy research, in which the notion of strategising has be-
come the emblem for a concern with the details of how
strategy is being practised in the everyday operations of
an organisation (for an overview, see Jarzabkowski et al.,
2007).
While this body of research shares, on the one hand, a
common concern with practice, it exhibits, on the other
hand, a wide variety of different theoretical approaches
to the topic. To be sure, practice approaches ultimately rely
on an empirical inquiry into practising. But this empirical
inquiry is guided by, and its results are made intelligible
on the basis of, the conceptual vocabulary of the practice
theory that is applied. It is the combination of an empiri-
cally based micro-view on what people actually do with
a more abstract conceptual understanding of practices that
makes practice theory an attractive vehicle to generalise
across contexts, while at the same time acknowledging
the limits of such generalisations.
In our paper, we will specically rely on the practice
theory of Schatzki (1996, 2002, 2005). Schatzkis approach
to practice comes in many respects close to the arguably
more well-known variant by Giddens (1979, 1984), but dif-
fers in the conceptual vocabulary used to characterise
practices. While Giddens distinguishes between different
types of rules and resources as the dening elements of
practice, Schatzki characterises practices in terms of four
main elements: rules, practical understandings, teleoaffec-
tive structures and general understandings. Rules comprise
formulations including everything from statute laws to
rules of thumb pertinent to the practice. Practical under-
standing refers to what is required by an actor in terms
of his or her ability to identify, perform and respond to
the events within a practice. Teleoaffective structures are
sets of ends and projects towards which a practice is ori-
ented allied with the emotions that are commonly ex-
pressed in the pursuit of these ends. General
understandings, nally, are elements of practices (ends,
rules, emotions etc.) that are tied to the site of which the
practice is a part; they are thus common to several prac-
tices within this site.
Schatzkis vocabulary seems particularly fruitful for the
study of organisational practices, insofar as it puts consid-
inscribed in practices (see Ahrens & Chapman, 2007). Many
business practices do have a strong teleological orienta-
tion, i.e. they have clear ends or projects inscribed into
them. Also, there are usually quite robust general under-
standings that guide a set of organisational practices in a
more indirect way, such as a concern with efciency or
protability (Schatzki, 2002, p. 87).
 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
Moreover, Schatzkis practice theory is appreciative of
the complexity of practices and of the uidity of their fron-
tiers. Practices, he contends, are open-ended with respect
to how they can be carried out (ibid., p. 83). This is so be-
cause practices usually allow for alternative ways of being
performed, in the sense that actors can, for example, choose
among different projects or ends that are conceivable with-
in the practice. If, for instance, a business practice is sup-
posed to be both customer-oriented and prot-oriented,
then this enables actors to make trade-offs. To which extent
such trade-offs are possible depends on how narrowly the
practice describes acceptable behaviour. Schatzki (1996,
p. 124) refers to this as practices having different degrees
of totalitarianism. The more totalitarian the practice, the
more it species correct behaviour, whereas in a less total-
itarian practice, a range of acceptable alternatives is estab-
lished (ibid.). What is acceptable in a practice is, of course,
subject to discussion within the relevant social community
(e.g. organisation). Therefore, disagreement about the rules
to be followed or the ends to be pursued may lead to a ques-
tioning of a practice (Schatzki, 2002, p. 84).
Organisational practices may be subject to such dis-
agreement for various reasons. One important reason is gi-
ven by interdependencies between practices. If the output
of one practice enters another practice, then practitioners
of the second practice have an interest in the specication
of the rst one. Sales people, for example, have an interest
in production practices insofar as the latter can make it
more or less difcult for them to sell a product. Also, practi-
tioners within the same practice may have different per-
spectives on a given practice because they engage at the
same time in other practices which provide them with com-
peting understandings (Schatzki, 2002, p. 150). Production
people may, for example, have a different perspective on
management practice than accounting people, given their
different functional backgrounds, knowledge, and goals.
The more complex an organisation is in terms of the
interdependencies between practices, and the more plural-
istic it is in terms of the different orientations of its prac-
tices and practitioners, the higher the potential for
disagreement and debate (see Denis, Langley, & Rouleau,
2007). Such disagreement may be solved in different ways,
such as by introducing a meta-rationality which translates
different rationalities into each other or by negotiating a
compromise between the different rationalities. The goal
of protability, for example, may serve as a meta-rational-
ity that can solve conicts between sales and production
practices by translating their preferences into costs and
revenues. But, likewise, sales and production people may
nd a workable compromise without such an overarching
criterion (see Thvenot, 2001).
Management accounting practices can enable the reso-
lution of (potential) disagreements because they introduce
a common criterion for the evaluation of practices (such as
protability) and/or because they provide a space that al-
lows a workable compromise to be developed.
Management accounting as practice
The rich body of interpretive accounting research that
has developed since the 1970s (see Baxter & Chua, 2003;
187
Hopwood & Miller, 1994) can be seen as the wider intellec-
tual tradition within which the concern with management
accounting practice has gained momentum over time. Only
recently, however, has there been a more explicit formula-
tion of a practice theory approach to management account-
ing which takes up many of the insights from the tradition
of interpretive accounting research, while at the same time
introducing new elements from practice theory as outlined
above (Ahrens & Chapman, 2007). Ahrens and Chapman
(2007) draw upon Schatzkis approach to practices to ana-
lyse management accounting in a British restaurant chain
(see also Ahrens & Chapman, 2004). Management account-
ing, in their case, emerges as the continuous effort of bring-
ing restaurant practices in line with the overall strategic
and nancial objectives of the organisation. Restaurant
managers and their hierarchical superiors would discuss
different alternatives for action and evaluate them by mak-
ing sense of how these actions relate to the companys
strategic priorities and what nancial consequences they
are likely to imply. Ahrens and Chapman describe, for
example, the practice of menu design, and how this was
inherently linked to considerations about the target food
margin that every menu should more or less achieve. Ques-
tions of protability were interwoven with operational
decisions in the sense that the dish and its calculative
presence in the spreadsheet became mutually constitutive
during the menu design process (ibid., p. 15). Financial
information on its own was not practically useful in all
but the simplest of settings (ibid., p. 21), and in most
cases, it needed to be contextualised by relating it to stra-
tegic messages and operational activities. As operational
activities were discussed together with nancial informa-
tion and strategic messages, managers were engaging in
both accounting and strategising at the same time.
Managers local efforts to improve their restaurants were
thus informed by but also constructive of the nancial
and strategic imperatives advertised by senior manage-
ment (ibid., p. 21). The practice of management account-
ing that emerged in the company was not only driven by
the rules and objectives inscribed in accounting informa-
tion; it also related to the general understanding expressed
in the organisations strategic messages and the more prac-
tical understandings that managers had of the operational
practices they were familiar with.
While Ahrens and Chapman (2007) explicitly build
upon a practice theory perspective, other authors have
provided analyses of management accounting practice
which are broadly in line with such a perspective, insofar
as they have also looked at how actors skilfully carry out
practices in the pursuit of organisational objectives and
the extent to which accounting information does or does
not shape these local efforts. Vaivio (1999), for example,
discusses the impact of accounting numbers on discourses
about the customer in a UK chemicals company. In the case
company, a rather informal and mostly ad hoc way of man-
aging the customer was at one point in time challenged by
an initiative to more strongly quantify the customer and
her needs. Existing modes of operational action were prob-
lematised as being too uncoordinated and unfocused. With
the introduction of a set of non-nancial performance indi-
cators, a new calculable space (Miller, 1994) was created
188 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
that allowed a new form of knowledge based on numeri-
cal clarity to emerge (Vaivio, 1999, p. 697). Many rules of
operational practice, in functional areas like eld engineer-
ing and the companys invoicing routines, were reshaped
by this formal knowledge (Vaivio, 1999, p. 702).
While, in this way, accountings inuence over func-
tional areas increased, sales managements inuence de-
creased. Over time, however, the pendulum swung back,
as the Quantied Customer was challenged by a compet-
ing knowledge that was rooted in sales managers local
interpretations of customer needs. The sales managers
perspective on the customer recognised the complexity
of the business, the customers at times ambiguous de-
mands, and their unstable preferences. This competing
knowledge mobilised the qualities of particular customers
against their quantitative representation: the numbers
that represented The Customer became dubious proxies
for something more subtle that could not meaningfully
be quantied (ibid., p. 705). To end or at least mitigate
the controversy between these two modes of management,
the company eventually reduced the size of the calculable
space and decided to separate it more strongly from oper-
ational management, resulting in a more passive and
unintrusive form of monitoring and control (ibid., p. 709).
Vaivios (1999) case study illustrates how different ap-
proaches to managing the customer are informed by differ-
ences in functional backgrounds and local practices.
Mouritsen (1999) provides evidence on a very similar de-
bate between competing management control approaches.
In his case, however, the debate was not originally moti-
vated by a concern with the customer, but rather by a con-
cern with costs. BusinessPrint (the case company) faced a
high amount of indirect production costs, and there was
agreement among managers that this posed a threat to
the companys overall protability. The CEO regarded indi-
rect costs through the perspective of the existing contribu-
tion accounting system which focused on variable (direct)
costs. For him, indirect costs represented an unexplained
lump sum that resulted from the high degree of exibility
in production. He thus promoted an integrated information
system (based on the existing contribution accounting ap-
proach) that would help increase visibility over the pro-
duction process, thereby improving the possibility to
plan, monitor, and stabilise production, which would even-
tually help reduce the indirect costs by reducing exibility.
The production manager held a different view: while he
also saw the need to manage indirect costs, this was not
to be done through increased integrated planning and
monitoring but through local hands-on efforts of coordi-
nation. Integration was thus to be achieved through talk
and improvisation, maintaining a high degree of autonomy
at the shop oor.
Again, as in Vaivios (1999) case, different conceptions
of control are related to different functional backgrounds,
knowledge, and interests, and although the debate in Busi-
nessPrint was motivated by a concern with costs, it clearly
had wider ramications: Indirect costs represented more
than reduced protability as they also gave impetus to a
possible redenition of what exibility should be, what it
meant to be innovative, and consequently to what it meant
to serve the customer (Mouritsen, 1999, p. 38). The
accounting-driven concern with costs was thus linked to
major strategic questions. What provided ammunition for
the debate about indirect costs and eventually turned it
into a trial of strength (Latour, 1987) was the fact that
strategic concerns such as those with exibility had a
rather complex relationship to accounting numbers. As
Mouritsen (1999, p. 39) explains:
[I]t was difcult, if not in principle impossible, to
produce an accounting calculation which would sort
out and evaluate the pros and cons of exibility.
Although accounting performance was drawn upon
to produce and frame a debate concerning exibility,
it could not dene the desirable level of exibility
and it merely enabled a debate about its pros and
cons (. . .). The debate connected indirect costs and
exibility but did little more than hint at possible
consequences of different modes and levels of
exibility.
If the costs and benets of exibility in production are dif-
cult to pin down, would the same not be true to an even
bigger extent for the costs and benets of design decisions
in new product development? And if, as Vaivio (1999) ar-
gues, customer-related practices are often rooted in
knowledge which escapes extant quantication, should
the same not hold true to an even bigger extent in the case
of NPD practices?
While nancial, strategic and operational arguments
were shown to be highly compatible in Ahrens and Chap-
mans (2007) case of a restaurant chain, both Vaivio
(1999) and Mouritsen (1999) show that this is not auto-
matically the case in every setting. Conicts between dif-
ferent types of knowledge claims may result in different
opinions on how to best account for organisational prac-
tice. And not always can this plurality of perspectives be
translated into the common language of accounting, as
illustrated by Mouritsen (1999). Moreover, efforts to do
so may be challenged on the basis of accountings only
imperfect representational qualities of the practices in
question, as shown by Vaivio (1999). In such cases, the eco-
nomics of calculation are replaced by a politics of expla-
nation (Mouritsen, 1999, p. 49), where different types of
accounts compete against each other in making sense of
the desirability of a particular set of practices. This is still
about accounting, but not in the narrow sense of calculat-
ing with numbers, but in the wider sense of the production
and negotiation of accountability.
Over time, the relative strength of particular types of ac-
counts may result in a stabilisation of a certain pattern of
accountability, such as shown by Vaivio (1999). Ahrens
(1996) refers to such a pattern as a style of accountabil-
ity. In his eld study on British and German breweries,
Ahrens contrasts British and German management accoun-
tants perspectives on the relevance of accounting informa-
tion. Commenting upon the specic case of a leaking roof
in a British Brewery that had to be repaired, he states:
The British view seemed to be that nancial perfor-
mance objectives together with strategic ambitions
to build brands are much more important than the
repair of a leaking roof. The Germans, on the other
 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
hand, emphasized the integrity of operational pro-
cesses and expressed their indifference towards
any accounting information which does not mirror
what they regard as the underlying operational
economies of the organisation. It appears that the
British senior management accountant and his
nance director primarily hold themselves account-
able to managing their organisation such that it gen-
erates revenues now and in the future (. . .). The
German manager and the senior management
accountant both seem to hold themselves account-
able to a concept of management which puts opera-
tional integrity and economy before reported
earnings (Ahrens, 1996, p. 152).
Where this resonates with Vaivios (1999) and Mouritsens
(1999) ndings is in the illumination of competing concep-
tions of control and their relative importance within an
organisation; what it adds is the idea that such differences
may be made intelligible in light of the wider institutional
and cultural setting of the organisation (see also Kurunm-
ki, 2004; Lounsbury, 2008).
Research focus
While Ahrens (1996) focused on comparing styles of
accountability between two sets of organisations (German
and British breweries) and thus argued on the level of the
organisation, we are more interested in shedding light on
the style of accountability in one particular set of organisa-
tional practices, i.e. NPD practices. Accordingly, while Ah-
rens (1996) explained his ndings mainly on the basis of
different organisational environments and different con-
ceptions of the organisation, we link our ndings to the
particular nature of NPD practices and to the ways in
which these are organised in our case company. Our case
organisations NPD practices thus constitute the site
(Schatzki, 2005) in which, and as part of which, accounting
practices take on a particular shape.
The particular site of NPD promises to bring to the fore
aspects of management accounting practice that would
usually not emerge in the more commercial and arguably
routine setting of a restaurant chain, as analysed by Ahrens
and Chapman (2007). Decisions on menu design or mar-
keting efforts, which constitute an important part of man-
agement practices in a restaurant chain, have a more
immediate relation to accounting numbers than decisions
about NPD. In the latter, there is a wider timespace dis-
tance between decisions and outcomes and thus more
uncertainty about results. Also, there exist arguably more
competing demands upon NPD practices in a technology
rm compared to menu design practices in a restaurant
chain. While the high degree of plurality increases the po-
tential for disagreement among competing rationalities,
the uncertainty about results makes it difcult to translate
these rationalities into the language of accounting num-
bers (Mouritsen, 1999). At least, efforts to do so may be re-
sisted on the basis of accountings only imperfect
representational qualities (Vaivio, 1999). Whether this
eventually materialises in a conict between different ac-
tors, such as evidenced in Vaivio (1999) or Mouritsen
189
(1999), remains to be seen. It may well be that knowledge
claims and rationalities are ultimately reconciled in a way
similar to what could be observed in Ahrens and Chap-
mans (2007) restaurant chain. If indeed they are recon-
ciled, it will be interesting to see how this takes place,
given the differences in settings.
Research design and methodology
The analysis in this paper is based upon a eld study
conducted in a single organisation. We adopt an under-
standing of eld study research according to which the
main task of the researcher is to inquire into a eld of prac-
tices and to make sense of his or her observations by
abductive reasoning, i.e. by moving back and forth be-
tween data and theory (Ahrens & Chapman, 2006). This re-
quires, rst and foremost, a close proximity to the eld
(Garnkel, 1967; Jnsson & Macintosh, 1997). To identify
and understand practice as it happens, argues Schatzki
(2005, p. 476), requires considerable participant observa-
tion: watching participants activities, interacting with
them (e.g. asking questions), and at least ideally
attempting to learn their practices. While we certainly
cannot claim to have learnt the complex set of practices in-
volved in new product development, we feel that we have
obtained a rather intimate understanding of what the peo-
ple in our case organisation do and why they do it. This
was facilitated by the fact that the possibility to carry out
the research in the company was linked to our commit-
ment to provide feedback and recommendations at the
end of the observation period. This commitment was also
a commitment for the company to support us in sourcing
the information we required.
The presentation of our empirical ndings follows the
narrative approach to writing (Czarniawska, 1999), which,
in our view, is an adequate means to convey the richness of
a qualitative eld study. While critics may think of narra-
tives as nothing but storytelling, [o]nce a narrative is
understood as a template it is potentially transferable
across contexts and can be reinterpreted to become rele-
vant to other settings (Llewellyn, 1999, p. 225; see also
Dyer & Wilkins, 1991). As such, it pleads for a contextual
rhetoric of generalisation (Lukka & Kasanen, 1995; see also
Flyvbjerg, 2001). To do so requires profound theorising of
the empirical data, rather than leaving them as merely rich
accounts of the complexity of social life (Ahrens & Chap-
man, 2006).
The eld study was conducted over a period of 16
months, from September 2004 to December 2005. During
this period, one of the researchers spent approximately
three days per week every second week at the company.
Far from all days had programmed activities, but to ob-
serve daily activities as they went on outside the articial
interview situation and to increase acquaintance with
employees and managers and thereby increase access to
potentially rich data, a large number of working days were
spent at the company. Formally, the research is based on a
combination of three types of data: interviews, archives
and participant observation. Two formal rounds of inter-
views were conducted with a twelve-month interval (see
190 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
Fig. 1a). The rst round was rather wide in its scope both in
terms of the people interviewed and the topics covered to
obtain an overview (Ahrens & Dent, 1998), whereas the
second was more focused and thus may be described as
theoretical sampling (Strauss & Corbin, 1998) to probe dee-
per into themes identied in the rst round and in general
during the many days spent at the company.
Interviews were recorded and transcribed. Notes were
taken during the interviews and more detailed notes were
taken immediately after an interview while listening to the
recordings not to interpret and code the data in a nal
sense, but to make sense of what had been said and hence
to continually revise the understanding of what was going
on in the organisation.
The archival data studies were primarily concerned
with the authorisation documents for the NPD projects re-
searched. In the case company, each time a project had
developed a stage further it had to be authorised by the
Management Board (more about this later) to pass the gate
and move on to the next stage. Stages, gates and authorisa-
tion criteria were all described in the NPD process manual,
which was also studied carefully. Two projects were fol-
lowed more closely: one in the late stages of development
(rst variants were released for sale in autumn 2005) and
one in the early stages (followed during the concept and
system design processes). However, strategic documents
about future plans and objectives and other top manage-
ment communication also were reviewed (see Fig. 1b).
Documents were typically accessed through the companys
intranet, handed out during interviews, or left on the
researchers desk.
Data from observation were retrieved in an unstruc-
tured and informal manner. A number of NPD project
meetings and department meetings were attended. Out-
side of meetings, observation took place during lunch
breaks, coffee machine conversations, chats over the desk,
and by overhearing and observing communications and ac-
tions of daily operations.
Case organisation
The case organisation, Division, is owned by Company, a
private company with annual revenue of about 170 million
euros. According to Companys mission, it provides rapid,
reliable and dedicated analytical solutions for routine con-
trol of quality and processing of agricultural, food, pharma-
ceutical and chemical products. Company was founded in
the 1950s, and from the start the fundamental business
idea was to automate otherwise time-consuming analyti-
cal methods and to offer a faster, more accurate, reliable
and cost efcient method of analysis. The general principle
behind Companys instruments is to illuminate the sub-
stance to be analysed and to measure the infrared or
near-infrared refraction. The refraction is then compared
to a reference database from which it can be deducted that
if you are measuring milk, for example, and this is your
refraction, then your sample contains so much fat, so many
bacteria etc.
Agriculture was the main market in the beginning. La-
ter, the dairy industry became the largest customer group.
Today, the company pioneers new product concepts in sev-
eral elds. In 1997, Company doubled both revenue and
number of employees through acquisition. This put the
company in a position to be rst and best in analytical
solutions within segments of the food, agricultural, phar-
maceutical and chemical industries. From a small start
with a staff of three, Company has grown to incorporate
all aspects of development, assembly, marketing, sales
and after-sales service, employing 1100 people in 21 com-
panies world-wide. Companys export share is 97%, and it
is nancially strong with a solvency ratio above 70% and
a steady pre-tax return on sales of 13%.
Company has a niche focus, typically holding a market
share of 80100% within its target markets. Companys
products are often the most expensive, but they are also
the most reliable and accurate on the market. They tend
to have more functionalities than competitors products
and are also differentiated in terms of design and support
service. Company uses the terms dedicated, user-
friendly and tailor-made to describe its products. Also,
Company uses the term solutions, rather than the term
instruments, because it seeks to offer customers far more
than technical equipment. Pre-sales consulting, ready-to-
use calibrations, customised application development,
and industry discussion forums on the Company intranet
are supposed to create a value proposition that the cus-
tomers are willing to pay a premium for.
Division is the product development and production leg
of Company (see Fig. 2). Division employs more than 500
people at two sites, one in Denmark and one in Sweden.
The two sites are run as one company (i.e. with one CEO,
one R&D director etc.). The R&D Department within Divi-
sion employs about 135 people. About 95 of these are em-
ployed at the Danish site, where we conducted our
research. The remaining companies within the group are
sales and service subsidiaries.
Case analysis
Our analysis of NPD practices in Division is informed by
empirical material about the NPD process more generally
as well as by data on two specic NPD projects, which
we hereafter will call Alpha and Beta, respectively. Al-
pha was a project aimed at developing a family of instru-
ments for the analysis of liquids, as needed in the wine
and dairy industries. The project concerned an ambitious
revamp of earlier developed versions of these instruments.
Importantly, Alpha was the rst project that was based on
the concept of modularity, as explained in more detail be-
low. Beta was the project immediately after Alpha. It also
concerned the development of an instrument for the anal-
ysis of wine, but it was less sophisticated than Alpha inso-
far as it was targeted not at industrial customers, but at
farmers. On average, an NPD project at Division would last
for about 3 years. Alpha was more time-consuming due to
the whole discussion about modularity as explained below.
It was initiated in 2000 and was in the nal stages when
we conducted our empirical research (20042005). Beta
was rst authorised in 2004, just before our research work
started.
 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
Round one
Time December-January 2004/2005
Interviewees 1 CEO
1 Finance director
1 Production director
1 R&D director
1 Group controller (from Company)
11 middle managers across the
organisation
1 R&D strategist
1 project coordinator
1 production planner
19 interviews in total
Document types
Authorisation documents
Ad hoc analyses
Monthly management reports
Other
Fig. 1b. Documents reviewed.
Our analysis is organised in two sections. As accounting
plays a role both in the formulation and renement of the
strategies that underlie NPD projects and in the day-to-day
operations of these projects, we dedicate the rst part of
our analysis to strategic issues and the second part to the
more operational tasks. That said, it will become clear
throughout the text that the domains of strategy and
operations cannot be easily separated but must really
be understood as closely interwoven.
Accounting for the strategy of new product development
Company is a very R&D intensive business. Its success
has been based on innovative products since its beginnings
in the 1950s. New product development is thus a critical
area for Company. The particular practices carried out in
NPD are inuenced by broader strategic and nancial con-
siderations regarding where the company wants to go and
how it wants to go there. A few years prior to the start of
191
Round two
November-December 2005
1 CEO
1 R&D director
1 middle manager
2 project managers
1 market analyst
3 development engineers
9 interviews in total
Fig. 1a. Interviews.
Examples/Description
Authorisation documents, prepared for the meetings at the
gates, from five different projects were reviewed. The
documents which related to Alpha and Beta were studied
in detail.
The Test Platform
The costs of poor quality in Company
Modularity Means and Ends
The Ranking Report
From the CEO of Company
From the CEO of Division
From the Quality manager
Strategy documents
Manual for the R&D Development process
Consulting reports
our research, Company made an important strategic deci-
sion that would inuence all subsequent NPD projects. As
our analysis will show, this decision was to some extent
based on nancial considerations and accounting num-
bers; it was also the starting point for a continuous practice
of strategising during the course of which the nancial
dimension of NPD would repeatedly be enacted.
The making of the strategy of modularisation
The making of the strategy of modularisation started in
the late 1990s, when a customer with whom Division had a
very close relationship had purposely poured wine into an
instrument originally developed to measure levels of dif-
ferent constituents in milk to see what happened. The
instrument produced meaningful data by comparing the
measurement with some reference data. When wine was
used instead of milk as the object of analysis, the instru-
ment still produced output data, but these data had no
immediate information value, as they had no relation to
192 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
Division
Finance
R&D Production
Team Project Support
Business Development Team Greenhouse
Fig. 2. Organisation chart.
the reference data used for milk. However, this incident
made the company inquire in more detail into the output
data produced in the case of wine, and the engineers rea-
lised that, ultimately, these data would have some infor-
mation value if compared to a meaningful reference
point. This suggested that the original instrument could
eventually be sold to a completely new market segment.
The company therefore embarked on a development pro-
ject which resulted in a new instrument for the wine
industry, which was successfully sold to wine producers.
After some time, several customers suggested that they
could make use of a similar instrument for the analysis of
the constituents of grape must. This led the company to
adapt the instrument again and to produce a third product
variant of the instrument originally designed for milk. A
couple of years later, feedback from sales people and engi-
neers suggested that it was about time to redesign the
three instruments.
It was at this point that a senior manager came up with
the idea to design the three instruments on the basis of
reusable modules rather than in isolation from each other,
as the concept of modularity seemed to be of wider rele-
vance for the companys products. The story that the man-
ager promoted was that by basing products on combinable
modules, the company would be able to serve low-volume
customer segments with special requirements:
When you have really seen modularity, you are actu-
ally in a position where you can enter markets that
you would never have entered otherwise because it
would be too costly. Lets pretend that Heinz came
by and said that they would like to make some mea-
surements on ketchup and that it required a special
ow system to handle this substance. We would
Company
Sales & Service
Subsidiaries
HRM
Sales & Marketing
Team Hardware Creation
Team Module Creation
Team Product Creation
never even think about doing that in the old days
because it would require a total reconstruction of
the instrument to install a new ow system. If we
made it [modularisation] right, we could substitute
the existing ow system module with a specially
designed ketchup module. A ketchup module may
cost 125,000 euros, and then it may be protable
to sell only 50 or even 25 instruments. That is an
easy calculation! Is it protable to develop a module
for 125,000 if you can sell 25 instruments to Heinz?
That would never be protable in the old days. Senior
Manager, Team Greenhouse, when asked to tell the
ketchup story that everyone still remembered him
carrying on about back in 2000.
The nancial benet expected from modularity was that by
investing in platform development from which technology
and even physical modules could be reused, future variants
would be much cheaper to develop. These nancial bene-
ts were not obvious, however, for it proved difcult to
translate the intuitive thoughts about the benets of the
new strategy into hard numbers.
The pending project involving the three instruments for
analysis was used to try to calculate whether modularisa-
tion would pay off. But there were two problems with the
comparison of the modular with the non-modular product
variants of the three instruments. First, the existing
spreadsheet model that was usually used for such prot-
ability calculations has always been regarded with some
scepticism, for it was based on a generic NPD project
with particular characteristics. NPD projects differed quite
considerably, however, and translating them into the
terms of the model was often an act of creativity. In other
words, protability calculations at this early stage were
 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
considered somewhat problematic in principle (see also
our discussion below). Secondly, the existing spreadsheet
model was designed to handle only one product at a time,
while in the case of modularity, there would be several
products or product variants that had to be evaluated in
tandem because they would share one or more modules.
Normally, modules that can be shared among projects are
more expensive in their development costs and variable
production costs than stand-alone product parts. This
was expected to be more than offset by the savings in
development costs over time and also savings on variable
costs due to economies of scale; however, these expected
savings are not really visible in the accounting criteria used
in Division to evaluate projects if they are evaluated indi-
vidually in the sense that all initial development costs
are fully allocated to the rst project.
Throughout the debates, the Senior Manager was per-
sistent, and eventually he made a breakthrough:
Finally, after one of my numerous presentations to
the Management Board trying to get them to follow
my idea of modularisation, [the CEO] cut through the
talk and said that he was fed up with this discussion.
He believed in the idea [of modularisation] and the
project [Alpha] was hereby authorised! If he had
not done that, the idea would have been scrapped.
Senior Manager, Team Greenhouse.
The decision to go modular was made in 2000. It was not a
direct result of the existing accounting model that was
used to estimate the nancial protability of NPD pro-
jects; rather, the CEO believed in the idea. Maybe he really
did, or maybe he had to because in the new ve-year
strategy plan, the CEO announced his double or trouble
slogan signifying that he wanted revenues to double with-
in ve years. The primary way in which Division could
contribute to this was by launching more new products
faster. When Divisions management pondered how to
realise this, the idea of modularisation was already there,
waiting for a problem to solve. So, despite the problems of
calculating the benets of modularisation or, perhaps,
because of these problems the CEO made the decision
to go modular. Part of the rationalisation of this strategy
was provided by the belief in the strategic importance of
modularity, which intuitively seemed to be a good way
to increase the number of product launches and make
product development less costly overall. Another reason
to go forward without knowing the exact numbers was
the idea that the rst concrete NPD project that would
be based on modular design (the project Alpha) would
deliver the necessary answers to the yet open questions.
In light of these considerations, the decision to authorise
Alpha was a logical next step. Although this decision
was formally separated (Alpha had to go through the
usual decision process for NPD projects), it was de facto al-
ready made when the decision to go modular was made
(as indicated in the above mentioned statement by the se-
nior manager).
There were perhaps other answers that could have been
mobilised as a strategic move towards doubling revenue,
but the CEO and his management team specically chose
this one. It was no small step. It involved not only the archi-
193
tecture of Divisions instruments, but their entire business
model. It signied a major change in the strategic approach:
from being primarily explorative and market leading in
terms of technology, Division had to become much more
exploitative and begin to reuse existing technology rather
than invent something new. Internally, the R&D and Pro-
duction Departments were reorganised to accommodate
the changes. Most importantly, engineers needed to change
their approach to design products, as the project authorisa-
tion report for Alpha made clear:
The traditional strong focus on cost on the individual
instrument must be changed to a focus on the cost of
the whole technology family.
As an example:
 The developer who designs a unit without any con-
siderations of modularity and optimises that unit to
an individual instrument and to a low cost gets no
points in [Alpha].
 The developer who designs a unit with consider-
ations of modularity and optimises that unit as a
module to be used in many instruments, but to a
higher cost than in the previous example, gets a lot
of points in [Alpha].
(Authorisation Report for Alpha, 2001, p. 8)
And the report continued to acknowledge that this might
not be an easy change process: This is different from
what we have asked our developers to do in previous
R&D projects and will for sure result in some confusion.
The customer side was also up for revision since new
market segments could be potentially targeted. Also, the
modular technology would make it possible to repair indi-
vidual modules that customers had returned and to sell
them as second-hand modules to customers willing to
buy used material. Thus, the management board saw mod-
ularisation as an opportunity not only to contribute specif-
ically to the growth strategy imposed on them from
headquarters, but also to improve a set of strategic imper-
atives such as decreased lead time due to delayed product
differentiation, increased customer satisfaction from im-
proved testing abilities, efcient use of resources in the
R&D, and increased rate of innovation due to development
of technology platforms and product families based on
modules.
The somewhat intuitive way in which the strategy of
modularisation was decided upon was not particularly
exceptional for the company. Rather, it reected the com-
panys practice of dealing with uncertainty in NPD projects
more generally. The CEO and his management team knew
that the spreadsheet model could not serve as an answer
machine (Burchell, Clubb, Hopwood, Hughes, & Nahapiet,
1980). But they had found a way to make decisions based
on the model, even if the information in the model was
not applied in a strict sense. Decisions were made by draw-
ing upon criteria which were not accounting criteria as
such, but which nevertheless had a relationship to account-
ing numbers. Considerations about functionalities, quality,
production design and the like were not nancial consider-
ations in the rst place. Implicitly, however, managers
would use them in their argumentation and sense-making
194 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
as shortcuts for the expected nancial impact of their deci-
sions. Thinking in terms of more strategic or operational
categories seemed to be a way to account for the rather
limited explanatory power provided by the numbers as
such.
Management had been quite aware that modularity
was a concept that could bring about different types of
benets for the company, as there were different strategic
considerations linked to the use of modules. How exactly
the company should exploit the possibilities of modularity
was not exactly clear at the time of deciding to go for mod-
ularity. However, the board expected that the rst NPD
project which would be based on modularity (Alpha)
would clarify the open issues:
When we decided on the modularisation scheme, we
said that Alpha had to pave the way, and then we
would have to learn as we went along instead of
doing the big theoretical groundwork from the out-
set. Hell, we would not have got past that yet
and the world would have passed us by. CEO.
This process of learning as they went along turned out to
be even more intense than management had envisaged,
however. The decision to go modular was by far not the
end of the making of the strategy of modularity.
Accounting and strategising
Once the decision about modularity had been made, the
questions surrounding the modular design were handed
over from the management board to the development engi-
neers. Bringing the strategic message to life in the day-to-
day operations of developing new products proved difcult,
for what was a module? It turned out to be a major chal-
lenge to develop self-contained subassemblies that would
meet the requirements of the instrument variants to be
developed in a particular project and potentially also
requirements of instruments to be developed in future
projects.
In the case of Alpha, the many promising aspects of
modularity identied in the strategic decision-making pro-
cess became a hurdle. Not all potential benets were
mutually sustainable, e.g. reuse and combinability called
for small and relatively simple modules, whereas improved
quality and the development of an exchange system re-
quired what came to be known as intelligent modules that
were big and costly due to the necessary testing require-
ment for these specic purposes.
In line with managements view that Alpha would pro-
vide a learning opportunity, some people within the devel-
opment teams were not very concerned about these
apparent difculties:
I am unsure whether we succeed in meeting the
objectives set up for the NPD side of things. It does
not look like it, but we shouldnt stop believing in
the idea just learn from Alpha. Alpha is not a go
or no-go for modularisation. We will get some things
right and learn a lot, but it wont be a clear success.
We will get something to develop on that is how I
will put it. Project coordinator, Production.
It think it is possible [to be successful with modular-
ity], but it is wrong to decide after just one round. It is
like with projects. . .a team is only really good when it
has had a couple of runs. Same with this we need to
go some rounds before we are really in gear before
we can run more smoothly without all these coordi-
nation meetings. Then it will be more a matter of rou-
tine and we will just grab on to someone ad hoc
rather than through formalised meetings. Manager,
Team Module Creation.
Others, in contrast, took a more critical stance towards
the new strategic message:
I think it is a huge weakness that we have not
dened explicitly what we want to achieve with
modularisation. We have a number of objectives:
faster production, testable modules, etc. But in mar-
keting they have a different idea they are thinking
of modularisation as something that will enable
them to sell any conguration of the instrument
highly driven by software conguration and there
are many more. I think they are all very good, but
they only to some extent overlap and no one ever
really determined how much these ideas should
overlap. R&D strategist.
Whether the given trajectory was approved did not
change the fact that decisions about the form and num-
ber of modules had to be made in practice. How this was
done can be illustrated with the example of Beta. Beta
was supposed to lead to the development of two variants
of a wine instrument and was in this sense a less com-
plex project than Alpha. The accounting practice involved
in this process was implicit and very qualitative. The
development engineers in Team Greenhouse suggested
what they believed to be the best solution for the num-
ber and size of modules, and described alongside it two
extreme cases: one with very few modules and one with
the largest number of modules that they could imagine
the instrument being split into. With these three scenar-
ios in hand, they met with representatives from all the
different areas of the company which they thought
would be affected by the degree of modularisation. In
this meeting, the trade-offs between different strategic
and operational goals were discussed. Fig. 3 summarises
the conclusions made by the NPD team after the
meeting.
The creation of the modular architecture of Beta is a good
example of how local practices resulted in different
perspectives on the question of modularity, which were then
negotiated in light of the overall strategic imperatives that
Division had set. The organisational members all knew
Divisions mission of developing high-quality analytical
instruments for particular industries, the strategy of modu-
larisation and, in Betas case, the low cost approach. How
they each envisaged these aims, however, differed depend-
ing on the local practices in which they participated. The Ser-
vice Engineer from Sales & Marketing was thus concerned
with what effect the proposed modular architecture would
have on customers cost of ownership, whereas the Project
 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204 195

Department Fewest modules Most likely Most modules

R&D Modules too complex The splitting Too time consuming
Too little flexibility corresponds to Very flexible
functionality, which
makes development
very manageable

Production Modules not Suitable size in terms High yield due to easy
manageable in of physical testing
assembly due to manageability in
physical size assembly
Danger of poor yield4 The splitting largely
due to quality issues corresponds to test
from problematic structure, which in
testing of such general is good for all
complex units sub-departments in
Production

Sales & Architectures

Marketing implications of
customers cost of
ownership are unclear
What is the service
strategy for the
instrument, and how
does the proposed
splitting fit with this?
Module size not so
important, as long as
it is easy to repair

Total Probably the poorest This was clearly the This solution received
solution. Several people most desired solution. some positive
expressed that they No direct negative comments, but it was
would have to divide effects were mentioned. generally believed that
modules into smaller Division did not yet
units to lift the local possess the modularity
tasks for which they maturity to reap the
were responsible. benefits of this scenario.

4
Yield = number of modules passing th e quality test in the first attempt.

Fig. 3. Conclusions from discussion of how to modularise beta.

Coordinator from the Production Department representing
the interests of Assembly had an interest in modules being
physically manageable. The Quality Manager, of course, ar-
gued for an architecture that would increase yield4
and thereby make him achieve targets and full the role he
had.
There were no formal control systems through which all
these ends could be translated into an optimal solution.
There were, however, skilful practitioners who would dis-
cuss with each other how an appropriate solution for this
particular project could look like (March & Olsen, 1989).
These practitioners shared a general understanding of the
strategic objectives of Division; they differed in their expo-
sure to local practices and in their practical understanding
of these practices.
Such agreements about the approximate number and
design of modules, as in the case of Beta, were often not
the end of the story, however. Discussions would arise
again later in the process, when the rather abstract deci-
sions about the number of modules had to be translated
into the concrete physical realisation of the parts. Again,
4
Number of modules or instruments passing the test in the rst attempt.
this presented a potential source of conict between differ-
ent actors:
I think that the production departments denition
of modules is what the development engineer thinks
of the most a self-sustained testable module,
whereas at a more general level in the R&D depart-
ment, we think more about the idea of reusability.
However, what is being realised is not really as reus-
able as we hoped, and I think there are more sur-
prises waiting for us. It will probably be the
production department that will harvest the biggest
advantages. R&D strategist.
In other words, strategic decisions taken at a certain point
would come up again at later stages in the process when
they had to be broken down to a more operational level
on which discussions about trade-offs between strategic
goals (strategising) would be continued.
This iterative process of accounting for the benets and
costs of different design solutions seemed, at least to some
extent, inevitable, given the evolving nature of the NPD
projects. It was clearly impossible to decide upon every de-
tail in advance. However, there was also dissatisfaction
196 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
with too much iteration, and part of this dissatisfaction
was reected in the ranking report. This report was writ-
ten in November 2003 by staff members from the develop-
ment department of Division and was intended to rank the
driving forces behind modularisation. In the introduction,
the rationale for the report is made clear:
This project has its origin in the development
department. The lack of ranking makes the early
decision processes much harder, because it is not
fully clear what is most prioritized and best for the
whole company in the long run. Increased costs in
the development phase do not necessarily lead to
decreased protability, because of the great savings
later in the value chain by for instance reduced man-
ufacturing costs, reduced warranty costs and a more
timely market introduction due to less rework at
production ramp-up (Ranking Report, p. 4).
The report was based upon interviews with employees of
seven different departments as well as with representa-
tives from two customers. The results showed quite
remarkable differences in the perceived importance of
the various aspects of modularity. Hence, the authors of
the report concluded with the following statement:
This report could be a good basis of a further mod-
ularisation discussion within the management
group and hopefully facilitate future decision-mak-
ing. The recommendation for the next step is that
the management group meets and hammers out a
strategy and priority list for the modularity imple-
mentation in [Company]. It is important to declare
a common business focus and to diminish the dif-
ferences between the departments by, for instance,
meetings, discussions and education. To be able to
benet from all the advantages of modularisation,
all departments and employees have to be
involved, and it should be high priority to increase
the knowledge and understanding of modularisa-
tion and customer needs. (Ranking Report, p. 34)
What is notable here is that the report acknowledges
the need for both a clear prioritisation by top management
and for aligning the perspectives of different departments
in a more bottomup way through meetings or discus-
sions. Strategic priorities had to be determined at the top,
but they equally needed to be continuously discussed
and aligned within and between the departments.
Such a pattern also became evident in the question of
whether the company should invest in a test platform for
modules. One of the expected benets of modularity was
that each module would be individually testable rather
than only as part of the overall product. This individual
testing would provide more exibility and make problem
analysis much more efcient. To test modules, a test plat-
form was needed; unfortunately, the development of such
a test platform would be a major investment for the com-
pany. Also, testing modules would increase the develop-
ment costs of the modules themselves, since they would
have to be developed in a way that would make them test-
able, which required some additional engineering. The
question was thus whether the company should stick to
70 Hours spend to test one
60
67 h [pre-Alpha instrument]
Max time
50
Average time
40
Minimum time
30
16 h Additional time for test
20 24 h of modules
Time to be saved
10 3h
5h
0
Total test time pr. instrument
Benefit saved test time
16 hours / instrument
119 DKK / hour
= 1.904 DKK / instrument
320 [Alpha] Instruments per year
= 609.500 DKK / year
Estimated annual savings in [Division] are:
= 3.5 to 4.5 m DKK
Note: Absolute numbers were changed, but the same ratios apply.
Fig. 4. Presentation slides used to make the case for the test platform.
the idea of testing modules individually, or whether this
benet of modularisation should be given up. The issue ar-
ose during the project Alpha and was eventually solved
through a topdown decision by management, which
decided that the test platform should be developed. Again,
this decision was to some extent based on calculations
through which the costs and benets of the test platform
were brought to the fore. Fig. 4 displays two slides taken
from a presentation in which the case for the test platform
was made. The rst slide shows the expected time savings
of an investment in the test platform; the second one
translates this into cost savings, based on an hourly full
cost.
The representational limits of these calculations were
also acknowledged, however. Benets and costs were ulti-
mately not only or primarily discussed in terms of account-
ing numbers. Rather, the decision about the test platform
was driven to a large extent by the question of what kind
of strategic benets would be concerned by this decision:
On the one hand it is obvious that this is what we
should do; on the other, it is very uffy. Do we
believe in it? There are a lot of in-built assumptions.
The upfront investments are enormous, so we had to
calculate it and had to understand how many of the
initial objectives related to modularisation were
actually going to be realised by investing in develop-
ing the test platform. Production Director.
But even though there was a decision to develop the test
platform, the Production Director acknowledged a need to
consider anew in each case whether the modules should
be developed according to the needs of the testing platform
or whether a different design would be more appropriate:
 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
Now we have accepted this in principle. It has been
all the way round the management board and the
Group management. We know the assumptions,
and we have decided to go ahead. But that does
not mean we should just do this [to use the test plat-
form] in every project. We should use our brains and
evaluate whether the particular project is really sui-
ted for the test platform. In general, yes, the test
platform is a good idea, and [Alpha] will demon-
strate just that. But there may be special test needs
in future projects where we should choose a differ-
ent way. Production Director.
Again, this may be seen as an example for the need to
strategise anew in each case, i.e. to dene the priorities
of how to design a particular product. This process of prior-
itising was not only a matter of deciding on the trade-off
between strategic objectives; it also took place on a more
operational basis in the day-to-day work of NPD, in which
different possibilities to design and engineer a product had
to be compared with respect to their impact on
protability.
Accounting in the everyday operations of NPD
Accounting at the gates
The decision process at each gate basically resembled
the process of initial authorisation of a new project. To
become and continue to be an NPD project in Division,
new ideas and projects in process had to show a certain
contribution ratio level and a payback ratio level found
as the sum of ve years expected contribution margin
divided by the development costs. These KPIs were
calculated in the spreadsheet model mentioned above.
Divisions stage-gate (Cooper, 1999) model (see Fig. 5)
had seventeen stages out of which seven were considered
so important that to pass the gate and go on to the next
stage required authorisation by the management board,
which included all directors (CEO, R&D Director, Produc-
tion Director, Sales & Marketing Director, Finance Director,
HR Director). This authorisation was subject to meeting
the KPIs and other less specied criteria related to the
market and technology.
Start Concept Design End System Design
Profitability Evaluation Start Product Creation
Proof of Concept System Module
Principle Design Design Creation
(POP) Project Project Project
Team Greenhouse Team Module Creation
Fig. 5. Divisions stage gate model.
197
Three different teams were responsible for the project
at different times during the development process (see
Fig. 5). Team Greenhouse did the fuzzy front end work
and then left it to Team Module Creation to physically rea-
lise the components of the new instrument. Team Product
Creation was responsible for the integration of modules
and other subassemblies into whole, functioning instru-
ments and for transfer of projects to production. During
the research period the responsibility for the system de-
sign stage was shifted from Team Greenhouse to Team
Module Creation because the tasks involved were consid-
ered to be too detailed to match the competencies held
by Team Greenhouse engineers.
At each gate, the project manager of the Team who cur-
rently worked on the project had to prepare a report that
showed the key nancial indicators and other relevant
information. The report was discussed in a meeting with
the management board, during which the board would
scrutinise the validity of the numbers presented. Since a
small percentage of all details could be incorporated in
the report or discussed in the meeting, the management
board developed a practice of raising sample questions.
These were questions that demonstrated to the board
whether the project manager was able to convincingly ar-
gue the case for continuing with the project. If the sample
questions were answered satisfactorily, this indicated that
the project manager could have told the full story, if time
had allowed him to do so (see Jnsson, 2004).
The evaluation of the project during the meeting was
centred on the main accounting criteria. But it went be-
yond accounting numbers insofar as the management
board tried to become clear about whether the project
manager was aware of the various relevant dimensions of
the NPD project:
Its everything. Each of us [directors] represents spe-
cic interests and possesses specic competences
and knowledge. It may be the costs: are they calcu-
lated the right way, is that thing right? I had a look
at [Alpha], and saw that they had allocated as much
test time in assembly as in the old days. But that is
completely wrong, if our development of a test plat-
form is to make any sense. So they had to go. And
Market Release
Sales Release
Product Product & Follow- Respon-
Creation Production up sibility
Project Maturation Project transferred to
production
Transfer to Production Meeting
Team Product Creation Production
198 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
evaluation of costs: are they really that expensive
considering what we know from earlier instru-
ments? Sales prices are just as interesting: have they
come up with unrealistically high prices or have they
identied a realistic market level, or what is it? Then
there is the question of features can we really sell
this instrument with all these features or with only
those features? There is the positioning of the prod-
uct: what variants to market and what features
should they have relative to each other, and how
should we price these features to cover the cost of
a reasonable market window? And then of course
the project plan: is it realistic? Production Director.
When evaluating the projects at the gates, management
started out with the calculations as they were presented
to them by the project managers. In this respect, they man-
aged by the numbers. However, they did not blindly rely on
these calculations. They went beyond the numbers by crit-
ically examining some of the assumptions behind the cal-
culations and by evaluating the project managers general
understanding of the project. As part of this, they sought
to ensure that practices of information exchange and coor-
dination were in place, rather than trying to specify exactly
how each and every practice should be carried out. Within
an organisation, individuals coexist through the intercon-
nections among the practices that they carry out (Schatzki,
1996, p. 198). What is important for coordination is there-
fore to identify the relations among practices by virtue of
which they form nexuses (Ibid., p. 199). In a sense, this is
what the management board tried to insist on:
The Management Board already knows the project
from earlier presentations. Team Greenhouse pre-
sented the general idea to them this is what we
are going to develop so of course that is not up for
discussion. Team Module Creation has developed
the modules, so that is also in place. So based on their
work we check that the world has not changed too
much. So at the Management Board meeting we start
out by agreeing that what we set out to do is in line
with what we are actually doing and also that this
is what we still want to do. We have a much better
idea about the costs how much to expect for screws,
tools, packaging materials, etc. So we make an esti-
mate of the total product costs for all product variants
and also an estimate about the resource costs not yet
spent on the project. This is combined with the
updated sales expectations from marketing in order
to give a full view. [. . .] The Management Board is
particularly focused on the uncertainties in the pro-
jects in terms of costs, timing and sales budget. And
of course they ask about the launch plans, and if the
service organisation is ready for these new products.
Project Manager, Team Product Creation.
The questions were thus whether the project manager
linked the current development stage to the other prac-
tices that the project would go through, and whether he
or she had a sufcient understanding of the rules and
objectives that would drive these other practices. This sort
of inquiry was based on the idea that an integration of dif-
ferent concerns by different parties was important at any
stage during the NPD project to prevent development from
moving into a wrong direction. In turn, it also fostered pro-
ject managers concerns with integrating these different
perspectives. As we will show in the next section, this is re-
ected in the everyday practice through which project
managers accounted for the progress of their project be-
tween the gates.
Accounting during the stages of a project
Between the gates, technical issues about how to design
and engineer the products were at the centre of interest.
This does not mean, however, that the nancial conse-
quences of technical solutions were ignored. The fact that
the project manager had to hand over the project at the
next gate, and thereby present the report including key
performance indicators to the board, impacted the engi-
neers and project managers sense-making during the
stages. Although engineers were primarily concerned with
how to solve technical problems, they would try to relate
technical solutions to questions of revenues and costs. Pro-
ject managers, in turn, were particularly aware of the
needs to make accounting numbers meet the specied
accounting criteria at the gates and to defend their project
in front of the management board. Their job was mainly to
coordinate the work among the teams engineers as well as
between the team and the other departments.
In our department, Team Greenhouse, it is all about
not controlling too much, but rather point out direc-
tions in order not to restrict innovation and creativ-
ity. But then, when ideas start coming, we try to
manage them in a meaningful direction. We do not
draw up a tight schedule from the start, but let it
develop through a number of stages. Of course there
is a budget and a rough time estimate and some
high-level targets for what we want to achieve, but
at this point in time we do not know what will work
which is why there must be some room for choosing
new directions as we go along. Therefore, being a
project manager is not so much about controlling. I
mean, of course you need to control, but it is more
like coordinating what is going on by being in dia-
logue with all the parties involved in the project.
Project manager, Team Greenhouse.
This suggests that NPD practices were organised in a non-
totalitarian manner (Schatzki, 1996, p. 124), i.e. that the
understandings, rules, and teleoaffective structures within
the practices were dened in such a way that they al-
lowed for several alternatives of how to carry out the
practices. As explained above, during the meetings at the
gates, the management board would challenge project
managers general understanding of the project in an at-
tempt to determine whether important issues from later
stages were properly reected in the accounting numbers
presented in the reports. Project managers were thus ea-
ger to try and link to the perspectives of other
departments:
So you talk a lot, go to a lot of meetings and walk
around to be on top of things and to nd out what
 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
people are working with. Some of it is related to
hardcore development issues, you know engineering
stuff: does this technology work, what are the
parameters and things like that how do we develop
this new instrument. But a large part of it is also to
make sure that what we do is in line with marketing,
service and production. You need to have your rela-
tions in place and to call on the right people at the
right time. Project manager, Team Greenhouse.
Similarly, the R&D strategist explains that development
engineers in the Team Module Creation should adopt a
wider perspective and be concerned not only with the
specications that they received from Team Greenhouse
but also with the wider implications of realising these
specications.
For example, I heard about a power supply dimen-
sioned for an [Alpha] variant. . ..that did not take into
account that the power input needed in [another
instrument] was higher. It did not say explicitly in
the specication documents that this power supply
should account for both instruments, but it did say
that the project was supposed to develop both these
instruments. So we want the Team Module Creation
engineers to take a wider approach, but not too
wide, of course it is the responsibility of the Team
Greenhouse architect to develop the right specica-
tion. R&D Strategist.
The way in which the integration of different perspec-
tives was achieved in practice can be illustrated with
the example of Beta. Project Beta presented a challenge
to the engineering teams in that it targeted a new type
of customer segment. Beta was a low-cost product that
differed in its specication from the high-quality prod-
ucts on which Company had exclusively concentrated in
the past. In order to understand the users needs in terms
of functionality and costs, development engineers were
sent on eld trips. There, they sought to understand what
type of user they were up against (e.g. chemist or farm-
er), how the users would handle the instruments (e.g.
transportable or stationary), the environment in which
the future instruments would be used (e.g. levels of dust
and humidity) and similar issues. You simply have to
see it, you need to get your hands dirty; there is no
way around it (Senior Manager, Team Greenhouse). Send-
ing development engineers on eld trips was believed to
be important for making the right design and engineering
decisions:
It works much better when they have been out there
and have met these farmers that only speak Italian
and how do you think they are going to use an
instrument with a lot of fancy functionalities? It is
very effective. We are much more certain about
what we are doing after having visited a producer,
whereas before where we fumbled a bit. Project
Manager, Team Greenhouse.
The eld trips fullled a similar function as the internal
coordination with other departments that would take
place later on in the project development. They ensured
199
that engineers understood the eventual uses of the product
they were developing, as engineers needed to get inside
the customers practices to become acquainted with the ar-
ray of activities constituting these practices and their men-
tal organisation.
While being in favour of the development engineers
venturing into the eld, market analysts usually warned
against using the impressions from such isolated events as
generally valid market information:
You have to be careful, because then they made a
few eld trips with the engineers, which I think is
a very positive thing, but when they had seen three
and now I am being a bit provocative but if they
had seen three, four or maybe ve producers, they
thought they knew the business. That is dangerous
because they didnt, right? Sometimes we had argu-
ments like the customers want this and that, and
then Id say: Yes, in the specic situation you expe-
rienced in Spain, but. . .. Market Analyst, Business
Development.
Market analysts, in turn, evaluated the market not on
the basis of one type of data but a combination of informa-
tion from various sources:
I do my market evaluations based on how many pro-
ducers are there, how big are they, where are they
located geographically and so on. So that is like hard
statistics that I can access on the Internet or buy
from databases. [. . .] I know that we are not going
to sell to all of them: on the Internet I cannot nd
information on how interesting our idea is and
how much value it creates for the customers. There-
fore I will call three or four of the most important
markets and talk to our sales people: Listen, have
any of your customers ever mentioned this? And
he will respond: Yes, as a matter of fact they have.
And then I will ask him to dig a bit deeper to nd out
how much they would be willing to pay for such a
solution, how they would use it, and how many of
this type of customer he has, and then get back to
me. And I also know consultants, major producers,
university people and others like that, and I choose
my sparring partner depending on the type of task
at hand and its condentiality. Market Analyst, Busi-
ness Development.
The knowledge acquired during these activities was then
translated into sales volumes, price points, instrument
specications, etc., which was then used as inputs in the
NPD project in question. The result was a combination of
numbers and text through which it seemed that Division
effectively bridged the latent conict between the quanti-
ed customer and the sales customer (Vaivio, 1999). Thus,
engineers on eld trips acquired valuable knowledge about
the particular use of the future product but not about the
entire market; conversely, the Market Analyst collected
information about the market, but not about the product
and its use as such. However, when these understandings
were combined and reproduced in the product develop-
ment report (to be eventually presented at the gates) as
technical specications and accounting numbers, a strong
200 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
case emerged, the validity of which was discussed at pro-
ject meetings. At such meetings, negotiations about the
customers, technology, software, time plans, quality issues,
etc. were conducted in relation to the overall strategy, the
strategy of the future product, and ultimately economic
elements of the business case, e.g. cannibalisation of exist-
ing products, sales volumes and contribution ratios. This
required some efforts of translation. Knowledge about the
sales customer was, for example, translated into the
language of the quantied customer, which most organi-
sational members could more easily relate to. Thus, when
the sales people argued for a specic feature which they
believed was important for the sales customer, its contribu-
tion was evaluated in relation to the quantied customer.
The process was reversed when sales people believed that
ideas borne by the quantied customer would harm the
sales customer. However, since the language of the sales
customer was less common compared to that of the
quantied customer, it required some perseverance to
make the case. Essentially, it required that the sales people
were able to explain the customer practice to the other
organisational members and thereby enable them to speak
(or at least temporarily understand) the language of the
sales customer. The exchange of perspectives and ratio-
nales for action that could be observed in these meetings
constituted these actors practice of accounting. Their local
information allowed them to reduce uncertainty towards
particular goals and discuss the trade-offs between differ-
ent goals.
Back in the workshop, development engineers had to
come up with technological solutions that would meet
the various specications that had been agreed on: the
target cost found as the expected sales price dened
by Business Development, less the contribution ratio
required by top management. This solution had to be
achievable in a way that did not violate the other KPIs,
meaning that ve years contribution margin had to cover
development costs by a factor X, nor could it violate the
strategy and value statements of Division. The process of
meeting target costs was not the outcome of a detailed
breakdown of functional requirements matched with
allowable costs. Trying to tease out this process revealed
a subtle array of activities organised by a mental causality
held by the engineers of what was necessary to know and
do to move on given the situated case of technology,
customer and strategy:
Eh, yes, well I did not really do it that way. I found
out what they [the parts] were probably going to
cost. I mean, of course we have tried to split it up a
bit, but, really, I mean, [a key part] is not from our
project team. Its from [one of our development engi-
neers]. And then there were some evaluations of
that. And I have tried to determine the manufactura-
bility of his idea, and does it include the features
necessary to make it functionally adequate. Sort of
backwards, I suppose you could say. [. . .] It is not like
I had a budget for a lot of functionalities, it is more
sort of. . .here is the most boiled down solution we
can imagine does it comply with the KPIs? Devel-
opment Engineer, Team Greenhouse.
Exactly how this mesh of rules, ends and values was
accomplished was only partially explicable by the project
manager and development engineers, underlining Schatz-
kis (1996, p. 128) comment that the limits of intelligi-
bility are broader than those of language. Certainly, it
did not help that the physical sites of this practice were
dispersed in time and space: like in Prestons (1986)
arrangements of informing, development engineers met
colleagues at the coffee machine or they incidentally
bumped into each other at lunch and used the opportu-
nity to exchange ideas and receive immediate feedback.
Seemingly, the textbook version of target cost manage-
ment refers to a much more clear-cut or totalitarian
practice compared to the actual activities involved in this
process, as was found in Division (see also Mouritsen,
Hansen, & Hansen, 2001).
While, in this way, accountabilities were enacted in a
rather informal manner and were shared among different
actors, there was at the same time some need for a more
formal denition and separation of accountabilities. This
need was mainly created by the stage-gate-process de-
scribed above. Before our eldwork started, Company had
introduced a change to this stage-gate-process. In the past,
the same team of engineers would stay with a project
throughout all its stages. While this allowed the project
team to become owners of a particular project, it also
meant that engineers who would specialise in a particular
type of task had to cover a variety of different engineering
activities, not all of them being of equal interest to every-
one. Moreover, when a project came to a gate and had to
be justied in terms of its viability, it was not always yet
ready for the next stage. But since the same project team
would continue with the project, it became an accepted
practice to have a certain overrun and to nish some of
the activities later than initially planned. Mainly for those
two reasons, management reorganised the stage-gate pro-
cess by splitting each project into three main phases and
allocating three different teams to these phases. Not only
did this allow for more specialisation on the part of engi-
neers; it also forced project managers to full all their du-
ties before handing over the project to the next team. This
new practice therefore created a more clear-cut account-
ability of each project team and, given the sequential inter-
dependencies of tasks, each project team had an interest in
enforcement of the accountability of the others.
In the case of Beta, this became obvious at the point
where Team Greenhouse had to hand over the project to
the Team Module Creation. Team Greenhouse came up
with the design of the architecture of the instrument and
outlined the various functionalities together with cost esti-
mates in the project report. While the project report thus
contained a representation of the project in accounting
terms, the receiving team was not entirely satised with
this representation. The numbers contained in the report
were too aggregate for Team Module Creation to base their
actions on. They requested a more detailed representation
to see through the numbers and judge the viability of
realising the required functionalities within the indicated
overall target costs. The receiving team simply did not
want to run the risk of accepting unachievable target costs
and ultimately threatened to use its right not to sanction
 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
the projects transfer to the next stage. That this became an
issue was a result of Alpha showing a signicant budget
overrun, which caused the manager from Team Module
Creation and his people to feel the Senior Manager from
Team Product Creation and the MB breathing down their
necks. Team Module Creation did not want to end up being
blamed again for something over which they had no con-
trol, as they felt had been the case with Alpha.
There was also another issue involved here, for besides
criticising the overall lack of detail in the documentation of
costs in the project report, the receiving team also com-
plained that the report did not include any indirect vari-
able production costs (IPC). These costs became visible
only once the Team Module Creation entered the bill of
materials (i.e. the list with all required materials) into
the ERP system. The ERP system automatically adds a cer-
tain percentage to the direct variable costs in order to ac-
count for these indirect costs, which are not entered
separately for a particular instrument. Apparently, Team
Greenhouse engineers were unaware of this automatic
allocation procedure and did not include it when preparing
their cost estimates. For Team Module Creation, this meant
an additional cost item which increased actual costs and
made it more difcult to stay within the target costs elab-
orated by Team Greenhouse. When this issue was men-
tioned at a project meeting with participants from all
relevant departments and teams, a task force was ap-
pointed to solve this problem. The result of the discussion
was that the development engineer from Team Green-
house who was responsible for outlining the target costs
would, from now on, have to include indirect production
costs in his cost estimate.
The need to hand over the project at the gates reminded
engineers and project managers that numbers matter
and that representations of the status quo of a project
had to be expressed in a way that allowed the separation
of accountabilities, but not always was everyone satised
with the available methods to accomplish this. Limits of
calculability were acknowledged and better solutions
looked for, as the following two quotes illustrate:
A project manager in Team Greenhouse is not the
best person to make profound nancial evaluations
in order to determine if a module should be of a cer-
tain size or be produced of this or that component. It
would be much better if we had someone with the
right skills that could focus on that. I mean, I can
throw numbers into a spreadsheet, but we really
need more than that. Project manager, Team
Greenhouse.
I really need a tool to evaluate the nancial benet of
reuse. What is the cost implication in the production
department of having one product structure com-
pared to another? I also miss a quantication of lead
time implications what are the costs and benets
of one week more or less? I think we know our var-
iable costs, but what about all the activity-related
costs? I am unable to make a fact-driven argument
about all the cost types that are not direct. Project
Coordinator, Production Department.
201
Discussion
It is hard to say whether Division was more oriented to-
wards nancial or strategic goals and whether it was ulti-
mately putting more focus on operational efciency or
strategic effectiveness. However, the fact that there were
several, at times competing, strategic objectives (a fact that
the Ranking Report had criticised) indicates that there was
at least no focus on one particular strategy. As a conse-
quence of the variety of strategic objectives associated
with modularity, there was considerable leeway regarding
the interpretation and evaluation of NPD practices. NPD
practices were in this respect less totalitarian than the
operational practices in Ahrens and Chapmans (2007) res-
taurant chain. Distinct practices in time and space clearly
existed and ensured continuity and order (Schatzki,
1996), but the way in which these practices were carried
out was subject to variation. Control of these practices
did not work through specication of each and every de-
tail, but rather through high level targets and coordination.
As a consequence, engineering and design choices could be
accounted for and justied from different points of view
and this is in fact what happened in Division.
But while there was competition between different
strategic concerns, there was no open conict as evidenced
in Mouritsen (1999) or Vaivio (1999). Different strategic
objectives were also regarded as complementary in the
sense that each of them was supposed to contribute in
its own way to overall protability. It was clear that there
were trade-offs and that not all benets of modularity
could be realised to the same extent. Ultimately, however,
there were no substantial political agendas to promote
particular strategic objectives as ends in themselves or,
at least, we did not observe any conicts that would have
stemmed from such agendas; rather, strategic concerns
were regarded as means to protability that had to be bal-
anced in a reasonable way. While the different strategic
objectives entered NPD practices as part of their teleoaffec-
tive structures (Schatzki, 2002), they were not the only
means through which the appropriateness of these prac-
tices was assessed. The overall concern with protability
constituted the general understanding (Schatzki, 2002) of
functionality across the different practices and parties. It
was in the name of protability that strategic objectives
had to be negotiated.
The stage-gate process was critical in this respect, as it
created a formal structure of accountability which re-
minded project managers and engineers of the importance
of the overall goal of protability. This created an incentive
to think about accounting numbers when debating design
choices and to discuss the trade-offs between strategic
objectives also in terms of their nancial impact, even if
this was possible only to a limited extent. But the imper-
fect representational qualities of accounting were not con-
tested, because strategic objectives were not translated into
numbers; they were rather mobilised in tandem with
nancial arguments. Accounting inscriptions were not re-
garded as the single best way of representing what hap-
pens in the organisation or even as a road to
commercial salvation, as in the case studied by Ezzamel,
202 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
Lilley, and Willmott (2004). Managers in Division did not
want to rely entirely on knowledge that was disembodied
in inscriptions (Ibid., p. 808). This also became clear when
projects were to be evaluated at the gates, insofar as such
evaluation was not exclusively guided by nancial motives
either. On the one hand, the management board drew from
their own practical expertise in order to see through
numbers that featured in the project reports. In this re-
spect, their inuence on project managers did not exclu-
sively or primarily build upon the particular quality of
accounting inscriptions as mechanisms of action at a dis-
tance (Latour, 1987; Robson, 1992). On the other hand,
the management board used the meetings at the gate to
ensure that there was local communication and coordina-
tion. Top managements control from the top was not sup-
posed to replace the more hands-on practice of control in
NPD, as in the case of BusinessPrint (Mouritsen, 1999); it
rather tried to promote it. In a way, this made sense given
the plurality of strategic messages that modularisation
stood for. While the contribution that modularisation
could make to each of these strategic goals was clear in
principle, it was less evident how this could be achieved
in practice. Only by drawing upon diverse bodies of local
knowledge and ongoing experiences in product develop-
ment was it possible to understand the relationship be-
tween module design and each of the strategic objectives,
and only then was it possible to discuss how these objec-
tives should be traded off against each other. In other
words, the strategising process was both about uncertainty
reduction and goal congruence, and accounting informa-
tion was mobilised in the name of both (see Davila,
2000). In pluralistic settings, these two functions will often
intermingle, since the selection of a goal is at the same
time a reduction of uncertainty at the local level, and since
local information is often needed to understand what dif-
ferent goals actually mean and how they should be
traded-off against each other. This is also in line with Ah-
rens and Chapmans (2007, p. 23) observation that means
and ends are constructed simultaneously in practice (see
also Lave, 1988). In contrast to their ndings from the res-
taurant chain, however, our case suggests a more pro-
nounced bottom-up contribution to the strategising
process. Local knowledge seems to play a stronger role
for the crafting of practices in our case of NPD than it does
in the commercial setting of Ahrens and Chapmans restau-
rant chain. This, we suppose, is linked to the high degrees
of uncertainty and complexity in our case or, rather, to the
way in which organisational actors enacted these particu-
lar circumstances.
At the gates, nancial accountability was created
through a set of rules (formal criteria) dened by top man-
agement. Between the gates, it was more like a general
understanding that orchestrated behaviour. Strategic
objectives constituted part of the teleoaffective structure
of the different practices in NPD. The accountability toward
them was enacted through the fact that different actors
quite naturally drew upon these objectives in the discus-
sions, building upon the practical understanding of the
practices they were familiar with (e.g. customer-related
practices). In contrast, this was not really the case for
nancial accountability. Apart from top management,
there were no spokespersons (such as management
accountants) who would, on a continuous basis, try to en-
act this form of accountability. However, the need to pro-
vide accounting numbers at the gates motivated project
managers and others to enact nancial accountability also
during the stages.
This case shows that even in the absence of a strong
reliance on accounting numbers, a drifting of practices
(Quattrone & Hopper, 2001) can be avoided because other
forms of accountability are mobilised to ensure a coordina-
tion of NPD practices. In our case, control assumed the
form of horizontal information sharing, guided by strategic
objectives and a general understanding of the need to be
protable. Interestingly, our case also shows that some
attention to accounting information is likely to be impor-
tant in uncertain and ambiguous settings such as NPD.
The enforcement of nancial accountability at the gates
can be seen as a means to remind managers of the impor-
tance of accounting numbers even if these are only
imperfect representations of the decisions and practices
in NPD. Accordingly, accounting information was shown
to have a rather indirect effect on organisational practices
in Division. It was not the case that different rationalities
were translated into accounting; rather, accounting infor-
mation was selectively enacted to amend the evaluation
of these rationalities.
To be sure, the combination of the more formal, nan-
cial accountability at the gates and the rather informal
control mechanisms during the stages should not be read
as neither an optimal nor a suboptimal solution. We
suggest simply seeing it as the companys reaction to the
particular setting in place. There were no management
accountants who could have developed more sophisticated
costing systems that would have allowed translating the
engineers logic more easily into an accounting logic. Per-
haps this was good, because it meant that engineers had
to come together and coordinate their work in a bottom-
up way. Perhaps it was suboptimal, because things could
have been done more efciently with a more sophisticated
formal structure in place. The fact that not everyone was
entirely happy with the amount and quality of nancial
information available was due to strategic imperatives
being partly conicting and in need of trade-off. More
knowledge of the costs and benets of different design
choices could have helped make these trade-off decisions;
however, it could also have created resistance against too
strong a quantication of what is regarded as a question
of qualitative judgement.
Whether optimal or not, the inuence of accounting
information can only be understood when considered in
interaction with other types of accounts or rationalities,
such as strategic objectives. This has some important impli-
cations for research with which we conclude the paper.
Conclusion
Accounting information is enacted as part of an account-
ability relation (Ahrens, 1996). Accountabilities can be di-
verse, especially in pluralistic settings (Denis et al., 2007;
Sinclair, 1995). As a consequence, the role and relevance
of accounting information becomes intelligible only against
 B. Jrgensen, M. Messner / Accounting, Organizations and Society 35 (2010) 184204
the background of its interaction with other types of
accounts. In a sense, this is in line with contingency ap-
proaches to NPD, which have tried to link the relevance of
accounting information to different types of strategy and
uncertainty (Davila, 2000). However, as our case shows, it
may not (or at least not only) be the content of strategy that
mediates the usefulness of accounting information; it may
also be the way in which, and the extent to which, strategic
ideas are mobilised that co-determine the relative impor-
tance of accounting numbers. This can be an important
message for contingency approaches to the topic, which
tend to take strategy as a black box (Chua, 2007) rather
than considering the strategising efforts of actors.
As illustrated in this paper, practice theory offers a use-
ful vocabulary to illuminate these processes of strategising
and the way they relate to the use of accounting informa-
tion. While our paper has brought to the fore some of the
complexities and nuances in the relationship between
accounting and strategising, there is clearly scope for more
research in this area. It seems especially worthwhile to
examine in more detail how accounting tools and concepts
contribute to the process of crafting strategies and to
which extent strategies are pre-congured by the exis-
tence or non-existence of such tools. Similarly, the possible
competition between accounting representations and
strategic ideas is a promising area of research. Since it is
not always possible to unambiguously translate strategic
objectives (relating, for example, to quality or customer
satisfaction) into the language of accounting, the question
arises to which extent organisational actors refer to either
of them when evaluating alternative courses of action.
Accounting is a powerful practice, but it is at the same
time only one among many activities within an organisa-
tion. To study accounting in the contexts in which operates
(Hopwood, 1983) implies examining the ways in which
accounting relates to, and intersects with, other types of
activities, such as strategising or marketing. An increased
examination of such intersections would not only be
worthwhile for accounting researchers but is also likely
to increase the interest of other disciplines in the outputs
of accounting research.
Acknowledgements
Comments from two anonymous reviewers as well as
from Chris Chapman, David Cooper, Fiona Anderson-Gough,
Kari Lukka, Martin Carlsson, Morten Jakobsen, Niels De-
chow, Paolo Quattrone, Taka Fujioka, and the participants
at the workshop on Field Work in Accounting Research at
Warwick Business School (June 2006) have helped us im-
prove this paper. Acknowledgements are also due to the
accounting departments at Turku School of Economics
and Business Administration and Sad Business School, Uni-
versity of Oxford, for hosting the visits of one researcher
during which parts of the paper were developed.
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