Accounting Relativism: The Unstable Relationship between Income Measurement and Theories of the Firm

The knowledge structures underlying accounting representations are rarely investigated and usually tend to be taken for granted. As a case of the problematic knowledge foundations of accounting, we concentrate on one of the most relevant conceptual underpinnings informing the construction of the accountsÐthe relationship between theories of the ®rm, accounting theories, and income measurement. In particular we analyse and compare the ways in which this relationship has been conceived and developed in two theoretical contexts, the Italian tradition of Economia Aziendale and the US entity vs proprietary debate. Various and contradictory approaches to the concept of the ®rm and income calculation in these two theoretical traditions emerge. Such a conceptual variety is what we refer to as `accounting relativism'. This is de®ned here as the co-existence of di erent accounting representations and measurements, both of which are not objectively rankable in any conceptual hierarchy, because of the incommensurability of their basic assumptions, i.e. of their knowledge bases. This intrinsically `unstable' character of accounting at a conceptual level is likely to have relevant implications, representing a major source of theoretical variety, as well as a premise for making sense of power uses of accounting within organisational settings