The Financialization of the Firm
Show Less

The Financialization of the Firm

Managerial and Social Implications

Alexander Styhre

The term ‘financialization’ denotes the general tendency in the advanced Western economies to allow a substantial proportion of taxable profits to accumulate in the finance industry. Alexander Styhre discusses the financialization of the firm in the period after 1980 and stresses how key managerial activities have been redefined on the basis of finance theory and free-market ideologies. This book critically examines the literature and the implications of financialization for organizations and the economy as a whole.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 5: Managerial control, auditing, and accountability

Alexander Styhre


In 1978, Pfeffer and Salancik published their influential The External Control of Organizations, a treatise wherein they elaborated on the idea that all organizations are bound up with its environment and need to effectively manage these external relations to thrive and survive. Then again, organizations cannot effectively respond to all impulses and stimuli from the outside but must rather, as Daft and Weick (1984) put it, enact their own environment, that is, determine what environmental factors to recognize and respond to. As part of this external control of the corporation, Pfeffer and Salancik (1978) introduced the concept of external standards, meaning the performance parameters being used to evaluate the organization’s performance that are commonly established outside of the firm. Say Pfeffer and Salancik (1978): The most important aspects of [external standards] is that the acceptability of the organization and its activities is ultimately judged by those outside the organization . . . This does not imply that the organization is at the mercy of outsiders. The organization can and do manipulate, influence and create acceptability for itself and its activities. (Pfeffer and Salancik, 1978: 11). Albeit being written in the decade of great economic turbulence and at the very threshold of the new regime of financialization beginning in the 1980s, Pfeffer and Salancik (1978) here anticipate what Michael Power (1996) would refer to as the audit explosion, the sharp growth in auditing practices in the new regime of managerial control.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.