Stakeholder salience and accounting practices in Tanzanian NGOs

Abstract

Abstract: Purpose – This paper seeks to investigate the influence of stakeholders on accountability relationships and the development of accounting practices and processes within two Tanzanian non-governmental organisations (NGOs).

Design/methodology/approach – Stakeholder analysis is employed to evaluate the positions of stakeholder groups in terms of Mitchell et al.'s attributes of power, legitimacy and urgency. Data analysis was undertaken using a grounded theory approach.

Findings – The research found that overseas donors were the stakeholders with the highest salience as a result of which they significantly influenced accountability relationships and accounting processes and practices within NGOs. Despite the often proclaimed NGOs' objective of improving welfare of beneficiary groups there appeared to be little accountability by NGOs to beneficiaries. Differences in the accounting functions in the NGOs were explained by the influence of dominant stakeholders, the credibility of the organisation and its managers and the varied ways through which the organisations negotiated and accounted for funding. Moreover, accounting was virtually unemployed in internal decision-making processes indicating that it was largely a tool for satisfying claims of the highly salient stakeholders.

Research limitations/implications – This paper makes a contribution to the literatures of both stakeholder theory and NGO accounting. From the grounded theory analysis it is suggested that the stakeholder framework of Mitchell et al. could be usefully extended in the three areas of power asymmetries of definitive stakeholders, stakeholder salience asymmetries across organisational phenomena and asymmetries across time.

Originality/value – The paper contributes to the empirical accounting literature by seeking a deeper understanding of how and why accounting and accountability relationships develop within NGOs. It sheds light on a type of organisation that has not been extensively studied in the public sector management literature.

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