The impact of external pressures (gaiatsu) and internal pressures (naiatsu) on Japan's accounting reforms since the late 1990s

Abstract

PurposeThe paper extends the literature by examining the impact of politics, conflicts and compromises resulting from external pressures (gaiatsu, 外圧) and internal pressures (naiatsu, 内圧) on the convergence and globalization of accounting and accountability in Japan.Design/methodology/approachUsing Japan as a case study, it is examined how and why the stimulus for significant accounting reforms arises, how the government manages and reacts to the powerful forces of gaiatsu and how it balances naiatsu among key stakeholders.FindingsThe ongoing changes in accounting regulations in Japan are neither the result of an unmediated response to gaiatsu nor the outcome of naiatsu. Rather, Japanese accounting changes are the consequence of complex external interactions and internal compromises. Specifically, Japan demonstrates a repetitive pattern of conflict management, which alters the domestic power balance based on naiatsu, and forces the Japanese government to make compromises to policy changes initiated by gaiatsu.Research limitations/implicationsThe findings have implications for the development of accounting and accountability, the globalized business world and international accounting research because they challenge claims made by global standards setters that international standards such as International Financial Reporting Standards are superior, are built on so-called “best practices” and are relevant to all countries.Originality/valueInvoking the concepts of gaiatsu and naiatsu is a critical approach to understanding Japan's convergence toward economic liberalism and Anglo-American models of accounting and accountability.

Theoretical and methodological milestones in international accounting research: the contributions of Jill L. McKinnon

“…McKinnon's legacy is further reflected in publications in AAAJ such as Greer and Patel (2000), Pan and Patel (2017) and Tsunogaya and Patel (2020) with my PhD students. Building on, and guided by, McKinnon's doctoral socio-cultural framework, Greer and Patel (2000) examined how the clash of western, capitalist values embedded in the language of accounting and accountability contributed to the marginalization and disempowerment of Australian indigenous peoples.…”

“…Building on, and guided by, McKinnon's doctoral socio-cultural framework, Greer and Patel (2000) examined how the clash of western, capitalist values embedded in the language of accounting and accountability contributed to the marginalization and disempowerment of Australian indigenous peoples. More recently, the infusion of McKinnon's framework to international accounting research is evidenced in Tsunogaya and Patel (2020), which examines the politics, conflicts, and compromises resulting from external pressures ( gaiatsu , 外圧) and internal pressures ( naiatsu , 内圧) on the convergence and globalization of accounting and accountability in Japan. McKinnon's focus on eclecticism of method is reflected in Pan and Patel (2017) which applies a mainstream between-subjects, quasi-experimental research design and a combination of personality and cultural values to provide sharper insights into Chinese accountants' judgments in applying principles-based International Financial Reporting Standards.…”

Decision‐making processes of public sector accounting reforms in India—Institutional perspectives

“…Public sector accounting reforms have been explored through multiple theoretical dimensions frequently focusing on links between modern political ideas and the conversion of these ideas into organizational practice (Antipova & Bourmistrov, 2013; Lassou & Hopper, 2016; Tsunogaya & Patel, 2020). For example, diffusion theory (Rogers, 1995) has been used to explore the range and extent to which organisational practices incorporate and implement accounting systems (Bjornenak, 1997).…”

“…Subsequent public demands for greater state accountability demonstrates the exertion of socio‐political pressure on the state while NPM reforms in response to such demands, manifested through the ensuing institutional changes enforced by the government on in its agencies is an example of functional pressures exerted by the state on its own agencies (Goddard et al., 2016; Mutz & Flemming, 1999). Socio‐political pressures in the national context also often arise because of the need of the government to reinforce its legitimacy at the local level (Ball & Craig, 2010; Dillard et al., 2004; Meyer & Rowan, 1977; Tsunogaya & Patel, 2020). This could result in governments of countries volunteering to adopt international norms or standards perceived as symbols of legitimacy (Djelic & Quack, 2008; Palmer et al., 1993; Tsunogaya & Patel, 2020).…”

“…Socio‐political pressures in the national context also often arise because of the need of the government to reinforce its legitimacy at the local level (Ball & Craig, 2010; Dillard et al., 2004; Meyer & Rowan, 1977; Tsunogaya & Patel, 2020). This could result in governments of countries volunteering to adopt international norms or standards perceived as symbols of legitimacy (Djelic & Quack, 2008; Palmer et al., 1993; Tsunogaya & Patel, 2020).…”