Survival and Growth as Organizational Goals

Thomas R. Prince , Extension of the Boundaries of Accounting Theory , (Cincinnati, Ohio: South-Western Publishing Co., 1963).

David H. Li , "The Nature of Corporate Residual Equity Under the Entity Concept," The Accounting Review, (April, 1960), p. 259.

Richard Mattessich , Accounting and Analytical Methods, (Homewood, Illinois: Richard D. Irwin, Inc. , 1964), p. 186.

David H. Li , "The Objectives of the Corporation Under the Entity Concept," The Account-ting Review, (October, 1964), p. 946.

Orthodox accounting practice appears also to have imposed the viewpoint of the proprietor or stockholder, i.e., it has equated the entity's interest with that of this group of entity participants. This viewpoint implicitly equates profit generation to entity self-sufficiency and the economic theorem of profit maximization to entity motivation.

Dwight R. Ladd , Contemporary Corporate Accounting and the Public, (Homewood, Illinois: Richard D. Irwin, Inc., 1963), p. 21.

K.W. Rothschild , "Price Theory and Oligopoly," The Economic Journal, (September, 1947), pp. 308, 309.

Robert Lyon , "Profit Maximization and Motivation, "Economics and Business Bulletin, (September, 1963), pp. 16-24.

Gunnar Myrdal , The Political Element in the Development of Economic Theory, ( Cam-bridge, Massachusetts: Harvard University Press , 1955), p. 93.

Richard M. Cyert and James G. March , A Behavioral Theory of the Firm, (Englewood Cliffs, New Jersey: Prentice-Hall, Inc., 1963), p. 43. These participants include stockholders, potential stockholders, suppliers, customers, employees, federal and state government agencies, loan creditors, and the public at large.

Ibid, p. 240.

There are many "real life" illustrations of this survival objective where organizations have continued to exist long after their basic objectives have been accomplished. These organizations have changed the direction of their objectives towards new goals. A good illustration of this is the "March of Dimes" which was set up to fight polio, and now is concentrating on birth defects.

Norton M. Bedford , "The Nature of Future Accounting Theory ," The Accounting Review, (January, 1967), p. 84.

Li , " The Nature of Corporate Residual Entity Concept," op. cit.

E.T. Grether , Marketing and Public Policy, ( Englewood Cliffs, New Jersey: Prentice-Hall, Inc., 1966), p. 37.

Joseph W. McGuire , Business and Society, (New York: McGraw-Hill Book Company, 1963), p. 275.

William J. Baumol , Business Behavior, Value and Growth, (New York: The Macmillan Co., 1959), pp. 45-53. Baumol observes that, when sales decline, people tend to shun the product, banks become less receptive, distributors are lost, and the firm becomes vulnerable to general deterioration.

Ibid, p. 49.

See Tables 1 and 2.

American Accounting Association , A Statement of Basic Accounting Theory, (Evanston, Illinois : American Accounting Association, 1966), p. 21.

Louis Goldberg , An Inquiry into the Nature of Accounting, (Iowa City, Iowa: American Accounting Association , 1965), p. 58.

R.K. Mautz , Financial Reporting by Diversified Companies, (New York : Financial Executives Research Foundation, 1968), p. 105.

Respondents were required to indicate the relative importance of these characteristics, and Table 1 is based upon the median as an appropriate measure of central tendency for this purpose. The latter methodology applies to Tables 2 and 3 as well.

A.A. Berle , Jr., "The Corporation in a Democratic Society," in Anshen and Bach (eds) Management and Corporations 1985, (New York : McGraw-Hill Publishing Company, 1960), p. 75. 25. Peter F. Drucker , Concept of the Corporation, (New York: John Day Company, 1966), p. 15.

The rejection of a "stockholders only" in favor of a "widespread participants" approach results in a need to identify quite specifically the needs of these participants. The Mautz study is the result of consultation with one group of these participants, and, in addition to indicators of growth potential, it lists the relative importance of indicators of the other characteristics listed in Table 1.

The Mautz study is an example of such suggestion, and the usefulness of profit as an indicator of growth potential is clear from Table 2.