Audit Structure and Its Relation to Role Conflict and Role Ambiguity: An Empirical Investigation Author(s): E.

Michael Bamber, Doug Snowball, Richard M. Tubbs Reviewed work(s): Source: The Accounting Review, Vol. 64, No. 2 (Apr., 1989), pp. 285-299 Published by: American Accounting Association Stable URL: http://www.jstor.org/stable/248003 . Accessed: 10/04/2012 03:37
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THE ACCOUNTING REVIEW Vol. LXIV, No. 2 April 1989

Audit Role An

Structure Conflict and

and Role

Its

Relation Ambiguity:

to

Empirical

Investigation

E. Michael Bamber, Doug Snowball, and RichardM. Tubbs

ABSTRACT: The trend towards more structure in some of the largest accounting firms' audit methodologies has generated considerable interest, but little empirical evidence. This study provides evidence on the role conflict and role ambiguity perceived by audit seniors in structured versus unstructured accounting firms. Role theory provides a basis for analyzing the effects of audit structure on the organizational characteristics which are potential sources of role conflict and ambiguity. The results are based on a sample of 67 seniors from structured and 54 seniors from unstructured firms. The seniors' perceptions of their firms' organizational characteristics and their perceived role stress differed systematically across structured versus unstructured firms. No evidence is found of the concerns (such as inflexibilityin atypical audit environments) that have been raised regarding the trend towards increasing audit structure.

an attempt to simultaneouslyimprove audit quality and audit efficiency, several of the largest accounting firms have adopted a more structuredapproachto their audit process. Cushing and Loebbecke (1986, p. 50] have described this trend as "an intriguing development that deserves additionalconsiderationby auditingreand perhaps and practitioners, searchers by the AuditingStandardsBoard." This study examinesaudit structurefrom the of the field auditorswho are perspective responsiblefor applyingtheirfirm'sparticularaudit approach.The study's primary objectiveis to determinethe association between the degree of structure by of the auditapproach(as documented Cushingand Loebbecke[1986])and the role conflict and ambiguityexperienced by audit seniors. behaviorresearch(for Organizational reviews, see Cummings[1982]and Dal-

IN

ton et al. [1980]) often finds that structure has important effects, at both the individual and organizationallevels. Consistent with this, auditing researchers have identified potential advantages and potential disadvantages of increased audit structure(e.g., Dirsmith and McAllister [1982a; 1982b], Ashton [19831, and Cushing and Loebbecke [1986]). Potential advantages include better quality control of audit work, staff training, communication among auditors, and cost effectiveness. Possible disadvantages of E. Michael Bamber is an Assistant Professor and Doug Snowball is a Professor, both at the University of Florida. Richard M. Tubbs is an Assistant Professor at the University of Iowa.
Manuscript received May 1987. Revision received July 1988. Accepted September 1988.

285

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too much structure include inflexibility in atypical audit environments, overauditing of small or low-risk clients, shifting too much control away from the field auditor, and increased demands on engagement management. These potential effects of audit structure are likely to influence the ambiguity and conflict that auditors, especially field auditors, associate with their organizational roles. Indeed, Senatra [1980] found that measures of audit seniors' role conflict and role ambiguity were significantly related to (1) the seniors' perceptions of their firm's organizational climate (in which structural variables play an important role), and (2) the seniors' job satisfaction and job-related tension. Auditing research has recognized both the potential for conflict and ambiguity in audit roles, and their potential consequences in the form of stress, turnover, and reduced levels of performance [Montagna, 1968; Schultz, 1974; Sorensen and Sorensen, 1974; Baker, 1977; Senatra, 1980; and Choo, 1986]. The current study assumes that role conflict and ambiguity can adversely affect auditors and audit performance,' and focuses upon audit structure as an antecedent condition to role conflict and ambiguity. The paper is organized into four sections. The first section discusses the primary variables (audit structure, role ambiguity, and role conflict) examined in the study, and presents the framework on which our hypotheses are based. The second section describes the method used in the empirical investigation. The third section reports the results, and the final section presents the conclusions and implications of the study.
THEORETICALFRAMEWORK

the location of particular firms along that dimension have been topics of recent debate (e.g., Sullivan [1984] and Mullarkey [1984]). Underlying this discussion may be the fact that Cushing and Loebbecke's definition of "structure"2 encompasses elements of both structure and technology, which more traditional organizational research treat as distinct constructs. Structure has been defined as the arrangement of people, tasks, and authority to achieve more calculable and predictable control over organizational performance [Ranson et al., 1980], and it is often described in terms of a mechanistic-organismiccontinuum [Burns and Stalker, 1961]. Cushing and Loebbecke [1986, p. 32] acknowledge that their definition of audit structure is "not inconsistent" with that continuum.3 In contrast, technology refers to the means by which inputs are transformed into outputs [Fry, 1982]. The prominent roles ascribed to audit tools and decision aids by Cushing and Loebbecke [1986] and Kinney [1986], suggest technology also plays a part in audit structure. Accordingly, the framework and hypotheses de-

Audit Structure The meaning of audit structure and

' Numerous studies in the organizational literature (and the meta-analysis by Jackson and Schuler [1985]) find that role ambiguity and role conflict are associated with unfavorable outcomes for both the individual and the organization. 2 Cushing and Loebbecke [1986, p. 32] define a structured audit methodology as ". .. a systematic approach to auditing characterized by a prescribed, logical sequence of procedures, decisions, and documentation steps, and by a comprehensive and integrated set of audit policies and tools to assist the auditor in conducting the audit." I Mechanistic organizations generally have specific goals, explicit policies and procedures, a high level of formalization, centralized decision making, and topdown communication. Organismic organizations, on the other hand, tend to have implicit goals and directions, intergroup cooperation, decentralized decision making, a low level of formalization, and open communications. Dirsmith and McAllister [1982a; 1982b] have described "mechanistic audits" and "organic audits" in terms of this continuum.

Bamber, Snowball, and Tubbs

287

firms. The underlying propositions are that: (1) auditors' perceptions of organizational practices and task-technology will differ between the two types of firms, Role Conflict and Role Ambiguity and (2) the role conflict and role ambiguity that auditors experience are related Role conflict refersto the presenceof to their perceptions of these organizaand Wolfe pressures. incompatiblerole tional characteristics. role define Snoek [1962,p. 103]succinctly The Relation Between Audit Structure conflict as: ". .. the simultaneous occurrenceof two (or more) sets of pres- and Organizational Characteristics. Figsures such that compliance with one ure 1 explains each organizational charwould make difficult or impossiblecom- acteristic included in the study and predicts how audit structure will affect each pliancewith the other." Varioustypesof resources, the time, role conflict(between one. The expectations are based on the capabilities,or values of the individual organizational behavior and audit strucand defined role behavior;betweentwo ture literature discussed earlier. To the or more roles for the same individual; extent that audit structure involves a and throughincompatiblepolicies, stan- structuring of audit tasks, seniors from dardsof evaluation,requests,and expec- highly structured firms should perceive tations of others) have been identified that their roles are more subject to formalized rules and procedures (i.e., greater [Rizzo et al., 1970]. simultaneously formalization). Work flow coordination Thoughoften examined with role conflict, role ambiguity is a is often associated with formalization theoreticallydistinct construct [Jackson [Rousseau, 1978] and, accordingly, we and Schuler, 1985]. Rizzo et al. [1970, posit that seniors in highly structured firms will perceive greater work flow pp. 155-156] define role ambiguity ". . . in of the out- coordination. Consistent with findings termsof (1) the predictability relating to more mechanistic structures come or responsesto one's behavior.... and (2) the existenceor clarityof behav- [Rizzo et al., 1970], audit seniors from often in termsof in- more structured firms are more likely to ioral requirements, whichwould perceive their authority as adequate, and puts from the environment, serve to guide behavior and provide experience fewer violations in the chain knowledgethat the behavioris appropri- of command, than will their counterate....9" Thus, nonexistent or unclear parts from less-structured firms. Cushabout ing and Loebbecke [1986] have suggested directivesand policies,uncertainty authority, duties and relations with that audit structure may facilitate comothers, and uncertaintyas to the effect munication, hence we posit that audit of behaviors on sanctions and rewards seniors from highly structured firms will perceive greater adequacy of communishould increaserole ambiguity. cation. Finally, the concern about audit Framework structure's possible inflexibility in atypis that ical audit environments suggests that The study'sprimaryhypothesis will be subjects in highly structured firms may less role conflict and ambiguity firms from auditors using perceive their adaptability to be less than by experienced dethat of auditors in less structured firms. audit (as methodologies structured Audit seniors from both structured fined by Cushingand Loebbecke[1986]) than by auditors from unstructured and unstructured firms are likely to per-

includeboth orgaveloped subsequently nizational structure and technological aspects of audit structure.

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The Accounting Review, April 1989

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Bamber, Snowball, and Tubbs

289

ceive their tasks as relatively routine (particularly since managers and partners generally assume greater responsibility when atypical situations arise).4 However, the greater centralization of decision making associated with highly structured firms [Cushing and Loebbecke, 1986] should heighten perceptions of task routineness. Moreover, structured firms' integration of specific forms of technology (such as preprinted forms, checklists, decision matrices, and other guidelines) into the audit approach reflects the philosophy that audit tasks are generally programmable. Since this technology is largely focused on audit seniors' task responsibilities, seniors in these firms should perceive their tasks as more analyzable and less variable. The Relation Between Organizational Characteristics and Role Conflict and Ambiguity. Figure I also summarizes the expected relations between (1) perceptions of organizational practices and task-technology, and (2) perceptions of role conflict and ambiguity. The directional relations are consistent with House and Rizzo [1972a] and Senatra [1980]. House and Rizzo [1972a] found that the six organizational practice variables shown in Figure 1 were related to role stress (i.e., role conflict and ambiguity). While their examination was limited to one firm, subsequent studies have replicated and extended their findings (for a review, see Jackson and Schuler [1985]). Senatra's (1980] study examined nine organizational practice variables as predictors of audit seniors' role stress in a single Big Eight firm.5 While the directions of the relations should be the same as Senatra [1980] reports, this does not preclude differences in the significance of the relations. For example, violations in the chain of command might occur less frequently within structured firms, but may lead to

greater role stress when they do occur. On the other hand, if reduced adaptability is a particularly significant disadvantage of the structured audit approach, then the relation between adaptability and role stress may be more significant for those firms. Figure I does not include specific hypotheses of this kind because of the preliminary state of research on audit structure and its effects. This study is also exploratory with respect to relations between the routineness of the task-technology and role perceptions. Though a negative relation between task routineness and role ambiguity is intuitively appealing, the literature yields neither a theoretical nor a strong empirical basis for expecting particular relations.6
METHOD

Sample and Procedure Audit seniors were chosen as subjects in this study since structured audit methodologies are primarily aimed at directing efforts in the field. Offices of four Big Eight accounting firms participated in the study. According to Kinney's
4 Ballew [1982] points to participation in determining professional standards, constraints imposed by auditing and accounting standards, and retention of audit clients, as factors underlying his expectation that technological routineness would be higher for audit teams than other teams functioning within public accounting firms. However, Ballew's findings were not fully consistent with his expectations. I Less formalization, violations in the chain of command, and inadequate communications were significantly associated with increased role conflict; violations in the chain of command and inadequacy of authority were associated with increased role ambiguity. 6 Schuler [1977] and Rogers and Molnar [1976] (among others) have suggested that role perceptions may depend on interactions between task-technology and other organizational characteristics. We believe that such interaction effects are unlikely in the audit setting because (I) it is unlikely that firms will differ sufficiently in structure and technology to cause an interaction, and (2) increased audit structure is argued to be associated with greater organizational structure and greater technological routineness.

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The Accounting Review, April 1989

[1986] classification, these four firms are comprised of two firms from the structured end of Cushing and Loebbecke's [1986] scale, and two firms from the unstructured end. To reduce any potential office effects, four offices from each firm provided subjects. Each office's managing partner or another liaison person arranged distribution of the questionnaire to the office's audit seniors. Each participant sealed the completed questionnaire in an accompanying envelope before returning it to the liaison person for mailing. A total of 133 questionnaires were returned-a response rate of close to 100 percent. Twelve questionnaires with missing responses were omitted from the analysis, leaving 121 usable responses (67 from the two structured firms and 54 from the two unstructured firms). The participants' average years of experience was slightly more than three years, with a range of one to six years. Measures Cushing and Loebbecke [1986] developed their classification of audit approaches inductively from their empirical results. Their approach may be described as an "institutional" approach based on firm materials and interviews with key personnel. In contrast, our study used an organizational behavior-based questionnaire to measure audit seniors' perceptions.7

Role Conflict and Role Ambiguity. The role conflict (eight-item scale) and role ambiguity (six-item scale) measures were developed by Rizzo et al. [1970] to measure role stress in complex organizations. Their sample consisted of managers and research and engineering personnel. Schuler et al. [1977] analyzed the scales' psychometric properties on six samples from three different industries. They reported a range of .56 to .83

for the scales' internal consistency reliabilities. Based on this and additional tests (including an analysis of factor structure, test-retest reliabilities, and correlations with other attitudinal and behavioral variables), they concluded that the scales are valid measures and recommended their continued use. Most subsequent research on role theory, including Senatra's [1980] study, has used these measures [Jackson and Schuler, 1985]. Structure and Organizational Practices. Measures of organizational practices were obtained from House and Rizzo's revised Organizational Practices Questionnaire [Rizzo et al., 1970; House and Rizzo, 1972b]. As originally designed, the questionnaire provided measures (or scales) for 19 variables. The six organization variables used in the current study (see Fig. 1) reflect our specific interest in the structural aspects of accounting firms. House and Rizzo [1972b] verified their measures using Campbell and Fiske's [1959] validation techniques. The scales' convergent validity was tested in terms of the convergence between their measures and other conceptually related measures: Campbell and Fiske's three tests of discriminant validity were used to test whether the scales captured distinct constructs. House and Rizzo concluded that the questionnaire satisfied convergent and discriminant validity requirements, as well as the reliability criterion (the scales' average internal consistency was .71). Technology. This study uses Daft and
' The questionnaire included a scale, tolerance for ambiguity [MacDonald, 1970], which is not discussed in the section. This scale was included to provide one measure of individual differences and, specifically, to test whether personality moderated the organizational effects examined in this study. It is excluded from the discussion and the reported analyses because the seniors' tolerance for ambiguity was not significantly different between firms, nor was it a significant covariate in any of the analyses undertaken.

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291

Macintosh's [1981] technology scale. The scale is based on Perrow's [19671 conceptualization of technology at the individual task level in terms of routinenonroutine work. They used 14 organizations in the scale development, including respondents from manufacturing and the education, legal, and accounting professions. Following Perrow, the scale is composed of two subscales. The first scale, task variety (six items), measures the frequency of unexpected and novel events. Low variety means there is considerable certainty about the occurrence of future activities. The second scale, task analyzability (five items), concerns the way in which individuals respond to problems that arise. An objective computation procedure is available for analyzable tasks; for other tasks, time must be spent thinking about what to do, and active search for solutions may be required. Withey et al. [1983] evaluated Daft and Macintosh's scales as well as five other instruments used to assess Perrow's dimensions of technology. Daft and Macintosh's instrument performed best on the reliability criterion (internal consistency of .69 for analyzability and .73 for variety) and, based on convergent and discriminant validity criteria, was identified as "one of the better instruments" [p. 57]. The measures used in this study were not specifically developed for the auditing setting. However, the measures have been used in managerial settings where the respondents (like auditors) have some degree of autonomy. Only minor modifications (e.g., replacing the term "work group" with "audit team") were needed to accommodate the study's audit setting. Moreover, the several auditors from each participating firm who pretested the research instrument indicated no difficulty in understanding the questions or using the response scales.8

As described earlier, organizational behavior research has tested the validity and reliability of each of the chosen scales. We also examined the scales' internal consistency reliabilities [Cronbach, 1951]. Table 1 reports the results. Overall, the values denote moderate reliabilities, similar to those typically found in the organizational literature, which are acceptable for testing relations. The one unacceptable result was a reliability coefficient of .36 for task variety.
RESULTS

The results are presented in four parts. First, results for differences in perceived organizational characteristics of structured versus unstructured firms are presented. This is a test of the left hand side of the model in Figure 1. The second section concerns our primary hypothesis and reports on differences in role conflict and ambiguity between the two types of firms. Third, as a test of the right hand side of the model, we examine the relations between role conflict and ambiguity and their potential sources (i.e., organizational characteristics). This analysis includes all four firms (without considering the structuredunstructured firm dichotomy) and provides a basis for assessing the study's consistency with prior research. Finally, we explore whether these relations differ systematically between structured and unstructured firms. Differences in Organizational Characteristics Between Structuredand Unstructured Firms. The model presented in Figure 1 hypothesizes that the known differences in the structure of firms' audit I All items in the questionnaire were answered on fivepoint anchored response scales. The anchors were "To a Very Little Extent"-'"To a Very Great Extent" for the technology items and "Strongly Disagree''-"Strongly Agree" for all other items.

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TABLE 1

The Accounting Review, April 1989

INTERNAL CONSISTENCY RELIABILITIES FOR MEASURES

(n= 121) Reliability Coefficient.71 .82 .73 .61 .70 .59 .73 .60 .36 .72

Measure Role conflict Role ambiguity of rulesand procedures Formalization Workflow coordination Adequacyof authority Violationsin chainof command Communication adequacy Adaptability Task variety Task analyzability

aThe (internal coefficientrepresents the averageintercorrelation consistency) reliability of repeatedrandomsubsamplesof items from the scale [Kerlinger, 1973, pp. 451-455].

methodologies will be associated with perceptual differences in firms' organizational characteristics. Table 2 shows the mean scores and standard deviations obtained for these characteristics. The structured firm versus unstructured firm mean score vectors are significantly different according to Hotelling's P-test (T2= 15.48, p= .08 assuming homogeneous variances; T2= 13.54, p =.09 assuming nonhomogeneity-not included in Table 2).9 Post hoc tests reveal which organizational characteristics contribute most to the multivariate difference. These onetailed t-test results (see Table 2) show that, as hypothesized, seniors from structured firms had different perceptions regarding both task-technology and organizational practices than those of seniors from unstructuredfirms. Structured firm seniors perceived their tasks as more analyzable than did seniors in unstructured firms (p < .0 1). That is, consistent with the notion of a structured audit methodology, they viewed their technology as involving greater use of available objective computation procedures,

as opposed to active search for solutions beyond normal approaches. Structured firm seniors also perceived their work to be characterized by greater formalization of rules and procedures (p <.04), adequacy of authority (p <.03), communication adequacy (p<.09) and, in the opposite direction to that hypothesized, adaptability (p < .06). The latter three results do not necessarily indicate structured firm seniors had greater absolute authority, communication, or adapt' This nondirectional statistical test result is conservative, since seven of the eight differences in organizational variables are in the hypothesized direction. These and the subsequently reported differences between structured and unstructured firm auditors are even more impressive when the similarities between the two firms within each category are recognized. The same test (Hotelling's T2) found no significant differences (p> .5) between the two structured firms, nor between the two unstructured firms. Moreover, for those characteristics subsequently reported as significantly different between structured and unstructured firms, neither the difference between the two structured firms nor the difference between the two unstructured firms was significant at p=.20 (one characteristic was an exception, at p = 1). Finally, the order of firms' mean scores is entirely consistent (e.g., both structured firms' mean scores for formalization are larger than the corresponding scores for the two unstructured firms).

Bamber,Snowball,and Tubbs
TABLE2 DIFFERENCES BETWEENSTRUCTURED AND UNSTRUCTURED FIRMS'AUDIT SENIORS' PERCEPTIONS OF ORGANIZATIONAL PRACTICES, TASK-TECHNOLOGY, AND ROLE AND AMBIGUITY CONFLICT

293

Measures Formalization of rules and procedures Work flow coordination Adequacy of authority" Violations in chain of command Communication adequacy Adaptability Task variety" Task analyzabilityb Role conflict Role ambiguity

Mean Score (Standard Deviation) For Structured Firms 3.84 3.62 3.79 2.73 3.66 3.45 3.18 2.53 2.27 2.24 (.520) (.611) (.441) (.541) (.484) (.536) (.382) (.448) (.471) (.480)

Mean Score (Standard Deviation) For Unstructured Firms 3.67 3.52 3.59 2.82 3.53 3.29 3.25 2.81 2.48 2.36 (.533) (.615) (.610) (.520) (.508) (.575) (.508) (.534) (.609) (.652)

t-statistic 1.75** .86 1.98** -.91 1.35* 1.56* -.87 -3.06* -2.08** -1.18

n,=67

n,=54

Variable had unequal variances when tested by the folded form of the F-statistic [Winer, 1971, pp. 39-401. In these cases, the t-statistic was computed under the assumption of unequal variances, and Satterthwaite's [1946] approximation for the degrees of freedom was employed. b Task analyzability has reverse scoring, so that a high score indicates less analyzability (and less routineness), just as a higher score for task variety indicates more variety (and less routineness). A five-point response scale was used for all measures. Significant at the .10 level (one-sided). * Significant at the .05 level (one-sided). *** Significant at the .01 level (one-sided).

ability. Rather, they may indicate the seniors perceived they had more adequate levels of these characteristics for the demands placed on them. Differences in Role Stress Between Structured and Unstructured Firms. Mean scores for role conflict and role ambiguity also appear in Table 2.10 As hypothesized, the mean level of role conflict for unstructured firm seniors is significantly higher (p <.02) than that for seniors in the structured firms. That is, on average, unstructured firm seniors experience greater incompatibility between the requirements and available resources associated with their role. The mean level of role ambiguity is higher for unstructured firm seniors (as hypothesized), but the difference is of only marginal statistical significance (p < .12).

Role Conflict, Role Ambiguity, and Organizational Characteristics.The right hand side of the model presented in Figure 1 hypothesizes relations between certain organizational practices and technology and role conflict and ambiguity. Table 3 presents these relations for the sample as a whole (i.e., the 121 seniors from all four firms). The coefficients of multiple determination (R 2) reported in the table show that the eight measures of the seniors' perceptions of
'? The mean levels of role stress in this study are lower than those obtained in a stressful organizational climate by House and Rizzo [1972a]. Mean scores for both role conflict and ambiguity were close to the scale midpoints in House and Rizzo's study. However, role stress measures varied widely across individuals in the current study. For the sample as a whole, scores range from 1.38 to 4.13 for role conflict, and from 1.00 to 4.50 for role ambiguity. (Standard deviations are included in Table 2.)

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TABLE

The Accounting Review, April 1989

THE RELATIONS BETWEEN ROLE CONFLICT, ROLE AMBIGUITY, AND THEIR POTENTIAL ORGANIZATIONAL SOURCES

(n= 121) Role Conflict Measures Intercept

Formalization of rules and procedures Work flow coordination Adequacy of authority -.38 -.51 -.50
-

Role Ambiguity
/3

r 3.94***
-.47 -.65
-.36

5.07***
-.06

.13* -.22**

-.10 -.33*** -.05

Violationsin chainof command

Communication adequacy Adaptability Task variety

.48
-.60

.13
-.24** -.20* **

.53
-.64

.26***
-.29*** .05 .06

-.53 -.18

- .05

-.35 -.09

Task analyzability Role Conflict

.14

.05

.17

.03

R2=.519 (R2k=.484); F= 15.09***

Role Ambiguity R2=.574 (R2=.544); F= 18.87***

* Significant at the .10 level. ** Significant at the .05 level. *** Significant at the .01 level.

organizational characteristics account for a statistically significant (p < .01) amount of the variance in seniors role conflict and role ambiguity. In order to examine the relations between the dependent and independent variables, Table 3 also includes the zeroorder correlation coefficients (r) and the partial regression coefficients (f).1" The Table 3 results suggest that there is a different relation between the independent variables and role conflict versus role ambiguity. This is consistent with Senatra's [1980] finding that role conflict and role ambiguity are distinct constructs which both require attention in the audit setting. Work flow coordination, adequacy of authority, communication adequacy, and adaptability all contributed significantly to role conflict in the directions hypothesized in Figure 1. Work flow coordination, violations in the chain of command, and communication adequacy contributed significantly to role

ambiguity in the hypothesized directions. The remaining relations (except for that between adaptability and role ambiguity) were in the hypothesized direction, but not statistically significant. Potential Sources of Role Conflict and Ambiguity in Structured Versus Unstructured Firms. The analysis presented in Table 4 is used to explore the relations between organizational characteristics and role conflict and ambiguity in structured versus unstructured firms. As discussed earlier, since so little is known about the effects of audit structure, no specific hypotheses were established concerning differences in these relations between the two types of firms. Table 4 presents results analogous to those re" The zero-order (simple) correlations indicate the direction and strength of the unconditional relation between each independent and dependent variable. The regression coefficients are used to test incrementalexplanatory power of each independent variable.

Bamber,Snowball,and Tubbs
TABLE4 AND MEASURES OF THE RELATIONS BETWEENROLECONFLICT,ROLEAMBIGUITY, SOURCES IN STRUCTURED AND UNSTRUCTURED THEIR POTENTIAL FIRMS

295

Structured Role Conflict Intercept

Formalization of rules and procedures Work flow coordination Adequacy of authority -.33 -.35 -.29

Unstructured for t-statistic r

-.38 -.67 -.61

( 3.41***
-.12 -.03 -.05

(3Ho1=02
6.98***
-.02 -.19 -.26**

2.42**
.52 -.86 -1.23

Violationsin chainof command

Communication adequacy

.57
-.51

.32***
-.14

.40
-.68

-.15
-.42**

-2.69***
-1.24

Adaptability
Task variety

-.45
-.27

-.12
-.09

-.59
-.15

-.36***
.02

-1.54
.69

Task analyzability Structured

.00

.00

.18

.06

.34

R2=.433 (R2 =.355); n=67; F=5.54***

Unstructured R2= .685 (R2= .628); n = 54; F= 12.20*** Structured Role Ambiguity Intercept
Formalization of rules and procedures Work flow coordination Adequacy of authority -.37 -.59 -.28 r r

Unstructured t-statistic for

:t3 Ho
=32

2.56***
- .02 -.28*** -.11 -.54 -.71 -.39

6.20***
-.31* -.29 -.04

2.43**
-1.47 -.01 .40

Violationsin chain of command

Communication adequacy

.58
-.56

.36***
-.20*

.49
-.71

.10
-.43**

-1.48
-.98

Adaptability Task variety Task analyzability Structured

- .33 -.21 .19

.11 .02 .21**

-.35 -.03 .12

-.07 .11 -.17

-1.11 .54 -2.17**

R2=.592 (R2=.535); n=67; F=10.51***

Unstructured R2=.619 (R2= .551);n=54; F=9.12***

*

**

Significantat the .10 level (two-sided). Significantat the .05 level (two-sided). Significantat the .01 level (two-sided).

ported in Table 3, but calculatedseparately for the structuredand unstructured firms. Again, each regression (p<.01). significant model is statistically In the models for structuredfirms, role conflict is significantlyassociated with violationsin the chainof command;role associatedwith ambiguityis significantly work flow coordination, violations in the chain of command, communication adequacy, and task analyzability. For unstructuredfirm seniors, adequacy of

authority, communication adequacy, and adaptability are all significantly related to role conflict; formalization of rules and procedures and communication adequacy are significantly related to role ambiguity. 12
12 Similar analyses were also performed at the firm level. Despite the reduced sample sizes, each characteristic (in Table 4) that was significant at the .05 level or better for the structured firms was also significant for each individual firm. For the two unstructuredfirms, this was the case only for adaptability, suggesting relatively greater diversity among unstructured firms.

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These results suggest both similarities and differences between the structured and unstructured firms. Perceived deficiencies in communication (i.e., the provision of accurate and timely information as needed) is related to role stress in both types of firms. In addition, structured firm seniors appear sensitive to superiors bypassing the chain of command, inadequate work flow coordination, and lower task analyzability. For seniors from unstructured firms, the lack of perceived authority to make necessary decisions, including handling problems that arise, and the inability to adapt on a timely basis to changed circumstances appear to be particularly associated with role stress. Table 4 also provides the results of testing the magnitude of the relations between organizational characteristics and role conflict and ambiguity. The statistically significant differences between structured and unstructured firms' intercepts are consistent with the higher role conflict and ambiguity indicated by subjects in the unstructured firm. The significantly higher regression coefficients for violations in the chain of command and task analyzability (reverse scoring) for structured firm seniors suggests that they are more sensitive (in terms of role conflict) to violations in the chain of command and more sensitive (in terms of role ambiguity) to lack of task analyzability. These findings provide limited evidence that the magnitudes of the relations between organizational characteristics and role stress also differ across structured and unstructured firms. 13
SUMMARY, CONCLUSIONS, IMPLICATIONS AND

firm that differed in the structure of their audit approach. The perceptions of the audit seniors who participated in the study generally were consistent with Cushing and Loebbecke's institutionally based distinctions between structured and unstructured firms. Compared to their counterparts in unstructured firms, structured firm seniors perceived their tasks as more analyzable and perceived a greater degree of explicit formalization of standard practices, policies, and position responsibilities. No significant differences were found with respect to the extent to which interrelated work activities are coordinated or the extent which audit seniors are kept informed. In concluding that role conflict and role ambiguity are distinct constructs in the audit setting, the study provides support for prior research by Senatra [1980]. Moreover, relations between perceived organizational characteristics and role stress generally were in directions consistent with prior research and expectations. Work flow coordination, adequacy of authority, communication adequacy, and adaptability were related significantly to role conflict; work flow coordination, violations in the chain of command, and communication adequacy were related significantly to role ambiguity.
13 Given these differences, we explored whether Senatra's [1980] results (based on one firm) matched our results for a particular firm type (i.e., structured or unstructured). The Fisher Z-test [Cohen and Cohen, 1983, pp. 53-55] can be used to test zero-order correlation coefficients across studies. Five of the organizational characteristics are included in both Senatra's and our study. Correlating each of these five characteristics with both role conflict and ambiguity enables ten comparisons. Only two of Senatra's correlations are significantly different from our structured sample (adequacy of authority and violations in chain of command with role ambiguity), while six are significantly different from our unstructured sample. This suggests that Senatra's subjects' perceptions were more similar to the perceptions of our structured firm subjects.

This study modeled and examined relations between role conflict and ambiguity and perceived organizational characteristics in four Big Eight accounting

Bamber,Snowball,and Tubbs As specified in the study's primary hypothesis, the role stress perceived by our participants from unstructured firms appeared greater than that perceived by structured firm participants. The difference was especially marked (statistically significant at p <.02) for role conflict; the difference was of marginal statistical significance (p <.12) for role ambiguity. Moreover, evidence of differences in the relations between organizational characteristics and role stress was obtained for structured versus unstructured firms. The results of the study offer insight into two important issues: Is the trend towards greater structure desirable? How might the role stress experienced by auditors be alleviated? The appropriateness of the increased use of structured audit methodologies cannot be assessed simply by perceptualdata. Where seniors' perceptions regarding organizational characteristics differed significantly between structured and unstructured firms, however, the more positive responses came from structured firm seniors. In addition, the structured firm seniors reported significantly lower levels of role conflict (and somewhat lower role ambiguity) than seniors from unstructured firms. At least for the firms and variables in our study, negative reactions by auditors to increased audit structure appear to have been avoided.

297 By itself, the study cannot provide a basis for choosing actions to reduce role stress. Other factors, including other organizational practices, could affect the relations reported. However, some implications for action would differ according to whether or not firms utilize structured audit methodologies. In particular, as part of an effort to alleviate seniors' perceptions that they are subject to inconsistent demands (i.e., role conflict), unstructured firms might critically evaluate the authority delegated to seniors, and their information and flexibility requirements. 14 For structured firms, efforts to reduce role ambiguity might entail critical evaluation of the adherence to the chain of command, work flow coordination, and information needs. Violations in the chain of command (though perceivedto occur less frequently than in unstructured firms) should be of particular concern to structured firms. The significant results obtained, their internal consistency, and their consistency with prior research (including the work of Cushing and Loebbecke [1986]) are positive indicators of the validity of the study's findings.
These seniors do not necessarily require, for example, greater delegated authority. However, there needs to be a better match between perceived task demands and the perceived authority delegated to achieve those demands.
14

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