Introduction
In Italy, accounting history literature has very rarely dealt with the food industry, despite Italy being known in the clichĂ© that is most popular outside its boundaries, as the âhome of pizza and spaghettiâ (i.e., centuries-old cooking, food and winemaking traditions).
The food industry covers a wide range of areas, addressed herein as an industrial food and beverage-making process in which Italian products are unrivalled: pasta, cheese, chocolate, liquorice, sweets, olive oil, wine and champagne. Of such industrial products, one of those that may be most relevant to accounting history is certainly beer. In Italy, the âbrewing cultureâ only caught on in the late nineteenth century and especially in the twentieth century, as it had to compete with the centuries-old wine-drinking tradition. Therefore, brewers had to understand and adapt to the environment to assert their rights and prevail over their domestic and international competitors. From this perspective, this chapter will look into the strategies and accounting practices adopted by Birra Peroni, a company that sells one of Italyâs most popular beer brands, mainly known for its TV commercials on âCarosello,â a popular prime-time advertising show that was broadcast for many years on Italian State television after the Second World War.
Founded in 1846 in Vigevano, Birra Peroni moved to Rome in 1864 and then gradually grew, peaking at the turn of the century when it took over a number of beer and frozen food companies. After the First World War, which deprived the company of its best engineersâGerman ones, from the enemy countryâand under the Fascist regime, the new company was the first to concentrate its businesses. Over those years, it expanded its productive capacity and opened three plants, in Bari, Naples and Livorno. With the Second World War and Allied occupation, Birra Peroni came into contact with U.S. tastes and technology, so it changed its formulas and plants accordingly. Birra Peroni enjoyed prosperity after the Second World War and the following two decades, spurred by Italyâs economic miracle. Finally, in 1988, it was taken over by the multinational corporation Danone.
Of this 170-year history, we have cut out the middleâfrom 1896 to 1946ânot only for its time-defining momentum but also because that was the time the company produced the greatest (and sometimes the only) archival evidence of its accounting system. In the period covered by this chapter, the accounting system went hand in hand with the companyâs strategic response to environmental pressure, especially when it introduced cost accounting and reporting systems in its Italian plants and changed the corporate financial reporting system. This eased the institutional work required to build the companyâs identity and strengthen the institutional approach that the organisation was beginning to embrace.
The purpose of this chapter is to contribute to accounting history literature in several respects:
- It provides a picture of the history of the context, the response strategies and the institutional dynamics of one of Italyâs most important food companies.
- It adds archival evidence to the many other papers that have already been written about the brewing industry, very popular in the United Kingdom.
- It applies new institutional sociology (NIS) to private companies, which is not the favourite domain of this approach, as has been done before, with another Italian company, by Sargiacomo (2008).
- It shows the importance of change and the establishment of accounting rules and routines in legitimising and corroborating the companyâs strategies in response to environmental pressure and the building of a corporate institution and its operational approach.
The chapter is organised as follows. The second section describes the research method, based on a literature review of accounting history studies in brewing, outlines a NIS-based theoretical framework and describes the main primary and secondary sources for the chapter. The third section reviews the life of the company, briefly as to the first (1846â1896) and third (1946â1996) half-centuries, and more extensively as to the second one (1896â1946). The fourth section is focussed on Birra Peroniâs accounting system, its organisation, its change and its role, from our theoretical perspective. The last section offers conclusions, summarises the results and reveals the limits of the chapter and points to the potential developments thereof.
Research Method
Literature Reviews
In Italy, the food industry has been all but forgotten by Italian-language accounting history papers (Capellaro, 1996; Cavazzoni, 1998; Mari et al., 2008). With the exception of all chapters published in this volume, Italian papers published in international refereed journals have neglected this industry too.
This is not the case with international economic history, business history and accounting history literature. There are very many, and varied, historical papers about food and beverage, and they cover several countries in Europe, America, Asia and Oceania. In this vast scenario, attention may be focussed on papers that specifically deal with accounting history in the brewing industry. Such papers may be divided into three groups.
The first group is that of textbooks and articles published at the time between the late nineteenth century and the Second World War. This group provides an extremely interesting portrait of accounting practices in the brewery industry as reported by the current affairs press of the time (Clarke, 1898; Harris, 1899; Lanham and Northcott, 1906; Allen, 1912; Thornton, 1913; De Payer, 1916; Goettsche, 1934; Hamilton, 1939), as well as a helpful secondary source (Mutch, 2008).
The second group of papers is about the âstrange caseâ of brewing, nation-alised in the UK during the First World War, as strategic for the British Army, then privatised only 60 years later (Talbot, 2002, 2005a, 2005b, 2007).
Finally, the third group of papers reviews the accounting systems adopted and developed by the worldâs key breweries (Wilson and Gourvish, 1998), such as Guinness (Quinn, 2014; Quinn and Jackson, 2014), as well as breweries in the United States (Stack, 2000; Walter et al., 2014), Canada (Felton and Mann, 1990), Spain (Moreno, 2011; Moreno and CĂ mara, 2014), Australia (Wilson and Shailer, 2007) and Britain (Corran, 1981; Gourvish and Wilson, 1985; Mason, 1992; Talbot, 2006; Higgins and Verma, 2009).
Multiple approaches and issues are addressed, but they are all focussed on the brewing industry. They are also similar in quite a few respects, which are also relevant to this chapter, such as market and production issues, the relationship between beer and the national culture and the complexity of the accounting systems, especially cost accounting.
Theoretical Framework
The theoretical framework of the chapter is the aforementioned NIS. The research perspective, based on the institutional features of organisations, relative to their context on the one hand, and developments in multiple decision centres on the other hand, began over 30 years ago (Meyer and Rowan, 1977; DiMaggio and Powell, 1983; Scott, 1987; Zucker, 1987; Powell and DiMaggio, 1991).
Today, the new institutionalism applied to sociology and organisational research is best represented as an extended family of scholars who share a broadly defined theoretical approach. Within this framework, researchers differ in their conceptualisation of institutions (specific legal or resource relationships versus a wider culture), the focus of causal arguments (top-down versus bottom-up) and the focal feature of organisations (formal structures versus practices and behaviour) (Greenwood et al., 2008; Powell and Bromely, 2015).
We particularly refer to institutional work, that is, examining the practices of individual and collective players aimed at creating, maintaining and disrupting institutions (Lawrence et al., 2011); institutional approaches, defined as the socially constructed, historical pattern of material practices, assumptions, values, beliefs and rules by which individuals produce and reproduce their material subsistence, organise time and space (Thornton and Ocasio, 1999); and strategic response to institutional pressure, classified into acquiescence, compromise, avoidance, defiance and manipulation (Oliver, 1991). These three concepts, and their related theories, help us explain the organisation and entrepreneurial behaviour of Birra Peroni over time.
Within the institutional framework, management and accounting scholars face many problems concerning the way organisations adapted to cope with external pressure and to reduce variety in knowledge, routines, techniques and accounting systems as part of their structures (Scott, 1995; Covalenski et al., 1996; Abernethy and Chua, 1996). At the same time, many forces push enterprises to adjust to the outside world (Goodstein, 1994). Finally, the legitimacy of accounting tools or innovation comes from experiences, rules or values shared by a community of professionals or scholars (Covalenski and Dirsmith, 1988; Carpenter and Feroz, 2001); at the same time it bolsters the image and reputation of the organisation (Carruthers, 1995). One of the most influential patterns of research based on the institutional approach attempts to explain the ways, forces and the shapes connected with stability (Granlund and Lukke, 1998; Granlund, 2001; Lukka, 2007) and change in management accounting (Burns and Scapens, 2000; Brignall and Modell, 2000; Hussain and Hoque, 2002; Siti-Nabiha and Scapens, 2005; Seal, 2006), as well as financial accounting and financial reporting systems (Ansari and Euske, 1987; Mezias, 1990; Greenwood and Suddaby, 2006; Tsamenyi et al., 2006; West and Carnegie, 2010; Goretzki et al., 2013).
As to accounting history research, NIS is applied especially in order to explain accounting change. Most cases refer to State-owned firms, such as the Spanish monopolies in the eighteenth century examined by Carmona et al. (1998), Carmona et al. (2001) and NĂșñez (2002); Japanese aviation between the world wars, investigated by Noguchi and Boyns (2012); the Japanese local government in the last 30 years by Yamamoto and Noguchi (2013); public sector organisations, such as the Portuguese Royal Treasury in the eighteenth century, analysed by Gomes et al. (2008); and finally private firms, with the contributions of Ahmed and Scapens (2000) on the evolution of cost accounting practices and Sargiacomo (2008) on the history of the Italian firm Brioni after the Second World War.
Sources for the Chapter
This chapter is based on many primary and secondary sources. Primary sources come from the Archivio Storico Peroni (Peroniâs historical archives), located in Rome, Via Birolli 8, whose evidences were inventoried and listed in Brignone (2001). Our sources consist of the articles of the association (1898) and all account records made available by the firm: annual reports (1900; 1907â1920), a journal (1903), preparatory documents to the annual reports (1915), a ledger (1942), a report on the Naples plant (1929), a report on production management (1929), a memorandum on the Bari plant by Alberto Canali (1925â1932), revenue and expense reports on the Bari and Naples plants (1933), a memorandum on the Naples plant (1933) and the 1934 financial statements of SocietĂ Toscana Paszkowski and the beer- and malt-testing sheets of SocietĂ di Livorno (1933). No account records are listed in the official archive list with reference to the period 1846â1896 and the period 1946â1979 (Brignone, 2001).
Secondary sources come from books about the history of the company, of brewing and of the industries in Rome, as well as a wide international literature about brewing and its accounting system, covering the period addressed in this chapter.
