Informal communication is at the heart of organization communication.
It has been acknowledged time and again as the primary mode to disseminate
information and to enable mutual understanding. The structured and
formal channel of communication in the typical hierarchical organization
tends to be inadequate and artificial by comparison. So it is not
surprising that numerous research studies have found that people
have often resorted to informal communication, of which face-to-face
is seen as the predominant medium. Indeed, trends towards a flatter
and network structured organization further reinforce this emphasis
on informal communication, because in such organizations lateral
communication is encouraged and is necessary to hold the organization
together. Lateral communication
is where informal communication media excel.
With the rapid introduction of information technologies in organizations,
more media choices are available. The question that arises is whether,
and if so how, this changes the informal communication process in
organization. This thesis submits that these modern communication
media have greatly liberated and enhanced the informal communication
process in organizations. This submission is explored through the
perspective of communication media choice. More specifically, the
research agenda is to examine the chief financial officers' (CFOs)
choice of communication media under different task situations. This
is illustrated on Figure 1.1.
Media, or channel, in this thesis is defined as any means that
enable communication or transfer of information between two or more
persons. Examples of communication media are outlined in Table 1.1.
Communication media are further divided into two categories in
this thesis: traditional communication media and modern communication
media (or technologies). As the name suggests, modern communication
media have a more recent origin and they tend to be based on some
electronic or computer technologies.
The remaining sections of this introductory chapter outline the
background and motivations of this thesis.
In the 1990s the business environment is highly turbulent and complex,
where competitive pressure is increasing with globalization. Topping
this off is the dramatic, pervasive and quickly felt implications
of the information revolution. In this climate new paradigms are
created and with it new opportunities. To capitalise on these opportunities
and to handle the complex environment, an organization requires
timely and relevant information more than even before. Information
has always been the life blood of the organization; it enables an
organization to make sense of the world, to resolve ambiguity and
to facilitate decision making and coordination. Information is an
important source of competitive advantage.
Information technology (IT) refers to the means that facilitate
the handling of information. It provides the mechanisms to store,
retrieve, sort, analyse the information (data) and to ensure that
the information is available to those who need it.
IT is, in fact, central to the provision of competitive advantage.
Increasingly, IT is recognised as an enabler of fundamental organisation
change, from work practices, human inter-relationships to structural
change. Nowadays, an organization needs to be flexible
and responsive to external needs and to make effective use of all
assets, have employees that behave as owners and actively contribute
to the goals of the organisation, and a management system that provides
feedback to promote fast organisational learning.
IT enables such qualities of modern organisation.
Thus, it is not surprising that billions of dollars are spent on
IT and improvements. Yet our understanding of the impacts of IT
on organizations is sparse. This provides the general motivation
for this study.
Information processing is required for the coordination of the
interdependent activities of the subgroups in organizations. The
greater the task uncertainty the greater the amount of information
that has to be processed in decision making during task execution
in order to achieve a given level of performance (Galbraith, 1973).
The problem that arises is that as the amount of information processing
increases, it will eventually overload the capacity of the organization.
Galbraith (1973) advocated strategies that decrease the need for
information processing and increase the information processing capacity. In this era, information technology needs to be considered
and integrated as part of such strategies. Two points about these
strategies can be made.
First, with the adoption of new management philosophy, like JIT,
the creation of slack resources would no longer be a viable option.
Indeed, to reduce slack an online-realtime system is required. Even
Galbraith (1973) recognised that this approach is "perfect in theory"
because it ensures consistency of action, timely response to situation;
but he identified two significant problems: (i) expense, and (ii)
structure and cultural inhibition. But this is 20 years ago. Now, IT is relative cheap and arguably
with years of assimilation the cultural and structural constraint
is eroding away.
Second, with IT triggering flatter organization structure, investment
in vertical information systems may be less important compared to
the creation of lateral relations. Galbraith recognised this, and
he even identified 10 points to facilitate the creation of lateral
relation. However, a point that has been alluded to, but not drawn
out explicitly is the important role of IT. IT ensures the availability
of information that is central to the creation of lateral relations
and information processing in a flatter, customer-focused and dynamic
organization (Galbraith and Lawler, 1993). Hence, it would aid organization
design to understand the implications of IT in the creation of lateral
relations. And integral to this is the informal communication process
Numerous studies have identified managers' tendency to rely on
informal communication because the formal system is regarded as
not timely and grossly inadequate to capture the information needs
or processes of managers (Mintzberg, 1972; Preston, 1986; Bruns
and McKinnon, 1993):
"Much of the detail necessary to run a company has characteristics
that make informal oral transmission more efficient than
entering it into a formal system. (emphasis added)"
Indeed, the modern organization paradigm suggests a movement away
from a hierarchical structure to an "adhocracy".
The net effect is that informal communication is likely to become
more prevalent. Thus, the need to better understand this process
The study of informal communication in this thesis is achieved
through the perspective of media choice theories. These theories
address how and why people choose particular communication media
to transmit informal information. Literatures on media choice have
yielded significant insight into this media choice process. Yet,
some inadequacies persist. In particular, findings that involve
modern communication media are mixed.
Prior media choice research did not address the consequence of
information technologies. Arguably for research before the 1990s,
IT and related communication media was not a big issue. Now it is.
With the convergence of telecommunications and computers, the
distributed processing of modern IT and the development of the `information
superhighway', information of all variety can readily be moved throughout
the world on a massive scale.
Managers are no longer confined by the physical location of the
organization database; they can now access information anywhere,
anytime. Nor do they have to rely on someone who knows how to access
the information required because of `user friendly' technology.
At the same time, the raw power of modern computer increases the
managers' ability to process the information.
An implication is that there are more communication media to choose
from. The question that arises is whether informal source of information
is necessarily restricted to oral or face-to-face communication.
Previous research such as Mintzberg's 1972 study focused on oral
communication as a source of informal information. Today there are
many other informal sources as well. Email, for example, is a rather
common informal mode of communication these days. And increasingly
internet, intranet and groupware
technologies have opened additional powerful and versatile avenues
of informal communication. These technologies provide an especially
interesting source of research because there is little known about
how these modern communication media are chosen and used in practice.
Prior studies addressed media choice in a piece-meal fashion. Some
adopted a rational perspective and some social. And the focus is
often on a small aspect of each. Little attempt is made to provide
a comprehensive model integrating these diverse elements. A contribution
of this study is the formulation of a more comprehensive framework
to address media choice.
Media choice literatures lack an accounting focus and they tend
to examine non-financial managers only. This study contributes to
the literature by studying CFOs communication choice related to
Further, a study of CFOs is interesting in that the role and function
of CFOs itself is sparsely addressed in the literature. This suggests
that a study of CFOs per se should prove to be informative.
This is particularly the case given that the role of the CFOs is
rapidly changing. As competition increase in the global market,
they are adopting more proactive roles in the organization. These
broad roles can be summed up as follows:
(i) They are no longer restricted to the traditional function of
management accountants, such as costing and budgeting; their task
often involves tying together a whole range of information, both
financial and non-financial, to help raise shareholder values;
(ii) At a time where an organization is undergoing massive re-engineering
to capture the improvement in performance and the increase in competitive
advantage enabled by advanced information technology, financial
controllers have been urged to be more like a "business advocate", or, a "business strategist". Consistent with this, there are evidence to suggest that
controllers are often the main instigator behind the adoption of
new IT in organization.
(iii) Increasingly there is also a shift from the traditional closed
and "need to know" channels of communication supported by independent
financial systems, to one where the communication channels are more
open and integrate financial information with business operations.
In this context, financial controllers serve a vital link in the
organization communication channel. They are the ones "who link
the business-getters (who know what to do to win) with the information-providers
(who understand the technology."
These trends raised the natural implication that the information
and the source of information required would shift. The new strategic
and proactive role requires different information and different
information channels (ie. the communication media) to resolve uncertainties
and to coordinate activities. In this regard, the modern informal
communication tools would seem to be invaluable.
In summary, the motivations for this study are:
1. Consistent with the features of modern organization, informal
means of communication are likely to become more prevalent. Couple
with the advent in IT that has the potential to facilitate such
informal means of communication, our understanding of this area
2. While media choice literatures in the information system literatures
offer a substantial body of theories that shed light on this area,
these theories are themselves fragmented.
3. CFO is a little understood group. This plus their changing roles
invites study. Also, previous research examined only general managers
and not the more accounting oriented tasks of the CFO.
4. An overarching motivation is to lay the foundation for further
work in this area. A better understanding of how communication media
fits with the diverse range of communication tasks clearly would
have practical and design implication given the large sum of money
organization spent on IT in recent years.
The essence of this thesis is to examine how CFOs choose between
the different communication media available when faced with different
communication tasks. Intuitively, there is little doubt that the
choice varies in response to different tasks. So far the literature
has focused only on one task characteristic: the equivocality of
the task. Whilst this task characteristic explained the choice within
the confines of information richness theory and in relation to the
more traditional (older) communication media, it represents a rather
narrow perspective. The media choice literatures are reviewed in
Chapter 2. In addition, it does not explain
the research findings in studies of modern communication media such
In response to this narrow focus, an important aim of this thesis
is to examine the media choice process with a broader and more realistic
range of task characteristics. To this end a framework is established
to guide analysis in Chapter 3.
Chapter 4 outlines the research methodology
adopted. This involved a questionnaire instrument together with
a structured interview.
The findings canvassed in Chapter 5 reveal
a substantial consistency with the proposed framework and establish
that task characteristics do have an impact on media choice.
Within the limitation of this study, Chapter
6 concludes on the note that: (i) communication task characteristics
do influence media choice, and (ii) informal communication processes
in organization have been augmented by modern communication technologies.
 See Hind and Kiesler (1995),
where it was found, inter alia, that the rise of horizontal
organization of technical workers has increased the use of non-hierarchical
 While the modern telephone system
uses a significant amount of computer and digital switches it is
not regarded as a modern communication media in this thesis because
it has been available for a very long time. This is consistent with
classification in the literature.
 This is explained by the concept
of "value chain" and "value system". Briefly, a company's activities
can be divided into a system of interdependent "value activities"
that are connected by linkages. Such linkages also exist between
the firm's and its suppliers and customers and other stakeholders.
Of particular relevance here is the idea that careful coordination
of these linkages provide competitive advantage. IT facilitates
such coordination by sustaining and creating linkages. See Porter
and Millar (1985), Kaye (1995a).
 The point to note is that IT
is an `enabler'; it does not itself provide any sustainable competitive
advantage. The adoption of IT per se will not lead to sustainable
competitive advantage. Some even argued that it would be counter
productive. See Cragg and Finlay (1991). It is the use of the IT
to generate new information thereby adding value that enables it
to contribute towards competitive advantage. See also Morton, M.
 Ie. "The bigger the world economy
the more powerful its smallest players" Naisbitt (1994), p2. As
companies become more global, they tend to break up into small autonomous,
market-aligned business units. Rapid decentralisation is in progress.
And in this environment the ability to learn faster could be the
organisations only source of competitive advantage. See Steingraber
 Morton (1992), p277.
 As organizations became bigger
and more complex, the problem of coordination needs to be handled
by explicit mechanism. Initially, the use of rules, procedures,
hierarchical structure and goal setting is adequate. But eventually
the amount of information that need to be processed will overload
the system. Galbraith (1973) proposed four strategies: (i) creation
of slack resource, (ii) self-contained tasks/ units, (iii) investment
in vertical information, and (iv) creation of lateral relations.
 Galbraith (1973), p42.
 Ie. Whereas previously hierarchical
structure is the norm, nowadays organization is global and network
 Bruns and McKinnon (1993)
 Malone and Rockart, 1991.
These features of modern organization include: globalization, team
orientated, customer-focus, lateral or network structure, turbulent
and rapidly changing environment. See also Galbraith, et al (1993).
 See Chapter 2.
 See Sproull and Kiesler,
 Kaye (1995b).
 Groupware refers to communication
technology that facilitate the communication, collaboration and
coordination of group oriented work in an organization. It integrates
the organization database, electronic massaging services in a single
system; it provides text, graphics, sounds, etc. A notable proprietary
approach is Lotus Notes. An alternative approach is through an intranet,
which is an internet like set up that works within an organization.
It uses the same communication protocol as the internet to transfer
the files. Eg. Netscape Communicator. See Ryrie (1996). A more practical
definition is offered in the first part of the questionnaire instrument
in Appendix 1.
 Harisak (1996), Ottolini
(1996), and Wilson and Ervin (1996)
 Jablonsky and Keating (1995)
 Harisak (1996)
 'Controllers Lead Technology
Innovations' (1995), Management Accounting Vol. 77 No. 3, pp28-
 Jablonsky and Keating (1995)
 Sheridan (1994), p50.