The development of budgets and their use for purposes of control in Japanese aviation, 1928-1945: The role of the state

Purpose – This paper aims to examine the role of the Japanese state in the development of budgets within “special companies” in the transportation sector between 1928 and 1945. Design/methodology/approach – Using evidence contained in the archives of “closedown institutions” this paper examines the role of the state in determining the use of budgets within Japan Air Transport (1928-1938) and Japan Airways (1938-1945). The paper adopts the lens of new institutional sociology to examine the changes in the use of budgets effected when Japan Airways succeeded Japan Air Transport. Findings – Prior to 1938, although subject to the need to provide budget statements to the government, the budget systems operated by special companies within the Japanese transportation sector were largely utilised for the purpose of legitimising receipt of government subsidies. Following the establishment of Japan Airways in 1938, however, an increasing use of the budget system as a control mechanism is observed. It is found that a key role in this coercive process was played by the Aviation Bureau of the Ministry of Communications, reflecting changes not only in its own status but also the financial pressures exerted on the Japanese government during the Second Sino-Japanese War from 1937 and the Pacific War from 1941. Originality/value – This paper examines the development of the use of budgets at a time, the interwar period, which is considered critical to the development of budgets for purposes of control. By doing this within a context (special companies) and within a geographical space (Japan) which has not previously been analyzed by accounting historians, this study helps to add to the material available for conducting comparative international accounting research. Furthermore, by using the lens of new institutional sociology, this study provides an in-depth insight into how, and under what conditions, the degree of decoupling between formal policies and actual practices can vary over time depending on the extent of coercive pressures.