Contingency-based research has a long tradition in the study of management control systems (MCS). Researchers have attempted to explain the effectiveness of MCS by examining designs that best suit the nature of the environment, technology, size, structure, strategy and national culture. In recent years, contingency-based research has maintained its popularity with studies including these variables but redefining them in contemporary terms. This paper provides a critical review of findings from contingency-based studies over the past 20 years, deriving a series of propositions relating MCS to organizational context. The paper examines issues related to the purpose of MCS, the elements of MCS, the meaning and measurement of contextual variables, and issues concerning theory development. A final section considers the possibility that contingency-based ideas could encompass insights from a variety of theories to help understand MCS within its organizational context.

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Management control systems design within its organizational context: findings from contingency-based research and directions for the future

Accounting has come to be seen as playing a key role in organizational functioning. Concerned, as it now is, with such activities as assessing the costs and benefits of organizational actions, the setting of financial standards and norms, the representation and reporting of organizational performance, and financial planning and control, accounting has been used to cast important aspects of the functioning of the modern organization into economic terms. By offering particular economic representations of organizational activities and outcomes to both internal participants and interested external parties, it has come to be involved in the creation of a quite specific organizational order and mission. Accounting is now associated with particular ways of seeing and trying to shape organizational processes and actions, with the maintenance of certain forms of organizational segmentation, hierarchy and control, and with the furtherance of an economic rationale for action (Batstone, 1979). Indeed in many cases the forms taken by decision processes, the structuring of organizational activities and even the specification of an organizational boundary are not independent of the accounting representation of them. Modes of accounting have become not only important and valued management practices but also ones whose existence and consequences are difficult to disentangle from the functioning of organizations as we know them. Accounting, in other words, has become centrally implicated in the modern form of organizing. With accounting so intertwined with organizational functioning it is surprising that so little is known of the organizational nature of accounting practice. That, however, is the case. Although early studies of accounting in action focused on trying to understand its organizational roles and consequences, many more recent investigations have detached accounting from its organizational setting, preferring instead to study the consequences which it has at the individual rather than the organizational level.’ Admittedly such studies are providing us with many interesting and useful insights into both the interpretation of accounting information and ways of trying to facilitate its use in decision making situations. Be that as it may, they do not explicitly aim to help us to understand what is at stake in the organizational

On trying to study accounting in the contexts in which it operates

The aim of this study is to examine, from a resource-based perspective, the relationships between the use of management control systems (MCS) and organizational capabilities. More specifically, the study focuses on the diagnostic and interactive uses of one important aspect of MCS, namely performance measurement systems (PMS), and four capabilities leading to strategic choices (i.e., market orientation, entrepreneurship, innovativeness, and organizational learning). Three research questions are investigated in this study: (i) to what extent do the diagnostic and interactive uses of MCS contribute specifically to the creation and maintenance of capabilities leading to strategic choices? (ii) To what extent do the diagnostic and interactive uses of MCS act in combination to produce dynamic tension which contributes to the creation and maintenance of these capabilities? (iii) To what extent does the use of MCS contribute to organizational performance? The results suggest that an interactive use of PMS fosters the four capabilities by focusing organizational attention on strategic priorities and stimulating dialogue. Also, by creating constraints to ensure compliance with orders, the diagnostic use of PMS exerts negative pressure on these capabilities. Furthermore, some evidence suggests the influence of dynamic tension resulting from the balanced use of PMS in a diagnostic and interactive fashion on capabilities and performance.

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Management control systems and strategy: A resource-based perspective

In this paper we argue that understanding accounting practices in their organisational contexts requires more than a technical description of accounting information systems as they are conceived and designed in abstract. What is required are studies of the way in which accounting systems become embodied, through use, in organisational systems of accountability. We present a framework for analysing the operation of systems of accountability in organisations, and illustrate this by contrasting, in an ideal-typical manner, forms of accountability in relationships characterised by regular face-to-face contacts, with forms of accountability in relationships which span physical distance.

Accounting systems and systems of accountability — understanding accounting practices in their organisational contexts

Historically, marketing control research has involved either the development of output-oriented financial controls or the analysis of how financial controls affect performance. This work on marketi...

Toward a theory of marketing control: Environmental context, control types, and consequences.

It is our contention that accountants have typically sought to reduce uncertain situations into a framework characterized by well structured tasks and highly measureable outputs. We review the literature on budgetary and organizational control in the light of this argument. Furthermore, we describe the many kinds of behaviors that can result from the efforts of subordinates to distort the information system to their desired ends when they find themselves operating outside the structured and measureable framework.

Lawrence Turopolec

Papers

The organizational context of accounting

Reply to J. Buckley