Samenvatting
Summary of all the articles for MAC
This summary provides an insight in all the articles that need to be studied for Management Accounting Change sorted by subject. Note: It is made with help of AI.
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Contingency TheoryThe document, titled "Management Control Systems Design Within Its Organizational Context,"
authored by Robert H. Chenhall, reviews 20 years of research on management control systems (MCS)
through a contingency-based framework. This approach investigates how MCS effectiveness varies
based on contextual factors like environment, technology, organizational structure, size, strategy, and
national culture.
Key Highlights
1. Purpose and Scope of Review: The paper reviews empirical studies on MCS since the early
1980s, focusing on contingency-based findings about how MCS should adapt to suit different
organizational and environmental conditions. It explores MCS purposes, outcome variables,
and critical contextual factors influencing system design.
2. Contextual Variables:
o Environment: MCS design depends significantly on environmental uncertainty,
hostility, and complexity. Uncertain environments require more flexible, informal
control systems, while hostile or competitive environments benefit from formal
controls like budgets.
o Technology: Complex or variable technology settings favor organic MCS designs
with flexible, informal controls, while predictable environments can rely on formal,
standardized systems.
o Structure, Size, and Strategy: Larger organizations and those with structured
strategies require more formal controls. Strategic factors also influence MCS,
particularly how systems align with goals like cost efficiency, innovation, and market
adaptability.
3. Contemporary Manufacturing Practices: Advanced manufacturing techniques like Total
Quality Management (TQM), Just-In-Time (JIT), and Flexible Manufacturing Systems (FMS)
introduce new demands on MCS, requiring them to support continual improvement, integrate
non-financial performance metrics, and adapt to interconnected supply chains.
4. Criticisms and Future Research Directions:
o Measurement Limitations: Variations in measuring MCS elements hinder consistent
findings. Future studies could enhance reliability by standardizing measures and
exploring links between MCS, organizational goals, and performance.
o Theory Development: Integrating various theories could deepen the understanding of
MCS in dynamic settings, emphasizing how combinations of control systems and
broader organizational practices enhance adaptability and goal alignment.
5. Propositions for MCS Design: The paper suggests propositions linking MCS design to
different organizational contexts, emphasizing that MCS should reflect the organization’s
environment, technology, and strategic needs to support goal achievement.
This critical review underscores the need for a flexible and adaptive approach to MCS design that can
evolve with technological advancements and changing organizational strategies. Future research
directions aim to improve the theoretical foundation and practical applicability of contingency-based
MCS research
,Extended summary
This document is a literature review of contingency-based research on management control systems
(MCS). It examines the different factors that can affect the design of MCS and how these factors can
be used to improve organizational performance. The review considers various elements that influence
MCS design, including:
Purpose of the MCS: How MCS is defined and measured.
Outcomes of the MCS: How MCS are used and how useful they are perceived to be.
Contextual variables: The external environment, technology, organizational structure, size,
strategy, and national culture of the organization.
The review begins by discussing the meaning of MCS and how they have evolved over time. It notes
that MCS research has expanded to encompass a broader scope of information, including non-financial
and external information, and recognizes the influence of social controls.
The review then considers the outcomes of MCS, including their use, usefulness, and impact on
individual behavior and organizational performance. It highlights the importance of considering MCS
in conjunction with broader organizational control systems.
Next, the review examines the different contextual variables that can affect the design of MCS.
External Environment: The review notes that uncertainty, hostility, turbulence, diversity, and
complexity of the external environment are all important factors. Organizations operating in
uncertain environments tend to require more open, externally-focused, non-financial MCS,
while those in hostile and turbulent environments may rely more on formal controls and
budgets.
Technology: The review discusses how technology complexity, task uncertainty, and
interdependencies between tasks can influence MCS design. Advanced manufacturing
technologies such as Total Quality Management (TQM), Just-in-Time (JIT), and Flexible
Manufacturing Systems (FMS) often require broadly based MCS that incorporate non-
financial performance measures and informal controls to manage the inherent variability and
interdependence.
Organizational Structure: The review notes that decentralization, functional differentiation,
and the use of teams can all affect the design of MCS. Decentralized organizations are
associated with greater use of aggregated and integrated information in their MCS, while
team-based structures are linked to the use of comprehensive performance measures and
participation in MCS design.
Size: Larger organizations tend to have more formal and sophisticated MCS than smaller ones
due to increased information processing needs. However, the review notes that there has been
limited research on the specific role of MCS in small and medium-sized businesses.
Strategy: Different strategies require different types of MCS. Organizations pursuing
conservative, defender, or cost leadership strategies are often associated with formal,
traditional MCS focused on cost control and budgets. Those with entrepreneurial, prospector,
or product differentiation strategies may need more flexible and less standardized MCS that
incorporate non-financial measures.
National Culture: The review recognizes that national culture can influence the design of
MCS. It notes that cultural dimensions such as power distance, individualism, uncertainty
, avoidance, and masculinity-femininity can affect the effectiveness of different MCS
characteristics.
The review concludes by discussing issues related to theory development in contingency-based MCS
research. It suggests that different forms of theoretical fit – selection, interaction, and systems models
– can be used to explain the relationship between MCS and context. Finally, it emphasizes the need for
MCS research to consider alternative theories from economics, psychology, and sociology to provide a
richer understanding of how MCS operate in practice.
The document titled "The Contingency Theory of Management Accounting and Control: 1980–2014"
by David Otley provides an in-depth review of the evolution and impact of contingency theory in
management accounting and control from 1980 to 2014. Here’s a summary of the key points:
1. Evolution of Contingency Theory:
Contingency theory in management accounting has evolved, initially focused on static,
mechanistic approaches but now includes a broader, dynamic understanding of "control
packages" that adapt over time.
Early studies primarily examined budgeting and financial measures but have expanded to
include non-financial controls like the Balanced Scorecard (BSC).
2. Key Variables in Contingency Theory:
Environmental Factors: Factors like uncertainty and hostility affect MCS design. Hostile
environments favor budget-focused controls, while uncertain ones require flexible, adaptive
controls.
Internal Organizational Factors: Variables such as technology, size, structure, and strategy
significantly impact MCS design. For instance, different strategies (cost leadership vs.
differentiation) demand distinct control systems.
3. Shift to Control Packages:
Instead of standalone systems, modern organizations use "control packages" — combinations
of formal and informal control mechanisms that evolve independently but need coordination.
These packages can experience "loose coupling," where elements operate semi-independently,
allowing adaptability but sometimes creating coordination challenges.
4. Methodological Issues:
Otley critiques the measurement inconsistencies in past studies, noting the lack of
standardized metrics across research, which complicates comparisons.
He suggests future research should focus on dynamic models that accommodate changes
within MCSs rather than static, one-size-fits-all solutions.
5. Future Research Directions:
Otley proposes a focus on "middle-range theories" that offer more adaptable solutions for
MCSs, accommodating unique organizational needs.
He also emphasizes the need for empirical studies that integrate qualitative and quantitative
data, reflecting the complex and evolving nature of management control.
, This review underscores that as business environments become more dynamic, MCS design must
remain flexible, aligning with both organizational strategy and external factors to effectively support
decision-making and performance management.
Extended summary
This article provides a review of the literature on the contingency theory of management accounting
and control systems, focusing on studies published between 1980 and 2014. The review is structured
around three main themes:
The definition and measurement of contingency theory.
A survey of the literature on contingency theory.
A review of key findings from the literature, focusing on the relationship between MCS
design and factors such as reliance on accounting performance measures, environmental
uncertainty, strategy, culture, and effectiveness.
Defining Contingency Theory:
The article emphasizes that a robust contingency theory needs to:
Identify specific aspects of an accounting system.
Define the circumstances associated with those aspects.
Demonstrate an appropriate match between those aspects and the defined circumstances.
The author emphasizes the importance of focusing on the extent and manner in which accounting
techniques are used, rather than simply on their existence within an organization. Furthermore, he
argues that defining an appropriate match between aspects of accounting systems and contingent
factors has been challenging due to the reliance on long-run equilibrium assumptions and the use of
performance as a variable, which could also be considered an independent contingent factor.
Surveying the Literature:
The review encompasses 236 articles, mainly from European and Australasian journals, reflecting a
preference for qualitative work and smaller datasets in contingency research.
Key Findings from the Literature:
Reliance on Accounting Performance Measures (RAPM):
While early studies suggested that over-reliance on accounting performance measures (RAPM) in
evaluating subordinate performance led to undesirable consequences, recent research has shifted away
from this concept due to measurement difficulties. However, the author argues that the underlying idea
remains relevant, especially with the rise of performance targets. He cautions that emphasizing
quantitative targets over other organizational objectives can lead to dysfunctional behaviors, citing
examples from both private and public sectors.
Environmental Uncertainty and Hostility:
The article identifies environmental uncertainty as a crucial contingent factor, noting that it may have
increased due to globalization and the rise of complex supply chains. Studies suggest that
organizations facing high uncertainty require flexible and adaptable control systems. Conversely,
hostile environments, often characterized by intense competition, are associated with a greater reliance
on accounting controls like budgets. The author points out the challenge of reconciling conflicting
recommendations arising from these two factors, which may often coexist.
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