All articles for the course Management Accounting Change. Otley, Chenhall, Roberts, Tsamenyi, Burns, Cruz, Gioia, Choo, Tillman, Becker, Van der Steen, Malsch, Spence, Aerts and Merkl-Davies.
Samenvatting Management Accounting Change
Onderdelen: introduction, literature, conclusion/results and discussion. Focus is on
introduction, literature and conclusion/results.
Introduction tells us:
- What the author wants to do;
- And why the author wants to do this;
- What is the problem?
Literature tells us:
- Extension of literature;
- Also talks about the problem;
- Tells us the background of the field;
- What is done? How far are we?
Results and discussion tells us:
- Findings;
- Know the theoretical meaning. What does it add to the theory?
- And what for the state of the field?
- What do we learn?
- What did the author achieve with the paper.
Contingency theory and institutional theories are about the stability while the rest is about
change.
Give stability: institutions, routines, scripts.
Give change: cues and sensemaking
The accounting system is:
- The system is a sense making devices
- The system gives cues that something out of the ordinary is going on.
- The system gives scripted interactions, rules, routines and objects
,Week 1 – Contingency theory
Additions from PowerPoint:
It is really hard to get people to be aware of things. Understand the importance of awareness.
The economical rational man is able to oversee all alternatives and then chooses the best
alternative. The economical rational man has an utility curve. The curve can be increased by
giving more time or money. The assumption of the economical rational man is that everyone
is the same. We all crave for more utility. People always try to maximize utility. Back in the
days people were naïve, because the assumption was made that human behaviour is easy to
guide. Not many people are economical rational. If you want people to do things for you, you
must change their utility calculation. How? Rules, rewards and control systems. This will
change the nature of your utility calculation.
Text books try to predict the behaviour of people based on the economical man. If you want
to change the behaviour, change the system. Most of the time the control system is at fault and
not the people. It is possible the performance measurement system promotes the wrong
behaviour. The ‘right’ control system is for every firm different.
Contingency theory. There needs to be a fit between the controls on the one hand and the
organizational circumstances. Usually in the form of a formula. We know the conditions and
the expected behaviour of the people. If we know the conditions, and we know the expected
behaviour, that makes us know with certainty what the right system is. With the contingency
theory back in the day the focus laid on the systems, not on the people. IT WAS ALL
ABOUT THE SYSTEMS. The contingency theory is about the conditions and about what
behaviour we want. Conditions system behaviour.
Contingency variables. Are being made to determine which control system results in optimal
performance. It was yet again about the systems and not about the people. People were seen
as variables. Researchers wanted to predict the right system with these variables.
THE IDEA OF CONTINGENCY THEORY. There is this unique match between the control
system and the behaviour which depends on these variables.
THE PROBLEM WITH CONTINGENCY THEORY.
- The variables only work for one point in time. Change is an ongoing process.
Managers have no use for these variables because there are too many possibilities and
variables. The questions still exist: how should we do things? How should the control
system look? The variables are static.
- The contingency theory did not focus on the people, only on systems.
The thinking back in the time: if you want to change behaviour, you change the system. A lot
of these systems failed because they did not think about the people. Nobody really knew what
was going on. People are not the system they are modelled to be. They thought an individual
was a machine.
,The undermentioned model was the next level of thinking. This model scans the environment,
interprets the environment and learns something from it. It updates its expectations. The
accounting systems were located in the scanning part. So they collected more and more data.
There is now an element of learning in it. The economical rational man had no real part of
learning in it. So this model was a step forward.
This model yielded a lot of new problems. How do we interpret it? Based on what criteria is it
interpreted? It yielded more questions. How do we interpret it? If I don’t know how your
behaviour is, how can I make you change? Something nice happened late 1980s. We have to
look for a theory which helps us understand how people bring order in their interpretation of
the environment (institutional theory). These theories did something unique. How do we bring
order in our environment? The starting point is chaos. We don’t understand a lot. Institutional
theory said: there are certain patterns in how people behave, are confronted about the need for
interpretation. We interpret things with institutional theory. What bothers us? We have no
capacity to interpret everything 24/7. It has to do something on how we interact with the
environment. Institutional theory is the start of it.
Contingency theory said: there needs to be a fit between the control system on one hand and
on the other hand the environment like strategy, type of management. When you get that fit
perfectly you have the right type of control system. Even with 50 variables you will get
trillions of possibilities, so this is useless for controllers.
Controllers didn’t know how all those variables helped. And they didn’t know when the
variables need to be in place. So in the begin or at the end? Or when they think at changing?
The studies were about one point in time, change was on or off, it was not a continue process.
Change involves between two times, so not at one point. When do you need to have those
variables in place? The current papers don’t give any answer to this question. Contingency
theory does not say anything about the human nature, but it does not have to say anything
about the human nature because its roots lies with the economical rational man. Contingency
theory starts always with the economical rational man. It assumes everyone is economical
rational man (ERM)! They use the ERM to make sense of stuff that they’d otherwise would
understand. ERM is not enough to understand why we do things.
,
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