Battles in the costing war: UK debates, 1950-75

In the UK, 1950-75 was a lively period in the long-running debates between proponents of absorption and marginal costing. In the nexus of competing interests, management accountants advocated and defended rival costing systems with much vigour and passion. Expressed in the language of the times, these debates were 'battles' in the costing 'war'. We focus on these battles, analysing the various forces that operated upon the combatants, and locate them in the wider costing war. We conclude that no final resolution of the conflict was achieved in the twentieth century, nor is one likely in the foreseeable future.     

Pedagogical cases in the strategic development of management accounting systems

Discussion of the ‘lost relevance’ of management accounting and the ‘gap’ between theory and practice has focused the criticism that management accounting education is built round a set of techniques applied in simplified settings. One reason for this may be the scarcity of case studies, discussing management accounting practices, which may be adopted in classroom situations. The recent promotion of ABC, throughput accounting, just-in-time (JIT) methods and performance measures to support modern manufacturing provide additional educational challenges relating to the integration of these into the accounting curriculum. There is a danger that these may also be developed as other techniques to be learned in isolated situations rather than to be applied selectively by organizations in appropriate situations. This paper offers two case studies which support class discussion of accounting requirements within a modern manufacturing and commercial environment. The cases emphasize that any one technique is inappropriate to all situations. They force examination of manufacturing and marketing policy and strategy in the development of appropriate management accounting information. The authors' experiences of using the case studies is evaluated, to determine the strengths and weaknesses of using the non-numerical cases as a basis for class discussion of contextual factors in accounting system design.     

Towards the formalization of ‘small is beautiful’: Societal effectiveness versus economic efficiency

Economic efficiency criteria are often based on considerations of concentration, standardization and centralization of activities which may undertake or omit entirely various internal and external diseconomies of by-products associated with any growth process. This paper re-examines the context in which the efficiency criterion is usually applied. The notion of effectiveness is analysed theoretically from two perspectives. Social costs are introduced initially in a static framework and then the inertia of large organizations is discussed in a dynamic perspective. The flexibility of the system in adjusting to rapid changes in technology is analysed from a structural approach based on smaller and more decentralized organizations.     

The illusion of no control: management control systems facilitating autonomous motivation in university research

Autonomous motivation, a fundamental factor influencing research success, can be undermined when people feel pressured, managed or controlled. So how do universities – which are under increasing external pressure to manage research activities to produce outcomes – exert management control without threatening the autonomous motivation of their researchers? We address this question through an exploratory case study of the management control systems used in two university faculties. Our results confirm the importance of autonomous motivation in driving researchers’ activity and show how incentives, performance evaluation and cultural–administrative structures can be designed to not only preserve, but also enhance and leverage this motivation.     

The Whip Cancer Walk: A case of real earnings management in the nonprofit sector

The Whip Cancer Walk case is designed for students currently learning about nonprofit accounting. Based on a real scenario, you are introduced to an organization that reports only the net proceeds from a series of fundraising walks, instead of both the funds raised and the related costs. The case explores the applicable accounting standards and asks you to consider the appropriate accounting treatment. In this case, you will be asked to consider how the accounting treatment of the walks affects the reported financial numbers, and as a result the rating received from Charity Navigator and the ability to pass the Better Business Bureau’s standards for accountability.     

The choice agenda in European health systems: the role of middle-class demands

Choice for patients, over varying aspects of healthcare, is becoming an increasingly common feature in Europe, especially in tax-funded healthcare systems. This paper investigates patients’ choice of healthcare provider. The middle class, in countries implementing choice reforms, is shown to have a pronounced preference for the availability of choice as a component of a quality healthcare system. Important implications of this for theory and policy are discussed.     

The use of performance measurement systems in the public sector: Effects on performance

We study the use of performance measurement systems in the public sector. We hypothesize that the way in which these systems are being used affects organizational performance, and that these performance effects depend on contractibility. Contractibility encompasses clarity of goals, the ability to select undistorted performance metrics, and the degree to which managers know and control the transformation process. We expect that public sector organizations that use their performance measurement systems in ways that match the characteristics of their activities outperform those that fail to achieve such fit. We test our hypotheses using survey data from 101 public sector organizations. Our findings indicate that contractibility moderates the relationship between the incentive-oriented use of the performance measurement system and performance. Using the performance measurement system for incentive purposes negatively influences organizational performance, but this effect is less severe when contractibility is high. We also find that an exploratory use of the performance measurement system tends to enhance performance; this positive effect is independent of the level of contractibility. The effectiveness of the introduction of performance measurement systems in public sector organizations thus depends both on contractibility and on how the system is being used by managers. These findings have important implications, both for practice and for public policy.     

A Levinasian ethics critique of the role of management and control systems by large global corporations: The General Electric/Nuovo Pignone example

This essay extends [Shearer, 2002] Levinasian critique of the role of financial accounting with its neo-classical underpinnings in today's global market capitalism. It expands on Levinas's ethics-of-being-for-the-other by emphasizing how he developed his radical ethics by drawing on the ancient Jewish texts, an ethics that gives place of privilege to ontology rather than epistemology in contrast to much conventional Western philosophy. The essay illustrates the potential of his ethics for mounting a critique of the use of management and control systems by global corporations. It provides General Electric's takeover of the Italian company Nouvo Pignone as an instance. The systems are an essential element in the expansionary strategies of these massive enterprises that have come to dominate the world. The essay concludes that GE's instantiation of its generic management and control systems into the firms it acquires runs afoul of a Levinasian ethics. That many large global corporations employ similar systems and tactics highlights the urgent need for a broader accountability on the part of such organizations than economic efficiency and producing profits to report to capital markets. Levinas's ethics, thusly, presents a space of entry to expose and confront the economic commodification of employees scattered across the world.     

Ownership and Production Costs: Choosing between Public Production and Contracting‐Out in the Case of Swedish Refuse Collection

Many comparisons of public and private firms use a public/private ownership dummy variable to capture cost differences. If, however, public and private firms use different production technologies, the dummy‐variable approach is misspecified. Data from public and private firms should not be pooled. Secondly, selectivity bias may arise, making it more difficult to identify cost differentials that actually exist. Thirdly, if data should be pooled, the resulting empirical model may be logically inconsistent. This paper compares public and private firms using the refuse collection costs of 170 firms in 115 Swedish municipalities. First, public production costs were 6 per cent lower than private production costs. Secondly, cost differences did not affect producer choice. It is crucial to adjust for selectivity. Data for private and public firms should not be pooled. The dummy‐variable model is misspecified.     

The societal relevance of management accounting innovations: economic value added and institutional work in the fields of Chinese and Thai state-owned enterprises

This paper contributes to the ongoing debate about the relevance of management accounting. In doing so, we widen the definition of ‘relevance’ from the largely managerialist focus dominating this debate to examine how management accounting innovations get imbued with a broader range of societal interests and how actors representing vested interests go about entrenching and resisting such innovations. We explore these issues with reference to the institutionalisation of Economic Value Added (EVA?) as a governance mechanism for Chinese and Thai state-owned enterprises. Adopting a comparative, institutional field perspective, we theorise our observations through the conceptual lens of institutional work, or the human agency involved in creating, maintaining and disrupting institutions. We extend extant research on institutional work by exploring how the evolution of such work was conditioned by differences in field cohesiveness, defined in terms of how consistent and tightly coordinated key interests clustered around EVA? are. Our analysis also draws attention to how different types of institutional work support and detract from each other in the process of upholding such cohesiveness. We discuss the implications for future research on the societal relevance of management accounting innovations and institutional work.     

Dynamic of foreign direct investment in the states of Mexico: An analysis of Markov's spatial chains

The aim of this investigation is to analyze the evolution of the spatio-temporal distribution of foreign direct investment (FDI) across Mexican states. The literature that analyzes foreign direct investment in Mexico is numerous and diverse; however, it is argued that the analysis of the spatio-temporal distribution of FDI conditioned to spatial interaction effects in Mexico is still absent. In this sense, by applying the spatial Markov chain approach as proposed by Rey (2001), we found a divergence process in the FDI inflows among Mexican states that seem to get stronger over time. In particular, during the period from 2006 to 2013, the process of divergence toward higher-FDI inflows quantiles occurs among states spatially associated with neighbors in lower-FDI quantiles.