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This is consistent with contingency theory -- not only must the managerial system be broadly appropriate for the firm type, but is must also be fine-tuned to meet the specific structural and environmental needs of the firm. The subsystems must be congruent with the firm's objectives, and firms of the same type do not necessarily have the same objectives (Wade & Schneberger, 2006).
A firm can, if it chooses, use a managerial system that broadly fits its needs, such that the same system is used in a number of similar organizations. However, for a firm to be most effective, it should tailor that broad system to meet its specific circumstances. Management cannot assume that a managerial system used by a similar organization will work for them, because not too firms will have the exact same structure, environment, and objectives. Because management accounting is so focused on the provision of information for evaluation, the firm must ensure that the information provided fits with the specific things it wants to evaluate. While management...
Remember that management's role is to improve the firm's operations, in most cases vis-a-vis competitors. If each firm of the type uses the same evaluation metrics from the same management accounting system, it will be difficult for management to outperform. They must make adjustments for their own circumstances in order to outperform.
Works Cited:
Hayes, David C. (1977). The Contingency Theory of Management Accounting. The Accounting Review. Vol. LII No. 1, January 1977 pp.22-39
Chennall, Robert H. & Morris, Deighan (1986). The Impact of Structure, Environment, and Interdependence on the Perceived Usefulness of Management Accounting Systems. The Accounting Review. Vol. 61, No. 1, January 1986, pp.16-35.
Wade, Mike & Schneberger, Scott. (2006). Contingency Theory. York University. Retrieved July 17, 2009 from http://www.istheory.yorku.ca/contingencytheory.htm
Works Cited:
Hayes, David C. (1977). The Contingency Theory of Management Accounting. The Accounting Review. Vol. LII No. 1, January 1977 pp.22-39
Chennall, Robert H. & Morris, Deighan (1986). The Impact of Structure, Environment, and Interdependence on the Perceived Usefulness of Management Accounting Systems. The Accounting Review. Vol. 61, No. 1, January 1986, pp.16-35.
Wade, Mike & Schneberger, Scott. (2006). Contingency Theory. York University. Retrieved July 17, 2009 from http://www.istheory.yorku.ca/contingencytheory.htm
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