Assessment of the Evolution of Strategic Management Accounting

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An overview of the evolution of strategic management accounting. In order to understand the future of strategic management research, it is important to provide a historical perspective on the origins of the observed changes and evolutions in the development of the field. The evolution of management accounting in the last century can be also assessed on historical grounds. Figure 1 below shows four main theoretical frameworks that can be used to describe the development of management accounting. Contingency Theory

1980’s – 1990’s – Universalistic rules are not appropriate

Contingency Theory
1980’s – 1990’s – Universalistic rules are not appropriate

Agency Theory
1960’s and 1970’s, Contracts between the various parties in the firm

Conventional
wisdom
Before the 1960’s, involved accurate accumulation of costs and systems based on standards

Strategic Management Theory
1990’s to date Recognizes the external environment of the firm

Figure [ 1 ] Evolution of Strategic Management Accounting

Evolution as per Standards (IFAC)
Although the IFAC (1998) framework is focused on concepts rather than practices, there is some lack of clarity about this. It seems that those who drafted the statement view concepts merely as derivatives of practices. Another caveat, recognized by the statement, is that the scope, role, and organizational positioning of management accounting differ across organizations, cultures and countries. This problem is compounded (unless one believes that concepts are in vogue at the same time throughout the world) by the identification, in the Statement, of evolutionary stages with dates in history. Nevertheless, despite its limitations (consideration of which is beyond the scope of this research note) the framework provides an interesting view of history and a useful set of parameters. The four stages of evolution identified by IFAC (1998) are shown in Figure 2 and described below. It should be pointed out that the stages...
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