RESEARCH IN MANAGEMENT CONTROL 281
in his article entitled ‘The Impact of Budgets on People’, an emphasis reversed
neatly almost 20 years later by Schiff and Lewin (1970) in their article ‘The Impact
of People on Budgets’. Lowe and Shaw (1968) discussed the tendency of managers
to bias budgetary estimates that weresubsequently used for control purposes.
Buckley and McKenna (1972) were able to publish a review article summarizing
current knowledge on the connection between budgetary control and managerial
behaviour in the early 1970s. Mintzberg followed his 1973 study of the nature
of managerial activity with a 1975 study of the impediments to the use of man-
agement information, which dealt with many of the behavioural issues in the
operation of control systems. There was thus a growing awareness of the human
consequences of control systems use and operation beginning to emerge in the
early 1970s, perhaps lagging some 20 years behind the equivalent human relations
movement in the organization theory literature.
A behavioural perspective on the theme of managerial performance evaluation
also began to emerge at this time. Hopwood (1972, 1974a) identified the different
styles that managers could adopt in their use of accounting information and
studied their impact on individual behaviour and (implicitly) organizational
performance. Rhaman and McCosh (1976) sought to explain why different uses of
accounting control information were observed, and concluded that both individual
characteristics and organizational climate were significant factors. A study by
Otley (1978) yielded almost exactly contrary results to those of Hopwood (1972)
because the research site had significant differences; the conflicting findings could
be reconciled only by adopting a contingent approach, a task that was more
thoroughly undertaken by Hirst (1981).
The idea that systems used to evaluate performance are affected by the infor-
mation supplied by those being evaluated has led to the concept of information
inductance (Prakash and Rappaport, 1977; Dirsmith and Jablonsky, 1979). This
generalized the observations of information bias and manipulation reported pre-
viously as just one manifestation of a more general phenomenon. Such work was
extended by Birnberget al.(1983) into a unified contingent framework, based on
the ideas of Thompson (1967), Perrow (1970) and Ouchi (1979).
Despite the categorization of organizational contingency theorists into the open
systems box by Scott (1981), the early contingent work in accounting-based control
systems has a clear closed systems flavour. It was only in the late 1970s that the
open systems ideas in contingency theory, which followed primarily from the use
of environment as a contingent variable, began to be reflected in the management
control literature. This parallels developments in Organization Theory (OT), for it
is arguable that early contingent work by writers such as Woodward (1958, 1965)
concentrated on internal factors such as technology, and did not adopt an open
systems approach until later. Thus, texts in the management control area, such as
Emmanuelet al.(1985, 1990), Merchant (1985), and Johnson and Gill (1993) which
recognized the behavioural aspects of MCSs as well as adopting some tenets of
the contingency framework, tend to lie along the boundary of the closed natural
category and the open rational approach.
The Open Rational Perspective As in OT, the emergence of an open systems
perspective was accompanied by a return to more rational approaches and a