282 ACCOUNTING FOR MANAGERS
relative neglect of the natural (albeit) closed approaches of the preceding years.
The recognition of the external environment, key to the open systems approach,
had never been strong in the early MCS literature. However, in the early 1970s
there was a movement towards an open systems perspective, if only from a
theoretical standpoint, an approach well illustrated by the collection of readings
in the monographNew Perspectives in Management Control(Lowe and Machin,
1983). This approach was most cogently led by Lowe (1971) in an article which
clearly recognizes the coalition of stakeholders involved in an enterprise (a concept
used by Scott (1981) as an exemplar of an open systems approach) and the need
for adaptation to the external environment. It is further clarified in Lowe and
McInnes (1971) article which adds the concept of resolution level. At the same
time Beer (1972) was developing his own, somewhat idiosyncratic, approach and
moving beyond cybernetics into more general systems analysis drawing heavily
on neurophysiological ideas.
More significant, empirically, was the development of the contingency theory of
management accounting control systems (summarized by Otley, 1980). Although
several contingent variables were shown to be significant (e.g. technology, envi-
ronment, organizational structure, size, corporate strategy), it was the impact of
the external environment in general, and of external uncertainty in particular,
that most clearly indicated the adoption of an open systems perspective. It is this
distinction that marks the divergence of the study of management accounting
systems, which have steadfastly retained their internal orientation (despite valiant
attempts by a few proponents of so-called ‘strategic management accounting’
(Simmonds, 1981; Bromwich, 1990), and the study of the wider area of manage-
ment control systems. Within management accounting, contingency theory waned
in the early 1980s, to be replaced by various critical approaches in Europe, and
to continue down a universalistic track in the US with the burgeoning popularity
of activity-based costing under the leadership of Kaplan (1983) in particular. The
wider study of control systems picked up on the neglected variable of corporate
strategy at this point, which led to a small but significant stream of work most
notably by Govindarajan and Gupta (1985) and Simons (1987, 1990, 1991, 1995).
The Open Natural Perspective There are two developments which can be
seen to mark a movement into this final perspective, which are illustrated by the
collection of papers published in the monographCritical Perspectives in Management
Control(Chuaet al., 1989). First, there is a recognition that contingent variables are
not to be seen as deterministic drivers of control systems design. In particular,
the environment is not to be seen only as a factor to be adapted to, but also
something which can itself be manipulated and managed. Second, there is the
recognition of the political nature of organizational activity. However, although
radical theorists have clearly been concerned with the exercise of power in and
around organizations, it is not clear that they have contributed greatly to the
study of control in its adaptive sense, nevertheless they have clearly indicated
the complex political environment within which control systems have to function
(see, for example, Ezzamel and Watson, 1993; Hogler and Hunt, 1993). This
touches on the theme of legitimacy at various levels of resolution and addresses