ACCOUNTING DECISIONS 171
reward systems. Otley also argued that there were intervening variables that,
together with the contingent variables, influenced organizational effectiveness,
which was measured in relation to organizational objectives. Otley believed that
an organization ‘adapts to the contingencies it faces by arranging the factors it
can control into an appropriate configuration that it hopes will lead to effective
performance’ (p. 421).
In Chapters 1 and 2, the comment by Clark (1923) that there were ‘different costs
for different purposes’ can be seen as an early understanding of the application of
the contingency approach. Clark further commented that ‘there is no one correct
usage, usage being governed by the varying needs of varying business situations
and problems’. This reflected the need to use cost information in different ways
depending on the circumstances, which has been the focus of Chapters 8 to 10.
International comparisons.................................
Alexander and Nobes (2001) described various approaches to categorizing inter-
national differences in accounting, including:
žlegal systems;
žcommercially driven, government-driven or professional regulation;
žstrength of equity markets.
Alexander and Nobes argued that legal systems, tax systems and the strength of the
accountancy profession all influence the development of accounting, but the main
explanation for the most important international differences in financial reporting
is the financing system (such as the size and spread of corporate shareholding).
There have been efforts to harmonize financial reporting within the European
Union, although these have been slow. Through the International Accounting
Standards Committee (IASC) there are moves towards harmonization, to a large
extent following US practices. This is likely to be a continuing trend given the
globalization of capital markets. Whether there will be any effect of harmonization
on management accounting practices is as yet unknown.
In understanding management accounting, practising managers and students
of accounting receive little exposure to management accounting practices outside
the UK and US. It is important to contrast the UK/US approach with other
practices, particularly those in Japan. These practices are different because they
are predicated on different assumptions, particularly the different emphases on
long-term strategies for growth versus short-term strategies for shareholders.
There are historical, cultural, political, legal and economic influences underlying
the development of different management accounting techniques in that country,
to take a single example.
Management accounting in Japan
Japan has a strong history ofkeiretsu, the interlocking shareholdings of industrial
conglomerates and banks, with overlapping board memberships. This has, at