16
Research in Management Accounting,
Conclusions and Further Reading
Research and theory in management accounting.................
Theory is an explanation of what is observed in practice. The development of
theory from practice is the result of a process of research. Practice informs theory,
which in turn, via various forms of publication and education, can influence the
spread of practice between organizations and countries.
Otley (2001) argued that management accounting research ‘has, in a number
of respects, lost touch with management accounting practices’ (p. 255), having
concentrated too much on accounting and not enough on management. Otley
reinforced earlier arguments that management accounting had become ‘irrelevant
to contemporary organizations, but worse that it was often actually counter-
productive to good management decision-making’ (p. 243) and that we need to
‘put the management back into management accounting’ (p. 259).
Hopperet al.(2001) argued that there have been few British scholars who
have achieved innovation in practice, either because of ‘the anti-intellectualism of
British managers and accountants...or the marginal role of academics in British
policy making’ (p. 285).
Both issues are important, because an understanding of accounting tools and
techniques without an understanding of theory has the same problems as theories
divorced from business practice. An understanding of the underlying assumptions
of accounting and the limitations of the tools and techniques of accounting is
essential. If we ignore those assumptions and limitations, we are likely to make
decisions on the basis of numbers that do not adequately reflect any underlying
business reality.
Theory has been integrated with practical examples in this book to reflect the
importance of taking an interpretive and critical perspective on financial reports.
Theory is not developed by academics in ivory towers divorced from practical
business situations. It is developed from research, which typically takes one of
two forms:
ža quantitative study of a large number of business organizations that yields a
large database that can be analysed statistically in order to produce generaliza-
tions about accounting practice;