274 ACCOUNTING FOR MANAGERS
an imperfect reflection of management models of control. Hofstede (1968) offers
an early survey of the behavioural approach to budgetary control. He explores
how the role of budgets has been viewed in accounting theory, in motivation
theory, and from the perspective of systems theory. Finally, the brief overview
of research into control in complex organizations by Merchant and Simons (1986)
takes a broad view of what constitutes control, as does the present paper. It differs,
however, in also paying attention to agency theory literature and psychologist
research both omitted from consideration here.^1
It will be argued that one of the unintended consequences of Anthony’s (1965)
seminal work is that management control has primarily been developed in an
accounting-based framework which has been unnecessarily restrictive. Although
radical theorists have studied control processes more extensively, their attention
has been focused much more on the exercise of power and its consequences than
on the role of control systems as a means of organizational survival. This is an
important area, but one which is outside the remit set for this review which is in
closer alignment with Mills (1970) who argued for the place of management control
as a central management discipline. He suggested that it was a more appropriate
integrating discipline for general management courses than the tradition of using
business policy or corporate strategy courses. ‘Control’ is itself a highly ambiguous
term as evidenced by the difficulty of translating it into many European languages
and the list of ‘57 varieties’ in its connotations given by Rathe (1960). Given this
diversity some attention will be paid to matters of definition and the establishment
of appropriate boundaries for this review.
Anthony’s (1965) classic definition of management control was
‘the process by which managers assure that resources are obtained and
used effectively and efficiently in the accomplishment of the organization’s
objectives.’He saw management control as being sandwiched between the processes of
strategic planning and operational control; these processes being super-imposed
upon an organizational hierarchy to indicate the respective managerial levels at
which they operate.
Strategic planning is concerned with setting goals and objectives for the whole
organization over the long term. By contrast, operational control is concerned with
the activity of ensuring that immediate tasks are carried out. Management control
is the process that links the two. Global goals are broken down into sub-goals for
parts of the organization; statements of future intent are given more substantive
content; long-term goals are solidified into shorter term goals. The process of
management control is designed to ensure that the day-to-day tasks performed by
all participants in the organization come together in a coordinated set of actions
(^1) The authors recognize that this provides a narrow focus for the review, but space restraints
preclude the possibility of providing a more comprehensive survey. Our choice has been,
therefore, to restrict the survey to one which focuses on the literature which sees management
control as a practical activity of managers. See pages S32 – S33 for a discussion of the boundaries
of our survey.