300 ACCOUNTING FOR MANAGERS
theory was the depiction of corporations existing in a tentative equilibrium which
is inherently fragile, short lived and ever subject to a complex of personal, social,
physical and biological destructive forces (Miller and O’Leary 1989). As Miller and
O’Leary (1989) argued, it was axiomatic for the human relations perspective that
all organizations are founded on self-interest and a contractual principle; this is
the core reason that they are so fragile. This characterization of the organizations
founded on self-interest and contractual principles becomes a major thrust of the
organizational decision-making perspective as articulated in the work of March
and Simon (1958) but also in the related work of Simon (1957) and the later work
of Cyert and March (1963) and March and Olsen (1976).
In summary, March and Simon (1958) and the organizational decision-making
perspective started with an image of human behavior and individual decision-
making that was considerably more complex than the human relations perspective
that had preceded them, but nonetheless, reflected a common concern for the
managing of the organization. In turn, contingency theory blended the insights
on human behavior and individual decision-making as depicted in March and
Simon’s (1958) organizational decision-making perspective with the sociological
functionalist concerns regarding the impact of such structural factors as environ-
ment, size, technology, etc., on organizational behavior. Important in this lineage
of work were issues of organizational control and coordination which are so
germane to managerial accounting research.
Traditional management accounting research which has been based in the
contingency literature (as well as its predecessors – organizational decision-
making, human relations and scientific management) suggests that managerial
accounting information should reflect and promote rationality in decision-making.
Accordingly, management accounting information used by managers serves as a
quantitative expressions of organizational goals and are used to support rational
decision-making (Ijiri 1965). The prescriptive character of managerial accounting
information espoused by this traditional school of thought is essentially internal
and downward and also prescriptive in character (Anthony 1965), thus reflecting
the strong scientific management heritage, albeit later becoming more complex
when sociological and psychological as well as structural factors are brought in.^3
(^3) Caplan (1971, 13) identifies scientific management as providing the basis for the ‘‘Traditional
Management Accounting of the Firm’’ where the accounting system is assumed to be neutral and
rational as it serves as ‘‘...a control device which permits management to identify and correct
undesirable performance.’’ In contrast, entitling the human relations tradition as ‘‘The Modern
Organizational Theory Model,’’ Caplan (1971, 43) defined management accounting issues coming
from this perspective as being concerned with social and psychological factors as stated in his
terms, the ‘‘...the interaction of the accounting technique of the individual to be controlled.’’
Both of these functionalist perspectives are precursors to contingency theory and reflect work in
managerial accounting research much earlier than contingency theory. For example, the human
relations tradition is the intellectual basis for the classic work of Argyris (1952) who found that
budgetee participation in the budgetary process tends to foster fuller and more robust control over
budgetees. He suggested that genuine participation in the budget process as a remedy to negative
budget attitudes at lower levels (also see Hopwood (1973) as to the importance of budgetary
participation in the behavioral attitudes of employees). Through this initial work of Argyris (1952)