302 ACCOUNTING FOR MANAGERS
More recently, accounting researchers have sought to extend contingency
arguments to embrace relationships between firms’ strategies and the design
of their control systems (see Govindarajan and Gupta 1985; Merchant 1985;
Simons 1987). For example, Kaplan (1983) reasoned that managerial accounting
has served business inadequately; it has become overly simplistic, structured and
misdirected. He urged a close scrutiny of organizational activity of successful
organizations so that the managerial accounting systems adopted accurately
reflect the complex conditions confronting contemporary organizations. Merchant
(1981, 1984, 1985) found contingent relationships between corporate context (size,
product diversity and extent of decentralization) and the uses of budgeting
information. Govindarajan (1984, 1988) found environmental uncertainty to be
a major explanatory variable regarding the appropriateness of accounting data
in evaluating the performance of business units. Govindarajan and Gupta (1985)
extended the concern for contingency relationships between organizational control
mechanisms and variables such as technology, environment and size, by exploring
the utility of relating these contingency relationships to strategy, where the utility
of a particular incentive bonus system is contingent upon the strategy of the
focal strategic bonus unit. The work of Shank (1989) and Simons (1987) also
are important research efforts which mobilized contingency principles in the
examination of the use of managerial accounting systems and information in a
strategic manner.
Reflecting concerns for the role of managerial accounting information in con-
temporary organizations, the work of McNair and Mosconi (1988) and McNair
et al.(1989) also reflects an implicit contingency tradition, finding that changes in
technologies are accompanied by changes in performance management systems.
Furthermore, McNair’s group (McNair and Mosconi 1988; McNairet al.1989)
found that actual costs have begun to replace standards in JIT environments
because of the ability to trace costs more easily and because of the more simplified
manufacturing process. On this point, Foster and Gupta (1990) provided a cross
sectional comparison of manufacturing plants in an electronics firm, arguing that
contingency variables (size and complexity of cost drivers) affect manufacturing
overhead. Patell’s (1987) longitudinal study of JIT implementation and changes in
cost accounting procedures also highlighted the importance of contingency struc-
tural factors in the coordination problems of many new manufacturing operations
with regards to information for control and evaluation. The impact of structural
factors is also apparent in the work of Bankeret al.(1991) who found that firms that
have implemented JIT or other teamwork programs are more likely to provide
manufacturing performance information to shop-floor workers. A contingency
theme underlies Young’s (1992) work which raises the intriguing issue that power
shifting can occur within the organization as a result of the implementation of
JIT. Here it is argued that workers are given much more power under JIT than
management may realize (i.e., a workers’ strike could cripple them) because of the
tight coupling that takes place (see Wilkinson and Oliver 1989). Finally, Seltoet al.
(1995) provided a rather comprehensive contingency perspective of the adaptation
of JIT manufacturing and a total quality control system (JIT/TQC system) when
they considered JIT in relationship to classical contingency theory constructs,