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There are two developments which can be The Open Natural Perspective seen to mark a movement into this ﬁnal perspective, which are illustrated by the collection of papers published in the monograph Critical Perspectives in Management Control (Chua et al., 1989). First, there is a recognition that contingent variables are not to be seen as deterministic drivers of control systems design. In particular, the environment is not to be seen only as a factor to be adapted to, but also something which can itself be manipulated and managed. Second, there is the recognition of the political nature of organizational activity. However, although radical theorists have clearly been concerned with the exercise of power in and around organizations, it is not clear that they have contributed greatly to the study of control in its adaptive sense, nevertheless they have clearly indicated the complex political environment within which control systems have to function (see, for example, Ezzamel and Watson, 1993; Hogler and Hunt, 1993). This touches on the theme of legitimacy at various levels of resolution and addresses
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Ansari and Bell (1991) illustrate the effect of national culture; Broadbent (1992) and Dent (1991) focus in different ways on the impact of organizational cultures.
Overview This retrospective review of the roots of management control provides the opportunity to reﬂect on its overall nature before moving forward to consider the prospects for the subject. It is clear that there is a wide range of research into the functioning of MCSs, even when its focus is narrowed to the more managerialist approach which we have adopted. A rough categorization of MCSs research work since 1965 set into this framework is given in Table 1 and allows some reﬂection on the basic assumptions which underlie the work that has been undertaken.
As mentioned earlier, whilst the framework developed by Scott provides a means by which to structure this review, it is important to note that every paper reviewed does not ﬁt tidily into such a sequence. Further, it is clear that while practical theorists and scholars have developed ideas in new sectors of the diagram, this has not led to the abandonment of work in earlier sectors. The scientiﬁc management tradition is alive and well in areas such as operational research and in the consultancy world (e.g. in business process reengineering).
The diversity of research approaches available is illustrated in the contents of the text Managerial Control, Theories Issues and Practices (Berry et al., 1995) as well as the special issue of the British Journal of Management on MCSs published in 1993 Table 1 Representative papers from four perspectives
(September, Vol. 4, No. 3). Both these publications (plus the edited collections by Lowe and Machin, 1983 and Chua et al., 1989) have been spawned by the activities of the Management Control Association, a group of UK academics, which has sought for the past 20 years to promote wide-ranging research in the ﬁeld. The latest review of nearly 20 research approaches is by Macintosh (1994), which unusually develops the issues through a selection of methodological approaches.
The predominant ontological stance is realist, stemming from the original concentration of the practical theorists on what they saw as real problems in practice. The primary epistemological stance of these control theorists is positivist and functionalist. Functionalist approaches have been severely criticized (e.g.
Burrell and Morgan, 1979) as being part of the sociology (and perhaps the economy) of preservation, and thus antithetical to radical change. In the sense that management control is concerned with forms of stability this might be so, but the pursuit of efﬁciency has led to radical, and often unwelcome, change for many people, and control techniques have been used to promote quite radical social changes. Whilst some of the more radical theorists have examined this issue it, perhaps, remains somewhat under researched. Laughlin and Lowe (1990) using the framework of Burrell and Morgan (1979) along with Scott’s framework to review accounting research and demonstrate the diversity of approaches available argued that only the open systems approaches were beginning to move away from the functionalist orientation. Given our argument as to the paucity of open systems research, similar claims can be made for the need to extend the theoretical and methodological boundaries of management control research.2 The review shows that accounting still acts as an important element of management control. Whilst there have been developments in control in associated areas (such as Management Information Systems (MIS), human relations, operations research) these disciplines have been less inclined to see themselves as offering themselves as vehicles for integration of the diversity of organizational life than has accounting. Accounting is still seen as a pre-eminent technology by which to integrate diverse activities from strategy to operations and with which to render accountability. There is a sense in which the reduction of values to accounting measurements can contribute to management control sliding into the merely technical. Such a tendency is reinforced by the very constructs of the management information system and of information management which accounting uses. The ubiquity of computers, data capture, high-speed software, electronic data interchange and open access has changed the speed of data ﬂow without yet having had great impact on either management control research or practice. Yet the topic of management control holds the promise of providing a powerful integrating idea to provide a very practical focus to concepts developed in other disciplines if it is not wholly accounting focused. Mills (1970) thoughts about the role of management control as an integrative teaching device also appear to apply with some force to its role as an integrative research framework for an important part of management studies. With this in mind we move to the ﬁnal section.
Themes for future development Here, we suggest some lines of enquiry which we believe it would be fruitful to pursue in developing research in management control. These are our own views, and we acknowledge we come to these issues from our own particular history and perspectives, thus running the risk of being both biased and incomplete. However, we believe they cover a wide-ranging agenda of important issues from both a practical and theoretical perspective. This prospective part of the paper ﬂows from the retrospective review and is in two sub-sections. The ﬁrst sub-section considers that the nature of the current environment and the needs this engenders are signiﬁcantly different from those that determined and yet developed the earlier control approaches. The second sub-section considers the possibilities which could be available in the context of a broadening of the theoretical and methodological approaches adopted in research in the area.
The environment of control The development of earlier MCSs theory took place in the context of large, hierarchically structured organizations. It centred upon accounting controls and developed measures of divisional performance, such as return on investment and residual income. It considered the issues raised in utilizing accounting performance measures to control large, diversiﬁed companies, in particular the construction of quasi-independent responsibility centres using systems of cost allocation and transfer pricing. The central theme was to produce measures of controllable performance against which managers could be held accountable, yet the empirical evidence (Merchant, 1987; Otley, 1990) suggests that the ‘controllability principle’ was more often honoured only in its breach. It can also be argued (see Otley, 1994) that changes in the business and social environment have led to the replacement of large integrated organizations by smaller and more focused organizational units, which require appropriate control mechanisms to be developed.
Several features of the business environment seem to point towards a change in emphasis. A key trend is in the impact of uncertainty. It is a moot point whether uncertainty has increased, but it is true that the rate of change in both the commercial and governmental environment is rapid, requiring considerable adaptation on the part of organizations. Change appears to be affecting a much broader range of the population, whether it be technological, social or political change. The process of adaptation can no longer be left to a few senior managers who develop organizational strategies to be enacted by others; rather the process of change has become embedded in normal operating practices, and involves a wider range of organizational participants.
One consequence of this rapid rate of change has been encapsulated in ideas of global competition and ‘world class’ companies. As the rate of change increases, organizations need to devote more of their resources to adaptation and correspondingly less to managing current operations efﬁciently. One method of adaptation is planning, but this requires the prediction of the consequences of change, which is becoming more difﬁcult; an alternative response is to develop
ACCOUNTING FOR MANAGERSthe ﬂexibility to adapt to the consequences of change as they become apparent.
The ‘management of change’ remains an important managerial skill, but it should no longer be seen as a discrete event bounded by periods of stability; rather we are concerned with management in a context of continual change. This requires continual adaptation, a note which is reﬂected in the current popular terminology of ‘continuous improvement’.
A second feature has been a movement towards reducing the size of business units, certainly in terms of the number of people employed. In part, this has been driven by technological change, but there has also often been a strategic choice to encourage units to concentrate on their ‘core’ business and to avoid being distracted by irrelevant side issues. In turn, this has led to ‘non-core’ activities being outsourced, a process which can be most reliably undertaken in the context of long-term alliances. Such a trend is emphasized by just-in-time production and the processes of ‘market testing’ which have been imposed upon the public sector in the UK. The number of middle managers is being reduced and the range of responsibilities of those who remain is being increased. The split between strategic planning, management control and operational control, which was always tendentious has now become untenable, and a much closer integration between those functions has developed.
The boundaries of the organization and the boundaries of the control function are not necessarily co-terminus. Within the organization, ideas of ‘business process re-engineering’ have reinforced the need to devise control mechanisms that are horizontal (i.e. which follow the product or service through its production process until its delivery to the customer) rather than solely vertical (i.e. which follow the organizational hierarchy within organizational functions). As production processes are increasingly spread across legal boundaries (and often across national boundaries) new processes for the control of such embedded operations are needed (Berry, 1994). That is, control systems need to be devised which coordinate the total production and delivery process regardless of whether these processes are contained within a single (vertically integrated) organization or spread across a considerable number of (quasi-independent) organizations.
Traditional approaches to management control have been valuable in deﬁning an important topic of study, but they have been predicated on a model of organizational functioning which has become increasingly outdated. This has resulted in the study of control systems becoming over narrow by remaining focused primarily upon accounting control mechanisms which are vertical rather than horizontal in their orientation. Contemporary organizations display ﬂexibility, adaptation and continuous learning, both within and across organizational boundaries, but such characteristics are not encouraged by traditional systems. There is considerable anecdotal evidence to suggest that organizational practices are beginning to reﬂect these needs, so a key task for MCSs researchers is to observe and codify these developments.
In this type of changing environment the logic of systems theory could be argued to be of some importance in emphasizing issues such as the importance of environment and the holism of the organization. Although MCSs theory often makes references to the concepts of cybernetics, and sometimes to those of general