The appropriateness of statistical methods for testing contingency hypotheses in management accounting research

In recent years, the contingency-based management accounting literature has been criticized for being fragmentary and contradictory as a result of methodological limitations. This study adds to this picture by showing that the theoretical meaning of some commonly used statistical techniques is unclear, i.e. the functional forms are not precise enough to be able to discriminate between several sometimes even conflicting theories of contingency fit. The study also shows that the techniques differ significantly in terms of how interaction effects between context and management accounting are modeled. This implies that some methods are only appropriate when theory predicts interaction effects in general while others are only appropriate in cases where theory specifies a more precise functional form of interaction such as symmetrical or crossover interactions. Based on these observations, several recommendations for future research are proposed.

[1]  Anne M. Lillis,et al.  The impact of manufacturing flexibility on management control system design , 1995 .

[2]  Tom R. Burns,et al.  The Management of Innovation. , 1963 .

[3]  Sujatha Perera,et al.  Customer-focused manufacturing strategy and the use of operations-based non-financial performance measures: A research note , 1997 .

[4]  J. Jaccard,et al.  Interaction effects in multiple regression , 1992 .

[5]  A. V. D. Ven,et al.  The Concept of Fit in Contingency Theory. , 1984 .

[6]  P. Lawrence,et al.  Organization and Environment: Managing Differentiation and Integration , 1967 .

[7]  Jan Greve,et al.  Forms of contingency fit in management accounting research—a critical review , 2004 .

[8]  Jonas Gerdin,et al.  The Impact of departmental interdependencies and management accounting system use on subunit performance , 2005 .

[9]  Robert A. Simons.  Accounting control systems and business strategy: An empirical analysis , 1987 .

[10]  Jacob Cohen,et al.  Applied multiple regression/correlation analysis for the behavioral sciences , 1979 .

[11]  M. Abernethy,et al.  Management control systems in research and development organizations: The role of accounting, behavior and personnel controls , 1997 .

[12]  Jay R. Galbraith.  Designing Complex Organizations , 1973 .

[13]  D. Otley,et al.  The effects of the interactive use of management control systems on product innovation , 2004 .

[14]  A. V. D. Ven,et al.  Alternative forms of fit in contingency theory. , 1985 .

[15]  Jonas Gerdin.  The impact of departmental interdependencies and management accounting system use on subunit performance: A second look , 2005 .

[16]  Susan F. Haka,et al.  CAPITAL BUDGETING TECHNIQUES AND FIRM SPECIFIC CONTINGENCIES: A CORRELATIONAL ANALYSIS. , 1987 .

[17]  C. B. Schoonhoven.  Problems with contingency theory: testing assumptions hidden within the language of contingency "theory.". , 1981, Administrative science quarterly.

[18]  K. E. Southwood.  Substantive Theory and Statistical Interaction: Five Models , 1978, American Journal of Sociology.

[19]  J. Pfeffer.  Organizations and Organization Theory , 1982 .

[20]  K. Langfield-Smith,et al.  Antecedents to management accounting change: a structural equation approach , 2003 .

[21]  Joan C. Woodward.  Industrial Organization: Theory and Practice , 1966 .

[22]  Kenneth A. Merchant,et al.  The Budgetary And Performance Influences Of Product Standardization And Manufacturing Process Automation , 1990 .

[23]  Margaret A. Abernethy,et al.  The role of budgets in organizations facing strategic change: an exploratory study , 1999 .

[24]  J. Edwards.  Ten Difference Score Myths , 2001 .

[25]  Frank G. H. Hartmann,et al.  Testing contingency hypotheses in budgetary research: an evaluation of the use of moderated regression analysis , 1999 .

[26]  V. Govindarajan.  A Contingency Approach to Strategy Implementation at the Business-Unit Level: Integrating Administrative Mechanisms with Strategy , 1988 .

[27]  Ofer Meilich,et al.  Bivariate Models of Fit in Contingency Theory , 2006 .

[28]  Alan S. Dunk,et al.  Moderated regression, constructs and measurement in management accounting: a reflection , 2003 .

[29]  M. Abernethy,et al.  The consequences of customization on management accounting system design , 2000 .

[30]  P. Khandwalla.  The Effect of Different Types of Competition on the Use of Management Controls , 1972 .

[31]  Richard L. Daft,et al.  Management control systems and departmental interdependencies: An empirical study , 1987 .

[32]  S. Mark Young,et al.  Assessing the organizational fit of a just-in-time manufacturing system: Testing selection, interaction and systems models of contingency theory☆ , 1995 .

[33]  K. Merchant.  Influences on departmental budgeting: an empirical examination of a contingency model , 1984 .

[34]  R. Chenhall.  Management control systems design within its organizational context: findings from contingency-based research and directions for the future , 2003 .

[35]  L. Donaldson.  The Contingency Theory of Organizations , 2001 .

[36]  Frank G. H. Hartmann.  The impact of departmental interdependencies and management accounting system use on subunit performance: A comment , 2005 .

[37]  Michael D. Shields,et al.  Mapping Management Accounting: Graphics and Guidelines for Theory-Consistent Empirical Research , 2003 .

[38]  Frank G. H. Hartmann,et al.  Testing contingency hypotheses in budgetary research using moderated regression analysis: a second look , 2003 .

[39]  Vincent K. Chong,et al.  Strategic Choices, Environmental Uncertainty and SBU Performance: A Note on the Intervening Role of Management Accounting Systems , 1997 .

[40]  K. Langfield-Smith,et al.  The relationship between strategic priorities, management techniques and management accounting: an empirical investigation using a systems approach , 1998 .

[41]  Vincent K. Chong,et al.  Management accounting systems, task uncertainty and managerial performance: A research note , 1996 .