Accounting for Managers: Interpreting Accounting Information for Decision Making, 4th Edition

Chapter 5

Interpretive and Critical Perspectives on Accounting and Decision Making

In Chapter 4 we described the rational-economic paradigm that underpins management control systems in general and accounting reports in particular. There are, however, alternative paradigms. For example, Otley and Berry (1980) questioned the usefulness of cybernetic controls (goal-oriented, with targets and using feedback to take corrective action) given the limitations of accounting systems as a result of organizational complexity and rapid environmental change. Accounting systems provide an important, but limited, perspective on organizations which is enhanced by non-financial performance measurement (as we saw in Chapter 4). However, organizations are typified by more informal, and often more subtle, forms of control than formal systems like accounting and the Balanced Scorecard.

While Chapter 4 assumed a rational paradigm (a paradigm is a way of viewing the world), this chapter explores alternative ways to understand the role played by accounting and management control in organizations. We look at the role of research and review the interpretive paradigm and the social constructionist perspective and how organizational culture is implicated in accounting. We then consider the radical paradigm and how power is a major concern of critical accounting theory. These alternative paradigms to the rational-economic one described in Chapter 4 are an important focus of this book to which we return in subsequent ...