Management And Accounting Web

Caplan, E. H. 1966. Behavioral assumptions of management accounting. The Accounting Review (July): 496-509. (JSTOR link).

Summary by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Behavioral Issues Main Page | Controllership Main Page | Theories Main Page

The purpose of this paper is to discuss the differences between the underlying assumptions of traditional management accounting and modern (1966) organizational theory. The following table provides a brief comparison between the concepts underlying the two theories. Follow the McGregor link for a summary of theory X and theory Y.

Comparison of Traditional Management
Accounting and Mordern Organizational Theories
Concept or
Traditional Managment
Accounting Theory
Organizational Theory
Objective of Organization Maximize profit. Assumes that sub-goals are divisible and additive (responsibility accounting). The dominant members have goals, the organization cannot. Survival of the dominant members is the main goal and satisficing* is second. Sub-goals are not divisible and additive and may conflict.
Human Behavior Lazy man theory X.
Motivation is economic need.
Motivation factors include psychological, social and economic factors. Mixed theory X and Y.
Management Behavior Must control employees with close supervision to maximize profits. Make decisions to balance the contributions from participants with organizational inducements. Control through assigning and obtaining acceptance of authority.
Management Accounting Used to aid in maximizing profit with emphasis on bureaucratic control, but accounting is neutral. Used to provide information for planning and controlling to balance contributions.

* Satisficing is a term coined in the economics literature and refers to achieving satisfactory results rather that maximizing.


Related summaries:

Amabile, T. M. 1998. How to kill creativity: Keep doing what you're doing. Or, if you want to spark innovation, rethink how you motivate, reward, and assign work to people. Harvard Business Review (September-October): 77- 87. (Summary).

Bailey, C. D., L. D. Brown and A. F. Cocco. 1998. The effects of monetary incentives on worker learning and performance in an assembly task. Journal of Management Accounting Research (10): 119-131. (Summary).

Blake, R. R. and J. S. Moulton. 1962. The managerial grid. Advanced Management Office Executive 1(9). (The Grid).

Bonner, S. E. and G. B. Sprinkle. 2002. The effects of monetary incentives on effort and task performance: Theories, evidence, and a framework for research. Accounting, Organizations and Society 27(4-5): 303-345. (Summary).

Deming. W. E.1993. The New Economics For Industry, Government and Education. Cambridge: Massachusetts Institute of Technology Center for Advanced Engineering Study. (Summary).

Herzberg, F. 2003. One more time: How do you motivate employees? Harvard Business Review (January): 87-96. (Summary).

Kohn, A. 1993. Why incentive plans cannot work. Harvard Business Review (September-October): 54-63. (Summary).

Martin, J. R., W. K. Schelb, R. C. Snyder, and J. C. Sparling. 1992. Comparing the practices of U.S. and Japanese companies: The implications for management accounting. Journal of Cost Management (Spring): 6-14. (Summary).

McGregor, D. M. 1957. The human side of enterprise. Management Review (November): 22-28. Reprinted from the Proceedings of the Fifth Anniversary Convocation of the School of Industrial Management, MIT, April 9, 1957. (Summary).

Ouchi, W. G. 1979. A Conceptual Framework for the Design of Organizational Control Mechanisms. Management Science (September): 833-848. (Summary 2).

Ouchi, W. G. and A. M. Jaeger. 1978. Type Z organization: Stability in the midst of mobility. Academy of Management Review. (April): 305- 314. (Summary).

Pfeffer, J. 1998. Six dangerous myths about pay. Harvard Business Review (May-June): 109-119. (Summary).