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Luft, J. L. 1997. Long-term change in management accounting: Perspectives from historical research. Journal of Management Accounting Research (9): 163-197.

Summary by Anita Reed
Ph.D. Program in Accounting
University of South Florida, Spring 2002

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The author contends that historical studies have influenced and affected studies of management accounting, but researchers in accounting are not well versed in the methodology used for historical research and may consequently not treat the material from historical studies critically. Her purpose is to provide a "consumers’ guide" (p. 164) to be used by management accounting researchers for evaluating historical studies.

History and Management Accounting Research

The author articulates two reasons why management accountants’ use history in their research (p. 164):

"1. Historical research has the potential to make contributions to the understanding of present-day practice, which the analysis of present-day data cannot make so easily.

2. Research on present-day practice has been influenced by, and share certain limitations with, key historical works of the 1960s and 1970s. Subsequent critiques of these works in the historical literature can be helpful in highlighting these limitations. The historical literature suggests additional questions that need to be addressed and additional explanatory factors that need to be examined in order to provide a more satisfactory account of management accounting practice."

Uses and Influence of Historical Data

Historical data in economic research and management accounting research is useful for testing theories and observing the long-term rate of change in organizations. Historical information may be more readily available than present-day information since it has lost its competitive value or sensitive nature and firms are more willing to share it with researchers.

Two major research streams in management accounting research, agency research and activity based costing research, were developed from historical studies of large firms in the U.S. that was published in 1962 and 1977 (Chandler). The historical studies provided links between the theoretical ideas and the actual development of the research streams. Historical examples also provided the underlying support for work done by Johnson and Kaplan (1987) regarding the "competitive value of improved product costing" (p. 166).

The work of Chandler and of Johnson and Kaplan has been criticized by historical researchers for being too focused on the demand function to the exclusion of the supply function, distribution of wealth and power, and the changes in knowledge structures with the result that they provide a misleading image of the dynamics of change in management accounting activities.

Approaches to History

The author describes history as a "field defined by its subject matter, not by a unique theory or method" (p. 167), similar to accounting. Historians draw theories, philosophies and research techniques from the other social sciences. The author contends that historians tend to be more "eclectic" and "skeptical" in their use of borrowed methodology than accountants. She provides numerous examples to support this contention.

The author then provides a brief "history of history", delineating the development of historical narrative and research techniques over the period extending from the early nineteenth centuries to the present time. The various schools of thought and practice include the Annales, cliometric, and Foucaldian, which continue to co-exist and generate theoretical discussions. These theoretical discussions have created two areas of concern regarding the use of the narrative form and the problem of evidence.

Issues associated with the use of the narrative form of historical account are mainly centered on the idea that "narrative is not simply a chronological organization of facts: it is also a principle of selection and emphasis" (p. 168. As a result, bias may be introduced by the writer’s need to create a cohesive picture of the events being analyzed as if they were intended to lead up to the occurrence of a particular event, recounting the various successes and failures of a group of individuals or an organization on its path to a particular goal. Other critiques of narrative include "distortion in the choice and presentation of material" (p. 169), the existence of presentism, wherein present-day issues are injected into the historical account such that the present appears to be the intended end result of past events. Presentism can result in several forms of bias (selection of what to discuss and how to present certain events, taking events out of context, presenting misleading analogies) all of which may lead to a reduction in the value of the narrative as a means of understanding how and why organizational changes actually occur. The author discusses several alternatives to narrative technique, including the cliometric school that does not use narrative but instead uses formal modeling and hypothesis testing, the Annalistes view of narrative as a mixture of science and literary form and not a pure science and the Foucaldian school that presents history as a "series of haphazard conflicts" (p.170) with no conclusion regarding the results.

Issues associated with the problem of evidence center around the importance of establishing the "details of an event as it actually happened" (p. 171). Several factors create distortion of the facts: conflicting versions of the facts from witnesses, terminology used to describe events and occurrences is ambiguous, fluid and may suffer from false precision, and deciphering historical documents without being fully aware of the varieties of genre and writing conventions in practice at the time the documents were produced (which may lead a researcher to interject present-day conventions into historical documents and result in "anachronistic misinterpretation" (p. 171). As a result, historical researchers need to explicitly state the nature of the source documents and the circumstances of evidence collected from contemporaneous sources (witnesses), thus allowing the reader to judge veracity.

Management Accounting History: Economic Approaches

Discussion of the economic approaches to management accounting history is based on the initial economic-efficiency theory of management accounting change proposed by Chandler. This theory is concerned with the growth of modern management accounting practices as a result of particular technological changes and new accounting techniques that contributed to the feasibility of coordination and control of large organizations. Chandler’s view has been augmented in more recent literature by two additional categories of change: redistribution of wealth and supply-side explanations.

Distribution issues include the opportunities for redistribution of wealth that resulted from new measures and standards for direct labor, described by some accounting historians as being not only devices to create transaction cost reduction, but also to increase the effort and output of workers without reciprocal increases in pay. Chandler’s view had focused on the resulting increases in the "size of the pie", i.e. increase in net income to distribute. The distribution view focuses instead on the way the pie is shared, contending that management had increased power over labor and therefore a larger share of the resources. It is difficult to tell which is the more correct motivation, increased efficiency (larger pie) or redistribution (bigger share of the pie), underlying the development and use of the new management accounting techniques. Other economic theories include the labor process view of history and game theory consistent with Marxism and neoclassical free-market approaches.

Supply-side issues include the supply of information required to facilitate management accounting practices and the supply of innovative practices. The first issue concerns the information processing technology available to and possessed by an organization that will support management accounting practices, and how that information is used to create coordination within an organization. Different methods of coordination result in different solutions to similar problems in different organizations and are affected by culture as well as other factors. Vertical coordination is compared to horizontal coordination. The second issue of supply of innovations concerns the development and diffusion of innovative practices. This is an area that has not been addressed sufficiently in the literature, however the author discusses several studies of innovation diffusion.

The author concludes this section by pointing out two interesting points: 1) it is difficult to analyze the historical literature in management accounting and conclude that modern management accounting practices have resulted in significant efficiency gains and 2) the task of identifying and demonstrating efficiency gains is "seriously complicated by the problem of the dynamics of change" (p.176). In other words, there is not extensive proof that we are doing it better now than in the eighteenth century, and there has been so much change in organizational structure and culture not driven by management accounting that it is difficult to identify and measure the unique impact of management accounting. The author discusses the historical support for these points, including the limitations of documentation, witness accounts, absence or omission of evidentiary materials and the dynamics of organizational change.

Non-Economic Approaches: Foucaldian History

The author discusses the Foucaldian approach to historical analysis, which rejects narrative as having too narrow in perspective, too much emphasis on individual agency, and "its tendency to understate the differences between past and present ways of thinking" (p. 180). Foucaldian studies tend to focus on accounting "as part of the workings of society as a whole" (p. 181) as opposed to studying accounting in isolation as did the economic approach studies. In addition, Foucaldians do not view accounting as a tool for coordinating and controlling organizational members, but observe it as an outcome that is "only in part planned…emerging only partially as the result of intentional and planned actions" (p. 181), resulting as different members of society pursue their own interests "without full regard for or comprehension of the many forces affecting it" (p. 181). Foucaldians also present a different view of past versus present thought, questioning theories of wealth maximization and efficiency as historically preconditioned phenomenon and not as drivers of the development of innovative practices. They see the change from measuring and controlling things to measuring and controlling people (placing the focus on the examination of human performance) as the "decisive innovation in the creation of modern control systems" (p. 183) and suggest that innovations in accounting resulted from broader shifts in cultural codes that encouraged or facilitated the concept of controlling human performance. They do not, however, provide information regarding the source of the shifts in cultural codes.

Future Research

The author suggests that historical critiques of current management accounting research indicate several areas where research is lacking: supply-side issues, redistribution opportunities (for wealth and power) and the dynamics of change. Each of these topical areas is discussed in more detail. The author also discusses the future of management accounting history, describing various possible research topics including the twentieth-century history, developments in the history of technology, and the nature and limitations of the source materials available to researchers.


The author concludes that a long-term perspective of management accounting research can provide an understanding of the how the "waves of change" (p. 191) in the literature advance and recede through the economy and why management accounting practice has a particular form at a particular point in time, taking into account how "periodic waves of enthusiasm for particular topics and techniques" (p. 191) in practice affect the contemporaneous literature.


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