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McNair, C. J. and L. P. Carr. 1994. Responsibility redefined: Changing concepts of accounting-based control. Advances in Management Accounting (3): 85-117.

Summary by Mary Murphy
Master of Accountancy Program
University of South Florida, Summer 2001

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McNair and Carr discuss the changes in accounting-based controls that are occurring in organizations that have adopted new manufacturing techniques such as Just In Time (JIT) and Total Quality Management (TQM). The paper has several parts.

1. The authors discuss three aspects of their initial research question - When an organization introduces one or several of the new management techniques, what is the impact on the traditional responsibility control system?

2. This section includes an examination of the empirical methodology used in the study, and

3. The field observations and implications are discussed.

The Basic Nature of Accounting-Based Controls

McNair and Carr begin by discussing the traditional view of responsibility accounting. The traditional approach focuses on responsibility accounting as a means of cost control and therefore better management. It is implied that responsibility lies with the managers and that the other workers are passive and must be controlled. Emerging techniques, needed to keep up with the global economy, instead focus on team based authority and companies find the traditional controls are either not applicable or even detrimental to the new techniques. This leads the authors to the first refinement of the initial question:

In companies that are implementing a primary emergent technique (JIT or TQM), accountability will be redefined from the individual to the team level. In addition, the controllability criterion will be employed lower in the organization through empowerment.

Another area where traditional responsibility accounting is different from the emerging techniques is in the area of results-based controls versus the more recent balanced scorecard approach. It seems the control system is shifting from results oriented to action oriented. This leads the authors to yet another refinement of the research question:

In companies that are implementing a primary emergent technique, the focus of the control system will shift from results to process-oriented control at the point of action, decreasing the emphasis on the financially based control measures.

The authors next stress the role of continuous improvement that so many believe is at the heart of emergent techniques. The traditional view of “meeting current standards of performance” is incompatible with the emerging view of integrated improvements that are ongoing and involve all employees. Hence, the finial revision of the question:

In organizations implementing one or more of the emergent techniques, the control process will focus on supporting learning, or continuous improvement, rather than enforcing the status quo.

Methods and Data

Exploratory, theory-building field method used.

Information on nine companies:
All different industries.
Different levels of revenues ($25million- $15billion).
Each successfully implemented either JIT or TQM or both.
Study conducted over five years with 3-15 day visits at each company.
Individuals from throughout the companies were interviewed.

Analyzing the Empirical Results

The changes in the accounting system were explored on two levels:

1. Standard costing to ABC, and

2. Site-specific changes to existing accounting based control methods.

In seven of the nine sites some form of accounting based control system change was observed. One of the two unchanged companies, failed within five years and the other's status was undeterminable when the article was written.

Empowerment, Teams, and Accounting-based Controls

The first refinement of the research question was involved in the increase in team importance. From the evidence, it appears that a team orientation was present at every company. Several of the companies had incorporated this team focus into the accounting-based control system. It seemed though, that these controls were very informal and in some ways were used to help buffer the inaccurate traditional measures. Accountabilities did seem to be moving lower in the companies through empowerment and formal measurements.

The Changing Natures of Control Measures

The second refinement dealt with the newer view of action based controls. Across every company in the study, there was an increase in the reliance on operational controls. Six of the plants had very minimal reliance on financial measurements within their operational controls. Furthermore, action (process) controls emerged in response to the empowerment phenomenon.

Organization Learning versus Control

The final refinement question dealt with the concept of continuous improvement. The companies were examined to determine their static versus dynamic standards. Dynamic standards are any that measure performance based on rolling averages of actual results instead of a static standard that changes only after a new efficiency study. All but two of the companies switched to dynamic measures, although it is impossible to tell if the emergent techniques caused this shift.


Accounting-based control system changes appear to be related to the success of JIT/TQM implementations.

The focus of control systems has switched to cell based controls.

Control seems to be shifting lower in the organization through empowerment.

Operational controls have an increasing role. Financial (results) controls are used when they “fit”.

A “bottom-up” point of action control seems to be emerging.

Personnel controls (peer pressure) now make up about 80% of total controls.

Dynamic standards are replacing static standards.

Emphasis is shifting to decision support and continuous improvement and learning.


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