Summary by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida
Behavioral Issues Main Page | Controllership
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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 Assumption |
Traditional Managment Accounting Theory |
Modern 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.
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