Contingency Theory and the Design of Accounting Information Systems

Contingency theory suggests that an accounting information system should be designed in a flexible manner so as to consider the environment and organizational structure confronting an organization. Accounting information systems also need to be adapt to the specific decisions being considered.  In other words, accounting information systems need to be designed within an adaptive framework.                                                 

  • The first paper to specifically focus on the contingency view of accounting information systems in the accounting literature was "A Contingency Framework for the Design of Accounting Information Systems," Accounting, Organizations and Society , Vol.1, No. 1, pp. 59-69 (1976), by Lawrence A. Gordon and Danny Miller.  This paper laid out the basic framework for considering accounting information systems from a contingency perspective.
  • In a later paper, by Lawrence A. Gordon and V.K. Narayanan entitled "Management Accounting Systems, Perceived Environmental Uncertainty and Organization Structure: An Empirical Investigation," published in Accounting, Organizations and Society , Vol. 9, No. 1, pp. 33-47 (1984), it was shown that environmental uncertainty is a fundamental driver for designing management accounting systems among successful organizations.  A key finding in this study was that, as decision makers perceive greater environmental uncertainty, they tend to seek more external, nonfinancial and ex ante  information in addition to internal, financial and ex post information.  This latter finding has been confirmed by several studies that followed the Gordon and Narayanan paper.


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