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Management accounting and decision making: Two case studies of outsourcing

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  • Lars Braad Nielsen
  • Falconer Mitchell
  • Hanne Nørreklit

Abstract

•The Management Accounting and Decision Making: Two Case Studies explore the production and use of accounting information in complex and strategic significant decision settings.•We draw on two case companies that make outsourcing decisions based on accounting calculations.•Two methods for outsourcing decision-making are uncovered: an analytical and an actor-based.•The two methods have substantially different ways of managing information uncertainty, of fostering interaction among the coalition of decision-participants and of making use of management accounting.•The findings reveal that management accounting can be produced and used in relation to complex and strategic decision situations.Studying the outsourcing decision in two substantial manufacturing companies, the paper explores the use of management accounting information in a complex and strategically significant decision-making setting. The setting involves multiple decision participants with potentially conflicting preferences, constrained information provision capabilities and uncertainties in respect of the financial outcomes of alternative decision options. The two case studies reveal two different methodological approaches to decision-making: analytical and actor-based. These approaches incorporate substantially different ways of managing information uncertainty, fostering interaction among the coalition of decision-participants and making use of management accounting. The findings show that management accounting information and techniques do play an important role in relation to organisationally complex and strategic decision situations. The revealed methods provide potentially educational examples from which other organisations can learn. The findings address the simplistic nature of the conventional management accounting literature on decision-making (e.g. outsourcing and “make or buy”).

Suggested Citation

  • Lars Braad Nielsen & Falconer Mitchell & Hanne Nørreklit, 2015. "Management accounting and decision making: Two case studies of outsourcing," Accounting Forum, Taylor & Francis Journals, vol. 39(1), pages 66-82, March.
  • Handle: RePEc:taf:accfor:v:39:y:2015:i:1:p:66-82
    DOI: 10.1016/j.accfor.2014.10.005
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    Cited by:

    1. Stefan Schiller, 2017. "The Quest for Rationality: Chief Financial Officers’ and Accounting Master’s Students’ Perception of Economic Rationality," SAGE Open, , vol. 7(2), pages 21582440177, April.
    2. Poudeh, Hossein Dehghani & Cheshmberah, Mohsen & Torabi, Hassan & Karimi Gavareshki, Mohammad Hossein & Hosnavi, Reza, 2019. "Determining and prioritizing the factors influencing the outsourcing of Complex Product Systems R&D projects employing ANP and grey-DEMATEL method (case study: Aviation Industries Organization, Iran)," Technology in Society, Elsevier, vol. 56(C), pages 57-68.
    3. Jacobo Gomez-Conde & Ernesto Lopez-Valeiras & Fabricia Silva Rosa & Rogério João Lunkes, 2023. "The effect of management control systems in managing the unknown: Does the market appreciate the breadth of vision?," Review of Managerial Science, Springer, vol. 17(8), pages 2769-2795, November.
    4. McLean, Tom & McGovern, Tom, 2017. "Costing for strategy development and analysis in an emerging industry: The Newcastle Upon Tyne Electric Supply Company, 1889–1914," The British Accounting Review, Elsevier, vol. 49(3), pages 294-315.

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