Accounting for the economics of the firm

Abstract

A primary aim of this paper was to present of a survey of possible inter-connections between management accounting and the economics of the firm. The guiding philosophy is that both accounting and economics can be illuminated and developed by exploring the interface between the two disciplines. The paper sets out different economic perspectives on the firm and examines implications for the role and functioning of management accounting systems in each case. The different perspectives are classified in terms of the ways in which they incorporate organizational authority and organizational information use. The resulting classification of firm types reveals different roles for management accounting. But the discussion does not suggest that one of these taxonomic categories is necessarily superior to the others and by implication one role for management accounting being superior. Instead the approach taken here is that each approach embodies particular assumptions, or a particular world-view, that defines the characteristic questions that are asked and the answers suggested. By implication management accounting systems have equivalent multiple meanings that are (potentially) all relevant for any single organization.