Management accounting and decision making: Two case studies of outsourcing

Lars Braad Nielsen, Falconer Mitchell and Hanne Nørreklit

Accounting Forum, 2015, vol. 39, issue 1, 66-82

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”).

Date: 2015
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Citations: View citations in EconPapers (5)

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DOI: 10.1016/j.accfor.2014.10.005

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