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This chapter is concerned with the ways in which organizational structure can act as a means of influencing and controlling the behaviour of the individuals who work within it. This is the subject matter of organizational theory, so the first part of the chapter reviews its development. It is found that no coherent overall theory of organizational design exists, rather organizational theory consists of a series of different yet related insights which have emerged over a period of several decades.

Early theories of organization were universal in nature, attempting to discover the optimal way in which affairs were to be organized. More modern theories have tended to be contingent, attempting to relate their prescriptions to more specifically defined circumstances. Organizations have also come to be seen as an amalgam of both rationally designed elements, consciously designed to achieve certain goals, and naturally occurring elements which can arise in an unexpected and unintended manner. Most recently, theories which stress the socially created nature of organizations and their role in sustaining patterns of power and domination have come to the fore. Here it is argued that all these theories have their own insights to offer, but that none of them is sufficient or totally encompassing.

Central to the use of organizational structure as a control device is the assignment of authority and responsibility to individuals within the organization, and the holding of them accountable for the achievement of specific tasks or objectives. Information is a central component of such an accountability cycle, and its availability influences the types of control that can be used, a theme which is further developed in Chapter 4.

Accounting information is an important subset of more general management information. The design of accounting information systems (AIS) is evidently influenced by organizational design, so it is not surprising that theories of AIS design have developed in parallel with organizational theory. Since 1975, the so-called contingency theory of management accounting has become the main focus of attention. This theory has concentrated on identifying the main features of an organization and its environment which affect AIS design. Although it is still emerging, features of both an organization’s context and its internal structure and control arrangements have been found to have a substantial impact upon AIS design. But it is unlikely that any theory of this type will be able to explain all aspects of control systems design. The reaction of people against those aspects of control which negatively impinge upon them will ensure that the design of control systems will remain a developing social process within organizations. However, the theories that we do have at least allow us to begin to understand certain aspects of this on-going social process.

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© 1990 Clive Emmanuel, David Otley and Kenneth Merchant

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Emmanuel, C., Otley, D., Merchant, K. (1990). The design of organizations. In: Accounting for Management Control. Springer, Boston, MA.

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  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-0-412-37480-7

  • Online ISBN: 978-1-4899-6952-1

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