Advances in Accounting Behavioral Research

Behavioral research in management accounting: The past, present, and future

Alan S. Dunk

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BEHAVIORAL RESEARCH IN
MANAGEMENT ACCOUNTING: THE
PAST, PRESENT, AND FUTURE

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Alan S . Dunk

ABSTRACT
Behavioral research in management accounting has made significant
progress over the past half century . Although that progress has not often
been smooth, it has demonstrated the need to pay careful and close
attention to behavioral issues to promote effective organizational
functioning . The range of issues addressed has expanded dramatically,
consistent with the growth in the complexity of organizations, and the need
to manage cross-national operations . This paper provides a review of
major findings in the field. It then examines work that reflects on prior
literature and puts forward proposals that may contribute to the
advancement of the discipline. Finally, it considers some emerging
research issues and suggests some conclusions .

INTRODUCTION
Behavioral research in management accounting has had a relatively short though
chequered career . Stemming from the notion that managing behavior is crucial
in organizations, a growing stream of research has attempted to identify the
array of factors that influence behavior and impact on a range of criterion

Advances in Accounting Behavioral Research, Volume 4, pages 25-45

Copyright 2001 by Elsevier Science Ltd.
All rights of reproduction in any form reserved .
ISBN : 0-7623-0784-6
25

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ALAN S . DUNK

variables . This issue is of continuing and significant importance as organizations

expand across national borders and the need to manage geographically-dispersed
operations is essential .
Behavioral accounting research is frequently multidisciplinary, drawing on
the diverse fields of economics, political science, organization theory,
psychology, and sociology (Birnberg & Shields, 1989 ; Lord, 1989). Although
it lacks precise definition, behavioral accounting research frequently
encompasses the study of individual behavior as it influences and is affected
by accounting reports and procedures (Hofstedt & Kinard, 1970 ; Lord, 1989) .
Taking a behavioral perspective, Hopwood (1989) argued that accounting's
consequences reflect the contexts in which it operates and the ways in which
it relates to social and organizational phenomena .
Research into the behavioral effects of accounting is traceable back to the
work conducted by Argyris (1952) that addressed the impact of budgets on
managerial performance . Devine (1960), who explored the attitudes of
accounting information users and Stedry (1960), who examined the motivational
effects of budgets, are also considered to be two of the earliest researchers to
focus on behavioral issues (Lord, 1989; Dyckman, 1998) . Since then, the
literature has paid considerable attention to the behavioral implications of using
accounting information to promote organizationally goal congruent outcomes .
However, it is also replete with reports of subordinates gaming performance
indicators, strategically manipulating information flows, falsifying information,
and reporting invalid data (e .g . Hopwood, 1972 ; Hirst, 1983 ; Hartmann, 2000) .
Merchant (1990) warned that control systems can discourage new ideas,
encourage a short-run orientation, stimulate data manipulation, and contribute
to frustration and resistance . Hence, behavioral accounting research is critical
to the management of such issues to facilitate performance in increasingly
complex organizational settings .
The purpose of this paper is to first, examine the literature focusing on
behavioral research in management accounting and discuss a number of major
findings of the discipline . Second, review studies that attempt to analyze and
synthesize the behavioral literature . Third, to offer some comments that focus
on specific issues and challenges that should be addressed to progress work in
the area. Fourth, to provide some thoughts relating to the field's future research
opportunities .
The structure of the paper is as follows . The next section is an overview of
the behavioral literature . The subsequent section examines the work that reviews
and reflects on the state of behavioral research in management accounting . The
following section discusses some emerging research issues . The final section
offers some conclusions .

Behavioral Research in Management Accounting

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THE RECENT PAST AND PRESENT

Considerable impetus for the development of behavioral management
accounting is the literature focusing on evaluative styles published in the early
1970s . Of that research, Hopwood's (1972) and Otley's (1978) work on
superiors' evaluative styles underpinned many of the subsequent studies in the
field. Hopwood (1972) proposed that an evaluative style focusing on accounting
measures would negatively affect managerial performance . Otley (1978) found
instead that such a leadership style improves performance . Brownell (1982a),
in an effort to reconcile the Hopwood (1972) and Otley (1978) perspectives,
reported that budget emphasis enhances performance when budgetary
participation is high but not low . Although Brownell and Hirst (1986) argued
that Brownell's (1982a) findings may have been specific to settings in which
task uncertainty is low, their results are neither consistent with that proposition,
nor with that of Brownell (1982a) . Dunk (1989) failed to support the nature of
Brownell's (1982a) finding as his results suggest that performance is enhanced
in conditions of high (low) participation and low (high) budget emphasis .
Brownell and Dunk (1991) were concerned that the results of some studies
might be sensitive to the measure of task uncertainty employed and/or to the sampling procedure used . They questioned whether composite indicators of task
uncertainty, as used by Brownell and Hirst (1986), should be used in hypothesis
testing, rather than measures of the dimensions of task uncertainty, frequently
conceptualized as task difficulty and task variability . With respect to the sampling
issue, Hopwood (1972), Otley (1978), Brownell (1982a), and Brownell and Hirst
(1986) drew data from single organizational samples, which exposed their findings to possible firm effects . Brownell and Dunk (1991) argued that random sampling across organizations limits the extent to which testing/selection interactions
may threaten the external validity of a study, without the need to identify possible
confounding variables . Using a random multi-organizational sample, their results
support Brownell's (1982a) finding that performance is enhanced when participation and budget emphasis are high and task difficulty is low, as predicted by
Brownell and Hirst (1986) . Lau et al . (1995) also found results consistent with
Brownell and Dunk (1991) . Little work has taken place in this field since then
apart from that conducted by Otley and Pollanen (2000), who reported that their
results are consistent with those of Dunk (1989) and Brownell and Dunk (1991) .
Budgetary Participation

An area of research that has also attracted considerable interest is that of

budgetary participation and its effects on human behavior . Brownell (1982b)

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ALAN S . DUNK

developed a framework for organizing the work on participation by dividing

the literature into two parts . The first specified the environmental, structural,
technological, and cultural antecedent conditions that he considered create a
demand for participation, while the second focused on participation's likely
consequences including motivation, commitment, satisfaction, and performance.
Early research in this field typically examined the bivariate relation between
participation and managerial performance and reported positive, negative, and
zero associations. Although the array of outcomes have often been interpreted
as conflicting or mixed, the results indicate that the expectation of a simple
zero-order relation that is generalizable across settings does not hold . To portray
the participation literature in terms of an apparent conflict has impeded its
development, as it has inadvertently cast doubt on the utility of the research
into participation's effects .
Research more recently has focused on identifying the factors that moderate
or mediate participation's effectiveness in enhancing an array of dependent
variables . Moderating variable models emanate from an application of
contingency theory . Otley (1980) concluded that contingency theory has become
a major part of the published work in behavioral management accounting .
However, criticisms of contingency theory abound . Schoonhoven (1981)
stressed that contingency theory is not in itself a theory, as it relies on a few
explicit assumptions . Further, Otley (1980) stressed that moderating variables
require better theoretical and empirical articulation . Subsequent studies have
responded by more clearly specifying and examining the circumstances under
which moderating variables are likely to have an impact .
For example, evidence now suggests that the relation between participation
and performance is contingent on individual level and contextual factors .
Findings indicate that internals perform better in task situations characterized
by self-control, whereas those whose locus of control is external perform better
when control is in the hands of others (Brownell, 1981, 1982c) . Chenhall and
Brownell (1988) reported that participation leads to a reduction in subordinate
role ambiguity, which in turn improves their performance . Dunk (1990) found
that participation and agreement between superiors and subordinates on
evaluation criteria interact to affect performance . Kren (1992) reported that
job-relevant information also moderates the relation between participation and
performance . Dunk (1995a) found that participation enhances departmental
performance when subordinate managers have an interest in innovation, but not
when that interest is low . Dunk et al .'s (1996) results suggest that participation
positively influences the performance of field dependent managers, and
negatively affects that of field independent managers . Nouri and Parker (1998)
showed that participation affects managerial performance indirectly via budget

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adequacy and organizational commitment . Recently, Chalos and Poon (2000)

found that team member participation has a positive effect upon team
performance .
The link between participation and job satisfaction has also been explored.
Primary reasons for focusing on job satisfaction is that it is an important job
outcome and that it is negatively correlated with absenteeism and employee
turnover (Leung & Dunk, 1992) . Evidence indicates that the relation between
these variables may be dependent on factors such as locus of control (Brownell,
1982c), the configuration of authoritarianism between superiors and subordinates
(Chenhall, 1986), and role ambiguity (Chenhall & Brownell, 1988) . For
example, Brownell (1983) found that consideration and initiating structure
leadership styles interact to affect job satisfaction when participation is high,
but not when it is low . Aranya (1990) reported that participation and budget
instrumentality jointly affect franchisee job satisfaction . Dunk (1992) later found
that participation is more effective in enhancing the job satisfaction of high
rather than low level managers . Leung and Dunk (1992) reported that line
managers derive greater job satisfaction from participation than those in staff
positions . More recently, Lindquist (1995) indicated that participation is
effective in enhancing subordinates' budget and task satisfaction .
Attribution Theory
Attribution theory has facilitated research that has examined the consequences
of performance . One conclusion arising from attribution theory is that
knowledge of performance may cause individuals to make attributions for their
behavior. For example, Shields et al . (1981) reported that the attributions
managers use to explain reported performance are primarily external factors,
such as machines, materials, and the management control system . If so,
managers may regard their role in participative budgetary settings differentially
depending on their performance evaluations . In a study which provided an
indication that this may be the case, Nouri et al . (1999) found that subjects
receiving relatively high performance evaluations attribute their success to their
participation, whereas those receiving relatively low evaluations attribute their
apparent failure to a lack of participation .
Job-Related Tension and Environmental Uncertainty
The behavioral literature has also attempted to identify the individual and
contextual variables that impact on job-related tension (JRT) . As a means of
relieving JRT, Hopwood (1972) found that an evaluation style based on

ALAN S . DUNK

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adherence to budget targets is positively associated with JRT, as compared to

a profit conscious or a nonaccounting style . Otley (1978) reported instead no
relation between a budget-based style of evaluation and JRT . Subsequently,
Kenis (1979) found that JRT is positively related to the use of budgets employed
in a punitive fashion in performance evaluation, and negatively associated with
budget goal clarity . Hirst (1983) reported that in circumstances in which task
uncertainty is high, subordinates experience JRT when evaluated by accounting
performance measures . Brownell and Hirst (1986) later found that budget
emphasis interacts with participation to affect JRT in conditions of low task
uncertainty .
Although Hopwood (1972) speculated that JRT would be dysfunctional for
managerial performance, Otley (1978) reported no such relation whereas Dunk
(1993a) did. Choo and Tan (1997) recently documented that disagreement
between a subordinate's preferred evaluative style and that of the superior
increases JRT and decreases job satisfaction . These findings suggest that JRT
is a critical variable affecting the behavior of individuals in organizations and
further work has to be done to clarify its theoretical linkages .
Perceived environmental uncertainty (PEU) has received considerable
attention since the 1970s as a potential explanatory variable in behavioral
accounting research (Tymon et al ., 1998) . Studies have examined the relation
between PEU and an array of factors including organizational structure (Gordon
& Narayanan, 1984), management accounting system design (Chenhall
& Morris, 1986), subordinate motivation, performance and job satisfaction
(Ferris, 1977, 1982 ; Gul & Chia, 1994), as well as business unit performance
(Govindarajan, 1984) . For example, Brownell (1985) examined differences in
the level of environmental complexity and dynamism in marketing and R&D
departments and found that participation positively affects the performance of
R&D managers and negatively for those in marketing . Govindarajan (1986)
reported that participation contributes to managerial performance and attitudes
when uncertainty is high but hampers performance and attitudes when it is low.
Dunk and Lysons (1997) found that when environmental complexity is high,
participation positively affects departmental performance, but when complexity
is low, participation does not influence performance . These findings attest to
the importance of PEU in organizational settings .
Motivation

Brownell and McInnes (1986) concluded from a review of the literature that
budgetary participation, through a positive effect on motivation, would enhance
managerial performance . However, they were unable to find empirical support

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for the proposition . They also found no evidence of an association between

participation and motivation, in contrast to prior studies (Kenis, 1979 ; Merchant,
1981) .
Lal et al . (1996) questioned whether Brownell and McInnes' (1986) study
suffered from the use of an expectancy theory measure of motivation . Concerns
for the instrument's metrics and theoretical underpinnings have been discussed
in the literature (Otley, 1982 ; McInnes & Ramakrishnan, 1991) . Consequently,
Lal et al . (1996) used measures of intrinsic and extrinsic motivation, yet they
also failed to find evidence that either variable mediates the relation between
participation and performance . Hence, further work needs to be done to shed
light on the role of participation and motivation in promoting performance .
National Culture

Commensurate with efforts to identify and evaluate variables that moderate

the relation between participation and performance, research has examined the
effect of national culture on outcomes associated with participative budgeting.
Since evidence suggests that culture can affect the behaviors and attitudes
of individuals, Frucot and Shearon (1991) and Harrison (1992) argued that
specific cultural differences between nations will differentially influence the
effectiveness of participative budgetary control systems on a range of criterion
variables whereas others will not . Frucot and Shearon (1991) expected that
Mexican managers would favor less participative budgetary systems than would
their American counterparts, although they did not subject this proposition to
test. Focusing on the cultural dimensions of power distance and individualism,
Harrison (1992) found that the influence of participation on the relation between
budget emphasis and JRT and job satisfaction in low (high) power distance/high
(low) individualism nations is independent of culture, and concluded that
participation's effect may be generalizable across countries culturally characterized in this fashion. Since then, work has continued to examine the behavioral
influences of national culture in participative and non-participative settings
(Chow et al ., 1994).
Budget Tightness

Merchant and Manzoni (1989) reported that the literature suggests tight but
achievable budget targets, described as having a probability of less than 0 .50
of being met, maximize motivation . However, they found evidence that profit
budgets are achieved on average in excess of 80% of the time . Shields et al .
(2000) concluded from their review of Merchant and Manzoni (1989) that there

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ALAN S . DUNK

is little to support research recommendations of tight performance standards .

Nevertheless, budget goals are frequently considered to increase task
performance on the basis that setting specific, difficult goals generate greater
motivation than less difficult ones (Hirst & Yetton, 1999 ; Ruchala, 1999) .
McClelland (1985) reported that many empirical studies in psychology have
shown subjects high in need for achievement (n Ach) prefer tasks in which the
probability of success lies in the 0 .3 to 0 .5 range. If so, then the level of
individual n Ach may need to be considered in performance standard setting .
Murray (1990) argued that research suggests individuals low in n Ach set fairly
easy goals when participating in budgeting . In contrast, he proposed that for
subordinates whose n Ach is high, participation may result in difficult goals
being set . Hence, n Ach may moderate the relation between participation and
performance standards .
Budgetary Slack and the Propensity to Create Slack
The slack-creating behaviors of managers have been the subject of examination
in a growing number of studies . Reports chronicle both the magnitude and
frequency of slack inclusion in budgets (e .g . Lowe & Shaw, 1968 ; Schiff &
Lewin, 1968 ; Onsi, 1973) . Although participation provides principals with the
opportunity to gain access to subordinates' local information, concerns have
been expressed that agents may misrepresent or withhold that information (e .g.
Baiman, 1982 ; Merchant, 1985a ; Young, 1985) . Hence, while participation may
give superiors access to private information, information asymmetry may enable
slack to arise in participatively set budgets (Dunk, 1993b) . Moreover, the
literature suggests that budget emphasis may also be instrumental in slack
creation (Waller, 1988 ; Baiman & Lewis, 1989) .
Although Dunk (1993b) found evidence of a three-way interaction between
participation, budget emphasis, and information asymmetry affecting slack, he
reported that slack is high when information asymmetry, participation, and
budget emphasis are low, in contrast to the literature expectation that slack would
be high when these predictors are high . In an attempt to explore the issue of slack
creation, Dunk and Perera (1997) undertook a field study . Managers reported that
first, the more they participated, the lower their level of slack creation, and
second, when budget emphasis and information asymmetry are high, their interest
is best served by providing superiors with their local information . By supplying
that information, they claimed more accurate budgets are set which are likely to
be motivational and supportive of their career aims .
Individual risk preferences have also been examined to assess whether they
influence the extent to which managers create slack . Young (1985), Chow

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33

et al . (1988), and Waller (1988) found that risk-averse individuals build in more
slack than non-risk-averse subjects . Young et al . (1993) reported that an
individual's risk preferences, the degree of private information, and the use of
different incentives causes subjects to choose standards below their best
estimates .
Importantly, research suggests that slack may not necessarily be dysfunctional
as it can provide managers with a degree of flexibility in responding to changes
in operating conditions to maintain activities at planned levels (e .g . Schiff &
Lewin, 1970 ; Merchant & Manzoni, 1989 ; Nouri, 1994) . Dunk (1995b) found
that the detrimental effect of task difficulty on subunit performance is less
pronounced when slack is high in contrast to when it is low . Recently, Van der
Stede (2000) argued that an absence of slack makes short-term budget targets
more difficult to achieve, which may encourage managers to adopt a short-term
orientation .
Budgetary participation has also been implicated in the degree to which
managers exhibit a propensity to create slack . Onsi (1973) and Merchant (1985b)
reported a negative correlation between participation and slack propensities,
arguing that participation results in managers having less of a need to create
it . Govindarajan (1986) found that participation reduces managers' propensities
to create slack in high but not in low uncertainty settings . Nouri (1994) indicated
that for managers whose organizational commitment is high, job involvement
decreases slack propensities, whereas for managers whose commitment is low,
involvement increases them . Nouri and Parker (1996) found that for managers
whose organizational commitment is high (low), participation reduces
(increases) their propensity to create slack . Dunk and Lal (1999) subsequently
reported that participation is more effective in reducing managerial slack propensities when process automation is high (low) and product standardization is high
(low) than when automation is high (low) and standardization is low (high) .
However, research focusing on the propensity of managers to create slack has
not attempted to isolate the behavioral or contextual triggers likely to link it to
slack creation .

A STATE OF REVIEW
A number of review studies have been published that critically examine and
reflect on the state of the behavioral literature in management accounting, and
in particular, the evaluative style literature . Despite an investigation of the
behavioral effects of budgetary control systems for over 40 years, Briers and
Hirst (1990) argued that the evaluative style [also referred to as the reliance on
accounting performance measures (RAPM)] literature has been hampered by an

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ALAN S . DUNK

emphasis on statistical methods, poor theory development, selective referencing,

lack of clarity in measuring performance, and instrument wording shortcomings
in many RAPM studies . An example of the latter is reflected in the design of
the Hirst (1983) RAPM instrument, which although focuses on quantitative
matters, ignores in its item construction any reference to accounting . More
recently, Otley and Pollanen (2000) commented that deficiencies in the RAPM
literature are due to different authors examining different aspects of the RAPM
issue, different studies using different subsets of variables, and in many cases,
constructs being measured in different ways . Lindsay and Ehrenberg (1993)
concluded that the RAPM studies provide few generalizable findings, and they
expressed doubt that the concepts and measures used mean what they are
claimed to mean, thus raising the issue of instrument validation . Furthermore,
Hartmann (2000) argued that the effects of RAPM and budgetary participation
in combination are not well understood at this time .
Although Lindsay and Ehrenberg (1993) considered that research examining
the effects of evaluative style on subordinate performance evaluation represent
one of the few areas in management accounting where there has been any
sequence of studies, they took the view that it does not provide a coherent body
of knowledge . Similarly, Hartmann (2000) concluded there is little evidence to
suggest that the RAPM literature is organized in terms of a critical mass .
However, Otley and Pollanen (2000) argued that the research area is embryonic,
and to expect consistency in findings at this time is optimistic . This may also
be seen in terms of a wider social sciences context . Lindsay and Ehrenberg
(1993) proposed that the social sciences are as yet immature, having few reliable
bodies of knowledge or methods to facilitate its development .
Researchers will need to hasten slowly if generalizable findings are to be
expected . Challenges arising from theoretical, statistical, and data collection
issues (e .g . Briers & Hirst, 1990 ; Lindsay, 1995 ; Young, 1996) have to be
addressed to promote result consistency. These matters are not specific to the
RAPM literature, but to behavioral management accounting in general . Part of
this process will require the use of a greater number of replication studies, to
demonstrate the robustness of research outcomes . Kerlinger and Pedhazur (1973)
argued that replications ensure the reliability of research findings .
Otley and Pollanen (2000) expressed surprise that no single evaluative style
study has been precisely replicated . They argued that each subsequent piece of
work varied some aspect of prior research design so that the general validity
of any of the reported results cannot be assessed . However, Lindsay and
Ehrenberg (1993) stressed that replications should not be mere repetitions as
it is inappropriate to regard replication as merely involving repeating the original study exactly . They argued that identical replication (repetition) would be

Behavioral Research in Management Accounting

35

pointless on the basis that if all conditions were in effect identical, so would
be the findings . They further emphasized that differences in observation conditions should be taken advantage of as they occur in replications . They took the
view that the more explicit, differentiated, and/or deliberate such variations are
while still obtaining the same result, the more telling and exciting the outcome .
Moreover, Kerlinger and Pedhazur (1973) argued that studies should always be
replicated with different samples in different places, thereby casting doubt on
Otley and Pollanen's (2000) concern for samples being drawn from different
types of organizations in different countries in examining RAPM's effects .

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The Participation Literature

Shields and Young (1993) argued that the main focus of participative budgeting
research since Brownell's (1982b) review has remained on it consequences,
rather than on its antecedents . They suggested that addressing the reasons for
participation might result in a better understanding of the literature . Although
Shields and Young (1993) argued that information asymmetry is an antecedent
of participation, they found the two variables only correlated at 0 .24 (p < 0 .01) .
Consequently, a relation that explains a mere 5 .76% of the variance between
the two variables is hardly supportive of such a claim . Second, the findings of
their study are based on a response rate of 20%, which is not conducive to
result generalizability . Third, the measure of participation they used was an
adaptation of Milani's (1975) instrument, and therefore it lacks recognizable
psychometric properties .
More recently, Shields and Shields (1998) provided a comprehensive review
of the participation literature, and they proposed that the diverse results of prior
studies could be due to at least two reasons . First, they argued that the array
of theoretical and empirical models used has resulted in inter-study variation
in findings . Furthermore, these studies introduced many different variables as
independent, moderator, and dependent variables . Second, many of the studies
do not have strong theoretical and empirical links between their assumed reason
for why participation exists and their dependent variables . However, a more
fundamental question is whether the variables used in a study are theoretically
underpinned .
Shields and Shields (1998) argued that both environmental and task
uncertainty, as well as information asymmetry, are causal antecedents of
participation, and hence cannot be treated as moderator variables when
participation is also an independent variable as they claimed Dunk (1993b) did
because they cause participative budgeting . Moreover, they argued that it is
theoretically incorrect to treat participation as a moderator variable and

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ALAN S . DUNK

uncertainty as an independent variable as they considered Brownell and Dunk

(1991), Brownell and Hirst (1986), and Lau et al . (1995) had done because
uncertainty causes participative budgeting and independent and moderator
variables should not be correlated .
However, Shields and Shields' (1998) comments are subject to some caveats .
First, Dunk (1993b) did not model task uncertainty . Second, the correlation
of 0 .110 (n .s .) between participation and information asymmetry reported in
Dunk's (1993b) study fails to support the perspective that information
asymmetry causes participation . Third, Brownell and Dunk (1991) treated
participation as an independent variable and uncertainty as a moderator . Fourth,
although Shields and Shields (1998) focused on proposed antecedents of
participation, a limitation of their study is that they did not directly measure
participation as part of their data collection . This raises the question of what
was in the minds of the respondents when they provided their views on participation . As Argyris (1952) pointed out, participation can mean different things
to different people and hence, failure to control for a variable crucial to their
study is disconcerting . Fifth, Lau et al . (1995) reported a correlation of 0 .09
(n .s .) between task uncertainty and performance, which also does not add weight
to the proposition that uncertainty is an antecedent of participation .
Psychometric Issues
As commented on by Otley and Pollanen (2000), specific independent and
criterion measures employed in many studies make generalizations difficult . A
necessary tension exists between the choice of consistency of measure usage
from one study to the next versus the choice of different instruments considered
to be superior in terms of their reliability and validity . Similarly, another issue
that requires attention in the literature is the frequent use of adaptations of
existing measures . Although knowledge of the psychometric properties of instruments is typically scant, researchers subsequently adapting those measures and
using them in hypothesis testing results in findings that may simply be a function of the measures used .
A more general concern focuses on the nature of the psychometric properties
of instruments used in research. Studies increasingly report Cronbach alphas
and factor structures of measures used to provide evidence of their internal
consistency and dimensionality respectively . However, assessments of internal
consistency do not provide evidence of a scale's reliability in terms of its
fundamental meaning of test-retest and further, knowledge of an instrument's
factor structure does not evidence of its construct validity . Work needs to be
conducted to provide better evidence of an instrument's validity ; in other words,

Behavioral Research in Management Accounting

37

to enhance the degree of confidence that a measure assesses what it is intended

to measure . Furthermore, Anastasi (1982) argued that the contribution of internal
consistency data to instrument validation is limited, and in the absence of data
external to the measure itself, little can be learned about what an instrument
measures .
The question of whether variables should be measured subjectively or
objectively is a frequent matter of debate in the literature . Effort often focuses
on the search for objective data, in contrast to respondents' self-reports in survey
work (Birnberg et al ., 1990) . For example, Brownell and Dunk (1991) reported
on concerns regarding the use of self-report measures, as compared to purported

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objective measures, such as those obtained from formal corporate records . They
argued that the sense in which such ratings are more objective than self-ratings
has never been made clear . Brownell and Dunk (1991) reported that literature
has found self-report measures to be less biased than researchers typically given
them credit for.
Understanding the effects of possible bias in self-ratings may be considered
from the perspective of measurement error . Errors of measurement can be
classified as non-random (systematic bias) or random (Nunnally, 1981) .
Systematic bias may be likened to the addition (or subtraction) or a constant
that is positively (or negatively) signed to the otherwise `true' score for the
dependent variable (Carmines & Zellar, 1982) . Yet the addition (or subtraction)
of a constant to (from) the dependent variable score does not change the relation,
if any, between it and the independent variables in multiple regression models
(Nunnally, 1981) . If the error is of a random nature, the error is absorbed in
the model error term (Neter et al ., 1985) thereby reducing the likelihood of the
null hypothesis being rejected . Therefore, the results of a multiple regression
analysis in which there is systematic bias in the dependent variable are unlikely
to be affected by that bias . Although errors may be present in the responses to
the measure of criterion variables in any study involving self-ratings, they are
unlikely to confound research findings (Nunnally, 1981) .
Response Rates and Non-Response Bias
A major concern, primarily of the studies conducted using questionnaires, is
the issue of response rates. Some authors have stated in justifying their poor
response rates that it is a matter that afflicts questionnaire-based studies in
general . Making such a claim is not persuasive, as the underlying issue is that
their research design is ineffective . Studies reporting that potential respondents
are first contacted personally to elicit their cooperation in providing data for a
study have shown their response rates to be in the order of approximately 65% .

ALAN S . DUNK

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38

Response rates below 50% expose the results of studies to considerable

non-response bias . Although some non-response is likely to be random and,
hence independent of survey content, non-response may also interact with the
nature of the survey content (Alreck & Settle, 1985) .
Claims made relating to the testing for non-response bias is another matter
of concern . A considerable number of studies indicate that a test of non-response
bias was conducted by comparing the responses of the last-received
questionnaires with those received first . If no differences are reported, the
conclusion typically drawn is that the research is not subject to non-response
bias . However, there is no compelling evidence that the last received surveys
in any way proxy for non-respondents . Respondents returning their
questionnaires later than sooner may simply reflect that they have been out of
town, on vacation, or pressed for time in terms of work commitments .
Hypothesis Testing

The manner is which hypotheses are presented in terms of their null or alternate
form in studies is also a matter of concern . Hypothesis testing procedures are
predicated on an assessment of the null hypothesis, which is either rejected or
not rejected (Dominowski, 1980) . Null hypothesis formulation is essential as
alternate hypotheses cannot be directly tested (Monette et al ., 1986) . As the
objective of most studies is to find evidence that allows for the rejection of the
null hypothesis, rejection of that hypothesis does not mean that its purpose is
redundant . Consequently, the growing practice of only specifying in studies the
hypothesis in alternate form is questionable as it is not the one subject to test .

SOME EMERGING RESEARCH ISSUES

Considerable recent research in management accounting has addressed topics
ranging from activity based costing, target costing, just-in-time inventory
management, strategic cost management, to the use of balanced scorecards .
However, these proposed innovations in accounting pay little attention to
behavioral issues . For example, Kaplan and Norton (1992) argued that the
purpose of the balanced scorecard is to give managers a fast and comprehensive
view of an organization based on financial measures and those relating to
customer satisfaction, internal processes, as well as innovation and improvement
activities . Although they stressed that an organization's measurement system
strongly affects individual behavior, they stated that they assumed people simply
would adopt whatever behaviors are necessary to arrive at organizational goals .
Their approach, therefore, fails to consider behavioral variables that have been

Behavioral Research in Management Accounting

39

found to influence performance, together with the prospect that given the focus
on nonfinancial measures in performance assessment, outcomes are likely to be
influenced by individual behavior . Consequently, the balanced scorecard reflects
in many ways a somewhat mechanical approach to strategy development and
performance assessment . Prior research suggests that behavioral variables will
need to be made explicit and controlled for if significant benefits are to be
expected from the proposed accounting innovations .

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Performance Management
Otley (1999) recently reemphasized that the purpose of management control
systems is to provide information useful to managers in performing their tasks
and to maintain viable patterns of behavior . He argued that any assessment of
the role of such information requires consideration of how managers make use
of that information, a point recently echoed by Kloot and Martin (2000) .
Behavioral issues are central to such an evaluation and they are a reminder that
such systems are likely to require recalibration in responding effectively to
changing patterns of behavior.
The use of nonfinancial in addition to financial performance measures has
been increasingly called for on the basis that the former supplement financial
measures in the interpretation of organizational performance (Wouters et al .,
1999) . How non-financial measures influence or are influenced by the behavior
of individuals, if at all, is a matter of conjecture . To clarify this matter, research
work needs to be conducted . In addition, Kloot and Martin (2000) argued that
there should be less of a preoccupation with the performance measurement
process, and more attention paid to the context within which measurement is
carried out.
Information Technology (IT)
IT is often seen as a performance enabler within organizations . Evidence,
however, has shown that the bivariate link between IT and performance is far
from clear . Dunk and Roohani (1997) argued that for IT to enhance performance,
operational change factors such as business process reengineering need to be
considered, as well as the degree to which organizational culture is supportive
and the extent to which tasks are programmable . If so, then the behavioral
attributes inherent in organizational culture will have to be taken into
consideration to enhance IT effectiveness . Moreover, the links between IT and
accounting control systems may need to be explored to investigate potential
behavioral implications .

40

ALAN S . DUNK

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Life Cycle Costing and Environmental Issues

Life cycle costs comprise the costs associated with a product or service from
conception to abandonment . Boer et al . (1994) argued that measurement systems
are required to track, identify, and report environmental as well as life cycle
costs across product lines as global competitive pressures continue to intensify .
To respond to environmental issues, firms will need to implement environmental
performance criteria to modify managerial behavior in ways that reflect environmental and other life cycle priorities . At this time, an understanding of the
relations among environmental management, implementation of technologies,
and performance outcomes remains limited . Moreover, given the prospect of
competitive advantage associated with going beyond compliance (e .g . Porter &
Van der Linde, 1995), it is essential that management accounting develops the
incentives to induce goal congruent behaviors to facilitate such an outcome .

CONCLUSIONS
Behavioral research in management accounting has experienced considerable
development and almost exponential growth . Findings have shown that an
understanding of individual behavior is crucial in promoting organizational
activities and enhancing performance . Even though concerns have been
expressed regarding a range of theoretical, statistical, and related matters that
have arisen in prior research, the discipline has responded to many of these
concerns and has chartered a course that should lead to more robust and
generalizable findings . Moreover, the nature of the issues addressed is
increasingly strategic, particularly from a corporate perspective. This should
enhance the discipline's value-adding potential .
Although Dyckman (1998) argued that the future may not be as favorably
disposed to behavioral research, primarily due to a reduction in available
funding . To ignore behavioral issues, however, is not an effective strategy . For
as long as organizations comprise people, their behaviors will influence
organizational functioning .

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