ABSTRACT
In the management accounting literature increased dynamics has been emphasized for a long time. The message is that the world is changing, so management control systems (which encompass cost management systems) also have to change. In 1987 the US professors Thomas Johnson and Robert Kaplan wrote the book Relevance Lost – the Rise and Fall of Management Accounting. The book was a critique of how management accounting was taught in business schools, researched in academia and used in practice. The main point made by the authors was that the world had changed, but not the management control systems.
In this time of rapid technological change, vigorous global and domestic competition, and enormously expanding information processing capabilities, management accounting systems are not providing useful, timely information for the process control, product costing, and performance evaluation activities of managers.
(Johnson and Kaplan, 1987, Foreword) The solution to this problem was the introduction of a number of new and different management accounting tools, such as activity-based costing (ABC) and the Balanced Scorecard (BSc). These innovations engendered increased empirical research, especially case studies. Characteristics of successful and less successful companies were described and, additionally, statistics were gathered through surveys on how many companies had adopted the new tools. Moreover, textbooks and teaching material were changed. An example is found in the concepts listed in textbooks, e.g. in Horngren’s best-selling textbook Cost Accounting (co-authored by different US academics), more than 50% of the concepts were introduced between 1985 and 2005 (Ax and Bjørnenak, 2007). The new concepts were to a large extent related to the new tools which had arisen from the ‘Relevance Lost’ debate (e.g. activities, cost drivers and unused capacity related to ABC).