Managing in Dynamic Business Environments
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Managing in Dynamic Business Environments

Between Control and Autonomy

Edited by Katarina Kaarbøe, Paul N. Gooderham and Hanne Nørreklit

This timely and innovative book focuses on budgeting control and ongoing Beyond Budgeting trends and its consequences for the organization. Ensuring an optimal balance between individual autonomy and management control is a critical challenge for organizations operating in dynamic business environments. Too much of the former leads to chaos, and too much of the latter guarantees rigidity. This book explores the tensions that arise in seeking the best possible balance between these two dimensions. Resolving these tensions is a critical challenge for achieving competitiveness.
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Chapter 4: Management accounting tools in banks: are banks without budgets more profitable?

Trond Bjørnenak


The book Relevance Lost: The Rise and Fall of Management Accounting, which was published more than 20 years ago, introduced a debate and sparked academic interest in new forms of management accounting, new management control ideas and potential solutions (Johnson and Kaplan, 1987). The main argument was that information provided by typical management accounting and control systems came too late, and was too aggregated and distorted by financial reporting to be relevant for decision making. Furthermore, the book suggested that these systems did not support communication or the implementation of strategies. In response, a number of new management accounting tools were introduced, including activity-based costing (ABC) systems and balanced scorecards. Table 4.1 contrasts the traditional systems (before Relevance Lost) with the modern solutions (after Relevance Lost). After the publication of Relevance Lost, textbooks were changed, and the new concepts and tools were given significant attention. More than 50 percent of the concepts listed in the 1982 edition of Horngren’s Cost Accounting: A Managerial Emphasis (Horngren and Foster, 1982) were not included in the 2005 edition (Horngren, Foster and Datar, 2005) and vice versa. A dominant share of these changes related to concepts and tools discussed in the Relevance Lost debate, such as activity-based costing and balanced scorecards (Ax and Bjørnenak, 2007).

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