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Divisional performance control: An interdisciplinary-based management science/operations research approach
Abstract
Divisional control is a managerial accounting issue. It has often been mistakenly regarded as a simple problem. The need for an interdisciplinary approach has been stressed in the literature of managerial accounting, management science, operations research and systems engineering.^ Twelve relevant disciplines are examined and used throughout the research. These disciplines are: cybernetics, control theory, systems theory, economic theory, organization theory, behavioral science, managerial accounting, managerial finance, financial accounting, MS/OR, systems engineering and decision sciences.^ The concepts of control in various disciplines are examined and their implications for divisional control systems are derived. According to the Soft System Methodology, the relevant conceptual models are developed.^ Based on the concepts of reliability and implications of relevant disciplines, accounting-based divisional control systems are evaluated.^ A multidisciplinary-based divisional performance control system is proposed. The six integral components are: An interdisciplinary-based transfer pricing system, a multidimensional system, a qualitative evaluation system, a priority system, an early warning system and an equitable reward system.^ Main conclusions. The problem of divisional control is an ill-structured one where a myopia exists; each single discipline provides invaluable insights; agency theory is not equipped to handle the problem; no routine problem solving theory alone can handle the problem; controllability and responsibility accounting are different; Braide's proposition is invalid; Helal's definition of the reliability is neither realistic nor applicable to divisional control; transfer prices and cost allocation are incorrigible unless the interdisciplinary approach is adopted; objectivity in accounting does not exist; subjectivity is the foundation of objectivity (not its antithesis); accounting information is neither reliable nor sufficient for divisional control. Thus, an interdisciplinary approach is essentially the only choice in the development of effective divisional control systems.^ The research connects previously unconnected aspects of the problem. It has shown the essential unity of science and has resurrected and maintained the characteristic property of Management Science/Operations Research. The proposed system suggests that reduction in the probability of dysfunctional behavior can commonly be realized. ^
Subject Area
Business Administration, Accounting|Business Administration, Management|Operations Research
Recommended Citation
Abdel-Wahab, Mostafa Ahmed, "Divisional performance control: An interdisciplinary-based management science/operations research approach" (1988). ETD collection for University of Nebraska-Lincoln. AAI8818603.
https://digitalcommons.unl.edu/dissertations/AAI8818603