|dc.description.abstract||In the last decade, management accounting literature has been marked by an increased emphasis on organizational ability to adapt to changes in the firms' internal and external environment. Technological changes, competitors, and demanding customers are some of the factors that influence the firms' environment. In these studies, the changing role of Management Control System (MCS) and Management Accounting Systems (MAS) are highlighted. MCS is one of the three planning and control mechanisms employed by administrators to facilitate the processing of information (Anthony & Govindarajan, 2004) whilst MAS is a formal tool of which provides information to managers to ensure compliance of the organization's objectives.
One area of interest in management accounting literature is environmental uncertainty (EU) and its influence on management accounting systems (Khandwalla, 1972; Ginzberg, 1980; Gordon & Narayanan, 1984; Chenhall & Morris, 1986). Chenhall (2003) mentioned that with greater environmental uncertainty, there is greater reliance on management accounting controls. It is believed that organizations operating in highly uncertain environment will employ more management accounting controls in order to effectively manage the organization (Bruns & Stalker, 1961; Lawrence & Lorsch, 1967). These controls can include documented- and information-based activities for planning, budgeting, resource allocation and administrative reports (Lawrence & Lorsch, 1967).
Another area of interest in management accounting studies is organization size. Early contingency-based approaches in management accounting studies proposed that organization size could have an influence on the design of management accounting systems (Burns & Stalker, 1961; Bruns & Waterhouse, 1975; Merchant, 1981). These studies suggest that larger organizations employ more sophisticated management accounting controls in order to communicate more effectively throughout the organization (Bruns & Waterhouse, 1975; Libby & Waterhouse, 1996) when there is greater decentralization and structuring of activities (Lawrence & Lorsch, 1967).
This research seeks to study the influence of environmental uncertainty as perceived by managers and organization size on the MAS design. Porter (1985) stated that traditional MAS approach does not reflect the costs associated with activities outside the organization as traditional MAS provides aggregated financial information that is internally focused and relied on ex-post controls (Itter & Larcker, 1995). To adapt to changes within and outside of the business environment, discussions have been put forward to incorporate broader scope, non-financial and externally focused information in MAS design (Chenhall & Morris, 1986).
This research involved a survey of 600 manufacturing and 600 information technology firms in New Zealand. This research, however, found very weak support for the proposed model. The results may have been influenced by numerous factors, one of which can be attributed to the lack of explicit definitions for the various constructs used in this study. Prior research has found that, in most studies, this is one of the factors that can influence the outcome of the study (Kimberly, 1976). There is a potential for future development in the area of construct measurement.||en