Drivers of Management Control Systems Change: Additional Evidence from Australia

Purpose This study provides evidence on how changes in management accounting and control systems (MACS) associate with competition, organizational capacity to learn, decentralization, and firm size. In doing this, it replicates (and extends) Libby and Waterhouse’s (L&W) Canadian study in the context of Australian manufacturing firms. Methodology/approach Drawing on contingency theory, the study uses data from a mail-out survey of a sample of Australian manufacturing firms. Findings Change in MACS was found to be significantly and positively associated with greater organizational capacity to learn and a more intensely competitive environment. Firm size and decentralization were not highly significant with changes in MACS. Additional analysis of the data indicated the generalizability of the L&W model across divisions of large corporations, but not across stand-alone firms and local market-oriented firms. Originality/value of paper The results contribute to the field of management accounting change by suggesting that when an organization experiences changes in its business environment its management control systems need changes too.