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Contingecy Theory

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Contingency theory is perceived by some scholars as a fragmentation of various ideals patched together into a theory of management accounting, nevertheless, it should be recognised that it provides a wealth of knowledge into contemporary management accounting practices. Contingency theory provides enhanced information to the individual which ultimately improves decision making and assists in achieving organisational objectives (Hamas and Lääts, 2002, p. 379). This theory has invaluably provided research evidence that are attributable to contemporary management accounting knowledge and designs. It has provided a profound method to adjust to ever changing external environments and the need for changes in internal factors (Otley, 1980, p. 413).

Strengths of contingency theory style research

Challenging the criticisms of contingency theory for being fragmentary and contradictory due to its methodological limitations, it is the failure of critiques in realising the many different forms of management accounting designs under the contingency approach and the relationships between those design which have perpetuated this idea (Gerdin and Greves, 2004, p.303). Attention should be shifted to the concepts under which contingency theory has been applied. Contingency theory in its simplest form highlights that an organisation’s structure is conditional upon contextual factors such as environment, strategy and size. One of its key strengths is a congruence approach that it represents, whereby assuming context determines the structure of the organisation without any examination of the effects of this relationship on performance. It is implied that performance is determined by a natural selection process. A process where only the best performing organisations will survive at any point of time and those which survive often best acclimatise to its context (Gerdin and

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