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The review of various literatures and publications on the use of management accounting and changes associated with it had shown that the installation and use of different management accounting techniques were influenced by various factors and circumstances. This meant that, in order to understand the use of management accounting practices comprehensively by the Asphalt manufacturing company, the study needed to be based on the most appropriate theory. In this regard, the contingency theory was the most appropriate concept for this study. Most researchers who have specifically studied management accounting, the changes that attend it, and organizational changes have often utilized the contingency theory as the basis of their research. This means that it is the only theory that is best suited to explain the different factors that impact an organization, especially with respect to management accounting. Contingency theory is associated with a number of theorists: Fred Edward Fiedler, Kenneth Blanchard, Victor Vroom, Arthur Jago, and Paul Hesey (Daft 2014).
Contingency theory is described a class of behavioral theory claiming that there is no best approach to organize a corporate organization, to lead a firm, to come up with decisions within a firm. The proponents of this theory had argued that the optimal course of action is always dependent or contingent upon the external and internal situations (Battilana & Casciaro 2012). The proponents further argue that some courses of action of decisions may work for some organizations while fail to work for others (Battilana & Casciaro 2012). This implies that a specific organizational success may not help another organization, if applied verbatim. Therefore, organizations can achieve success through the creation and adoption of varied techniques. Contingency theory is closely related to situational theory in the sense that there is a presumption that there is no single one right approach to decision-making or running a corporate organization (Battilana & Casciaro 2012).
Some of the significant contingencies that may impact an organization include technologies, governments, unions, customers, laws and regulations, competitors, distributors, and suppliers (Dzimbiri 2009). Besides, scholars who are concerned with contingency theory have come up with various variables that influence the decision-making process within an organization (Dzimbiri 2009). One of the variables is the importance of a decision. In this regard, the consideration is made with respect to whether the decision is strategic in nature or it is difficult to reverse once it is made (Dzimbiri 2009). In addition, the amount of information that is available to managers and their subordinates is also an important variable (Dzimbiri 2009). In this case, the concern is whether there are similar decisions that had been made in the past, and whether there is existing results about such a decision. Another contingency variable is the relationships between managers and their followers (Forsgren 2008). According to the theory, the more positive the relationships between managers and their followers, the more support they are likely to have during decision-making processes (Forsgren 2008).
The historical development of the contingency theory was to create generalizations regarding the formal structures that accommodate the utilization of different technologies (Maurer 2011). In this case, the proponents of the theory posited that technologies directly played a role in influencing organizational characteristics such as scope of controls, centralization of authorities, and the validation of procedures, rules and regulations (Maurer 2011).
Generally, the proponents of the contingency theory have come up with four tenets of the theory. First, there is no general or single best way to manage (Haenlein 2004). Second, the structural design of a corporate organization and its existing systems must fit within or be able to cope with the prevailing business environment (Haenlein 2004). Third, an effective corporate organization must fit within its subsystems, not just the business environment (Haenlein 2004). Last, the needs of an organization are better met when it is appropriately structured and the leadership style is proper both to the roles performed and to the nature of the nature of the working team (Haenlein 2004). This means that failure to meet the foregoing conditions may be detrimental to the goals and objectives of an organization, especially one that is profit-oriented.
Contingency theory has survived for many years since it was first proposed. Despite the strengths of contingency theory, researchers who have focused on organizations have criticized it. It has been criticized for being just a loose categorization of rather dissimilar concepts without a uniting theoretical background (Rohrbeck 2010). Different values of structural constructs are required to fit specific conditions (Rohrbeck 2010) Therefore, it has been criticized as only expanding in multiple facets without necessarily sharpening the essential concepts. Critics have also argued that the theory is not comprehensive enough, because ignores crucial determinants of organizational structure, in which case, it claims that organizational structure needs to fit and accommodate the values of varied contingencies; this is not the ideal situation for all organizations (Rohrbeck 2010).
Scholars have also questioned the claim by the theory with regard to quasi-autonomous relationships between the contingency variables, performances, and organizational structures with contingency factors being the ultimate cause of organizational structures (Miner 2005). According to the critics of the contingency theory, the theory tends to view the management of a company as just implementers of organizational structures to fit into the contingency values and propositions (Miner 2005). The picture that comes out of this argument is that the management of an organization has no substantial power to either actively create the structure or to alter the contingency situations (Miner 2005). Finally, the contingency theory has been faulted because it takes a conservative position and offers little help for innovations in the creation process of organizational structures (Miner 2005).
However, despite the criticism, contingency theory remains the most appropriate in explaining the various factors that impact and influence the operations and structures of corporate organizations. Its weaknesses are not so weak that it cannot be used for its intended purposes. This is the reason it was deemed to be the most appropriate in the context of this study.
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