Management control systems too often are collapsed to management accounting, itself reduced to managerial accounting. Through this reductionism, management control finds itself narrowed down to mere cost accounting, budgeting and budgetary control, a.k.a. variance analysis. Thereby, management control is amalgamated with a fraction only of what it encompasses and appears as a dated vision of its reality. This reductionism amalgamates contemporary management control with twentieth-century manufacturing companies’ concerns. Thereby, the underpinnings of both strategy and management accounting tend to be ignored or underestimated.
It is therefore necessary to understand management control’s origins and journey across history. Accounting history research, namely New Accounting History, reveals that management control and accounting were born in Ancient Egypt and developed alongside Antiquity until they were systematic with the three monotheisms (Carnegie & Napier, 2002; Cordery, 2015; Merino, 1998; Miller, Hopper, & Laughlin, 1991). Over centuries, management accounting and control have evolved as new political or economic concerns. It is commonly accepted that most of the contemporary accounting and control concerns arose with the development of Capitalism as a response to a quest for economic rationality (Berland & Chiapello, 2009; Carruthers & Espeland, 1991). Even though Capitalism and economics are significant features of management control, history shows they are not unique and as central as often thought.
Considering strategic management accounting, history reveals that military science informs the notion of strategy and how accounting has appeared as a way of executing it: how to trace the way a war is conducted and won (or lost). It is too often neglected that strategy originated from military sciences in Ancient China (Tzu, 1078) and then by counsels to European Monarchs (Clausewitz (von), 1832; Machiavel, 1520). Strategy has been perceived as the art of putting procedures and people in place to win or to avoid losing in a conflictual situation. Similarly, management accounting’s roots can be found in a variety of non-business contexts, generally religious in the Middle Ages (Joannidès de Lautour, 2016). Both have been tightly connected.
Therefore, this chapter addresses the history of management accounting and control without pretending to be exhaustive. The purpose is not to go too far in accounting history research but to give an overview of how management accounting and control have evolved over time. This is aimed at highlighting where management control systems’ current concerns find their origins and form a consistent whole. To this end, this chapter is structured around three themes that cover three eras and areas of management accounting thinking. In the first place, the religious heritage of management accounting appears as the philosophical and ethical grounds of contemporary management control systems. As these have influenced our Judæo-Christian world for centuries, the Middle Ages and modern history have been deliberately neglected. The second period discussed is that covering the development of Capitalism from the second Industrial Revolution and until the middle of the twentieth century. Lastly, in its discussion of strategy, this chapter cannot avoid wartime, starting with World War I and finishing with decolonisation. World War I is the cut-off date for two reasons. Firstly, historians consider it a pivotal event in war history: it is the last conventional war and the first war of a new type. In itself, it reveals concerns expressed in centuries of military activity and announces the modern war. Secondly, World War I was the first time strategy and management accounting were colligated.
1.1 Management Accounting as Religious Heritage
Accounting was born almost concomitantly to writing technologies and reading. This occurred with the development of the first advanced languages, that is, in Ancient Palestine and Egypt with hieroglyphs, Aramean and Hebrew. At that time, accounting systems were aimed at reconciling world dualism and operated as drivers of faith and thereby the utmost form of ethics. Accounting as an expression of ethics lies in this double-entry mode of thinking that has characterised business accounting ever since. Whence the importance of understanding its deepest origins: in religions (Joannidès de Lautour, 2016).
1.1.1 World Dualism as Accounting’s Grounds
What is central to the four religions, and consequently crucial to accounting, is how world dualism is solved through accounting in different contexts and why solutions may differ from one setting to another. Within the four religions studied, a form of accounting differing from one belief system to another exists. It transpires from the three religions that the Book itself is not understood in a uniform way: God is jealous in Judaism, punishes Original Sin in Roman Catholicism and is a synonym of justice in Islam. This means that reality is contingent upon subjective representation of the meaning attached to it. That is, ways of pleasing God and salvation differ accordingly: a jealous, repenting or just God does not save believers in the same way.
Concurring with the idea of world’s dualism, we can see the reach of God and mankind for contemporary accounting. Traditionally, as with Roman Catholicism, the business world has been seen as divided into funders and managers. Their relationship has been said to be resting upon information asymmetry. This has given rise to agency theory as well as annual reports, interim reports and the need for auditing records as a way of reconciling these two parties (Power, 2003, 2009). As there is no standard for content and shape of annual reports, there is still room for making them operate as metaphors with icons, heroes, facts and stories readers can retain (Busco & Quattrone, 2014, 2018; Davison, 2004, 2010, 2011; Quattrone, 2009). The entire story of actions undertaken—mergers and acquisitions or new markets gained—provides organisational discourses with some coherence and consistency. These enable us to grasp the big picture of the path taken (McKernan & Kosmala, 2004). A form of objectification commences when, falling into the public domain, these accounts can be appropriated by anyone. The crossing of people’s subjectivities reifies and makes records as well as stories the truth for everyone. Funders and managers can then be reconciled through the representation of organisational deeds and achievements in financial terms, following either rules or accepted principles that make the whole intelligible (McKernan, 2007; McKernan & Kosmala, 2007).
Over time, world dualism has been considered more complex as to divide economic and non-economic items (Bebbington & Gray, 2001; Gray, 1992, 2006, 2010; Gray & Collison, 2002; Gray, Owen, & Maunders, 1988; Quattrone, 2004). At the non-economic end, social and environmental accounts have initially formed another dualism. This seems to have been solved through the merging of corporate social responsibility (CSR) disclosures as to give a consistent representation of the organisation’s conduct (Cho, Guidry, Hageman, & Patten, 2012; Cho & Patten, 2013). Such reports make public achievements through photographic representation of orphanages built or evidence of depollution campaigns. Despite endeavours from the Global Reporting Initiative (GRI) or other international bodies at enforcing organis...