Literature the last section presents the criticisms of



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2.2 An Overview
of the Contingency Theory of Management Accounting

Origins and Definition of Contingency Theory.

     2.2.2 The Contingency Theory of Management
Accounting Research.

Contingent Variables Categories.

    2.2.4 The Concept of Fit in Contingency

Contingency theory criticisms.

2.3 Management
Accounting and Modern Management Accounting techniques.

     2.3.1 History and development of management

Definition of management accounting

   2.3.3 The evolution
of management accounting.

  2.3.4 Modern management accounting techniques

2.4 Organizational Performance

      2.4.1 Definition and design of OP.

    2.4.2 Traditional financial measures.

   2.4.3 Non-financial measures.

   2.4.4 BSC usage as tool of performance measurement

 2.5 Research Gap














This chapter reviews: the literature related to contingency theory
and its variables, the concept of contingency theory and offers a brief outline
of its historical development,  presents
the concept and models of the contingency theory of management accounting research,
a brief different levels of analysis and models of contingency studies is
given, the categories of contingent variables found to have an effect on  modern management accounting techniques in
previous related studies, the various concepts of fit in contingency theory,
and the last section presents the criticisms of contingency theory and the
studies applying it.

2.2 An Overview
of the Contingency Theory of Management Accounting

The theory of contingency suggests there is no better way to design,
lead or manage an organization in all cases (Abdel-Kader and Luther, 2008;
Amara & Benelifa, 2017). From a contingency perspective, the impact of the
best practices depends on the organizational and environmental context in which
they are used (Ajibolade, 2013; Ketokivi & Schroeder 2004). This reveal
that the contingency theory plays a pivotal role in accounting system
understanding (Otley, 1980; Alboali et al., 2013). By adopting this contingent
approach, the accounting information system applied in an organization should
match the situations and conditions in which the organization is operating, to
enhance the performance (Al-Mawali, 2015).



 2.2.1 Origins and Definition of Contingency Theory

theory were developed from the sociological functionalist theories of
organization structure such as the structural approaches, which proposed that
organizational structure was contingent on an contextual factors have a causal
relationship with each other such as technology, dimensions of task environment
and organizational size (Chenhall, 2003 ; Islam & Hu, 2012). Kreitner (1998)
defined the contingency approach as: An effort to determine through research
which managerial practices and techniques are apposite in specific situation. Covaleski
et al. (1996) defined contingency theory as: “A theoretical perspective of
organizational behavior that emphasizes how contingent factors, such as technology
and the task environment affected the design and functioning of the

Contingency theory emerged in the 1960s as an important perspective
of organization theory, the contingency framework is reasonably new in that
there are no references to contingency theory in the accounting literature
before the 1970s (Otley, 1980). The initial highlighting was on of some common
factors must match the organizational structure (Zuriekat, 2005).

2.2.2 The
Contingency Theory of Management Accounting Research.

The contingency
theory as applied to management accounting which took its root from the
contingency theory of organizations is based on the premise that there is no universally
appropriate accounting system applying equally to all organizations in all
circumstances, so should Management Accounting System (MAS) adapt changes
external circumstances and internal factors if they are to remain effective
(Emmanuel et al., 1990). In other words, By adopting this contingent approach,
the accounting information system, as an element of the organizational
structure is conditioned by the factors features of the context in which the
organization operates, It must adapt to a set of contingent variables,
technology, environment, structure, size and strategy (Alimoradi & Borzoupour,
2017 ; Amara & Benelifa, 2017). When the compatibility between the
accounting system and contingent variables increases, the organization’s
performance will also increase. Therefore, MAS designers should take care of
the effect of these variables on this system (Ayadi & Affes, 2014;
Junqueira et al., 2015).  

Over the last 40 years, the importance of contingency theory for analyzing
MAS has been the central issue of a large number of studies (Haldma and Lääts,
2002), (Abdel-Kader and Luther, 2008), (Tuan Mat, 2010) and (Alimoradi &
Borzoupour, 2017), these studies have adopted the theory in order to explain
the apparent conflict in opinions about using more sophisticated management
accounting systems over traditional systems, Such studies have examined the
relationships between MAS design and some hypothesized contingent variables and
suggested that certain factors may influence the designs adopted and their
effectiveness (Haldma and Lääts, 2002). Haldma
and Laats (2002) classify the contingent factors into two general categories:
internal and external factors. Internal factors are concluded as organizational
characteristics, technology and strategy, these factors impacts on both
accounting practice and the effectiveness of performance measurement and evaluation.
In addition, there is a mutual influence between MAPs and effectiveness of
performance measurement and evaluation. External factors indicate the aspects
of external environment which include the business environment and accounting.
Environmental factors impact both on the characteristics of management
accounting practice and on the internal characteristics of an organization.