The use of management accounting systems in functionally differentiated organizations

Management Accounting Systems (MAS) facilitate decision making and control in organizations. This study investigates both theoretically and empirically how MAS help managers to make their decisions. This issue is specifically addressed in a context where production and sales managers face high levels of customization. This is a strategy where product features are determined by the customer, rather than by the organization. It is argued that, under these circumstances, production and sales departments must solve more difficult problems. Firstly, because each department must, for its own activities, consider what the consequences are of producing non-standardized products. Secondly, production of non-standardized products in one department may affect activities of other departments. For instance, sales must consider whether customer requirements are consistent with organizational objectives and technological constraints of sales as well as production. One of the major sources of information for decision making are MAS. The study reveals that customization increases interdependence, and that production and sales managers use MAS to co-ordinate the interdependence between production and sales. However, only weak support is found for the assumed relationship of customization affecting MAS use in its own right. Managers may use different information systems to address issues that concern their specific department only.