Cost and management accounting in early Victorian Britain: a Chandleresque analysis?

There is a widespread view that cost finding developed into cost accounting towards the end of the nineteenth century, with the further step towards what we today call management accounting occurring in the twentieth century. This bold assessment is based on an embarrassingly small amount of empirical evidence, while little is known of a key element in these transitions, namely the use of accounting information for business decision-making. This study utilises the primary records of a major industrial company for the middle years of the nineteenth century to explore these issues. The theoretical framework used to inform this study is the process of business development explicated by Alfred Chandler inStrategy and Structure. We find, not surprisingly, that the process of change was contingent upon a set of unique circumstances which shaped attitudes and actions. We discover an interaction between the accounting system, organizational structure and management decision-making process which is of twofold significance: it adds an important dimension to our knowledge of the potential of accounting numbers at this early stage in the development of the large scale enterprise; and it contains conclusions which will help to illuminate the contemporary theory-practice debate concerning the role of management accounting in such organizations