The Principles

In the first section of the book I will introduce different perspectives from economic and sociological theories to understand why organisations measure the performance of their employees and departments. The economic theories are often based on sophisticated mathematical models which scares off undergraduate students and textbook writers alike. I believe that I can explain the essence of these theories with stories. I call them stories because just like the models from the academic literature they are not literal descriptions of how the real world works. Still, they do reveal underlying principles that help us understand the real world. None of these stories will tell the whole story ^[1]. To present a fuller picture I need more than one principle and that is why the first story will introduce three economic theories at once. These three theories form the core around which the remainder of the book is structured.

I will then build on these stories and show how they can be used to explain the role of management accounting tools to support, implement, and change an organisation’s strategy. The other theories round out this core story and show how management accounting tools play a role in management activities that are hard to measure, and how organisations figure out what the appropriate management accounting tools are for their situation. The complete picture allows us to tackle the different management accounting tools and their value to support an organisation’s strategy.