Economic Topics
Core Competence
Management accounting and decision making: Two case studies of outsourcing
Time:2022-01-22 16:55

Lars Braad Nielsen a, Falconer Mitchell b, Hanne Nørreklit c,∗

a Booz & Company, London, UK

b Edinburgh University, Edinburgh, Scotland

c Aarhus University, Aarhus, Denmark



Studying the outsourcing decision in two substantial manufacturing companies, the paper explores the use of management accounting information in a complex and strategically significant decision-making setting. The setting involves multiple decision participants with potentially conflicting preferences, constrained information provision capabilities and uncertainties in respect of the financial outcomes of alternative decision options. The two case studies reveal two different methodological approaches to decision-making: analytical and actor-based. These approaches incorporate substantially different ways of managing information uncertainty, fostering interaction among the coalition of decision-participants and making use of management accounting. The findings show that management accounting information and techniques do play an important role in relation to organisationally complex and strategic decision situations. The revealed methods provide potentially educational examples from which other organisations can learn. The findings address the simplistic nature of the conventional management accounting literature on decision making (e.g. outsourcing and “make or buy”).


Keywords: Outsourcing; Decision-making; Management accounting; Strategy; Methods; Theory; Practice


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