Abstract Reviews the book "Social and Business Enterprises: An Introduction to Organizational Economics," by Jonathan S. Boswell.

Abstract The article presents the author's reply to the comments made by Associate Professors in Accounting, Peter Tiessen and J.H. Waterhouse on his paper "The Contingency Theory of Managerial Accounting." With respect to the comments on explanatory variables, Tiessen and Waterhouse make a number of points, some of which the author has difficulty in following. As noted by Tiessen and Waterhouse, the budget and financial variables are perceptual in nature; their intent was to elicit perceptual data on the ability of such measures to reflect performance. Interpreting them as inputs or determinants of effectiveness may be stretching a point, but it was difficult to obtain data on relative explanatory abilities in another way. Their second point with respect to the classification of these variables, that there is confusion between an implied surrogation of performance explanators and categorization only as internal variables, indicates confusion on the part of commentators between normative and descriptive statements. With respect to the factor analyses, the points made by Tiessen and Waterhouse are well-taken. The author recognizes, as they do, the problems in its utilization and interpretation.

Abstract Working mainly from the literature of modern organization theory, it was possible to develop a model of organizational performance for internal subunits. The model hypothesizes three major contingencies which affect subunit performance: (1) factors internal to the subunit (internal factors); (2) interrelationships with other subunits (interdependency factors); and (3) interactions external to the firm (environmental factors). The contingencies operate differentially across organizational subunits. Three propositions derived from the model were examined empirically in a field study of large manufacturing organizations. Strong support for two of the propositions was found, along with indications of support for the third, by using the analytical methodology of path analysis. The final section of the paper explores the implications of the study approach and results for managerial accounting theory and practice.