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Americanisation in 20th Century Europe: business, culture, politics. Volume 2

 | 
Nick Tiratsoo
, 
Mathias Kipping

The influence of the USA on the development of standard costing and budgeting in the UK and France

Nicolas Berland, Trevor Boyns et Henri Zimnovitch

Résumé

Cet article retrace les premiers développements, avant 1950, du contrôle budgétaire et des cofit standard en Grande-Bretagne et en France; il s’intéresse plus particulièrement à l’influence que les États-Unis ont pu exercer alors. Une première partie est consacree a la comparaison des niveaux de diffusion de ces techniques dans chacun des pays. Une seconde partie cherche a rendre compte des différences a partir des facteurs sociaux et culturels. Ce travail fait ressortir le caractère singulier des situations observees et montre que ce qui s’est produit en France comme en Grande-Bretagne n’est pas explique par le terme d’americanisation.

Texte intégral

introduction

  • 1 We gratefully acknowledge financial assistance from the Centre for Business Performance of the Ins (...)
  • 2 ‘Budgeting’ is used here to cover the whole range of possible uses of budgets, extending from simp (...)
  • 3 E.M. Sowell, The Evolution of the Theories and Techniques of Standard Costs, Alabama, University o (...)

1The final Roubaix conference session, which brought together participants from both the A and B sessions, revealed a clear difference of opinion.1 While the macroeconomic view from session A was that Americanisation had been very important for economic growth and development in Europe, the microeconomic view from session B was much more sceptical. In part, this difference seems to have resulted from different conceptualisations of Americanisation. Indeed, even amongst the participants within session B there was no clear consensus as to what was meant by the term ‘Americanisation’. From the microeconomic perspective, this chapter seeks to examine the extent, and speed at which, two accounting tools, namely budgeting2 and standard costing, were introduced into France and Britain during the first forty years of the Twentieth Century. These techniques have been chosen for study because they are generally seen to have been American in origin.3 Conventional wisdom has it that they were developed in the US early in the Twentieth Century, but only adopted by European firms after 1950. In this chapter, we present evidence that the development of budgeting and standard costing in France and Britain occurred somewhat earlier, and query whether or not the experiences of these countries can be seen as a case of ‘Americanisation’, narrowly defined as the copying of American techniques with the help of American influences.

  • 4 See Chapter Twelve, below.
  • 5 See Chapter Thirteen, below.
  • 6 For details of companies known to have used budgetary control, see N. Berland and T. Boyns, “The D (...)

2The approach adopted in this chapter is based on the same reasoning as employed by Amdam and Sogner, namely that to understand the character and complexity of the diffusion process it is important to examine developments at the firm level.4 Through such studies it is possible to examine whether or not there was a copying of ideas, in full or after relevant adaptations, or whether developments had separate origins, including the possibility of internal sources, largely, if not wholly, independent of external developments. Case studies, however, require detailed archival investigation of historical business records and, as Sluyterman points out, tracing exactly how companies were affected by any development is often no easy matter for historians.5 Bearing this point in mind, here we generalise about the process of diffusion of budgeting and standard costing in the two countries based on the results of numerous archival-based studies, of both French and British firms, conducted by the authors and reported in detail elsewhere.6

3In the first part of the chapter we examine the validity of the widely implied view that British and French firms lagged behind their American counterparts in the introduction of budgeting and standard costing. In the second, and more significant part, drawing on the evidence from specific companies, we investigate some of the factors which influenced the adoption of budgeting and standard costing in both Britain and France and, in particular, the role of ‘Americanisation’.

american lead and ‘european’ lag?

  • 7 Chandler 1977.

4During the session B discussions, Kipping pointed out, in the context of discussing the concept of ‘Americanisation’, that it is important to distinguish discourse from practice. Much of the existing discourse regarding budgeting and standard costing has emanated from America, and suggests that these techniques emerged there during the 1910s and 1920s in conjunction with scientific management, the move towards ever larger businesses and the development of the multi-divisional business form.7 Furthermore, it is heavily implied, though rarely explicitly stated, that American firms rapidly adopted these techniques and that they quickly became a fait accompli throughout American business. Checking the validity of this view, outside of a few well known examples such as Du Pont, General Motors, and General Electric, however, is difficult, not least because the number of case studies conducted by historians into the practices of American firms is relatively small. Hence, any attempt to compare the performance of firms in other countries with that of American companies is difficult because there is no sound base for such comparisons. It is true that a number of surveys of the use of budgeting and standard costing were carried out in America from the early 1930s, and that these often showed usage rates of 50 per cent or more amongst American firms (see Table 1). However, when the nature of these surveys is examined more closely, it is found that they were often small sample surveys and usually heavily biased towards those firms which would generally be considered to have been most likely to adopt these techniques (in particular, large firms). Furthermore, if attention is paid to the accompanying text, rather than simply the headline figures, it often appears that these techniques had only been partially introduced and/or their use was still being developed.

Table 1 - Sample Questionnaire Surveys, U.S.A., 1930-40

Table 1 - Sample Questionnaire Surveys, U.S.A., 1930-40

Notes
1. NICB, Budgetary Control in Manufacturing Industry, New York, National Industrial Conference Board, 1931.
2. R.P. Marple, “The Place of Internal Auditing in Industrial Companies”, NACA Bulletin XX (19), 1939, p. 1298-1297.
3. P.E. Holden, L.S. Fish and H.L. Smith,Top-Management Organization and Control, New York, McGraw-Hill, 1951. The 31 sample firms ranged in size from 5,000 to 70,000 employees.
4. Only one in eight firms had a complete System of budgets.
5. Only 25.6 per cent of the sample had complete budgetary

  • 8 J.M. Quail, “More Peculiarities of the British: Budgetary Control in US and UK Businesses to 1939” (...)

5That firms may only partially have introduced budgeting and/or standard costing is not altogether surprising because such techniques could require major organisational, as well as accounting, changes. Hence, the introduction of such techniques could take many years (often more than five), and in some cases involved continuous evolution. To criticise British firms for only partially introducing these techniques, while assuming that American firms had done so completely, and often apparently overnight, as some writers appear to do, is, in our view, nonsensical and results in a failure to make like-for-like comparisons.8Table 2 below presents figures for the number of British and French firms known to have been using budgeting and standard costing in c.1935. Also indicated is the number of firms employing 5,000 or more workers that would have been expected to have used these techniques if Britain and France had exhibited the same proportion using these techniques as did the US, as indicated by sample C in Table 1 above.

Table 2 – Comparison of actual and estimated numbers of British and French firms using budgeting and standard costing, c.1935

Table 2 – Comparison of actual and estimated numbers of British and French firms using budgeting and standard costing, c.1935

Notes
+ Indicates a minimum figure based on examples found to date.
 ? A suggested figure since there is no reliable estimate of the number of large firms in France
c.1935.

6Clearly, in respect of budgeting, the evidence presented in Table 2 suggests that, in proportionate terms, it was not the case that the British and French lagged behind their American counterparts c.1935 but rather that they were ahead of the game. In respect of standard costing, however, Table 2 does suggest evidence of a lag, moreover one that is more pronounced in the case of France, where research to date has failed to reveal any firms which used standard costing prior to 1940. Table 2, therefore, throws considerable doubt upon the conventional wisdom that Europe adopted budgeting and standard costing with a lag, through a process of Americanisation’ In section two of the chapter we examine various possible explanations for the results depicted in Table 2, including the influence of Americanisation.

explaining the differences: social and cultural factors

  • 9 In the US context it has been argued that consultants were the main proponents of standard costing (...)

7The discussion that follows is divided into two main sections: the first examines the extent of the literature and its impact; while the second focuses on the role of consultants and their influence.9 In carrying out this discussion we attempt to throw light on the extent of the influence of American ideas and developments, as compared to indigenous ones, on the nature and pace of change in Britain and France.

  • 10 R. Satet, Le contrôle budgétaire, Paris, Dunod, 1936.
  • 11 F.C. Lawrence and E.N. Humphreys, Marginal Costing, London, Macdonald & Evans, 1947.
  • 12 M. McKillop and A.D. McKlllop, Efficiency Methods: An Introduction to Scientific Management, Londo (...)
  • 13 T. Boyns, J. R. Edwards and M. Nikitin, The Birth of Industrial Accounting in France and Britain, (...)

8The dissemination of new ideas, techniques and practices can obviously be influenced by social and cultural factors. Learning about new ideas can come through personal contact, for example, as the results of visits, conversations, attending conferences etc., or through reading the relevant literature. In terms of texts, contemporary bibliographies such as that provided by Satet10, make it clear that, during the inter-war period, far more books and articles on standard costing and budgeting were published in America than in Britain or France. Two possible explanations for this are, first, the larger potential audience in America and, second, a greater willingness of Americans to commit their ideas and experiences to paper (an explanation which may, of course, be related to the former factor). Lawrence and Humphreys, commenting on the fact that for every British book on a subject there were 20 to 30 American ones, noted the tendency for Americans to write down what they did, whereas the British, being far more pragmatic, simply got on with doing things, rather than writing about them11 Indeed, as two contemporary commentators wrote: “the British manager... prefers doing his work to explaining what he thinks he is doing to the world at large”.12 It has been suggested that this British cultural proclivity helps to explain why, in respect of industrial accounting, practice in British companies during the Nineteenth Century was in advance of that in French companies, even though French texts on the subject were more numerous than their British counterparts.13

  • 14 T. Downie jr., The Mechanism of Standard (or Predetermined) Cost Accounting and Efficiency Records (...)
  • 15 A.W. Willsmore, Business Budgets and Budgetary Control, London, Pitman, 1932.
  • 16 T. Boyns and H. Zimnovitch, “L’influence de la profession comptable sur les méthodes de cout en Gr (...)
  • 17 Cégos, Une méthode uniforme de calcul des prix de revient. Pourquoi ? Comment ?, Paris, Cégos, 193 (...)

9During the inter-war period, in both Britain and France, articles tended to appear before texts fully devoted to budgeting and standard costing. The first British text on standard costing was published in 192714, while the first book on budgeting appeared in 1932.15 In France, however, while many authors discussed budgeting, few mentioned standard costs and, when they did, they treated them succinctly without explaining their advantages or presenting the principles (of exception, analysis of variances, etc.) upon which they rested. This reluctance to discuss standard costs in depth can be explained by their incompatibility with the preoccupations of the two main groups which could have aided their introduction: the accountants and the engineers. Throughout the period 1880-1950, the attention of accountants in France was with achieving professional status, something which it was believed could only be obtained by stressing the scientific nature of accounting.16 Standard costs, being fictitious values (i.e. not actual costs which had been incurred but rather predetermined or estimated costs), undermined this approach and the belief that it was possible to determine the true, real or exact cost. Hence standard costs were ‘crowded out’ of the French literature. Engineers likewise had a preoccupation which excluded consideration of standard costs: at the beginning of the 1930s, strongly inspired by corporatist ideology, they desired to possess a method of cost calculation which could serve as a source of information for regulating the economy. The wish to be able to calculate a legitimate cost which could serve as a reference point for fixing the price of products, and for comparing the costs of different enterprises, led to them seeking a method which allowed, as precisely as possible, for the charging of indirect costs, and which could be applied in the same manner by all firms in a given industry.17

  • 18 A. Berran,La gestion méthodique des entreprises, Paris, La comptabilité et les affaires, 1926.
  • 19 R. Satet and J.J. Quaglioni, La méthode ‘auto-contrôle’, Paris, CNOF, 1927.
  • 20 HOST, Conférence internationale du contrôle budgétaire, Geneva, HOST, 1930.
  • 21 C. Reitell and J. -P. Lugrin, “Le contrôle des frais d’exploitation par la méthode des taux standa (...)
  • 22 M. Ponthière, “Le budget et le contrôle”, L’Organisation, October 1934.

10With neither accountants nor engineers in France pre-disposed in favour of standard costs during the inter-war years, it is not surprising to find that texts largely ignored them at this time. Budgeting, however, found more favour. In the 1920s, authors such as Berran18 and Satet and Quaglioni19 independently developed ideas that closely resembled budgetary control, but it was the links with the corporatist concepts of hierarchies and responsibility that led to more works of this type during the 1930s. At the 1930 international conference on budgetary control held at Geneva, Musil spoke of human relations in industry, the psychological aspects of budgetary control, the sharing of information and cooperation, while Landauer saw in budgetary control a means of arriving at a “just solution to the controversial problem of the equitable participation in the profits of business”.20 Reitell and Lugrin wished to place every individual in the position of a manager directing his own business.21 Ponthière expressed the same idea, and emphasised that budgets were not simply a mechanism for reducing costs, but also of creating harmony within a business.22 For Bourguin, budgetary control contributed to structuring the French industrial scene according to corporatist logic:

  • 23 M. Bourquin, Méthodes modernes de répartition et de contrôle des frais généraux dans l’industrie, (...)

These same standard prices... can be compared with the elements produced by competition and become a solid base for discussion when putting in place an agreement between producers. Experience shows in effect that the first measure to take is to develop the standard prices which enlighten all the colleagues in a business and permits them to see the real situation and to speak the same language.23

11The conclusion, in other words, was that budgetary control ought to permit the resolution of the problem of collaboration between different parties in an enterprise.

  • 24 McKillop and McKillop 1917:2.
  • 25 J.A. Merkle, Management and Ideology, California, University of California Press, 1980 p. 136-171
  • 26 Lawrence and Humphreys 1947:34-35.

12While the writing of books and articles clearly forms a key part of the dissemination and diffusion processes, its influence depends on two factors, the receptivity of the audience, and the appropriateness of the techniques outlined. In commenting on the impact of the American literature on scientific management on British practices, McKillop and McKillop argued that American authors often engaged in “diffuse abstract discussion which is most unattractive to the British business mind”.24 Merkle has suggested that scientific management had a greater impact on French intellectual thought than on management practice.25 Market conditions in France and Britain were much different from those in America, where consumers were happy to purchase homogeneous, mass-produced goods. American industry therefore tended to be much simpler, comprising large-scale manufacture and mass production whereas, in Britain and France, industry had to cater for a more differentiated demand and hence tended to operate on a smaller-scale. The applicability of new accounting techniques, developed largely in the context of American big business, may not have been appropriate, at least not without some modification. It is possible that the non-use of standard costing in France before 1940 could be explained by its lack of suitability. In Britain, the new American ideas on costing had to undergo much pioneering work, carried out by British cost accountants, before they proved suitable in British conditions.26

  • 27 Merkle 1980:147.
  • 28 Merkle 1980:226.
  • 29 McKillop and McKillop 1917:19.
  • 30 C.R. Littler, The Development of the Labour Process in Capitalist Societies, London, Heinemann, 19 (...)
  • 31 R.K. Fleischman, “Completing the Triangle: Taylorism and the Paradigms”, Accounting, Auditing and (...)

13From an economic rationalist perspective, the appropriateness of new ideas is clearly important, since differences in experience would be linked to the costs and benefits of the new techniques. Adoption should, of course, occur first and most rapidly in those countries where the net benefit is large, while no development would be expected to take place in countries where it was zero or negative. In relation to scientific management generally, Merkle has indicated that French engineers were already in the process of developing analogues to scientific management control before Taylorism crossed the Atlantic27, while in respect of Britain she has argued that it had developed its own solutions to the problems tackled by Taylorism.28 It is far from clear, therefore, that the advances attributable to scientific management were large for either country. McKillop and McKillop, discussing scientific management in Britain noted the lack of benefit relative to the cost29, while Littler has suggested that one of the reasons why British employers rejected Taylorism was the high associated administrative and supervisory costs, leaving many British businessmen unconvinced of the profitability of scientific management.30 It is not clear, however, that the situation was so different in America, since Fleischman has recently suggested that the reason why scientific management and all that went with it failed to make major inroads in the first decades of the Twentieth Century was because “it was too expensive, ultimately not surviving a cost/benefit test”.31 He notes that the costs could often be high, while the returns were slow to materialise, with many businessmen being too impatient to wait.

  • 32 A.I.M. Fleming, S. McKinstry and K. Wallace, “Cost Accounting in the Shipbuilding, Engineering and (...)

14Given the generally perceived link between standard costing and budgeting and Taylorism, it seems plausible that forces which influenced the latter would also have impacted upon the introduction of the former. Fleming et al, in their examination of the costing Systems used in the shipbuilding, engineering and metals industries of the West of Scotland, found that in these sectors, where job or contract-based cost Systems predominated, there was a lack of introduction of standard costs and budgetary control before 1960, in part due to a scepticism with the ideas of Taylorism.32 These authors also note that there were few people in the area skilled in the use of these techniques and that there was a marked reluctance amongst the companies studied to use management consultants. Fleming et al also argue that industrial relations problems in the region, and the engineering culture of management, contributed to the lack of implementation of these techniques and, they suggest, may have done so more generally throughout Britain.

  • 33 J.M. Scott-Maxwell, “Scientific Management: A Solution of the Capital and Labour Problem”, journal (...)
  • 34 D.M. Moffatt, “Costing”, Accountant, 16 September 1922, p.401.
  • 35 R.F. Kuisel, Seducing the French: The Dilemma of Americanization, Berkeley, University of Californ (...)

15While Fleming et al do not suggest a role for anti-American sentiment, it remains a possible explanation, in so far as standard costing and budgeting were perceived at the time, rightly or wrongly, as being American. The electrical engineer and writer on costing matters, Scott-Maxwell, in the discussion following a paper he had delivered on scientific management, criticised the tendency of some commentators to denigrate any idea that came from America: “This disinclination to recognize that any good thing can come out of America or in fact out of any other country - except perhaps Germany in pre-war days - is a dangerous mental attitude to encourage”.33 The existence of anti-American sentiment in Britain after the First World War is also noted by Moffatt who argued that there was resistance to costing since it was seen as an American invention.34 In France, although American economic and technological prowess made an impression on some observers in the 1920s, its appeal collapsed under the upheaval of depression in the 1930s.35 Anti-Americanism was especially prevalent amongst the elite engineers created by the System of grandes écoles, who were concerned to generate French solutions to French problems and to minimise external, especially American, influences.

  • 36 M. Kipping, “Management Consultancies in Germany, Britain and France, 1900-60: An Evolutionary and (...)
  • 37 Kipping 1997: 69.
  • 38 Kipping 1996: 17.

16We now turn to the role and influence of consultants. Social and cultural resistance to ‘imported’ ideas could possibly have been overcome on the ground through the influence of individuals concerned to educate key people as to the benefits of the new ideas. Efficiency engineers, time and motion men, management engineers, cost consultants and management consultants all emerged during the early decades of the twentieth century in each country, but their backgrounds and influences were somewhat different. Kipping has shown that the role of consultancies varied as between different European countries.36 Whilst the institutional framework in Germany, where key organisations supported the adoption of scientific management, rendered them irrelevant, in Britain they played an important role from the late 1920s. In France, although organisations such as the Comité National de l’Organisation Français (CNOF) and the Commission Générale de l’Organisation Scientifique du Travail (CGOST, later Cégos) were largely in favour of the ideas associated with scientific management, their impact was somewhat limited and thus consultancies played only a partial role. Nevertheless, American consultants such as Harrington Emerson had established a consultancy in France by 1914, C.B. Thompson did so immediately after the First World War, and Wallace Clark and Charles Bedaux did so in 1927.37 During the 1920s, some French consultancies began to appear, set up in the main by individuals who had previously worked for the American consultancies. In the 1930s, however, many of the foreign consultants left France during the economic and social crisis, and only returned in the 1960s and early 1970s.38

  • 39 Kipping 1997 : 72.
  • 40 M. Ferguson, “The Origin, Gestation and Evolution of Management Consultancy within Britain (1869-1 (...)
  • 41 Urwick, who had succeeded Albert Thomas as director of the IMI in September 1928, joined together (...)
  • 42 Ferguson 1999:116.

17In Britain, the impact of American consultants was not altogether different from that in France, though prior to the establishment of the Bedaux consultancy in 1926, their impact appears to have been limited. Although the Gilbreths did some consultancy work in the country between 1910 and 192439, and Rowntree and Urwick modelled the Management Research Groups, formed in late 1926, on the Manufacturers’ Research Associations already established in the US, most of the consultancy work seems to have been carried out by individual British consultants.40 Following the example of the British Bedaux consultancy, indigenous British consultancy firms began to emerge in the 1930s, with Urwick, Orr and Partners and Production Engineering both being formed in 193441, while American consultancies, such as Stevenson, Jordan and Harrison, also established themselves in Britain at this time.42

  • 43 S. Kreis, “The Diffusion of Scientific Management: The Bedaux Company in America and Britain, 1926 (...)
  • 44 Kreis 1992:157.
  • 45 Kipping 1997: 75.
  • 46 Kreis, 1992: 157. The consultancy was renamed Associated Industrial Consultants in the late 1930s.

18Although Kreis has argued that the single most important actor in the consultancy market throughout Europe was the Bedaux consultancy43, whatever its impact on the adoption of some aspects of scientific management, it does not appear to have had a great influence, in either France or Britain, on the adoption of standard costing and budgeting. It is not altogether clear how many firms in either country had employed Bedaux by the outbreak of the Second World War, but it would appear to have been more than two hundred in each. Kreis, for example, has suggested that, by 1937, 144 French companies had installed Bedaux Systems44, while Kipping has suggested that the figure was 350 by 1939, at which time the Bedaux consultancy in France employed about 80 consultants.45 In Britain, Kreis has suggested that 225 British firms had bought Bedaux’s industrial services by 1937.46 These numbers are clearly much greater than those for the number of companies in either country using standard costing or budgeting, so the advent of the Bedaux consultancy does not appear to have had a major influence on the adoption of these techniques before 1940. One company where the British Bedaux consultancy may have had some impact in this respect is British Xylonite. At this company, where a System of ‘standard cost prices’ had been utilised for management control purposes since 1882, a fully-fledged System of standard costing was implemented in the early 1930s, not long after the appointment of J.B.B. Rule as cost accountant and the employment of Bedaux.

  • 47 N. Berland, “The Availability of Information and the Accumulation of Experience as Motors for the (...)
  • 48 The development of the techniques in-house reflects Hans’s preference for lasting gains which he f (...)

19Archival research indicates that American consultants were sometimes involved in the development of budgeting and standard costing in both Britain and France, but it is far from clear that they played a significant role. In France, the best known example is Wallace Clark, who helped introduce budgeting at Pechiney after 1929, and also advised other firms, including the Compagnie des Mines de Vicoignes, Noeux et Drocourt, at Noeux-les-Mines, and Les Ateliers des Forges et Aciéries d’Ugines.47 In Britain, an American, J.J. Lestro, was responsible for introducing standard costing at the Audley Engineering Co. Ltd. and the Daimler Co. Ltd. in the 1930s. In most cases, however, whether in France or Britain, evidence of direct American involvement is limited. At Hans Renold Ltd. in Britain, for example, under the guidance of Hans, and especially Charles, Renold, standard costing and budgetary control were developed in-house by individuals such as H.G. Jenkins and Roland Dunkerley.48 At BSA, the introduction of budgets does not appear to have been the result of any American influences, nor at Austin Motors, despite Herbert Austin’s intimate knowledge of American developments. In France, the motor vehicle manufacturers, Renault and Berliet, like Austin, also had a good knowledge of American developments. Despite earlier experiments, it was only after Louis Renault visited the US in 1911 that certain techniques of scientific management were introduced in a serious way. However, these did not extend to standard costing or budgeting.

  • 49 H. Zimnovitch, “Berliet, the Obstructed Manager: Too Clever, Too Soon?”, Accounting, Business & Fi (...)

20Although a significant factor militating against adoption of American ideas in France was the difference in language, this could be overcome by translations of American works into French. The main works of Taylor were so translated, and a French version of The Principles of Scientific Management was distributed widely by the French government during the First World War. Berliet even had a translation made for himself of the series of papers by Charter Harrison on standard costing published in the journal Industrial Management in 1918-19. Although Berliet was clearly interested in the technique, like others, however, he failed to introduce it in his company before the Second World War.49 Outside of the industrialists, certain individuals in France did try to encourage the use of new accounting methods. The most influential was Robert Satet, an academic, a member of the Taylor Society and a prolific writer of articles and books, who produced at least 57 works between 1926 and 1958, many of them on budgetary control.

21While some American consultants clearly came to Britain and France, and many European industrialists and engineers from these countries visited American companies to examine the latest business developments, it is far from clear that the introduction of standard costing and budgeting can be seen as simply a case of Americanisation. Archival research in France indicates that French industrialists and engineers did begin to develop techniques which, in many ways, were comparable to, or contained elements of, budgeting and standard costing. Though these probably owed something to American influences, there are sufficient differences to suggest that indigenous factors played a significant role. As French industrialists and engineers struggled to overcome new management problems in the late 1920s, they sought French solutions to French problems, largely independent of outside, especially American, influences. Hence, we find not only the ignoring of standard costing, but also the development of techniques which were close to, but did not exactly imitate, the American technique of budgeting. In Britain, archival research suggests possibly a somewhat closer link to what was happening in America. Standard costing was introduced before the Second World War, and budgeting was also developed from an early stage. In marked contrast to the supposed order of development in the US, however, save for one or two companies such as Hans Renold Ltd. and the Austin Motor Co., where the techniques were introduced largely alongside one another, most British firms implemented the use of budgeting before they adopted standard costing.

conclusion and epilogue

  • 50 D. Nelson, “Introduction”, in Nelson 1992: 1.
  • 51 D. Nelson, “Scientific Management in Retrospect”, in Nelson 1992: 16.

22The finding of key differences between not only the experiences of Britain and France, but also between these two countries and that of America, suggests that inter-war developments in budgeting and standard costing were not simply a case of Americanisation. This finding echoes somewhat that of Nelson who has argued, in relation to the diffusion of scientific management, that European countries developed their own indigenous movements which, while they “drew inspiration from the American pioneers...[they]...soon developed identifies of their own”.50 We would, however, in respect of standard costing and budgeting, point to certain differences. While a key role, in both Britain and France, was played by engineers and industrialists who had “some exposure to systematic management and were eager to realize the potential of the large and complex organizations they worked for or consulted”51, this linkage was not always a positive one. Different social and cultural factors in Britain and France influenced the response to similar economic and managerial problems. In both Britain and France, the introduction of budgeting in a meaningful way pre-dates that of standard costs, whereas in America, it appears to have been the other way around.

23In this chapter, we have presented results of archival research which throw doubt on the conventional view that British and French firms lagged behind their American counterparts in the adoption of standard costing and budgetary control during the first four decades of the Twentieth Century. Furthermore, it has been suggested that the British and French experiences to c. 1940 were not simply a case of Americanisation’, i.e. copying what America did, or in the way that America did it. Our results, however, should not be seen as necessarily negating the use of the term Americanisation’ to describe the process of adoption of advanced US management methods after 1950, though this has still to be investigated. The research reported in this chapter, however, does suggest that any post-1950 Americanisation’ may have been substantially different as between Britain and France. In Britain it might simply have been a case of reinforcing an already existing tendency to move towards the application of budgeting and standard costing. For France, however, Americanisation’ may have generated much more significant changes. Prima facie there is a case that, in matters of cost calculation, the pre-Second World War blockages that were established in France by the accounting profession and corporatist ideology were removed. The discourse was very much different after 1945. In books and articles, not forgetting the French accounting plan (plan comptable général), standard costs were presented in a more detailed and flattering light and, together with concepts such as direct costing, a term which the French did not even bother to translate, became more generally accepted. With the aid of consultants, a number of French firms, from the beginning of the 1950s, increasingly became aware of these methods and began to put them into place. In respect of budgetary control, the main change in France after 1950 appears to have been in the manner in which the technique was presented, and the functions which were assigned to it: it lost all its political connotations, and its raison d’être became centred on its usefulness, within a climate of renewed human relations inside firms, in which a new social group, the managerial staff, was invited to participate.

24It is clear that the nature of ‘Americanisation’ is somewhat enigmatic: it is difficult to define and its influence may have changed over time. In the context of a definition which sees it as the copying, by other countries, of American techniques with the help of American influences, it is only through further detailed archival research that we will get to learn more about the nature of this phenomenon, if, indeed, it really existed. Such research, however, will need to be carried out not only in countries such as France and Britain, but also crucially in America so that the development of managerial practices and techniques there can be better understood and thus provide us a with a valid yardstick against which to not only measure, but also to compare and contrast, developments in other countries.

***

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Boyns T., J.R. Edwards and M. Nikitin 1997. The Birth of industrial Accounting in France and Britain, New York and London, Garland Publishing.

Bourquin M. 1937. Méthodes modernes de répartition et de contrôle des frais généraux dans l’industrie, Paris, Dunod.

Cégos 1937. Une méthode uniforme de calcul desprix de revient. Pourquoi ? Comment ?, Paris, Cégos.

Chandler jr., A. D. 1977. The Visible Hand: The Managerial Revolution in American Business, Cambridge MA, Belknap Press.

Downie jr. T. 1927. The Mechanism of Standard (or Predetermined) Cost Accounting and Efficiency Records, London, Gee.

Ferguson M. 1999. “The Origin, Gestation and Evolution of Management Consultancy within Britain (1869-1965)”, unpublished Ph.D., Open University.

Fleischman R.K. 2000. “Completing the Triangle: Taylorism and the Paradigms”, Accounting, Auditing and Accountability journal, 13 (5), p. 597-623.

Fleischman R.K. and T.N. Tyson 1998. “The Evolution of Standard Costing in the UK and US: From Decision Making to Control”, Abacus, 34 (1), p. 92-118.

Fleming A.I.M., S. McKinstry and K. Wallace 2000. “Cost Accounting in the Shipbuilding, Engineering and Metals Industries of the West of Scotland, ‘The Workshop of the Empire’, c.1900-1960”, Accounting & Business Research, 30 (3), p. 195 211.

Holden P.E., L. S. Fish and H.L. Smith 1951. Top-Management Organization and Control, New York, McGraw-Hill.

HOST 1930. Conférence internationale du contrôle budgétaire, Geneva, HOST.

Johnson H.T. and R.S. Kaplan 1987. Relevance Lost, Boston, Harvard Business School.

Kipping M. 1996-7. “Management Consultancies in Germany, Britain and France, 1900-1900-60: An Evolutionary and Institutional Perspective”, University of Reading Discussion Papers in Economics and Management, Series A, vol. IX.

Kipping M. 1997. “Consultancies, Institutions and the Diffusion of Taylorism in Britain, Germany and France, 1920s to 1950s”, Business History, 39 (4), p. 67-83.

Kreis S. 1992. “The Diffusion of Scientific Management: The Bedaux Company in America and Britain, 1926-1945”, in D. Nelson (ed.), A Mental Revolution: Scientific Management Since Taylor, Columbus, Ohio State University Press, p. 156-174.

Kuisel R.F. 1993. Seducing the French: The Dilemma of Americanization, Berkeley, University of California Press.

Lawrence F.C. and E.N. Humphreys 1947. Marginal Costing, London, Macdonald & Evans.

Littler C.R. 1982. The Development of the Labour Process in Capitalist Societies, London, Heinemann Educational.

Marple R.P. 1939. “The Place of Internal Auditing in Industrial Companies” NACA Bulletin, XX (19), p. 1298-1297.

McKillop M. and A.D. McKillop 1917. Efficiency Methods: An Introduction to Scientific Management, London, Routledge.

Merkle J. A. 1980. Management and Ideology, California, University of California Press.

Moffatt D.M. 1922. “Costing”, Accountant, 16 September, p. 401-404.

Nelson D. 1992. (ed.), A Mental Revolution: Scientific Management since Taylor, Columbus, Ohio State University Press.

NICB 1931. Budgetary Control in Manufacturing Industry, New York, National Industrial Conference Board Inc.

Ponthiere M. 1934. “Le budget et le contrôle”, L’Organisation, October.

Quail J.M. 1997. “More Peculiarities of the British: Budgetary Control in US and UK Businesses to 1939”, Business and Economic History, 26 (2), p. 617-631.

Reitell C. and J. -P. Lugrin 1936. “Le contrôle des frais d’exploitation par la méthode des taux standards et du budget variable”, Bulletin du Comité National Belge de l’Organisation Scientifique, October, p. 265-275.

Renold H. 1913-14. “Engineering Workshop Organisation”, Proceedings, Manchester Association of Engineers, Discussion session, p. 21-57.

Satet R. 1936. Le contrôle budgétaire, Paris, Dunod.

Satet R. and J.J. Quaglioni 1927. La méthode ‘auto-contrôle’, Paris, CNOF.

Scott-Maxwell J. M. 1920. “Scientific Management: A Solution of the Capital and Labour Problem”, Journal of the Institution of Electrical Engineers, 58 (291), p. 329-376.

Sowell E. M. 1973. The Evolution of the Theories and Techniques of Standard Costs, Alabama, University of Alabama Press.

Willsmore A.W. 1932. Business Budgets and Budgetary Control, London, Pitman.

Zimnovitch H. 2001. “Berliet, the Obstructed Manager: Too Clever, Too Soon?”, Accounting, Business and Financial History, 11 (1), p. 43-58.

Notes

1 We gratefully acknowledge financial assistance from the Centre for Business Performance of the Institute of Chartered Accountants for England and Wales (grant ref. no. 29-5-393) and of the Economic and Social Research Council (grant ref. R000237946). We are also indebted to Dick Edwards, Nick Tiratsoo, Terry Gourvish and Matthias Kipping, for their helpful comments and suggestions on the original draft of this chapter.

2 ‘Budgeting’ is used here to cover the whole range of possible uses of budgets, extending from simple estimates of future expenditure to the development of more formalised Systems for realising management’s responsibilities for planning, co-ordination and control.

3 E.M. Sowell, The Evolution of the Theories and Techniques of Standard Costs, Alabama, University of Alabama Press, 1973; A.D. Chandler, jr., The Visible Hand: The Managerial Revolution in American Business, Cambridge MA, Belknap Press, 1977; H.T. Johnson and R.S. Kaplan, Relevance Lost, Boston, Harvard Business School, 1987.

4 See Chapter Twelve, below.

5 See Chapter Thirteen, below.

6 For details of companies known to have used budgetary control, see N. Berland and T. Boyns, “The Development of Budgetary Control in France and Britain from the 1920s to the 1960s: A Comparison”, European Accounting Review, forthcoming. Details of British companies using standard costing can be obtained from Trevor Boyns.

7 Chandler 1977.

8 J.M. Quail, “More Peculiarities of the British: Budgetary Control in US and UK Businesses to 1939”, Business and Economic History, 26 (2), 1997, p. 617-631.

9 In the US context it has been argued that consultants were the main proponents of standard costing (R.K. Fleischman and T.N. Tyson, “The Evolution of Standard Costing in the UK and US: From Decision Making to Control”, Abacus, 34 (1), 1998, p. 113).

10 R. Satet, Le contrôle budgétaire, Paris, Dunod, 1936.

11 F.C. Lawrence and E.N. Humphreys, Marginal Costing, London, Macdonald & Evans, 1947.

12 M. McKillop and A.D. McKlllop, Efficiency Methods: An Introduction to Scientific Management, London, Routledge, 1917, p. 15.

13 T. Boyns, J. R. Edwards and M. Nikitin, The Birth of Industrial Accounting in France and Britain, New York and London, Garland Publishing, 1997, p. 196.

14 T. Downie jr., The Mechanism of Standard (or Predetermined) Cost Accounting and Efficiency Records, London, Gee, 1927.

15 A.W. Willsmore, Business Budgets and Budgetary Control, London, Pitman, 1932.

16 T. Boyns and H. Zimnovitch, “L’influence de la profession comptable sur les méthodes de cout en Grande-Bretagne et en France”, in Y. Lemarchand and C. McWatters (eds.), Mer, navires et gestion, une histoire en chantier ; Nantes, AFC, 2001.

17 Cégos, Une méthode uniforme de calcul des prix de revient. Pourquoi ? Comment ?, Paris, Cégos, 1937.

18 A. Berran,La gestion méthodique des entreprises, Paris, La comptabilité et les affaires, 1926.

19 R. Satet and J.J. Quaglioni, La méthode ‘auto-contrôle’, Paris, CNOF, 1927.

20 HOST, Conférence internationale du contrôle budgétaire, Geneva, HOST, 1930.

21 C. Reitell and J. -P. Lugrin, “Le contrôle des frais d’exploitation par la méthode des taux standards et du budget variable, Bulletin du Comité National Belge de l'Organisation Scientifique October 1936, p. 265-275.

22 M. Ponthière, “Le budget et le contrôle”, L’Organisation, October 1934.

23 M. Bourquin, Méthodes modernes de répartition et de contrôle des frais généraux dans l’industrie, Paris Dunod, 1937.

24 McKillop and McKillop 1917:2.

25 J.A. Merkle, Management and Ideology, California, University of California Press, 1980 p. 136-171

26 Lawrence and Humphreys 1947:34-35.

27 Merkle 1980:147.

28 Merkle 1980:226.

29 McKillop and McKillop 1917:19.

30 C.R. Littler, The Development of the Labour Process in Capitalist Societies, London, Heinemann, 1982, p. 95.

31 R.K. Fleischman, “Completing the Triangle: Taylorism and the Paradigms”, Accounting, Auditing and Accountability journal 13 (5), 2000, p.615.

32 A.I.M. Fleming, S. McKinstry and K. Wallace, “Cost Accounting in the Shipbuilding, Engineering and Metals Industries of the West of Scotland, ‘The Workshop of the Empire’, c.1900-1960”, Accounting & Business Research, 30 (3), 2000, p.195-211.

33 J.M. Scott-Maxwell, “Scientific Management: A Solution of the Capital and Labour Problem”, journal of the Institution of Electrical Engineers, 58 (291), 1920, p.373.

34 D.M. Moffatt, “Costing”, Accountant, 16 September 1922, p.401.

35 R.F. Kuisel, Seducing the French: The Dilemma of Americanization, Berkeley, University of California Press, 1993.

36 M. Kipping, “Management Consultancies in Germany, Britain and France, 1900-60: An Evolutionary and Institutional Perspective”, University of Reading Discussion papers in Economics and Management, Series A, IX, 1996-7; M. Kipping, “Consultancies, Institutions and the Diffusion of Taylorism in Britain, Germany and France, 1920s to 1950s” Business History, 39 (4), 1997, p.67-83.

37 Kipping 1997: 69.

38 Kipping 1996: 17.

39 Kipping 1997 : 72.

40 M. Ferguson, “The Origin, Gestation and Evolution of Management Consultancy within Britain (1869-1965)”, unpublished Ph.D., Open University, 1999.

41 Urwick, who had succeeded Albert Thomas as director of the IMI in September 1928, joined together with John Leslie Orr, a former employee of British Bedaux, following the closure of the IMI in December 1933.

42 Ferguson 1999:116.

43 S. Kreis, “The Diffusion of Scientific Management: The Bedaux Company in America and Britain, 1926-1945”, in D. NELSON (ed.), A Mental Revolution: Scientific Management Since Taylor; Columbus, Ohio State University Press, 1992, p.l56-174.

44 Kreis 1992:157.

45 Kipping 1997: 75.

46 Kreis, 1992: 157. The consultancy was renamed Associated Industrial Consultants in the late 1930s.

47 N. Berland, “The Availability of Information and the Accumulation of Experience as Motors for the Diffusion of Budgetary Control: the French Experience from the 1920s to the 1960s”, Accounting, Business & Financial History, 8 (3), 1998, p.303-329.

48 The development of the techniques in-house reflects Hans’s preference for lasting gains which he felt would not result from the use of ‘professional business organisers’ who came in, made quick assessments, suggested changes and then left (H. Renold, “Engineering Workshop Organisation”, Proceedings, Manchester Association of Engineers, Discussion Session, 1913-14, p. 21). Even so there were undoubtedly American influences here: Hans visited America regularly from 1891; Charles graduated with a masters degree in engineering from Cornell University; and the company had close contacts with Link Belt, an early pioneer of Taylorism in the US.

49 H. Zimnovitch, “Berliet, the Obstructed Manager: Too Clever, Too Soon?”, Accounting, Business & Financial History, 11 (1), 2001, p.43-58.

50 D. Nelson, “Introduction”, in Nelson 1992: 1.

51 D. Nelson, “Scientific Management in Retrospect”, in Nelson 1992: 16.

Table des illustrations

Titre Table 1 - Sample Questionnaire Surveys, U.S.A., 1930-40
Légende Notes1. NICB, Budgetary Control in Manufacturing Industry, New York, National Industrial Conference Board, 1931.2. R.P. Marple, “The Place of Internal Auditing in Industrial Companies”, NACA Bulletin XX (19), 1939, p. 1298-1297.3. P.E. Holden, L.S. Fish and H.L. Smith,Top-Management Organization and Control, New York, McGraw-Hill, 1951. The 31 sample firms ranged in size from 5,000 to 70,000 employees.4. Only one in eight firms had a complete System of budgets.5. Only 25.6 per cent of the sample had complete budgetary
URL http://books.openedition.org/irhis/docannexe/image/1951/img-1.jpg
Fichier image/, 31k
Titre Table 2 – Comparison of actual and estimated numbers of British and French firms using budgeting and standard costing, c.1935
Légende Notes+ Indicates a minimum figure based on examples found to date. ? A suggested figure since there is no reliable estimate of the number of large firms in Francec.1935.
URL http://books.openedition.org/irhis/docannexe/image/1951/img-2.jpg
Fichier image/, 25k

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