The fall of management accounting: The NIRA and the homogenization of cost practices in the U.S.

This paper explores the impact of societal trends on cost practices, and the management techniques used to support business structures, within the United States. Specifically, the influence of the National Industrial Recovery Act [NIRA] on the development of the costing and pricing policies is explored from the perspective of social rule system theory. The premise of the paper is that the NIRA, as enforced through the symbol of the "Blue Eagle" displaced the free market economy in the United States. This resulted in a pseudo-competitive market structure where full cost recovery and the earning of a fair and reasonable profit became the basis for market pricing and business management. The displacement of the competitive market by the NIRA is argued to account for the apparent loss of relevance in modern costing theory and practice during the mid- to latter part of the twentieth century. It is also contended that these practices may have enhanced the shocks to the U.S. economic associated with the global marketplace. The paper concludes by suggesting that relevant management accounting theory has to be reconstructed within a competitive market framework that reflects key drivers of competitive advantage.