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A portfolio approach to develop a theory of future management accounting systems

Erkki K. Laitinen (Department of Accounting and Business Finance, University of Vaasa, Vaasa, Finland)

EuroMed Journal of Business

ISSN: 1450-2194

Article publication date: 16 May 2008




The paper seeks to introduce a method based on the Markowitz mean‐variance portfolio approach to outline a theory of future firm, its environment, and management accounting systems (MASs). The approach is based on the target to choose propositions for the theory to maximise expected credibility.


A conceptual approach with mathematical modelling is presented. It is illustrated by a set propositions extracted from a survey presented previously. The survey results are used to design a theory of future MASs by choosing an efficient sub‐set of propositions with the help of combinatory optimisation.


When maximising the credibility of a theory of future MAS, the trade‐off between the mean and the variance of expert judgments should be considered. The resulting theory depends on the level for disagreement aversion by the theory builder. The approach is a useful tool to design a theory of future MASs.

Research limitations/implications

How to select the level of trade‐off between the mean and the variance of judgments should be analysed further. The methods to design propositions for a theory should be researched in more detail. Possible instrumentation and response biases should be assessed.

Practical implications

This approach provides a practical method to analyse judgments to form a consistent set (portfolio) of propositions. It can be applied to any theory building where propositions cannot be tested (such as in futures research) but only assessed by experts.


The paper includes a new approach for researchers, consultants, and teachers to form a theory of future phenomena such as future MASs.



Laitinen, E.K. (2008), "A portfolio approach to develop a theory of future management accounting systems", EuroMed Journal of Business, Vol. 3 No. 1, pp. 23-37.



Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

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