The transfer of management accounting practices from London counting houses to the British North American fur trade

Abstract

During the late eighteenth and early nineteenth centuries management accounting practices were transferred from London counting houses to the British North American fur trade. This transfer involved a set of practices that was more effective for implementing the strategy being pursued at the time than the set used with the previous strategy. London counting houses had developed management accounting practices to facilitate their backward integration strategies with America and the West Indies. Pivotal to this development was the requirement for sub-unit accountability and responsibility.

Keywords:

• Management accounting
• technology transfer
• Hudson's Bay Company
• counting houses

Acknowledgements

The authors thank the reviewers for insightful and helpful comments and suggestions. They also thank the participants at the ABFH annual conference, Cardiff, 2003 and at the Ninth World Congress of Accounting Historians, Melbourne, 2002 for comments on earlier versions of this paper. Sandra Lang, Shuang Yu and Karen Wong provided excellent research assistance.

Notes

1. Verbatim transcriptions of primary reports and formal minutes will be noted by ‘transcribed by’. These transcriptions are essentially primary evidence. The only alteration is the transition from handwriting to print.

2. Cobb et al. (1995) extended the Innes and Mitchell (1990) management accounting change model by adding three variable: ‘leaders’, ‘momentum for change’, and ‘barriers to change’. For the HBC, we found leaders to be included in facilitators, and placed ‘momentum for change’ with the catalysts. We considered barriers to change to be implied by Innes and Mitchell.

3. Fleming (1932) assessed a large number of original documents form the following archives: Canadian Archives; Ontario Historical Society, Toronto Public Reference Library, Buffalo Historical Society, and New York Historical Society.

4. Establishing a London-based counting house by a North American trader was not unique to one company. In 1771, Joshua Johnson established for himself and his Annapolis-domiciled partners, Messrs Wallace and Davison, the London counting house of Wallace, Davison and Johnson in the hope of going behind their previous London merchants to buy from their suppliers, or to buy directly from manufacturers on better terms (Price, 1973, p. 155; 1979, p. xiii).

5. Jones and Ville (1996, p. 912) concluded that: ‘The contention that chartered trading companies represented the optimal organization from for conducting long distance-trade in the seventeenth and eighteenth centuries [i.e., the Carlos and Nicholas (1988) hypothesis] does not stand up to scrutinty.’ Carlos and Nicholas used transaction cost economics – management accounting use increases with asset specificity and uncertainty – is supported by HBC findings (Spraakman & Davidson, 1998; Spraakman, 1999).