Reviewed by Hideki Murai Nihon University

This book is unique in that it contains abundant quotations from Foucault’s philosophy. Accordingly, it may be classified as belonging to the critical school of accounting as found most prominently in the U.K. The reader, however, may find this approach to understanding Japanese management accounting a bitter pill to swallow. Okano, honored by the Japanese Institute of Certified Public Accountants in 1996, first aims to identify the fundamental characteristics of the Japanese management system; e.g., TQC (Total Quality Control), JIT (Just-In-Time) and CIM (Computer-Integrated Manufacturing). Second, he intends to construct that management accounting system in light of global standards and social theory. He has divided the study into two parts: an historical approach to management accounting (chapters 1-4) and a structural analysis of Japanese management accounting (chapters 5-7).

In his introduction, Okano develops his fundamental idea that the gap between theory and practice should be overcome by building “management accounting as a social theory” (MAST). Chapter 1 outlines his basic premise that a strict chronology of accounting history is not desirable. Instead, accounting should be examined against the social, economic, and cultural backgrounds prevailing at the time. As well, the relation of theory and practice in management accounting history is continuous, and change should be sought after synthetically (chapter 2). Chapter 3 covers Foucault’s theory as a background for subsequent discussion. In chapter 4 Okano maintains that Emerson’s standard costing theory needs to be reexamined as analyses of it have been not adequate from the standpoint of MAST.

In the second part of the book, Okano discusses whether Japanese management accounting can exist irrespective of such superficial management techniques as TQC, “kaizen,” etc. In chapters 6 and 7, he reviews the development of target costing (TC) at Toyota Motors. Born from value-added and value-engineering philosophy, TC became the overall management technique there. An emphasis is laid on the integrated target costing method through absorption of cost information from suppliers’ records, especially in the automobile industry. We know that almost 70% of manufacturing costs are the value of goods delivered from suppliers and to check their prices is vital in the automobile industry. The final chapter concludes, in only four pages, that the study of management accounting needs ongoing dialogue between theory and practice.

In short, we wish to congratulate the author on the birth of this epoch-making study on Japanese management accounting. Despite his passionate efforts to build a theoretical structure in this field, we regret to say that the integration of Foucault’s philosophy and Okano’s accounting theory seems unattainable. For example, how can the author explain the essential character of target costing from his own viewpoint? We expect Okano will expand and clarify his understanding of MAST in the future. C.A. Sprague published his Philosophy of Accounts in 1907, and H. Okano made public his philosophy of management accounting in Japan 88 years later.