Accounting for war risk costs: management accounting change at Guinness during World War 1.

This paper explores management accounting change at the St. James’s Gate Brewery of Arthur Guinness & Sons Ltd brought about by the effects of World War 1 (WW1). In particular, how additional war risk costs were accounted for internally is revealed. Using organizational routines as a theoretical backdrop, new management accounting practices are interpreted. These new practices allocated war risk costs incurred by head office (in Dublin) to other parts of the company. The key role of existing management accounting routines in the formation of new routines is also revealed. Although WW1 was an exogenous driver of change, endogenous change also featured as existing practices guided the creation/adaptation of routines. In essence, accountants within the Guinness Company drew upon their existing knowledge to deal with a new and complex scenario (i.e. WW1). Thus, change and stability went hand-in-hand. Although change did occur, it was moderate and more adaptive, which signifies existing accounting routines were strong and adaptable to major drivers of change such as WW1.