Accounting for war risk costs: management accounting change at Guinness during the First World War

This paper explores management accounting change at the St. James's Gate Brewery of Arthur Guinness & Sons Ltd brought about by the effects of the First World War (WWI). In particular, how additional war risk costs were accounted for internally is revealed. Using organisational 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 WWI 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. the war). Thus, change and stability went hand in hand. Although change did occur, it was moderate and more adaptive, which signifies that existing accounting routines were strong and adaptable to major drivers of change such as WWI.