Correspondence Analysis-Theory and Application in Management Accounting Research

Correspondence analysis is an explanatory data analytic technique and is used to identify systematic relations between categorical variables. It is related to principal component analysis and the results provide information on the structure of categorical variables similar to the results given by a principal component analysis in case of metric variables. Classical correspondence analysis is designed two-dimensional, whereas multiple correspondence analysis is an extension to more than two variables.

After an introductory overview of the idea and the implementation in standard software packages (PASW, SAS, R) an example in recent research is presented, which deals with strategic management accounting in family and non-family enterprises in Austria, where 70% to 80% of all enterprises can be classified as family firms. Although there is a growing body of literature focusing on various management issues in family firms, so far the state of the art of strategic management accounting in family firms is an empirically under-researched subject. In relevant literature only the (empirically untested) hypothesis can be found, that family firms tend to have less formalized management accounting systems than non-family enterprises. Creating a correspondence analysis will help to identify the underlying structure, which is responsible for differences in strategic management accounting.