Lean Management and Management Accounting System: An Actor-Network Conceptualisation

Abstract

Lean management is a philosophy that seeks the continuous improvement and meeting customer demands, through the elimination of any and all types of wastes. Initially rooted in Toyota corporation’s production system, lean management has rapidly spread to various manufacturing and non-manufacturing sectors. Yet, even with such spread of lean management implementation, our understanding of the developments in organisations’ management accounting system (MAS) in the context of lean is still ambiguous. The available literature either from the academic or the consultancy domain problematises the traditional accounting system to work with lean management and suggest either shedding traditional accounting practices at all or using ‘lean accounting’ as a ‘lean-tailored’ accounting system. However, neither the academic nor the consultancy literature succeed in developing an overall theoretical conceptualisation of how an organisation’s MAS works with lean. Nor do they provide an in-depth investigation of the role played by the main lean accounting practice; Value Stream Costing (VSC) and the factors affecting its acceptance or rejection. Additionally, management accounting literature has not contributed much to our academic knowledge on the MAS associated with lean management as a form of horizontal organisation and process innovation. Hence, this research aims at developing a theoretical conceptualisation of the developments in organisations’ management accounting system (MAS) in the context of lean management. Additionally, the research seeks to investigate the performative role of the lean accounting VSC practice and explore the factors affecting managers’ willingness to accept or reject its implementation.A longitudinal case study informed by the use Actor Network Theory (ANT) and Michel Callon’s (2007, 2010) performativity thesis, is conducted on one of the factories of a multinational manufacturing organisation, adopting a lean management system. ANT’s elements of the ‘sociology of translation’ (Callon, 1986; Latour, 1986; Latour, 2005) are used first to develop a literature driven conceptualisation of the current discourse in both consultancy and academic literatures on the MAS associated with lean. Empirically, various human and non-human actors are identified at both the organisation’s local and global levels. Callon’s (1986) and Latour’s (1986, 1996) four moments of translation are used to interpret actors’ interactions making up the developments in organisation’s MAS. Callon’s (1998a) concepts of framing and overflow and performativity thesis (Callon, 2007, 2010) are then used to develop an empirical driven theoretical conceptualisation of the developments in organisation’s MAS in the context of lean. The research tested the performativity of VSC by tracing its effects on product cost and analysed if, or to what extent, the organisation is willing to implement it. The research contributes to both academics and practitioners through providing new nuances on the operation and developments in organisation’s MAS and practices in the context of lean. It also, responds to calls from both management accounting and lean management literatures to the develop more context related management accounting research and provide in depth empirical analysis on the management accounting practices relevant to lean management. The use of ANT unpacked new insights on the social and technical aspects of the developments in an organisation’s MAS in the context of lean. Such aspects include; the influential role of management accountants and consultants in lean organisations, the performative role of operating structures in lean settings and the association between the performativity of accounting calculations and management accounting relational ontology. The literature driven theoretical conceptualisation shows that, more research is needed on actors’ interactions forming the fabrics of organisations’ MAS and how its calculations interact with other actors in a process innovation such as lean. In terms of VSC, the practice performed in an opposite direction to the predictions made for it. In the case study conducted, VSC was mobilised by the factory layout and intentions of the organisation actors; both locally and globally, which may have distorted the expectations from its implementation. Additionally, it was found that committing to a lean accounting tool as VSC can be difficult in the context of headquarters’ pressures and political unrest. Successful VSC implementation, requires organisations to review their needs for product unit costs along with, the construction pattern of their value streams. It is suggested that more case study research is required at the intersection between both MAS and lean management research areas, to help expand academics’ and practitioners’ understanding of the operation and development in the MAS’s of companies implementing a lean management system. Additionally, it would be helpful to provide more empirical evidence on the conditions needed for VSC implementation and continue to explore the role played by other management accounting or lean accounting practices in lean organisations. This strand of literature is still evolving and lacks codification.