Management Accounting Innovations Research Articles

Determinants and impact of strategy-driven manufacturing accounting techniques on organisational competitiveness: a structural equation modelling approach

Purpose This study aims to investigate contextual factors affecting the deployment of strategy-driven manufacturing accounting techniques (SMAT), as well as the impact of SMAT usage on organisational competitiveness. Seven major SMAT were investigated, namely, benchmarking, integrated performance measurement, environmental management accounting, strategic costing, strategic pricing, strategic investment and life cycle costing. Design/methodology/approach By using multi-informant strategy, structured questionnaire was used to gather survey data from 129 senior accounting, finance and production personnel of publicly quoted manufacturing companies in Nigeria. Data was analysed using structural equation modelling and propensity score matching. Findings Result shows that the usage rate of the SMAT is generally moderate. Market orientation and deliberate strategy formulation are notable determinants of SMAT usage. The inability of competition intensity and perceived environmental uncertainty to notably affect SMAT usage suggests that external environmental pressure to use SMAT is weak. Practical implications Although the impact of SMAT usage on organisational competitiveness is positive and statistically significant, it is conceivable that the impact of SMAT could have been more assuming SMAT recorded extensive usage. Thus, the lack of competitiveness of manufacturing companies in Nigeria may not be unconnected to the superficial usage of SMAT. Originality/value The study contributes to knowledge in three ways. First, it extends studies on the contingency theory that contextual factors influence the adoption of management accounting innovations. Second, it exposes the contextual factors affecting the adoption of SMAT in a developing country. Third, it provides evidence on the value relevance of management accounting innovation in enhancing organisational competitiveness.

A review of U.S. management accounting evolution: Investigating shifts in tools and methodologies in light of national business dynamics

This study provides a comprehensive analysis of the evolution of management accounting in the United States, focusing on the shifts in tools, methodologies, and the influence of national business dynamics. The primary objective was to understand how management accounting practices have adapted to technological advancements, economic changes, and regulatory developments. Utilizing a systematic literature review process, the study involved identifying relevant literature through databases like Scopus, Web of Science, and Google Scholar, employing keywords related to management accounting evolution. The selection of sources was based on predefined inclusion and exclusion criteria, emphasizing relevance, quality, and methodological rigor. Content and thematic analysis was used to interpret findings from the qualitative data. Key findings revealed a significant evolution from traditional cost accounting methods to strategic, data-driven approaches, influenced by technological advancements and changing business environments. The study identified a shift towards integrated, predictive, and data-driven management accounting practices, with a growing focus on sustainability and digitalization. The impact of technological, economic, and regulatory factors was found to be profound, necessitating continuous adaptation in management accounting practices. The study concludes that management accounting in the U.S. is highly dynamic, responding effectively to technological and economic changes. Recommendations for future research and practice include embracing technological advancements, adapting to economic and regulatory changes, focusing on sustainability, enhancing education and training, and encouraging collaborative research. This study underscores the necessity for ongoing adaptation and innovation in management accounting to maintain relevance in a rapidly evolving business landscape.

Does Management Accounting Lose Relevance Again? Supply-Chain Perspective

The purpose of this paper is to explore how supply chain has pose new challenges for management accounting regarding costing and performance measurement issues and whether management accounting contend with these challenges. The development of management accounting and how it regained its relevance will be discussed in general. Then, the new challenges rose as a result of the introduction to the notion of supply-chain in the areas of costing and performance measurement will be clarified. Although current management accounting practices are perceived by many researchers as useful in the context of supply chain, the new challenges rose by supply chain have now propelled the management accounting researchers to realise a “condition for possibility” for revisiting the “relevance lost” thesis and its post-relevance-lost era in which a number of management accounting innovations have been introduced. The major contribution of this paper is that it paves the way for researchers to commence in re-testing the ideas embodied in management accounting and its relevancy to supply-chain context.

Study on The Role of Management Accounting in The Implementation of A Two-Cycle Strategy

This paper will give full play to the role of management accounting innovation in the internal circulation of investment, services, finance and science and technology under the double-cycle development pattern, so as to promote the internal circulation of China's economy and finally realize the domestic and international double-cycle. Management accounting under the double-loop strategy needs to be continuously practiced and theoretically summarized and improved before a new management accounting theoretical system can be truly formed to adapt to the new development pattern, to the digital economy and to the actual development of Chinese enterprises.

The diffusion of management fashions as software in an intermediated market: The case of continuous accounting

Increasingly, management techniques and trends in accounting are incorporated into software. Continuous accounting, understood as the automated processing of firms’ accounting records to deliver real-time financial information, can be seen as a contemporary illustration of a shared belief that newly developed software stand at the forefront of progress in accounting. While such technologies are usually pictured as promising, the dynamics underlying their diffusion among accounting firms have drawn limited scholarly interest so far. Consequently, this paper sets out to explore how management fashions diffuse when they are embedded into software from the outset and sold on intermediated markets where resellers shape the interactions between fashion setters and fashion users. While extant literature on management fashions has mostly investigated cases where innovators actively promote new management concepts and ideas towards fashion users, the paper unveils the crucial role played by market intermediaries in the selection, processing, and dissemination of innovations sold as software. A revised framework of management fashion setting in intermediated markets is developed, which simultaneously contributes to the literature on management accounting innovations embedded into software and to the management fashion theory by highlighting how market intermediaries strive to maintain control over the diffusion of innovations.

Challenges of implementing management accounting innovations: Evidence from the field

This study investigates the challenges of implementing innovative management accounting techniques, referred to as strategic management accounting (SMA), the interrelationship among the challenges and the impact of the challenges on SMA usage intensity. From the analysis of survey data obtained from listed manufacturing companies in Nigeria, the result supports the conclusion that SMA implementation challenges are interrelated. However, lack of top management support and low awareness/lack of knowledge are contributory to most of the implementation challenges. The challenges discouraging the intensive use of SMA are the perception that SMA implementation is unnecessary as strategy issues are already integrated in other functions within the organization, high implementation cost and problems relating to information flow between departments within the organization. The current study contributes to knowledge in the sense that it is the first (to the researchers’ knowledge) to examine specifically the interrelationship among SMA implementation challenges in the Nigerian context, thereby drawing attention to the need to consider the challenges to embracing management accounting innovations holistically. Knowledge of SMA implementation challenges could help explain the low adoption rate of SMA in developing countries. Such knowledge might be helpful in providing a robust response to the challenges of implementing management accounting innovations.

Non-IFRS and changes in accounting institutions – Lessons from Nokia

We analyse the lessons learned from Nokia to illustrate the changing focus in accounting and organisational practices that affect the perceptions of relevant accounting work and the key measures of success. In the course of an analysis covering 25 years, the introduction of management accounting innovations was first emphasised regarding managerial relevance but were later replaced by financial accounting emphasis and innovations (e.g. non-IFRS reporting). Our data includes public reports, newspaper articles and 21 interviews made between 1996 and 2019. We present a framework for analysing shifts in the focus of accounting. Our case analysis on changing accounting practices, on shifting perceptions of relevance and reliability, and on primary measures of success, contributes to understanding the focus of key accounting measures in historical developments regarding perceived success or failure, and in changing institutional practices in terms of ‘institutional work’, especially through valourizing either the actions or valourizing reports.

Evolution and Development Prospects of Management Accounting in the Digital Economy and Digital Business Transformation

Relevance. Modern information technologies by virtue of their key characteristics such as simplicity, speed, scale, are becoming the basis for innovations in management strategies and management accounting, which are crucial for the success. Those who are responsible for the decision-making process should create the basis for the development of the digital economy today in order to ensure the economic growth of the country, as well as to improve the standard of living of the population. Goal. The main purpose of this article is to formulate recommendations for the transformation of management accounting in the digital economy.Objectives. The main objectives of the research are: (1) to study conceptual approaches to the digital economy and Industry 4.0; (2) to study the impact of Industry 4.0 and the digital economy on management accounting, including the proposal of possible solutions; (3) to consider the role of management accounting and the role of the accountant for management accounting in the digital economy; (4) to study cost management in digital economy and (5) forecast of the main trends in the development of management accounting.Methodology. The theoretical basis of the research is based on the ideas of the work and everyday interaction of societies, companies and governments of different countries. The following principles were specified from the mentioned goals: employees should have a certain level of digital competence; production processes become more flexible and efficient, which contributes to obtaining high-quality products at a low price; to promote digitalization, it is necessary to encourage and stimulate private investment by the state; to create an environment for cross-sectoral and cross-border cooperation, free from crime, and others.Conclusions. In the course of working on this article, we achieved to find the key to issues of real interest to the business and academic environment in order to stimulate the adoption of new challenges related to the introduction of innovative technologies and open new research areas. The involvement of various specialists, regardless of their geographical origin, contributes to the expansion of knowledge about the digital economy, the fourth industrial wave and the evolving trends of management accounting. As a result of our research, we also identified areas for further research.

Contextual factors moderating the impact of strategic management accounting on competitive advantage

PurposeThis study investigates the influence of six interrelated contextual factors, namely organisational structure, quality of information technology, business strategy in terms of deliberate strategy-formulation, market orientation, market competition and perceived environmental uncertainty (PEU), on the usage intensity of innovative management accounting techniques commonly referred to as strategic management accounting (SMA); the impact of SMA usage on competitive advantage; and the moderating influence of the contextual factors on the relationship between SMA usage and competitive advantage.Design/methodology/approachSurvey data were obtained through a structured questionnaire from publicly listed manufacturing companies on the main board of the Nigerian Stock Exchange (NSE). Ordinary least squares (OLS) regression and moderated regression were used to analyse data. Both exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) were used to examine the validity and reliability of variables as first and second order of analysis. Structural equation modelling (SEM) (maximum likelihood estimation method) was applied to assess the robustness of result.FindingsMarket orientation and deliberate strategy-formulation emerged as significant determinants of SMA usage intensity. Although there is a significant relationship between SMA usage and competitive advantage, the strength of the relationship is moderate. Organisational structure, deliberate strategy-formulation and PEU significantly moderate the relationship between SMA usage and competitive advantage.Research limitations/implicationsThe emergence of deliberate strategy-formulation, as both a significant predictor of SMA usage intensity and as the strongest moderator of the relationship between SMA usage and competitive advantage, establish that it is organisations that take a proactive approach to strategy issues that may derive the most benefit from SMA utilisation.Practical implicationsThe result from this study brings to fore the need to involve management accountants in strategy-formulation and implementation in order to leverage their competence in deploying SMA techniques to enhance organisational competitiveness.Originality/valueThe current study is the first, to the researcher's knowledge, to specifically examine interrelated contextual factors distinctively affecting SMA usage and organisational competitiveness in a developing country. Whilst these six factors have been stressed as important determinants of the adoption of innovative management accounting techniques, the study provides empirical evidence on the extent to which they exert on SMA. The study presents empirical evidence on the relevance of market orientation—a construct which has surprisingly received little research attention in management accounting literature—as a variable which could affect the adoption of management accounting innovation.

Incorporating Tax into Finance Executives’ Compensation Plan: Does It Benefit or Hurt Innovations in Management Accounting?

Incorporating Tax into Finance Executives’ Compensation Plan: Does It Benefit or Hurt Innovations in Management Accounting?

The implementation of activity-based costing by a local government: an actor-network theory and trial of strength perspective

PurposeSome public sector organizations have decided to implement activity-based costing (ABC), a new cost calculation device and management accounting innovation initially designed for the private sector. The purpose of this study is to better understand the translation of this new calculation device in the context of a local government and to identify the trials of strength that actors faced during the implementation.Design/methodology/approachBuilding on actor-network theory and the concept of “trial of strength,” this study examines how a major change in a large local government’s structure, the merger of several cities, led to the adoption of ABC. This case study provides a setting for conducting a longitudinal analysis of the translation of a cost management innovation, ABC, in a public sector organization.FindingsThis study highlights how human and non-human actors interact when implementing a management accounting innovation in a local government and the trials of strength that they face. It also shows that although ABC helped the local government deal with issues such as setting fees, assessing outsourcing opportunities, increasing accountability and improving processes, the oversophistication of the technology used to implement the ABC model and the lack of links between the costing device and the budgeting process provoked a struggle among these two networks, leading actors to choose the budget over ABC.Originality/valueThis study’s findings extend the work on trials of strength of Christensen et al. (2019) and Laguecir et al. (2020). While those two studies focused on the struggles existing between opposing networks of human actors regarding the strategic orientation or the mission of public sector organizations, this study highlights that trials of strength may also occur when actors agree on the objectives of the new accounting innovation but not on how it is implemented.

The unfolding rationales surrounding management accounting innovations: a balanced scorecard case

PurposeThe Balanced Scorecard (BSC) possesses an inherent duality, as it has been described as a carrier of institutions (i.e. the BSC is a “management ideology” or “mode of thinking”) and a flexibly interpretive boundary object at the same time. This study examines how this inherent duality of the BSC may influence the unfolding rationales surrounding its implementation and use.Design/methodology/approachEmpirical support for this investigation is gathered from an in-depth field study. The focal firm is a Brazilian electricity distribution company that transitioned from state to private ownership under hyper-regulation, and whose holding company experienced strategic and structural changes.FindingsThe study identified a misalignment between the characteristics of the firm (e.g. organizational logics) and the perceived BSC features. This misalignment initially produced tensions and institutional logics complexity for the organization forcing the BSC implementers to rationalize it to provide meaning regarding its implementation in the firm. The findings also show why and how the promoters of the BSC conducted its “strategy of translation” in order to disentangle and reassemble both the material and symbolic components of the BSC to facilitate its implementation and use. It was found that promoters of the BSC engaged in contextualization work, which featured two main actions: a combination of coupling and selective decoupling and a change of meaning.Originality/valueThis paper advances current understanding of the process of the unfolding rationales surrounding management accounting innovations (e.g. the BSC). The study shows that the BSC unfolds in more complex, time-related and simultaneous ways than has previously been reported in the literature. Moreover, the paper contributes by explaining how the management's rationales, relating to their historical understanding, perception of legitimation needs and social skills, contributed to the continuous unfolding of the BSC. In addition, four potentially interesting areas for further research were identified.

The Role of Organization Strategy and Management Accounting Innovations on Cost Performance: The Case of Higher Eduaction Institutions

Research aims: This study aims to examine the effect of strategy and management accounting innovations on cost performance of private Higher Education institutions (HEIs). Also, this study examines the management accounting innovations as mediating variable.Design/Methodology/Approach: This study is quantitative research with a survey approach. This study is conducted by involving HEIs located in several provinces in Sumatera Island, Indonesia, covering West Sumatra, Riau, Riau Archipelago and Jambi. The research respondents are head of the HEI finance department. Data analysis uses Structural Equation Model with Partial Least Square approach (SEM-PLS).Research findings: The results show that strategy and management accounting innovations have a positive direct effect on cost performance. However, management accounting innovations is not able to be mediating variable.Theoretical contribution/Originality: This study contributes to research areas related to strategy, management accounting innovations and cost performance in HEI sector.Practitioner/Policy implication: Effectiveness and efficiency in managing HEI funds requires a strategy and management accounting innovations.Limitation/ Implication: The research only includes HEI located in the areas of West Sumatra, Riau, Riau Archipelago, and Jambi.

Contextual Factors and the Diffusion of MAIs in Manufacturing and Non-Manufacturing Sectors in Libya

The diffusion of innovation theory has already addressed the major contextual factors hindering or facilitating the diffusion of management accounting innovations (MAIs) in organisations. However, the diffusion of MAIs in less developed countries (such as Libya) is still very low, and the contextual factors addressed by the diffusion of innovation seem to fail to explain the low diffusion. To address this important gap in the literature, this study used contingency theory and investigated the association between a variety of contextual (contingent and institutional) factors and the diffusion of MAIs in Libyan manufacturing and non-manufacturing organisations. Seven MAIs were chosen from the literature perceived to have higher popularity, namely, ABC, ABM, BSC, TC, life-cycle costing, benchmarking, and Kaizen. A questionnaire acted as the data collection instrument. Two hundred and fifty questionnaires were distributed, and one hundred and three useable questionnaires were returned. The results indicate that three factors were significantly associated with facilitating the adoption of MAIs in both sectors. They were using computer systems for MA purposes, top management support, and MA training programmes.

When the supply side of a management accounting innovation fails – the case of beyond budgeting in Sweden

Using the management fashion perspective as a theoretical lens, we explicate the limited success of the beyond budgeting (BB) concept in Sweden from a supply-side perspective. The fashion perspective assumes that management concepts do not emerge or diffuse by popular demand, instead viewing the activities of supply-side actors, such as management consultants, professional associations, and academics, as crucial to the success of management concepts in a marketplace of potential users. We conceptualize a management fashion-setting process that enabled us to explore how and why actors have selected or rejected BB, how and why BB has been processed, the channels through which BB has been disseminated, and how and why supply-side actors interact (or do not interact) with other supply-side actors and other parties in these activities. Our findings suggest that a weakly mobilized supply side has produced heavily reduced, heterogeneous packages of rhetoric and design characteristics regarding the BB concept that have reached only a small portion of the target audience of potential adopters. Our study illustrates how barriers to diffusion are created on the supply side in the absence of the localization of BB.

Do innovation attributes really drive the diffusion of management accounting innovations? Examination of factors determining usage intensity of strategic management accounting

PurposeThis study investigates the usage of modern management accounting techniques popularly referred to as “strategic management accounting” (SMA), and the extent to which innovation attributes (namely relative advantage, compatibility, complexity, trialability and observability) determine SMA usage intensity.Design/methodology/approachSurvey data was obtained through a structured questionnaire from 45 out of 56 publicly listed manufacturing companies on the Mainboard of the Nigerian Stock Exchange. Descriptive statistics, one-way ANOVA, exploratory factor analysis, confirmatory factor analysis and structural equation modelling were used to analyse data.FindingsWhereas the overall usage rate of SMA as an innovation is generally moderate, there is significant difference in SMA usage intensity across industries in the manufacturing sector due to environmental uncertainty. Compatibility emerged as the strongest determinant of SMA usage intensity, implying that commercial enterprises would intensely apply SMA to remain innovative, to continuously improve and to incorporate strategy in accounting practice in a bid to survive competition. SMA will witness extensive usage if it aligns with the competitive strategies of an organisation.Research limitations/implicationsThe attributes of innovation measured treat all SMA techniques as one, but did not measure relative advantage, compatibility, complexity, trialability and observability for each of the techniques. Future studies may consider investigating how innovation attributes specifically affect each SMA technique. The dimension of compatibility investigated in the study lean towards the alignment of SMA with competitive strategies. Taking into account the multidimensionality of compatibility as an innovation attribute, future studies may examine how past experience of implementing new ideas, as well as compatibility of SMA with corporate culture and value system, affect the dissemination and diffusion of management accounting innovations.Practical implicationsThe paper proposes that although innovation attributes may partly explain SMA usage, coercive factors such as competition and environmental uncertainty may also be responsible for the decision to adopt innovative management accounting practices. The study therefore calls for a critical appraisal of how coercive institutional factors such as competition, regulation and actions of key stakeholders influence the decision of organisations to adopt an innovation.Originality/valueThis paper contributes to knowledge by challenging existing knowledge and presenting evidence that innovation attributes acclaimed to determine the spread of an innovation may be inapplicable in certain settings due to some environmental challenges. The study also contributes to knowledge by developing a composite scale for measuring innovation attributes specifically adapted to management accounting innovation, which can be used in future studies.

To what extent are balanced scorecards used to manage sustainability Survey evidence from Norway

It has been suggested that a balanced scorecard (BSC) can be a useful tool for measuring and managing sustainability performance. Therefore, researchers have advanced the related concept of a sustainability balanced scorecard (SBSC). However, little is known about the extent to which SBSCs are used in practice. This research paper aims to use a survey-based approach to map the extent to which BSCs are used to manage sustainability in Norway. The survey shows that awareness and adoption of SBSCs are low among Norwegian organisations. This finding is surprising given that Norwegian organisations have considerable experience using the standard BSC, and the socio-political context has favoured ideas such as sustainability and corporate responsibility. The findings are also relevant to debates concerning the diffusion of management accounting innovations since the study provides insight into patterns of how a global management accounting innovation is adapted and received in a local institutional context.

Sustainable Smart Healthcare Information Portfolio Strategy Evaluation: An Integrated Activity-Based Costing Decision Model

Smart city and smart hospital development comprise a mainstream strategy worldwide to enhance the achievement of Sustainable Development Goals (SDGs) and Corporate Social Responsibility (CSR) practices. The smart healthcare industry needs to optimize its smart healthcare information strategies, creating the process-activity value and reducing the cost of healthcare without sacrificing the quality of patient care. This study proposes an decision model of Activity-Based Costing (ABC) concept and Multi-Criteria Decision-Making (MCDM) techniques that integrates the Decision-Making Trial and Evaluation Laboratory (DEMATEL), Analytic Network Processes (ANP), the VlseKriterijumska Optimizacija I Kompromisno Resenje (VIKOR) and Zero-One Goal Programming (ZOGP) to achieve optimal smart healthcare information system portfolio strategy decisions. The resulting data shows that the perspective of government policy support and the criterion of Minimize Equipment Maintenance Costs are the most significant evaluation factors, and that the Health Data Informational System and Hospital Device and Drug Management System comprise by far the optimal portfolio of smart healthcare information system which strengthen the connection between ABC and MCDM techniques in evaluation process. The major contributions of this study are as follows: (1) the proposed model contributes to the management accounting innovation development of a sustainable city and Operation Research (OR) application; (2) the integrated model can promote the smart healthcare industry development and help decision makers to more accurately understand how to allocate resources and planning for intelligent-related activities to each smart healthcare information system through appropriate cost drivers.

CONSEQUENCES OF ENVIRONMENTAL MANAGEMENT ACCOUNTING (EMA): THE THEORY BEHIND

The need for Environmental Management Accounting (EMA) can be associated with the major problems of environmental degradation that lead to other concerns, such as legitimacy and competitive issues. EMA is seen as a management accounting innovation whose consequence is a boost to corporate performance. EMA can benefit the competitive position of a firm by directing the attention of its managers towards potential cost reduction or potential areas for differentiation. EMA can also help firms gain resource productivity and process efficiency, which will result in the reduction of waste and improved the financial profitability of the firm. In other words, EMA practically improves both the environmental and economic performance of a firm. However, despite all these success stories, many firms are still reluctant to take a more proactive approach to EMA, perhaps due to a perceived lack of evidence that the benefits exceed the costs of pursuing these initiatives. The findings so far may also not be generalizable since they are based on descriptive statistics rather than rigorous hypothesis testing. There has been little empirical evidence regarding the impact of EMA on the business success of the firm. This is due to prior EMA studies that have made limited use of a theory that attempts to explain the consequences of the practice. Most research has focused on descriptive work and researchers seem to be unwilling to move beyond action-based case studies in further develop the framework of EMA practice and firm performance. This has raised a concern on the need for theoretical explanation on the consequences of EMA. As it is important to gauge the effects of EMA on firm performance, this study provides a discussion of how EMA could help companies in Malaysia to enhance both their economic and environmental performance and by this to encourage firms to put EMA in practice for their sustainable growth.

The evolution of a management control package: a retrospective case study

PurposeThis paper examines the evolution of a company's management control package (MCP) over time. The overall aim is to gain a deeper understanding of internal and external factors shaping a company's management control package.Design/methodology/approachThis paper employs a retrospective single-case methodology where a company is followed over a ten-year period (2005–2015). Theoretically, the paper builds on Malmi and Brown's (2008) MCP framework while also utilizing Simons' (1994) levers of control framework as well as Abrahamson's (1991) management fashion theory.FindingsThe company's MCP evolved in several ways. First, there was a change from using an interactive to a diagnostic budget. Second, the Balanced Scorecard approach was replaced by a narrow, strong focus on shareholder value. Finally, the quality system was reduced from a system for continuous learning and improvement to a system for compliance purposes only.Research limitations/implicationsThis paper offers naturalistic generalization to enable a holistic understanding of the changes to a management control package over time. The findings suggest that history matters in the design and configuration of MCPs. The MCP has evolved from being balanced and interactive, resembling Beyond Budgeting, to a diagnostic approach resembling traditional budgetary control. In 2005, the different controls were complementary and used for different purposes, while in 2015 the controls solely support the creation of shareholder value. The findings also indicate that management accounting innovations such as The Balanced Scorecard and Beyond Budgeting in this specific context may be considered fashions or even fads.Practical implicationsThe findings of the paper could be useful for CFOs and other managers who are involved in the design and configuration of MCPs. The findings show that internal and external events shape how much leeway managers have in the design and configuration of MCPs.Originality/valueThe paper answers a call for more empirical studies on MCPs. By adopting a retrospective approach, the paper can provide insight into the temporal evolution of a control package.