Management Accounting Change Research Articles

Effect of reorganization actions on the financial performance of small entrepreneurial distressed firms

PurposeThe purpose of this paper is to analyze the effect of different reorganization actions on long‐term financial performance of reorganizing small entrepreneurial firms in Finland.Design/methodology/approachAn structural equation model estimated by partial least squares is applied to survey data from 98 reorganizing very small firms to analyze the effect of organizational change (OC), financial reorganization, management control system change (MCSC), and management accounting change (MAC) on performance.FindingsEvidence supports three of the seven research hypotheses. Debt restructuring has a positive effect on performance. Liquidation of assets and OC do not show a significant direct effect but OC has a positive total effect. MCSC has a positive effect whereas the effect of MAC is negative. Compatibility of reorganization actions with the confirmed reorganization plan affects positively performance.Research limitations/implicationsThe sample is small. In further studies, larger samples should be used. Effect of reorganization on performance is self‐assessed by the firms. Further studies should apply more objective measures. The constructs of variables are intended for larger firms. New constructs should be developed for very small firms.Practical implicationsIt is important that reorganization administrators and consultants prepare a careful reorganization plan to be followed during the program. In small reorganizing firms, it is beneficial to develop management control systems. However, one should be cautious when developing formal management accounting systems for very small firms.Originality/valueThis paper is the first one developing a structural model of the effects of reorganization actions on performance of small firms. It brings new evidence on the effects of organizational and control system change.

The Fabrication of Management Accounting Systems – Why, How and What are the Consequences? A Romanian Testimony

There is a significant body of literature on management accounting systems and their roles in organizations, based on a broad range of theories. An interesting setting for research is developing economies, because of the nature of changes characterizing their economical and accounting environment. The issue of accounting change is a fruitful field of research for management accounting (Atkinson et al., 1997), yet little is known regarding the practice of management accounting (change) in Romania. The purpose of this paper is in this context, to explore and understand the process of fabrication (in Latourian terms) of management accounting systems in several Romanian companies. Data for this study were collected between 2005 and 2010 from 20 companies acting in the constructions field. We find that an originally-well designed and internally-supported system may be detracted from its initial purposes and use via complex relationships between the actors constituting the project’s network (each of whom are animated by their own interests). This is a testimony about management accounting change and failure in our country.

How the BSC implementation process shapes its outcome

PurposeThis paper has the aim of understanding how the reasons behind the adoption of the balanced scorecard (BSC) and the approaches undertaken during the entire change process influence the outcome, both in terms of BSC structure and use.Design/methodology/approachThe research studies the BSC change process and its use, adopting a multiple case study methodology which has been conducted in seven medium‐to‐large Italian non‐financial companies. The results have been analysed from an institutional perspective, considering the management accounting change process and its outcome not only as a technical problem, but also as a broader organizational issue.FindingsThe results show the interdependence between the change process, which is influenced by organizational forces, and its outcome. Different reasons for the adoption and different approaches in the design and implementation give rise to different BSC structures and styles of use.Research limitations/implicationsThe case study methodology that has been adopted does not allow the results to be generalized. Further research is needed to examine the BSC change process in order to support the findings.Practical implicationsThe findings could help managers decide when to introduce the BSC. Depending on how they use the device, they could become aware of the most suitable approach to adopt during the change process, a key feature in translating techniques into practice.Originality/valueThe paper explains the reasons behind the high fluidity of practice, considering the approach adopted during the management accounting change process.

The effect of leadership style on the information receivers’ reaction to management accounting change

Although we know that the use of accounting information and the leadership styles of managers are related, only little is known about how the leadership styles of managers affect the information receivers’ reaction to management accounting change. Therefore, using a case study of a company that owns ten car dealerships, this paper explores how the leadership styles of managers can affect the use of newly introduced management accounting information. In the case, new senior management introduced new accounting information to facilitate their leadership style. Interestingly, the individual car dealerships differed in the extent to which they used the new information and also in the history of their senior management's leadership style. Different leadership styles appeal to different work-related needs of employees and the paper explains (1) how the change affected the satisfaction of these needs; (2) how this resulted in support for or resistance to the change and (3) how this resistance was overcome.

Examining Management Accounting Change as Rules and Routines: The Effect of Rule Precision

This study examines change in management accounting practices as change in rules and routines. Informed by the institutional theory-inspired framework of Burns and Scapens (2000), the rules and routines relating to capital expenditure controls in a capital-intensive organisation are analysed. We explain how preciseness of rules affects not only the coupling of rules to routines, but also the emergence of multiple routines, enhancing the understanding of how management accounting practices remain stable and/or change over time. These results extend and refine recent research relating to management accounting change and offer new empirical insights into practice.

Special issue on Management accounting change in Japan

Special issue on Management accounting change in Japan

Greening the balanced scorecard

Environmental management issues have received an increased amount of attention in recent years, as have various performance measurement systems (PMS) such as the balanced scorecard (BSC). However, implementation of these systems is challenging due to the differences found amongst the companies and users of PMS. This study investigates how the presence of particular supporting factors served to facilitate a PMS change that incorporated environmental measures. Utilization of extant change models enables us to investigate different change factors like advancing and hindering forces, momentum, and the leaders of change. We found two models appropriate for investigating environmental management accounting change, even though the change factors can be either dynamic or static. The study also proposes that company culture should be carefully taken into account when companies are changing their PMS. Technical changes to PMS are far easier to accomplish than are changes to a dominant culture. Finally, we suggest that utilizing the BSC for the purposes of environmental management is a worthwhile pursuit.

Special issue on management accounting change in Japan

Special issue on management accounting change in Japan

Management accounting change: a comparative study of Indian and UK organisations

In the last two decades, management accounting research has received considerable attention. The research findings highlight a significant role for management accounting systems in modern organisations due to which management accounting information is now used in planning, decision making, control, performance measurement and business strategy in most organisations. However, as a result of the changing business needs, increased global competition and rapidly changing production technology, the internal management accounting systems of companies face severe challenges. This study, therefore, explores the changes in management accounting systems with respect to a number of change drivers and evaluates those changes in relation to the changing needs of different organisations in India and the UK. Two main drivers of management accounting system change are revealed: increased competition and changes in production technology. It is concluded that changes in management accounting systems attributed to change drivers have considerable effects on organisational performance in both Indian and UK organisations.

Management accounting in a learning environment

PurposeThe purpose of this paper is to report on the findings of a study designed to understand how management accounting changes when an organization evolves in a more network‐oriented direction, informed by an experiential or integrated approach to learning.Design/methodology/approachThis paper draws on a longitudinal case study initiated by the findings from a previous action research study at a manufacturing plant, the Volvo Floby factory.FindingsBy introducing and elaborating on the concept of local management accounting system (LMAS), this paper contributes to the debate about how management accounting reacts to new organizational forms and technologies. Two types of management accounting information are identified: one corresponds to the accountability aspect of accounting – Type 1 information, while Type 2 information refers to problem solving and control. A LMAS is supportive of both local accountability, which draws on valuing skills, and of local problem solving, which relies on decision skills.Research limitations/implicationsOne of the research implications of this study is that a LMAS may function as an important mechanism for innovation by explicitly integrating the holistic and the analytic dimensions of experiential learning.Practical implicationsThe reported case illustrates how management accounting may facilitate process innovation in a practical setting.Originality/valueBy adopting an experiential learning methodology to develop new knowledge, the production plant studied has succeeded in creating an environment characterized by continuous innovation.

Management Accounting Knowledge, Culture, and Change in Today’s Global Music Industry

Management Accounting Knowledge, Culture, and Change in Today’s Global Music Industry

Special issue on management accounting change in Japan

Special issue on management accounting change in Japan

The institutional pillars of management accounting function

PurposeThe purpose of this paper is to theorize the institutional pillars of management accounting function.Design/methodology/approachThe paper adopts a comparative case study approach.FindingsInstitutional pillars of management accounting are explored on the basis of two longitudinal case studies. Competitive/economic forces and three analytical elements of institutional theory are composing institutions: regulative, normative and cultural‐cognitive pillars. Each element is important, and all of them may work in combination, but they operate through distinctive mechanisms and processes. This paper illustrates how they provide the basis for compliance, order and the legitimacy of not the whole organization, nor of the management accounting systems but of the management accounting function. This “organizational legitimacy” of management accounting function may provide one potential additional explanation for the change and stability of management accounting in organizations.Originality/valueThis paper creates an institutional interpretation of accounting change or stability at the level of an accounting function. It illustrates how the pressure for change or stability in management accounting is collectively constituted in organisations, how it is given meaning and how individuals are making sense of things, i.e. how accounting is institutionally embedded.

Shifting NPM agendas and management accountants' occupational identities

PurposeThe purpose of this paper is to illustrate how the occupational identity of management accountants working in the public sector is influenced by a change in management accounting and control systems as well as the underlying management agenda.Design/methodology/approachFrom interviews with management accountants and their associates in five public hospitals, the paper illustrates how a change in new public management (NPM)‐related managerial agendas interacts with how the management accountants perceive their professional roles.FindingsIt is argued that the focus of the NPM agenda in Finnish public health care has shifted from a “down grid agenda”, emphasising private sector accounting and control methods, to a “down group agenda” that emphasises accountability, visibility and comparability. This change in agendas has materialised in the implementation of the diagnosis‐related groups (DRG) system, and the resultant abandoning of activity‐based costing (ABC) systems. Health care management accountants who rely on private sector ideals for constructing their occupational identity may resist the implementation of DRG if they interpret it as a shift in managerial discourse.Originality/valueThe paper links two different and sometimes contradictory agendas within the NPM framework with the occupational identity of management accountants. The observed reaction to the shifting agendas has implications for understanding why some accounting systems carry more appeal than others.

Research of Management Accounting Changes in Lithuanian Business Organizations

Most of today’s management accounting systems assume that the activity of an organization can be planned for a long-term period and following the planned strategy, goals of organization will be achieved. Nevertheless rapidly changing business environment does not allow planning organization’s activity for a long-term period. As informational and telecommunication technologies, virtual organizations and networks are quickly developing, the constant change of environment stipulates the need to adjust and change strategy of organization in line with the global changes of science, business, technologies, politics and society.

Special issue on management accounting change in Japan

Special issue on management accounting change in Japan

Interaction of Management Accounting Information System and Logistics Functions: A Case of a Developing Country-Vietnam

Research by Pomberg, Pourjalali, and Aptel (2009) provided insights into hospitals’ logistics department functions in Vietnam. The current study examines the relationship between management accounting and logistics functions of hospitals in Vietnam, in particular how hospitals have improved/intend to improve their accounting and logistics activities to decrease costs and how they have tried to implement known managerial (accounting) systems to improve efficiencies. For the first time, a study shows the influence of management accounting on maturity of logistics functions in hospitals in an environment that is rapidly changing from centrally governed to a more open capital market environments hospitals. Based on survey data from 53 hospitals in Hanoi and surrounding provinces, the study reports whether those environmental changes have resulted in actual or planned changes in management accounting and logistics activities. Our results show that in response to environmental and regulatory changes, Vietnamese hospitals have improved both accounting and logistics function in recent years and are planning to continue their development further. We also found that there is a direct relationship between accounting information and maturity of logistic functions. Our sensitivity tests revealed that our results are not derived from methodology used in developing indices for accounting and logistics functions.

Inertia and management accounting change

PurposeThis paper aims to investigate ways in which inertia obstructs the adoption of new management accounting rules. Drawing on the view of management accounting as organisational rules and routines, it aims to suggest various ways in which inertia can become more pronounced when new accounting rules challenge existing routines.Design/methodology/approachA longitudinal case study was conducted at one of the largest banks in The Netherlands. This bank introduced a program called “Results Oriented Management”, which produced various new management accounting rules.FindingsThe paper identifies various ways in which inertia manifested itself when new management accounting rules were introduced. Moreover, the paper shows that ambiguity and contradictions play an important role in the presence of inertia.Research limitations/implicationsThe identification of individual‐level habits and scripts is a difficult undertaking. Through a focus on the performative and ostensive aspects of routines, some of the processes of inertia and change on an individual level are identified. This is a relevant method for students of management accounting change.Originality/valueAlthough it is well known that routines can produce inertia, the process by which this inertia is manifested and how this affects the adoption of new management accounting rules is still unclear. The paper aims to contribute to this understanding.

Five easy pieces: a case study of cost management as organizational change

PurposeThe primary purpose of this paper is to merge two traditions in management accounting change – design theory and action research – to explain findings from a case study of introducing a cost leadership initiative.Design/methodology/approachThis paper is an example of action research in which design theory explains events related to the implementation of a strategic cost leadership initiative at Shell Gabon, a Royal Dutch Shell unit in West Africa.FindingsThe evidence shows that technical accounting changes are, in the final analysis, change management exercises. Implementing change requires thinking as a designer and employing the logic of conjecture rather than scientific deductive or inductive reasoning. Successful implementation requires conjuring an image of a future reality that does not currently exist and making that image persuasive by connecting it with the values of the organizational participants.Research limitations/implicationsThis case study provides five key lessons for future designers of accounting change. Implementers should: understand the mental models of organizational participants; show respect for the cultural values of the organization they are working in; meaningfully engage organizational participants; use structured processes to unfold change; and be ready to seize new opportunities and discard old game plans when necessary. The case study also reveals gaps in existing change management models and behavioural accounting theories.Originality/valueThis paper offers design theory as an alternative way of viewing organizational change and offers criteria for evaluating the use of design as a process and for assessing the value of the implemented change.

Special issue on management accounting change in Japan

Special issue on management accounting change in Japan