The potential of management accounting and control in global operations: Profitability-driven service business development
Abstract
Purpose
The purpose of this paper is to identify the financial potential of new service businesses in the context of a global machinery manufacturer. The objective is to examine the supportive role of management accounting (MA) and control in service business development, which has not been empirically examined previously.
Design/methodology/approach
The paper takes advantage of an interventionist case study at a global machinery manufacturer and is empirically based on a comprehensive examination of the service business potential in the selected product category in different market areas. The researchers were actively involved in the accounting development activities underlying this paper.
Findings
The results suggest that the development of a global service business is necessary to build on market area characteristics. An analysis should combine financial information and equipment fleet information across product lines and organizational units.
Research limitations/implications
MA and control practices tend to require significant development to actually support the process of identifying and capturing the service business potentials. As the findings are limited to one case environment, further studies should address the longitudinal evolution of MA and control, and the choice and utilization of different performance measures, in similar contexts.
Practical implications
The paper provides managerial insights on how to utilize MA information and proposes ideas for performance indicators.
Originality/value
The process examined in this paper responds to the need for tools and techniques supporting service business development. MA and control could provide a comprehensive understanding of the dynamics of service business profitability potential and support in identifying and prioritizing the possible avenues of realizing such potential.
Keywords
Acknowledgements
This paper is based on the DIMECC S4 Fleet research project and the authors greatly acknowledge the financial support of the Finnish Funding Agency for Innovation. The authors want to thank the case company’s valuable input, both in terms of research cooperation, and offering access to data collection. Moreover, the authors are grateful to the editor and anonymous reviewers for their insightful comments on the previous version of the paper.
Citation
Lindholm, A., Laine, T.J. and Suomala, P. (2017), "The potential of management accounting and control in global operations: Profitability-driven service business development", Journal of Service Theory and Practice, Vol. 27 No. 2, pp. 496-514. https://doi.org/10.1108/JSTP-05-2016-0106
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited