Advances in Management Accounting: Volume 23

Table of contents

(18 chapters)
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List of Contributors

Pages vii-viii
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Introduction

Pages xv-xix
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Sociological Approaches to Organizational Learning: Applications to Process Innovations in Management Accounting Systems

Advances in Management Accounting, Forthcoming 2014. First submission October 2012; Revised submission May 2013; Accepted October 2013. This paper introduces our book titled, An Organizational Learning Approach to Process Innovations: The Extent and Scope of Diffusion and Adoption in Management Accounting Systems, Emerald Studies in Managerial and Financial Accounting, Volume 24, 2012 (Sisaye & Birnberg, 2012). We are very grateful for the continued editorial assistance and support that we have received from the editors: Marc J. Epstein and John Y. Lee over the years. We have benefited from the comments of the two external reviewers in preparing the manuscript for publication. The authors assume full responsibility for the final product.

Pages 1-43
Purpose

The paper extends the organizational learning framework: Structural-Functional (SF)-single-loop or Conflictual-Radical (CR)-double-loop learning to the management accounting literature. The sociological approach of organizational learning is utilized to understand those contingent factors that can explain why management accounting innovations succeed or fail in organizations.

Approach

We view learning as enhancing an organization’s strategic competitive advantage by making it better able to adopt and diffuse innovation in respond to changes in its environment in order to manage improved performance. The success of management accounting innovations is contingent upon whether its learning process involves SF-single-loop or CR-double-loop learning to adopt and diffuse process innovation.

Findings

The paper suggests that the learning strategy that the organization chooses is the reason why some management accounting innovations are more successfully adopted than others and why some innovations are easily diffused in some organizations but not in others. We propose that the sociological approaches to learning provide an alternative framework with which to better understand the adoption and diffusion of process innovations in management accounting systems.

Originality

It has become evident that management accounting researchers need to pay particular attention to an organization’s approach to adoption and diffusion of innovation strategies, particularly when they are designing and implementing process innovation programs for an organization. According to Schulz (2001), there are two interrelated stages of the learning that can shape the outcome of the innovation process in an organization. The first stage is related to the acquisition/production (adoption) of knowledge that results in gathering information, codification, and exploration. This is followed by the second stage which is the distribution or dissemination (diffusion) processes. When these two stages – adoption and diffusion – are applied within an accounting context, they address issues that are commonly associated with the successes and/or failures of management accounting innovations.

Research limitations/implications

Although innovation involves learning, the nature of the learning process does not completely describe the manner in which an innovation affects the organization. Accordingly, we suggest that the two interrelated organizational sociological dimensions of innovations processes, namely, (1) the adoption and diffusion theories of Rogers (1971 and 1995), to approach organizational learning, and (2) the SF (single loop) and CR (double loop) approaches to learning be used simultaneously to describe management accounting innovations.

Practical implications

When an innovation is implemented, it initially can be introduced as an incremental change, one that can be limited in both in its scope and its breadth of administrative changes. This means that situations which are most likely to benefit from its initiation can serve as the prototype for its adoption by the organization. If successful, this can be followed by systemic accounting innovations to instituting broader administrative changes within the existing accounting reporting and control systems.

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Purpose

This paper analyzes citations from the first 20 volumes of Advances in Management Accounting using Google Scholar in April and May, 2013.

Methodology/approach

This study assesses the success of the first 20 volumes of Advances in Management Accounting using citation analysis. Four citation metrics are used. The four citation metrics are: (1) total citations since year of publication until April and May, 2013, (2) citations per author since year of publication until April and May, 2013, (3) citations per year since year of publication until April and May, 2013, and (4) citations per author per year since year of publication until April and May, 2013.

Findings

The top 20 authors for each citation metric, the top 20 faculties for each citation metric, and the top 20 doctoral programs for each citation metric are determined. Furthermore, the top 20 articles are determined using two citation metrics and the H-index for Advances in Management Accounting is computed.

Originality/value of paper

Potential doctoral students, current doctoral students, “new” Ph.D.s with an interest in management accounting, current management accounting faculty, department chairs, deans, other administrators, journal editors, and journal publishers will find these results informative.

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Purpose

This study provides evidence on how changes in management accounting and control systems (MACS) associate with competition, organizational capacity to learn, decentralization, and firm size. In doing this, it replicates (and extends) Libby and Waterhouse’s (L&W) Canadian study in the context of Australian manufacturing firms.

Methodology/approach

Drawing on contingency theory, the study uses data from a mail-out survey of a sample of Australian manufacturing firms.

Findings

Change in MACS was found to be significantly and positively associated with greater organizational capacity to learn and a more intensely competitive environment. Firm size and decentralization were not highly significant with changes in MACS. Additional analysis of the data indicated the generalizability of the L&W model across divisions of large corporations, but not across stand-alone firms and local market-oriented firms.

Originality/value of paper

The results contribute to the field of management accounting change by suggesting that when an organization experiences changes in its business environment its management control systems need changes too.

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Purpose

Prior studies in accounting argue that subordinates have private information about their areas of responsibility and that revelation of such information benefits the organization. This study investigates factors that encourage subordinates to share this information with their superiors during the budgeting process. According to the proposed theory, the fairness of the budgeting system, specifically its procedural justice, influences the degree of information sharing. If the subordinate believes that budgeting procedures are fair, the subordinate is more likely to disclose private information during the budgeting process.

Design/methodology/approach

We conduct an anonymous survey of supervisors and managers in four companies. Regression model is developed with information sharing as the dependent variable. Independent variables include procedural justice of budgeting system and also budget participation and organizational commitment, variables that prior studies have identified as important in information sharing.

Findings

Results support the proposed model in general. The three independent variables (procedural justice, budget participation, commitment) interact in their effect on information sharing.

Research limitations/implications

Results suggest that companies that seek the private information of subordinates should consider the fairness of the budgeting system. Fair procedures encourage information exchange.

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Purpose

To empirically test for an impact on profit performance when activity-based costing (ABC) is used in companies with customer service and low-price strategies. We also investigate whether the profit impact of ABC usage is affected by higher-quality information systems.

Methodology/approach

Survey.

Findings

We find a positive impact on profit performance when ABC is used by companies with customer service as a strategic priority but not when ABC is used by companies with lower emphasis on customer service. For companies emphasizing low-price strategies, we find a positive impact on profit performance, especially when ABC is used together with high-quality information systems.

Research limitations/implications

This study develops a method of measuring strategic priorities of a firm. It divides firms into strategy groups based on their degree of emphasis on three strategic priorities: low price, flexibility, and customer service.

Practical implications

Identifies certain contexts when ABC is especially beneficial.

Originality/value of paper

If the use of ABC information leads to better strategic and operational decisions, firm performance should improve. However, prior research on the impact of ABC on firm performance has found little to no connection and usually only when it is used with other practices. This is the first study to find an impact on profit performance for firms with customer service and low-price strategies and high-quality information systems.

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Purpose

This paper proposes and tests a model to explain the outcomes of three different information presentation formats. Based on cognitive fit theory, information visualization formats that best fit task characteristics are expected to lead to improved decision-making outcomes. We apply the Judgment and Decision-Making framework (Bonner, 2008) to investigate how certain factors can impact decision quality.

Design/methodology/approach

This study tests whether certain production variance presentation formats (percentages, dollar amounts, and schematic faces), task complexity, understanding of the presentation format, motivation, and effort increase the accuracy of a supervisor’s bonus calculation. A total of 281 students and professionals participated in this experiment. Their responses were examined using regression analysis.

Findings

Our results indicate that individuals mostly prefer the percentages presentation format and that the use of the percentages presentation format, a lower level of task complexity, and a better understanding of the variance presentation format lead to more accurate calculations in the experimental task.

Research implications

Our study provides a call for further research on factors that influence the choice of presentation format as a potentially fruitful area for management accounting researchers.

Practical implications

We exhort practicing management accountants to exert direct influence on employees’ decision making through the use of variance presentation formats that fit their tasks and promote understanding.

Originality/value

Our experiment introduced two major innovations: it uses an interactive data visualization approach allowing subjects to select their preferred presentation format; and it focuses on production variances, a topic that has received less attention in the academic managerial accounting literature, but is still very relevant to practitioners.

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Purpose

The purpose of this study is to investigate the effects of attribute frames and justifications on capital budgeting decisions and to examine whether the requirement to provide justification for a capital budgeting decision moderates the effect of attribute frames.

Methodology

One-hundred and eleven participants made a capital budgeting decision in an experimental case that manipulated the frame of the financial evidence provided and the requirement to provide a justification.

Findings

Results suggest that both attribute frames and justifications affect capital budgeting decisions but the requirement to provide justifications did not moderate the effect of attribute frames.

Originality/value

This study contributes to the capital budgeting literature by identifying two factors that may bias judgments. This study also contributes to the framing literature by examining one potential method of moderating framing effects – requiring justification for decisions.

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Purpose

Tooling is a common component of an industrial product’s manufacture. Specific tooling is devised to serve the fabrication of a particular product, while generic tooling can be used in the manufacture of multiple products. In the latter case, companies are confronted with the problem of fairly allocating the indirect costs of the tooling. This article studies how to allocate costs of generic tooling to single production orders.

Methodology

Ten allocation methods (AMs) are described that are in principle suited to the distribution of generic tooling costs to production orders. Since the presented methods have for the most part been discussed in differing contexts, we apply them to a specified generic tooling problem for comparison. Evaluation of the various methods is based on 16 criteria. Reasoning is supported by a computational Monte Carlo simulation. Furthermore, we suggest using the Analytical Hierarchy Process (AHP) to elaborate one final proposition concerning the most preferable allocation scheme.

Findings

The article reports the single allocation rules’ performances for different allocation scenarios. The described characteristics refer to fairness, efficiency, and simplicity as well as to empty-core performance. Using AHP analysis allows for the aggregation of the rules’ criteria ratings. Thus, especially suitable allocation schemes for the problem at hand are identified.

Practical implications

An allocation is required for budgeting reasons and also for the definition of projects’ bottom-up sales prices. Selecting the “right” AM is important, as a suboptimal AM can result in unfair allocation vectors, which will act as incentives to stop using the common resource, potentially leading to higher total costs.

Originality/value of the article

Research on the comparison of AMs is typically performed for certain purposes, such as enterprise networks, horizontal cooperative purchasing scenarios, or municipal service units. This article will augment the research evaluating AMs by introducing a novel set of evaluation criteria and by providing an in-depth comparison of AMs suited for the allocation of generic tooling costs.

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Purpose

The purpose of this paper is to highlight the particularities of the time consumption of transactions performed in an insurance firm and the prospective impact on costing.

Design/methodology/approac

This paper uses the results of an archival study conducted on data collected in an insurance firm.

Findings

The results suggest that the reasons underlying the heterogeneity of transactions’ time consumption are multiple and rule out a systematic and unique explanation. They lend support to the importance of the “human effect” in explaining the time consumption of service transactions and support the need for more research into the evolution of marketing thought that subordinates the concept of transaction to the concept of relationship. In addition, our results not only suggest that the drivers of time consumption and their importance are contingent on the type of service activity performed within the same firm, but also that inside a generic service activity, deviations in time consumption remain due to the provision of specific services.

Originality/value

Services have their own characteristics which make it difficult to trace their resource consumption. Yet limited research has focused on examining the impact of services’ characteristics on predicting costs. Our findings contribute to our understanding of such impact and cast doubt on the possibility of obtaining accurate costs for very detailed transactions for an acceptable cost-benefit trade-off.

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DOI
10.1108/S1474-7871201423
Publication date
2014-08-01
Book series
Advances in Management Accounting
Series copyright holder
Emerald Publishing Limited
ISBN
978-1-78350-632-3
Book series ISSN
1474-7871