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Behavioral accounting research has flourished over the past 40 years and vastly improved our understanding of accounting judgment and decision-making, human behavior as it is affected by accounting information and processes, and influences on organizational and social structures. However, to increase the validity and reliability of the work, researchers have generally narrowed the area of study to exclude many of the environmental factors that can influence the resulting behaviors that are observed. One environmental factor that has largely been ignored by the broader accounting research community is the rapidly increasing impact of information technology (IT) on all aspects of accounting. The purpose of this chapter is to elaborate on the predominance of IT in all areas of accounting and to urge behavioral accounting researchers to integrate IT aspects into their research to enhance the value and relevance of our research. Each of the major areas of accounting disciplinary research is considered (i.e., financial accounting, managerial accounting, auditing, and tax). This disciplinary focus is not intended to exclude the area of accounting information systems as is often the case in commentaries on behavioral accounting research but rather to focus on how accounting information systems are fundamentally integrated across the decision environments of every aspect of the accounting discipline.

This study examines challenges to the retrospective financial evaluation of continuous improvement (CI) activities. Through a review of the literature and active engagement with CI implementations, we identify several issues that may lead to divergence between operational and financial assessments. Out of this conflict emerges a set of concepts that we find important − the delineation of soft versus hard capacity benefits, the distinction between capacity used and capacity paid for, and the data gaps that relate to these benefits – and recognize operational improvement and financial improvement as distinct, yet interrelated, theoretical constructs. This study helps explain a series of persistent gaps in the management accounting literature: Conflict between operations and accounting managers, the divergent perspectives of Johnson and Kaplan after their publication of Relevance Lost (Johnson & Kaplan, 1987), and the need for both operational control (including detailed capacity control) and accounting control in CI firms. Instead of one control system being at odds with the other, or co-existing despite each other, each of these systems support a different component of the financial improvement process. Operational control systems in CI firms emphasize non-financial information and social and behavioral controls that empower decision-making by employees, while accounting control systems seek to motivate and translate operational gains into financial gains. Soft and hard benefits linked to capacity play an integral role in understanding the difference in focus of each control system, while data limitations help to explain why these systems remain loosely coupled in practice (or absent, as seems to be the case with detailed Capacity Management Systems).

Accounting for quality and improved organizational performance has recently received attention in management control research. However, the extent to which process innovation changes have been integrated into management control research is limited. This paper contributes to that integration by drawing from institutional adaptive theory of organizational change and process innovation strategies. The paper utilizes a 2 by 2 contingency table that uses two factors: environmental conditions and organizational change/learning strategies, to build a process innovation framework. A combination of these two factors yields four process innovation strategies: mechanistic, organic, organizational development (OD) and organizational transformation (OT).

The four process innovation typologies are applied to characterize innovations in accounting such as activity based costing (ABC). ABC has been discussed as a multi-phased innovation process that provides an environment where both the initiation and the implementation of accounting change can occur. Technical innovation can be successfully initiated as organic innovation that unfolds in a decentralized organization and requires radical change and double loop learning. Implementation occurs best as a mechanistic innovation in a hierarchical organization and involving incremental change and single loop learning. The paper concludes that if ABC is integrated into an OD or OT intervention strategy, the technical and administrative innovation aspects of ABC can be utilized to manage the organization’s operating activities.

Purpose – The purpose of this paper is to develop a framework which sheds new light on how sustainability control systems (SCS) can be used in proactive strategic responses to corporate sustainability pressures.

Design/Methodology/Approach – Corporate sustainability pressures are identified using insights from institutional theory and the resource-based view of the firm.

Findings – The paper presents an integrated framework showing the corporate sustainability pressures, proactive strategic responses to these pressures, and how organizations might use SCS in their responses to the corporate sustainability pressures they face.

Practical Implications – The proposed framework shows how organizations can use SCS in proactive strategic responses to corporate sustainability pressures.

Originality/Value – The paper suggests that instead of using traditional financial-oriented management control systems, organizations need more focus on emerging SCS as a means of achieving sustainability objectives. In particular, the paper proposes different SCS tools that can be used in proactive strategic responses to sustainability pressures in terms of (i) specifying and communicating sustainability objectives, (ii) monitoring sustainability performance, and (iii) providing motivation by linking sustainability rewards to performance.

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.

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.

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.

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.

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.

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.

The purpose of this chapter is to provide a comprehensive review of empirical research on performance management (PM) in former communist Central and Eastern European (CEE) countries, to evaluate the state of knowledge in this area and suggest possible directions for future research.

An examination of the literature was undertaken to review the empirical studies treating on PM in ex-communist countries from CEE. A total of 96 journal articles, PhD thesis, and conference papers were identified, categorized, and analyzed according to research questions, methodology, and theoretical framework. Contributions are classified by countries, according to progress in transition process (post-transition/transition countries) and membership in the Soviet Union (Soviet/non-Soviet countries). The review examines publications in four languages (English, French, Romanian, and Russian).

The literature review identified various stages of development of PM research and practice in the different groups of CEE countries.

In post-transition CEE countries, PM research follows the trends settled up in the developed countries (quantitative studies examining the extent of usage of different PM tools, influence of contingent factors, relationship PM-strategy, and impact on company’s performance). Also, the findings illustrate the modernization of PM practices: increasing importance of nonfinancial indicators and integrated performance management systems (PMS), although financial indicators are prevailing.

On the contrary, in transition countries PM research and practices are at an early stage, the reviewed literature highlights some specific issues related to transition context: the dynamic aspect of PM, change management, importance of informal systems, cultural aspects, and business traditions.

Because of the large number of CEE countries and the diversity of their national languages, many studies conducted in native languages have not been addressed in this literature review, which is essentially based on publications in English and French. Only for three CEE countries (Russia, Romania, and Moldova) publications in national language were considered.

This literature review may be useful for practitioners, providing insights on the extent of diffusion and usage of different PM tools and identifying difficulties and pitfalls to avoid in their implementation.

The chapter represents one of the first contributions to the knowledge about PM research and practice in former communist CEE countries. The adopted framework for reviewing and classifying the literature allows identifying the differences in PM research and practices between post-transition/transition and Soviet/non-Soviet countries.

Purpose: Analysis and systematisation of global trends in the transformation of DSSs from the standpoint of solving their global and local problems and determining the central axioms of setting up and supporting business processes in DSSs.

Need of the Study: Decision Support Systems (DSSs) are the basis of doing business in an enterprise by automating business processes, keeping accounting and reducing various risks associated with complexity, labour-intensiveness, slow execution time and, therefore, potential loss of profit. In recent decades, the rapid development of DSSs has led to the emergence of complex enterprise information system architectures. At the same time, many local business processes are not implemented or are partially implemented. In Ukraine, such techniques include VAT accounting.

Methodology: The study is based on the literature analysis, Internet resources and practical experience obtained during the SAP ERP system implementation projects. Particular attention is paid to developing information systems architecture to solve the problems enterprises face during their growth. Thanks to the analysis of the example of the realisation of the Internet sales process and the induction method, the axioms of automation of business processes in accounting systems were formed.

Findings: Regardless of the qualitative and quantitative transformation, modern DSSs still cannot solve all the enterprise’s problems, mainly due to the use of paper documents and the diversity of national legislation. By the example of the SAP ERP system, the optimal implementation of the business process of VAT liabilities was proposed by Ukrainian legislation for sales below cost price.

Practical Implications: Compliance with the established axioms of automation of business processes will reduce the cost of resources for their implementation, maintenance and correction of potential errors and, therefore, will provide an opportunity to process more transactions. Implementing the proposed algorithm for calculating VAT liabilities in SAP ERP for sales below the cost price will simplify the existing process and enable the fulfilment of other requirements within the framework of current legislation.

In Turkey for a long term, the public financial management system was carried out according to the provisions of the General Accounting Laws No. 1050 since this law was in force over a long period of time. This law had not been changed for long years and it became far from the needs due to developing dynamic conditions and rapidly changing economic conditions. In addition to these factors, the emergence of economic crises, the need for reform and the country’s EU harmonization process increased the need for revision in this field. The Public Financial Management Project was signed with the Ministry of Finance and the World Bank in 1995 and the Public Financial Management system was renewed with the Public Financial Management and Control Law No. 5018 dated January 01, 2006.

Due to the reasons mentioned above, these changes in public financial management led to the use of the concept of public sector accounting instead of state accounting. Public sector accounting is defined as a financial system that provides data for the effective and efficient use of resources. In this accounting, the current accounting system needs to provide the necessary data. While obtaining financial data in an economy, it is necessary to obtain information about the economic situation of that country in a healthy and transparent manner also.

The main objective of this study is to address a number of problems related to the effectiveness of public sector accounting auditing and to propose solutions. For this purpose, the public sector accounting system in Turkey has been handled by giving basic information on this subject; problems arising in this context have been evaluated and suggestions for solutions have been proposed.

This chapter examines China’s corporate governance and accounting environment that shapes the adoption of internationally acceptable principles and standards. Specifically, it examines international influences, including supranational organizations; foreign investors and international accounting firms; domestic institutional influences, including the political system, economic system, legal system, and cultural system; and accounting infrastructure. China’s convergence is driven by desired efficiency of the corporate sector and legitimacy of participating in the global market. Influenced heavily by international forces in the context of globalization, corporate governance and accounting practices are increasingly becoming in line with internationally acceptable standards and codes. While convergence assists China in obtaining legitimacy, improving efficiency is likely to be adversely affected given that corporate governance and accounting in China operate in an environment that differs considerably from those of Anglo-American countries. An examination of the corporate governance and accounting environment in China suggests heavy government involvement within underdeveloped institutions. While the Chinese government has made impressive progress in developing the corporate governance and accounting environment for the market economy, China’s unique institutional setting is likely to affect how the imported concepts are interpreted and implemented.