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In management accounting research, the capabilities of Partial Least Squares Structural Equation Modelling (PLS-SEM) have only partially been utilized. These yet unexploited capabilities of PLS-SEM are a useful tool in the often explorative state of research in management accounting. After reviewing eleven top-ranked management accounting journals through the end of 2013, 37 articles in which PLS-SEM is used are identified. These articles are analysed based on multiple relevant criteria to determine the progress in this research area, including the reasons for using PLS-SEM, the characteristics of the data and the models, and model evaluation and reporting. A special focus is placed on the degree of importance of these analysed criteria for the future development of management accounting research. To ensure continued theoretical development in management accounting, this article also offers recommendations to avoid common pitfalls and provides guidance for the advanced use of PLS-SEM in management accounting research.

Indirect or mediated effects constitute a type of relationship between constructs that often occurs in partial least squares (PLS) path modeling. Over the past few years, the methods for testing mediation have become more sophisticated. However, many researchers continue to use outdated methods to test mediating effects in PLS, which can lead to erroneous results. One reason for the use of outdated methods or even the lack of their use altogether is that no systematic tutorials on PLS exist that draw on the newest statistical findings. The paper aims to discuss these issues.

This study illustrates the state-of-the-art use of mediation analysis in the context of PLS-structural equation modeling (SEM).

This study facilitates the adoption of modern procedures in PLS-SEM by challenging the conventional approach to mediation analysis and providing more accurate alternatives. In addition, the authors propose a decision tree and classification of mediation effects.

The recommended approach offers a wide range of testing options (e.g. multiple mediators) that go beyond simple mediation analysis alternatives, helping researchers discuss their studies in a more accurate way.

Drawing on the literature on public service motivation, the authors investigate the relationship between public service motivation and defensive decision-making. Further, the authors explore risk propensity and risk perception as potential antecedents of defensive decision-making.

Based on survey data from 144 German public financial managers of municipalities and federal agencies, the authors find no significant direct relationship between public service motivation and defensive decision-making.

However, the authors can show that risk propensity fully mediates the relationship between public service motivation and defensive decision-making. The findings also indicate that beyond the public service motivation and individual risk propensity of public financial managers, their risk perception does influence their decision making.

The study makes three contributions to the literature. First, the authors contribute to the relatively small amount of research on the risk-taking behaviour of public managers by explaining the indirect impact of PSM on their risk-taking behaviour. Second, this paper furthers the understanding of the influence of risk perception and risk propensity on decision-making and enhances the models of Sitkin and Pablo (1992) and Sitkin and Weingart (1995). Third, the paper also contributes to the call for more international research on German public administrations.

Drawing upon new institutional theory and blame avoidance theory, this paper aims to examine how stakeholder pressure has an impact on the implementation and use of risk management practices in public administrations. Furthermore, this paper investigates whether top management support mediates this proposed relationship.

This paper is based on a survey among public financial managers of German municipalities and federal agencies. Data from 136 questionnaires were used to evaluate the model.

The results indicate that top management support fully mediates the relationship between stakeholder pressure and risk management practices. This finding suggests that top management support is crucial for the successful implementation of accounting techniques, such as risk management, in public administrations.

This study is based on subjective answers by public financial managers. Moreover, this study is based solely on German data. Hence, future research could use a mixed-method approach and data from other countries.

This paper examines whether stakeholder pressure exerts an impact on the sophistication of public risk management practices.

Because of the importance of accounting information to a manager’s decision-making process, his/her working relationship with his/her supporting management accountant is used as a paradigm of a superior-subordinate working relationship. This paper aims to analyze the drivers of trust in this relationship.

Based on responses from 446 managers, the authors tested a structural equation model for various trust drivers.

The authors found that when management accounting generally has a powerful role in a company, it positively affects the manager’s perceptions of his subordinate’s trustworthiness. Although the absolute level of trust remains stable over time, the influences of the bases of the trust change significantly. Over the long run, perceived trustworthiness fully mediates other trust factors, such as the manager’s trust disposition and the organizational setting, which highlights the importance of the individual trust relationship even for strong and functional superior–subordinate relationships.

Consistent with other studies, the results contain the classic limitations of survey studies. This study investigates the drivers of trust and provides insights into the trust relationship between managers and management accountants. Future studies should verify these findings for other important work relationships.

Trust research has typically focused only indirectly on the relevance of the trust that a superior has in his supporting subordinate. The authors show how these trust drivers intertwine and how their influences shift over time.

The purpose of this paper is to explore the relationship between organizational learning and patient safety culture in hospital pharmacy settings as determined by the learning organization survey short-form (LOS-27) and pharmacy survey on patient safety culture instruments, and to further explore how dimensions of organizational learning relate to dimensions of pharmacy patient safety culture.

This study is a cross-sectional study. Data were obtained from three public hospital pharmacies and three private hospital pharmacies in Kuwait. Partial least square structural equation modeling was used to analyze the data.

A total of 272 surveys (59.1 percent response rate) were completed and returned. The results indicated a significant positive relationship between organizational learning and patient safety culture in hospital pharmacy settings (path coefficient of 0.826, p-value <0.05 and R² of 0.683). Several dimensions of the organizational learning showed significant links to the various dimensions of the pharmacy patient safety culture. Specifically, training (TRN), management that reinforces learning (MRL) and supportive learning environment (SLE) had the strongest effects on the pharmacy patient safety culture dimensions. Moreover, these effects indicated that MRL, SLE and TRN were associated with improvements in most dimensions of pharmacy patient safety culture.

To the best of the authors’ knowledge, this is the first attempt to assess the relationship between organizational learning, patient safety culture and their dimensions in hospital pharmacy settings.

This paper aims to draw on Adler and Borys’ (1996) concept of an enabling use of bureaucracy to examine how the integration of a single-book tax-compliant transfer pricing system into the management control system is related to the perceived success of that transfer pricing system.

Based on survey data from Swiss multinational firms, the authors test a structural equation model. In addition, the authors conduct interviews with executives from three multinational enterprises.

The authors find that the integration of a tax-compliant transfer pricing system into the management control system may be perceived to be successful in achieving both tax compliance and internal (control) purposes. This is particularly true when the transfer pricing system is transparent and can be amended in the case of fundamental management control problems.

The typical shortcomings of a survey-based research apply to this study. Future research could build on this model and more closely investigate the relationship between transfer pricing system integration and an enabling use of the transfer pricing system.

Based on this study’s findings, the authors recommend that a strong integration of tax-compliant transfer prices into the management control system should be accompanied by internal transparency and the ability to repair the transfer pricing system.

Prior research on the integration between transfer pricing and management control systems has either been analytical or based on case studies. This cross-sectional analysis provides reliable insights into different levels of integration, use and the success of transfer pricing systems.

Research on biases in investment decision-making is indubitably important; however, studies in this context are relatively scarce. Unpacking bias has received attention in the psychological literature yet very little attention from management accounting research. This bias suggests that the perceived probability that an event will occur generally increases when the event's description is unpacked into a disjunction of subevents. The authors hypothesize that for a capital investment decision context, managers' judgement of the probability of a future event depends on whether the event is described as one packed event or is unpacked into several disjoint subevents. Additionally, the authors propose that altering the format of the description of an event's occurrence from percentage values to relative frequencies reduces unpacking bias.

To test the study’s hypotheses, the authors conducted two experiments based on a 3 × 2 mixed experimental design in which manager participants were asked to estimate the failure probabilities of technical systems in the context of an investment decision.

The authors provide evidence that unpacking bias occurs in an investment scenario, which can be characterized as a high-stakes decision context. Changing the format in which probabilities are presented from percentage values to relative frequencies significantly reduces the bias.

Additional instructions did not further reduce unpacking bias.

For investment decisions under uncertainty, performance indicators in management templates should be presented in relative frequencies to improve managerial decision-making. The fact that the authors could not show an additional effect of instructions in management accounting reports indicates that it is challenging for management accountants to reduce the biased decision-making of managers by “teaching” them through the provision of instructions.

The authors contribute to accounting research by illustrating unpacking bias and by deriving a debiasing mechanism in a capital investment decision context.