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1 – 10 of 27Anni Lindholm, Teemu Juhani Laine and Petri Suomala
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…
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.
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Natalia Saukkonen, Teemu Laine and Petri Suomala
To be utilized effectively in decision-making processes, management accounting (MA) information should fit the business context and at the same time reflect the roles…
Abstract
Purpose
To be utilized effectively in decision-making processes, management accounting (MA) information should fit the business context and at the same time reflect the roles, responsibilities and values of the actors taking part in the decision-making. This study aims to investigate the limitations for MA information utilization in decision-making. In particular, this study explores limitations stemming from the decision-making process structure and the involvement of several managerial actors.
Design/methodology/approach
An exploratory case study of an energy company and its customer company illustrates the current challenges in providing and integrating MA information into decision-making. The analysis is focused on the analytical and actor-based features of the decision-making and thus the limitations for MA information utilization. As a part of the broader research process, the researchers facilitated a meeting in the customer company, where the actors relevant to investment decisions discussed the current limitations in utilizing MA information.
Findings
Analytical and actor-based features may take different forms in the decision-making. Some relevant MA information may not be included in an organization’s decision-making process structure that allows merely conventional, yet analytical, decision alternatives. At the same time, certain actors’ viewpoints (such as sustainability metrics) can be excluded from the process without considering the logic behind the exclusion. This case study identifies the following limitations, largely related to insufficient actor-based features in the decision-making: managers may lack expertise in the use of MA tools, managerial interaction may lack reflection on taken-for-granted assumptions, different managers may appreciate different scope, content and timing of MA information and the process structure can ignore the required managerial viewpoints.
Research limitations/implications
This study demonstrates that both the decision-making process structure and the needs of the several actors involved may lead to limitations for MA information utilization. Although many limitations stemmed from the insufficient actor-based orientation in the case study, introducing new MA analyses and extending the validity of analytical approaches may also help overcome some of the limitations. Further research should address possibilities to integrate different actors’ viewpoints with MA information already in the decision-making process structure, find ways to introduce MA information on unconventional decision alternatives and enable reflection among and about relevant actors with respect to decision-making. These means could lead to more effective utilization of MA information for decision-making and, consequently, economically viable decisions.
Originality/value
This study addresses the limitations in MA information utilization by combining the viewpoints of analytical decision-making processes and reflective actors, and thus unveils possibilities for enhancing MA practice.
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Marta Tkaczyk, Anna Salina, Jouni Lyly-Yrjänäinen and Teemu Laine
New service businesses carry opportunities for industrial companies. The different cost management and management control implications of those service businesses deserve…
Abstract
Purpose
New service businesses carry opportunities for industrial companies. The different cost management and management control implications of those service businesses deserve attention, which is a widely under-researched area in management accounting and control literature. Digital twins could hold potential in unveiling and supporting those new service business opportunities, as a unique approach of this paper. Thus, the purpose of this paper is to examine the possibility and potential for creating a digital twin of a service, especially to unveil the management accounting and control implications of the digital twin in developing new service businesses.
Design/methodology/approach
This paper investigates the potential of a digital twin in unveiling cost and control implications of new service businesses by examining the characteristics of a digital twin in the service business development context. The paper use an in-depth interventionist case study, where the designed animations illustrate the possibilities of a digital twin of a service. The animations showing the service process characteristics were first used as a communication tool and eventually those animations were actively used in customer cases for different purposes. This motivated the idea for examining the implications of such animations representing a digital twin of a service.
Findings
The paper provides empirical insights regarding the potential for developing and using a digital twin of a service for different cost management and management control purposes. The digital twin of a service may include all main details of a new service offering, simulating the functionality of a service, hence making the performance and the implications of the new service concept clear for all the stakeholders. The digital twin of the service enables defining the processes, setting targets and helps communication about the value generation. Thus, they represent a significant toolkit for the management accounting and control function of the manufacturers.
Originality/value
This paper is among the first attempts to understand the digital twin of the service. The paper is unique in providing financial and control implications of digital twins also in the context of service business development. The in-depth interventionist approach enabled an exceptional exploration process on the subject. The article paves the way toward further research on managing the digital twins of services in the future.
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Jouni Lyly-Yrjänäinen, Leena Aarikka-Stenroos and Teemu Laine
This paper aims to propose an approach to broaden the focus of a low-fidelity prototype (i.e. mock-up) to enable user experimentation in a real environment at the early stages of…
Abstract
Purpose
This paper aims to propose an approach to broaden the focus of a low-fidelity prototype (i.e. mock-up) to enable user experimentation in a real environment at the early stages of the product development process. The functionality approaching a real solution enables customers to experience the key functionality, and therefore, the perceived customer value of the new product idea before major investments in the development.
Design/methodology/approach
The study is based on an interventionist case study in a manufacturing company. The researchers were involved in the development of two new products and analysing the potential process and cost implications.
Findings
Mock-ups enable the preliminary measurement of cost and value implications of a new product at the early stages of the development process. This holds significant potential for advancing development practices and reducing the uncertainties present in such processes. Thus, the business case at the early stage of the development process can be argued with “user-experienced” cost information and, therefore, also “perceived” customer value.
Practical implications
The use of mock-ups to gain customer feedback is well aligned with the fail-fast mentality emphasised in the contemporary start-up scene, but this study also encourages developers/practitioners from mature industries to use mock-ups to assess perceived customer value.
Originality/value
The originality of the paper lies in broadening the focus of mock-ups to enable user experimentation in a real environment at the early stages of the development process.
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Kati Tuulikki Stormi, Teemu Laine and Tuomas Korhonen
The purpose of this study is to reflect upon the feasibility of agile methodologies, Scrum in particular, to supplement the procedural design and implementation of performance…
Abstract
Purpose
The purpose of this study is to reflect upon the feasibility of agile methodologies, Scrum in particular, to supplement the procedural design and implementation of performance measurement systems (PMS).
Design/methodology/approach
The study is an interventionist case study that applied agile methodologies in the PMS development. Researchers actively participated in the PMS development, e.g. researchers designed some of the performance measurement prototypes in order to facilitate the agile development.
Findings
The study outlines an agile approach suitable for PMS development. The paper answers the topical needs for adaptability and agility in management accounting, by applying agile methodologies into PMS development. PMS development does not take place only as a project or process that systematically progresses from the measure selection to measure implementation. Instead, as the requirements for the PMS change during the development project, management may reject some measures and new measures emerge as the understanding about changing situations increase. Agile methodologies are a methodological way to respond to the inevitable change and to enhance management accounting adaptability.
Research limitations/implications
This study contributes to the PMS literature by proposing that agile development methodologies can advance organizational features that increase management accounting adaptability. As a result, the study proposes a new approach for PMS development to supplement existing ones. Agile methodologies are especially suitable for extending the PMS in new, yet relatively immature areas of performance measurement. The new approach applies Scrum principles in PMS development. By drawing from the theories of performance measurement (system) development and enabling PMS, the paper furthers academic understanding about agile development of accounting information systems.
Practical implications
Companies can use the proposed approach in PMS development, particularly after the initial system implementation in redesigning the system. The approach may increase the PMS impact in organizations and prevent PMS implementation failures.
Originality/value
The paper identifies the potential of using agile methodologies to enhance PMS adaptability and provides preliminary evidence of the potential of such approach in supplementing processual PMS development frameworks.
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Kati Stormi, Teemu Laine, Petri Suomala and Tapio Elomaa
The purpose of this paper is to examine how installed base information could help servitizing original equipment manufacturers (OEMs) forecast and support their industrial service…
Abstract
Purpose
The purpose of this paper is to examine how installed base information could help servitizing original equipment manufacturers (OEMs) forecast and support their industrial service sales, and thus increase OEMs’ understanding regarding the dynamics of their customers lifetime values (CLVs).
Design/methodology/approach
This work constitutes a constructive research aiming to arrive at a practically relevant, yet scientific model. It involves a case study that employs statistical methods to analyze real-life quantitative data about sales and the global installed base.
Findings
The study introduces a forecasting model for industrial service sales, which considers the characteristics of the installed base and predicts the number of active customers and their yearly volume. The forecasting model performs well compared to other approaches (Croston’s method) suitable for similar data. However, reliable results require comprehensive, up-to-date information about the installed base.
Research limitations/implications
The study contributes to the servitization literature by introducing a new method for utilizing installed base information and, thus, a novel approach for improving business profitability.
Practical implications
OEMs can use the forecasting model to predict the demand for – and measure the performance of – their industrial services. To-the-point predictions can help OEMs organize field services and service production effectively and identify potential customers, thus managing their CLV accordingly. At the same time, the findings imply new requirements for managing the installed base information among the OEMs, to understand and realize the industrial service business potential. However, the results have their limitations concerning the design and use of the statistical model in comparison with alternative approaches.
Originality/value
The study presents a unique method for employing installed base information to manage the CLV and supplement the servitization literature.
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Vesa Tiitola, Tuomas Jalonen, Mirva Rantanen-Flores, Tuomas Korhonen, Johanna Ruusuvuori and Teemu Laine
This paper aims to explore how the maieutic role of management accounting (MA) can be sustained in the context of MA digitalization.
Abstract
Purpose
This paper aims to explore how the maieutic role of management accounting (MA) can be sustained in the context of MA digitalization.
Design/methodology/approach
The paper begins with practitioners’ descriptions of the context that makes the MA support of non-routine decisions maieutic. To understand how the maieutic characteristics can be sustained in future MA digitalization, the authors then analyze the discourses these practitioners have about artificial intelligence (AI) in providing MA support.
Findings
As a basis, the authors’ data show various maieutic characteristics within the use of MA answers in decision-making as well as within the MA process of generating such answers. The paper then identifies three MA digitalization discourses, namely, “computation,” “judgment” and human-AI “interaction” discourse, each with their unique agendas on how AI should be used.
Originality/value
The paper is based on the premises that AI and digitalization are often discussed without sufficient understanding about the context being digitalized. The authors’ data suggest that MA support in non-routine decision-making is fundamentally maieutic, and AI – as it currently stands – is not expected to change this by providing perfect answers. The authors provide novel insights about maieutic MA support and the current discourses on using AI in MA support, and how digitalization does not necessarily compromise maieutic MA support but instead has the potential to sustain or even enhance it.
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Teemu Laine, Tuomas Korhonen, Petri Suomala and Asta Rantamaa
This paper aims to elaborate the concepts of boundary subjects and boundary objects in constructing and communicating relevant accounting facts for managing product development…
Abstract
Purpose
This paper aims to elaborate the concepts of boundary subjects and boundary objects in constructing and communicating relevant accounting facts for managing product development (PD). Boundary subjects as reflective actors benefit effective accounting enactment, by building a shared understanding about different actors’ roles and information needs, and by helping to respond to these needs with new boundary objects.
Design/methodology/approach
The paper uses a longitudinal interventionist case study of a machinery manufacturer. The focus of this case study was the production ramp-up phase at the end of a PD program. Different actors’ needs were first collected and elaborated by interventionist researchers (boundary subjects). Then accounting prototypes (boundary objects) provided new means of communication.
Findings
The findings show that dealing with boundaries is crucial in accounting development. The role of boundary subjects was fundamental in the process of choosing, constructing, elaborating and communicating accounting facts. During this process, accounting prototypes integrated new accounting facts, the boundary subjects mitigated the boundaries and the boundary objects focused and restricted communication about accounting facts.
Research limitations/implications
The paper tests the pragmatic constructivism approach by examining accounting enactment under uncertainty and ambiguity. The study refines pragmatic constructivism in terms of boundaries, boundary subjects as actors and boundary objects.
Practical implications
The intentional use of boundary subjects and objects as communication platform could push a more active inclusion of business controllers as active business partners.
Originality/value
The paper contributes to the literature on accounting development by highlighting the use of boundary subjects and boundary objects as fundamental mechanisms in constructing and communicating accounting facts.
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Antti Ylä-Kujala, Kati Kouhia-Kuusisto, Tuuli Ikäheimonen, Teemu Laine and Timo Kärri
While companies worldwide are largely comprised of small and medium-sized enterprises (SMEs), a significant amount of management accounting (MA) research focuses on larger…
Abstract
Purpose
While companies worldwide are largely comprised of small and medium-sized enterprises (SMEs), a significant amount of management accounting (MA) research focuses on larger organisations, thus leaving MA practice in SMEs relatively under-researched. This paper aims to examine MA adoption (MAA) and its interfaces with MA challenges and business performance from a small business perspective.
Design/methodology/approach
A sample of 502 small businesses is investigated with an embedded mixed methods research design comprised of qualitative content analysis, factor analysis and analysis of variance.
Findings
Up to 78% of small businesses are facing MA challenges that stem from organisation, systems, personnel and/or resources. Based on the present findings, MA challenges do motivate small businesses to at least consider investing in MAA as small businesses facing challenges are more likely to acquire systems and services than those reporting no issues at all. Hence, small business managers seem to not only recognise where their challenges lie, but also seek ways to improve the situation through MAA. The analysis also reveals that companies with the highest MA know-how have the best average solvency, suggesting that small businesses indeed benefit from MAA. Interestingly, the performance at medium levels of know-how declines while investments increase, revealing a “decreasing solvency phenomenon”. Potential explanations are, e.g. the MA not fitting the company’s exact needs, or information usability and use being limited by poor MA understanding.
Originality/value
The originality of the research lies in exploring the interfaces between MA challenges, MAA and small business performance using distinctive embedded mixed methods research design.
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