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This study investigates the processes leading up to the implementation of a change in an accounting system: how managers identify a need for change, and how possible solutions are found and evaluated. The study is set in twelve small, growing firms; a category of firms whose success is important for driving economic growth (Bhide, 1999; Storey, 1983). This is also a setting where change is frequent and relatively simple, making the change process more easily observed than in large firms. The challenges of the research design were met using research techniques that are new or uncommon in accounting literature: the Cognitive Interview (Milne et al., 1999), narrative analysis (Llewelyn, 1999), and data displays (Miles et al., 1994). Five stages that lead up to implementation are identified, along with the factors that act within each stage. Facing a Changing Situation is the first stage, in which a need for management accounting and control change develops. Key managerial tasks are identified in the four stages that follow: perceiving and interpreting signals about how well the firm is performing (Situation Awareness); finding gaps between how the firm is performing and how they want the company to perform (problem Finding); finding potential solutions to the problem (Solution Finding); and evaluating potential solutions in order to choose one (Decision Making). Finally, a typical chronological sequence for the stages is found, and divergences from this sequence explored. The conclusion of the thesis is that momentum for change depends on an interaction between the individual and the situation. To successfully respond to an organisational challenge the individual needs good situation awareness, appropriate value judgments, a variety of sources of inspiration, and effective evaluation methods. Finally, natural, messy, non-linear change processes can be as effective, and perhaps more efficient, than analytical, orderly, linear change processes.

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No description available.

Product-costing is recognised as being erroneous. This thesis examined the background to this inaccuracy through the undertaking of case studies in a range of industrial contexts, in particular the automotive and aerospace industries. Initial research and analysis of the costing literature identified distinctive engineering and economic perspectives underpinning the process. The thesis argues partly that it is the emphasis on these positions and the inadequate attention to human and cultural factors, such as communication, that have contributed to deficient costing processes. To address this a second phase of research was undertaken along side an analysis of human factors literature, to establish where and how qualitative changes might be made to improve organisational product-costing. Social and environmental issues were observed as being ubiquitous to the costing process generically; and subsequently needed to be considered on an interdependent basis alongside the physical, explicit components. The thesis presents an integrated cost-knowledge framework (ICKF), derived from the combined findings of industrial examinations, coupled with cost and cultural literatures. The research phases originally produced six main themes, which referred to the primary concerns correlated to the process, both physically and humanistically; they included issues surrounding: Resource, Data / Information, Comprehension and Training needs. These cost-themes directly related to the cost-knowledge framework. The latter comprises of eight identified knowledge types, recognised to be essential in compiling a cost; all of which are interlinked, incorporating: Costing Process knowledge; knowledge of Design, Materials, Risk, the Product, and Manufacturing Process, all in juxtaposition with Communication and Organisational Cultural knowledge. Hence the themes and knowledge framework focused on an amalgamated costing perception, of both the implicit and explicit aspects of the process. This lead to a question of the lateral dissemination of this Industrial Integrated Cost-Knowledge Framework, ICKF, via proposed costfocused training. In order to develop costing in this broader, inclusive context the training was designed to tackle softer, ‘social’ and ‘human issues’ by incorporating them within the programme, fused with the tangible, technical components of the cost-process. With research participation constituting 25 international organisations, the industrial implementation of the ICKF via targeted, specifically formulated training will assist in addressing the challenges currently experienced within the process of product-costing.

At the heart of many core Management Accounting (MA) practices there is a potential mismatch between the assumption of a materially predictable future operating environment, and the reality of an uncertain and unpredictable world. Practices such as budgets, product costing, investment appraisal and financial projections, aimed at facilitating the achievement of profitability goals, are based on the assumption that the future is sufficiently stable and predictable to benefit from analytical calculation. However, we live in a world where the future can be uncertain, unstable and unpredictable. Does this mean that when operating conditions become unstable, unpredictable and uncertain many MA practices lose their core modus operandi? This thesis addresses this issue through an interwoven mix of a longitudinal case study and literature reviews spread over three projects. The case study was longitudinal and based on in depth participant observation. The firm involved was a £38m UK logistics company. The study benefited from totally unrestricted access to all strategic, financial and operational activities and data, because of the author’s senior role in the firm. The literature review was conducted using a targeted systematic review (Tranfield and Denyer, 2003) supported by additional narrative reviews. This synoptic paper provides a reflective synthesis of the findings and the contribution of the three projects which together constitute the research. Four core interlinked findings emerged from the study, based on the assumption that the achievement of profitability goals is the primary goal of the organisation. First, building on the proposals of (Otley, 1999) a framework showing the relationship between MA, profitability, operations and uncertainty is proposed. It demonstrates how MA financialises operations by creating a parallel financial space to the operational space; how profitability outcomes result from the financial consequences of operational actions; how the role of MA is to inform and control operational actions in a manner that achieves profitability goals; and how uncertainty has a critical impact on MA functionality. Second, the differing dimensions and implications of uncertainty are distinguished. The principal distinction is between external and internal uncertainty. External uncertainties arise from unanticipated changes from customers, suppliers and the market and thus affect the predictability of the future on which plans and targets are based. The data gathered during the course of this research suggests that external uncertainty tends to be typified by pockets of instability oscillating with periods of relative stability. Internal uncertainties occur in relation to management effectiveness, reporting validity and choice of appropriate accounting perspective (five are identified - Product, Customer, Throughout, Process, Financial Accounting). The external uncertainties magnify the impact of the internal uncertainties by potentially changing and thus de-stabilising the requirements of management, the validity of reporting and the appropriateness of the accounting perspective used. Third, Management Accounting Systems (MAS) respond to external uncertainties, and the aspirations of external financial stakeholders for increased profitability, by operating in two differing modes – the first is fixed/control (Fixed), the second is inform/flex (Flex). Fixed is the default mode and assumes conditions of relative certainty; the role is to control the achievement of agreed plans and targets. Flex is intermittently initiated when, signalled by feedback, the impact of external uncertainties or profit pressures trigger the need to change original plans and targets. Calculative analysis informs revised operational plans aimed at maintaining the achievement of profitability goals; targets are flexed to reflect the changes. The intent is to develop a revised position of relative stability in which the achievement of profitability plans and targets can be controlled via reverting back to Fixed. The process is therefore continual, but appears to be typified by an uneven series of oscillations between the two modes. Four, the Financial Accounting (FA) profitability measure, with the goal derived from external financial stakeholders, provides partial responses to the three internal uncertainties by introducing for each an element of certainty. For management effectiveness uncertainty, the profitability goal provides a relatively certain external referent which can be cascaded down the organisational structure, and against which performance can be evaluated. For reporting validity uncertainty, FA standards provide an authoritatively accepted definition of profitability, so that reported profitability is treated as if it were ‘true and fair’. For multiple accounting perspectives uncertainty, four perspectives (Product, Customer, Throughout, Process) make up a range of MA tools for developing actions to achieve target profitability levels, and the fifth (FA) provides the definition of profitability; all five are complementary and compatible as their differing aggregations are composed of the same underlying financial transactions. These responses, however, are only partial as the aspirations of external financial stakeholders are in themselves substantially self referential and liable to change, and the underlying uncertainty of FA reporting validity still exists, even if treated as if it does not. The study contributes to the further development of MA theory. It extends the Otley (1999) framework towards linking operations and profitability through parallel operational and financial spaces, and incorporating the central role of uncertainty. It adds to the debate in MA research on uncertainty by providing a classification of its dimensions, and its impact on triggering a requirement for differing MA modes. It highlights the central role of profitability in providing a stable certainty of purpose as a counterbalance to inherent internal and external uncertainties. It provides a clear identification of the differences and complementarities between MA and FA, FA defining the quantum of profitability achieved, MA facilitating the achievement of profitability goal. Finally the study inputs to a wide range of issues addressed by MA research which at their heart reflect the impact of uncertainty (Budgeting, Accounting Representation, Costing Perspectives). The study contributes to practice by proposing a set of ten tenets designed to provide guidelines for MAS development, implementation and evaluation. These are drawn from a cross sectional deconstruction of the four findings, viewed as a whole, aimed at identifying the specific factors that have direct implications for practice. The intent is that these tenets provide a bridge between theory and practice, based on the premise that, since MA theory was drawn from practice, the test of MA theory development is its applicability and relevance to practice.

Management accounting information systems (MAISs) play an important role in supporting continuous improvement efforts and management decision-making activities. MAISs provide manufacturing companies with internal financial and some non-financial information required for the three essential functions of planning, controlling and performance measurement. According to Drury (2000), "management accounting systems accumulate, classify, summarize and report information that will assist employees within an organization in their decision-making, planning, control and performance measurement activities". Performance measurement is one of the most important aspects of MAISs. The development of the concept of performance measurement is the direct result of several dramatic changes in the way today's business environment is structured and how companies employ world class manufacturing (WCM) philosophies or techniques to compete for marketplace advantages. These changes have impacted on the way companies are organised and in skills required to manage, motivate, and empower the workforce to support continuous improvement. Other changes, especially in the Egyptian manufacturing environment, have come from the effect of international agreements, such as General Agreement on Tariffs and Trade (GATT) and World Trade Organisation (WTO), and organisational pressures, such as the ISO 9000 programme. This thesis presents a theoretical and empirical study to determine 'what', why', and 'how' performance measurement systems (PMSs) are changing, as a challenge for MAISs, with the adoption of Just in Time (JIT) and Total Quality Management (TQM) philosophies. A discussion of these questions is presented in Chapter 8. In order to investigate how PMSs can best be used to support the continuous improvement philosophy of JIT and TQM, a model for developing PMSs in a JIT and TQM environment was constructed (see Figure 8.1). This study has used a qualitative method of research. The research findings and the model for developing PMSs in a JIT and TQM environment have been obtained from a literature review and data collected from two Egyptian pharmaceutical companies. The model, as it stands, is exploratory in nature. It proposes a body of ideas that form a new theory formulated for developing PMSs in a JIT and TQM environment. The model could be applicable to manufacturing companies, which have started or plan to implement JIT and TQM philosophies, since it provides a framework for the development and use of PMSs, rather than prescriptive lists of measures and reports that should be used. Norreklit (2000) indicated that models are needed which deepen our understanding of how PMSs are created, and to this end MAISs research has to make its contribution.

There have been calls for more research into how changes in supply chain management practices (SCMPs) affect management accounting practices (MAPs) and in turn affect performance. While the linkages between SCMPs, MAPs and performance may seem intuitive, to date there has been limited empirical research testing these relationships. The objective of the research is therefore to test a number of hypotheses regarding the association between these variables and firm performance based on the contingency theory framework. Data were collected through a postal survey of senior accounting executives from the Consumer and Industrial Products Sectors under Malaysian publicly listed firms. The relationships between SCMPs, MAPs, supply chain performance (SCPERF) and overall firm performance (OPERF) were analysed using Partial Least Squares (PLS) path modelling in two conceptual models via PLS-Graph Beta Version 3. To supplement the questionnaire survey, semi-structured interviews were used to gather the experiences and views of selected companies as means to triangulate the research study. It was found that SCMPs are directly related to both MAPs and SCPERF, that MAPs are directly related to SCPERF, and that SCPERF was directly related to overall firm performance (OPERF). Although SCMPs and MAPs were not directly related to OPERF, they were related to OPERF indirectly. MAPs were categorized into stages of their evolution as postulated by the International Federation of Accountants (IFAC). The most sophisticated MAPs, however, have a positive direct and indirect association with OPERF. Supply chain performance (SCPERF) is found to be an important mediator linking SCMPs and MAPs to OPERF. The survey findings which are re-affirmed by the interviews are consistent with the contingency theory approach. This research adds to the existing body of research by developing a framework for linking a firm’s SCM practices to its management accounting practices, supply chain performance and overall firm performance. These findings provide management with strategically important insights that strategic supplier partnership, customer relationships, information management and internal supply chain activities are primary factors in SCM that will influence MAPs and supply chain performance. Managers can thus use MA information to effectively create an efficient SCM environment that will lead to improved SCPERF, which will in turn enhance overall firm performance. Areas where future research may prove fruitful are also discussed.

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During the late 1980s considerable publicity was given to the criticisms of management accounting. In response to these criticisms new innovations emerged. The innovation that has attracted the greatest interest has been activity-based costing (ABC). This study gathers empirical data to examine various issues relating to ABC derived from an extensive review and synthesis of the relevant literature, including the contingency theory literature. The major aims of the study are to investigate the extent to which various contextual factors influence the adoption of ABC systems, to determine the reasons and factors which have discouraged firms from adopting ABC and to examine the impact of various factors in determining the success of ABC systems. Other objectives include examining the importance of specific motives for implementing ABC systems and examining the extent to which other accounting innovations and strategic management accounting practices are associated with the adoption/non-adoption of ABC systems. A postal questionnaire was conducted using 1,000 UK manufacturing and nonmanufacturing organisations with an annual sales turnover in excess of £50 million as the target population. Not-for-profit organisations were excluded from the population sample. The findings are based on 176 responses (a usable response rate of 19%). Strong support was found for the intensity of the competitive environment, size, extent of the use of lean production techniques (including JIT techniques), importance of cost information, extent of the use of innovative/strategic management accounting techniques and corporate sector having a significant influence in the adoption of ABC systems. Using factor analysis, three factors were found to be significantly associated with ABC success. They were managerial understanding and the ability to use ABC information, positive attitudes by accounting staff towards ABC and adequate training for ABC and a clear understanding of its purposes. The dominant motives for implementing ABC related to the deficiencies of the existing system such as the existing system not providing useful information to management, it was necessary to update the existing costing information system and the existing costing system was not reliable. The most important reasons for not implementing ABC were that the perceived benefits did not justify the cost of implementing it, most of the indirect costs were fixed, the existing system was considered satisfactory for controlling overheads and the general lack of support from top management or individuals to act as champions. A distinguishing feature of the study is that it overcomes the deficiencies of previous ABC studies that have used bivariate statistical tests. These studies have examined independently, without controlling for the impact of other variables in the model, whether the difference between ABC adopters and non-adopters are statistically significant in respect of each of the selected contextual variables. This study uses mutivariate binary logistical regression that systematically controls for the impact of the other explanatory variables that are likely to influence the adoption of ABC.