Research in management accounting innovations: an overview of its development

Nur Haiza Muhammad Zawawi

and

Zahirul Hoque*

Department of Accounting La Trobe University, Australia

*Corresponding author’s address: Professor Zahirul Hoque, School of Accounting, La Trobe University, Victoria, 3086 Australia; Tel (613) 9479 3433; Fax (613) 9479 2356; Email: z.hoque@latrobe.edu.au

Paper prepared for the Second New Zealand Management Accounting

Conference, Auckland 20-21 November 2008

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Research in management accounting innovations: an

overview of its development

Abstract This paper reviews prior research in management accounting innovations covering the period 1926-2008. Management accounting innovations refer to the adoption of “newer” or modern forms of management accounting systems such as activity-based costing, activity-based management, time-driven activity-based costing, target costing, and balanced scorecards. Although some prior reviews, covering the period until 2000, place emphasis on modern management accounting techniques, however, we believe that the time gap between 2000 and 2008 could entail many new or innovative accounting issues. We find that research in management accounting innovations has intensified during the period 2000-2008, with the main focus has been on explaining various factors associated with the implementation and the outcome of an innovation. In addition, research in management accounting innovations indicates the dominant use of sociological-based theories and increasing use of field studies. We suggest some directions for future research pertaining to management accounting innovations.

Introduction A considerable number of scholars have conducted reviews on management accounting and control research, with particular timeframe and scope.1 The purpose of this paper is to extend these reviews, particularly by Hesford, Lee, van der Stede and Young (2007), Ittner and Larker (1998), Scapens and Bromwich (2001), Selto and Widener (2004), Shields (1997), Otley, Broadbent and Berry (1995), and Young and Selto (1991). These authors examined the topics studied, theories applied and methods used in the literature to provide understanding on the trend and development of management accounting and control research. Building upon these reviews, in this paper we focus on research in management accounting innovations to explore its recent development and to come up with some directions for future research. Table 1 summarizes the attributes of the above reviews and illustrates how the current review is different from prior reviews. As can be seen from Table 1, Young and Selto (1991) reviewed empirical research in cost management topics published prior to 1990. Their review centred on a framework that outlines several interrelated variables in order to

1 The review papers on management accounting , inter alia Elnathan, Lin and Young (1996), Hesford et al. (2007), Ittner and Larker (1998), Ittner and Larcker (2001), Langfield-Smith (2008), Otley et al. (1995), Scapens and Bromwich (2001), Selto and Widener (2004), Shields (1997) and Young and Selto (1991).

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explain the productivity paradox. Otley et al. (1995) include research studies on management control systems covering the period between 1954 and 1995. They focused on management control literature and categorized various managerial aspects into closed or open systems and rational or natural systems perspectives. Ittner and Larcker (1998) captured the trend of innovations in performance measurement from research studies on economic value measures, non-financial measures, and performance measurement initiatives in government agencies prior to 1997. They selected articles that are mainly on surveys conducted by consulting firms and government agencies.

INSERT TABLE 1 HERE

Selto and Widener (2004) entail wider coverage but limited to articles on conventional management accounting topics and topics that are prominent in professional finance and accounting literatures. Their review involves 14 management and accounting research journals and 7 professional magazines and journals, in order to identify the divergence between management accounting research topics and practice issues. Other reviews, however, do not rely on a specific area of management accounting, for example, Shields’ (1997) review focuses on articles published by North American for the period of 1990 -1996. His review is limited only to six leading academic accounting journals.2 Scapens and Bromwich (2001) explored the articles published in Management Accounting Research journal within the period of 1990 to 1999. They also briefly compared the state of the research of those articles to the North American papers reviewed by Shields (1997). Hesford et al. (2007) analysed management accounting articles in 10 journals published during 1981 to 2000. They observed the evolution of the research in this field and examined the articles’ citations to reveal the influential individuals, topics, methods, and source of disciplines. Overall, the above reviews have provided an overview of the state of the management accounting literature and encapsulated the researches done in the past towards identifying future directions. Nevertheless, today’s business situation within which an organization must operate is rapidly changing. Up until now, there are a number of research studies that have responded to the suggestions of the above reviews. The earliest article was published in 1954, which was reviewed by Otley et al. (1995) and the latest is reviewed by Selto and Widener (2004) and Hesford et al (2007) - both concluded their reviews in 2000. The current paper seeks to address the timeline issue by including the articles published until August 2008. Although most of the above reviews place emphasis on modern management accounting techniques, however, it is believed that the time gap between 2000 and 2008 could entail many “new” or innovative accounting issues.

2They are (1) The Accounting Review, (2) Accounting, Organizations and Society, (3) Contemporary Accounting Research, (4) Journal of Accounting and Economics, (5) Journal of Accounting Research, and (6) Journal of Management Accounting Research

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In addition, as management accounting field is a global issue, the current review features primary accounting journals from various regions. This includes journals explicit to management accounting areas (Management Accounting Research and Journal of Management Accounting Research), practitioner journals (Cost Management and Advances in Management Accounting) and other leading accounting journals listed in Table 2. The review mainly covers all publications of the journals up to the most current ones, specifically from 1926 to 2008. The focus is on the articles pertaining to management accounting innovations, with inclusion of both empiric-based studies as well as qualitative papers. As this theme involves a vast area, this paper thus sets the boundary by trying to define management accounting innovations that may best explain the articles reviewed.

Defining management accounting innovations In general, management accounting innovation in the literature has been observed by the emergence of contemporary management accounting techniques. A clear distinction between traditional and contemporary management accounting techniques is the latter are strategic-focused that combine both financial and non-financial information (Chenhall and Langfield-Smith, 1998). Recently, Chenhall (2008) recognised management accounting innovations as strategic management accounting “to connect the strategies to value chain and link activities across the organization that relates to cost objects” (p. 525). According to Chenhall (2008, p. 525), among the management accounting techniques that have these characteristics are benchmarking, activity-based costing, activity-based management, target costing, business process re-engineering, theory of constraints, balanced scorecards, total quality management, and value-chain management. Building upon this broader definition, this paper considers management accounting innovation research that primarily associated with the above contemporary management accounting techniques. Further, this paper classifies the above practices into two: management accounting and control system (MACS) and operations management (OM). According to Hansen and Mouritsen (2007), management accounting is regarded as performance number ‘at a distance’ whereas operations management is considered as ‘hands-on’ activities in operations. In addition, the literature demonstrates that tensions always exist when the management accounting system needs to keep pace with technological advancement, denoted as accounting lag by Dunk (1989) and productivity paradox by Young and Selto (1991). In light of this issue, the current review takes into account and show the division of both practices. With regard to the definition of innovation, the term is generally equated with the newness of an idea. For example, Abernethy and Bouwens (2005) perceived management accounting system innovation as either new systems or the redesign of an existing system. Within innovation studies, the term entails different interpretations particularly when referring to organisational context. An

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innovation is perceived when it is invented or regarded as novel whether it is adopted or not (Zaltman, Duncan and Holbek, 1973), or when an idea or procedures is first or early used (Becker and Whisler, 1967), being implemented (Evan and Black, 1967) and become successful (Mohr, 1969). This has also been reflected in the diverse management accounting researches particularly pertaining to the innovation and change literature. There are different stages of the innovation and change processes attached to the studies of management accounting practices ranging from the adoption decision (e.g. Brown, Booth and Goacobbe, 2004; Malmi, 1999) to the implementation (e.g. Argyris and Kaplan, 1994; Krumwiede, 1998) and the success of the implementation (e.g. Briers and Chua, 2001; Shields, 1995).

In this paper, innovations of management accounting and control systems signify various issues related to the initiation, implementation and internalisation of contemporary management accounting and control systems and advanced operation management tools such as JIT and TQM. This includes studies that investigate management accounting innovations in general and studies on specific management accounting practices. These studies involve different levels of analysis at individual levels (Emsley, 2005; Hicks, 1978), innovation levels (Ax and Bjornenak, 2005; Bjornenak and Olson, 1999), organisational levels (Hussain and Hoque, 2002; Lin and Yu, 2002), industry-levels (Ittner and Larcker, 1998; Lapsley and Wright, 2004) and national levels (e.g. Alcouffe, Berland and Levant, 2008; Firth, 1996).

From our observations, so far, no existing reviews have built upon the development of research in management accounting innovations. Thus, this paper is envisaged to make an incremental contribution to the management accounting literature to explore the likely trend and the state of the research of management accounting and control system and operations management. It endeavours to synthesize the published researches in management accounting innovations; thereby develop a better understanding of the issue. Fruitful suggestions then could be offered for future research in this area. The rest of the paper is organized as follows. Section 2 outlines the review method used. Section 3 discusses the topics, research settings, research methods, theories and findings of the articles reviewed. Finally section 4 provides concluding remarks and suggestions for future research.

Review method As shown in Table 2, the current review involves 22 accounting journals namely ABACUS, Accounting and Business Research (ABR), Accounting, Auditing and Accountability Journal (AAAJ), Accounting and Finance (AF), Accounting Horizon (AH), Accounting, Organizations and Society (AOS), Advances in Management Accounting (AMA), Behavioral Research in Accounting (BRA), British Accounting Review (BAR), Contemporary Accounting Research (CAR), Critical Perspectives on Accounting (CPA), European Accounting Review (EAR), Journal of Accounting and Economics (JAE), Journal of Accounting and Organizational Change (JAOC), Journal of Accounting Education (JAED),

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Journal of Accounting Literature (JAL), Journal of Accounting Research (JAR), Journal of Cost Management/Cost Management (CM), Journal of Management Accounting Research (JMAR), Management Accounting Research (MAR), Review of Accounting Studies (RAS), and The Accounting Review (TAR). The articles on management accounting innovations were searched using the term ‘management accounting innovation’. The search was targeted on the articles published on online database. However, for the purpose of the analysis, articles on financial accounting, corporate finance and research method topics, book reviews, committee reports and discussions were omitted. For organisational and employees’ performance measure, the selection was based on the use of non-financial measure or a combination of both financial and non-financial measures. Research in management accounting innovations comprises of two: first, research that focuses on management accounting innovations in general; and second, research focuses on a specific management accounting innovation such as ABC and the balanced scorecard. The result of database search is reported in Table 2. The third column of the table indicates the periods by which the search was conducted, the forth column indicates the number of articles found using keyword search of management accounting innovation and was ranked in descending order, as showed in column seven. The number of articles selected for review is reported in fifth column. As can be seen from the table, the search found 666 articles on management accounting innovations during the period between 1926 and 2008, both inclusive. From these articles, 89 were selected for further analysis, as they are widely cited articles and they are published in prestigious, internationally widely accepted ranked journals.

INSERT TABLE 2 HERE

From the ranking, large numbers of articles found from the database search are from TAR, AAAJ, JAR and EAR journals, however relatively a few were selected for the review. It is probably due to the function of search operation as described in the table’s footnotes. Meanwhile, the journals of ABACUS, ABR, BAR, JAED, JAL, RAS and CAR appear to publish very small amount of management accounting innovations research. This supports the overall idea of these journals that place emphasis on quantitative and empirical studies with less on management accounting topics. However, other generalist accounting journals like AOS, BRIA, JAOC, and AH place more equal weight on qualitative and quantitative management accounting research. They comprise of relatively large number of articles in this area with most of them reflect the scope of management accounting innovations defined earlier. With regard to the journals that pertaining to the other disciplines, AF seems to have some publications on management accounting innovations, but none in JAE. As expected, accounting journals specific to management accounting discipline comparatively constitute large number of management accounting innovations studies. From the table, JMAR publishes more articles on this area than its counterpart, MAR. Likewise, the articles from JMAR provide the largest

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number of articles selected for the review, which tend to focus on performance measurement system and activity-based system topics. It is also found during the search, the field research methods have been discussed and encouraged in JMAR (i.e. Ahrens and James, 1998; Baxter and Chua, 1998; Kaplan, 1998) although like other US-based journals, this journal is dominated by quantitative studies. With regard to the practitioner journals, JCM publishes more research on management accounting innovations than AMA. Besides, by comparison to the other journals, the articles from JCM discuss more diverse management accounting practices, focusing on the practical insights and experiences from case studies. Appendix 1 summarises the attributes of the studies under review. The table in the appendix comprises of 9 columns on author/year, journal, article type, key issues addressed, setting, theory, research method and key findings. For the research type, the articles were categorised whether it is a case study, empirical, experimental, descriptive, conceptual, practical insight or review. Theory used by the researches was based on the classification by Shields (1997), which are economic theories, psychological theories, sociological theories, organisational behaviour theories, production and operations management theories, and strategic management theories. The classification of research methods is done following Shields (1997) and Scapens and Bromwich (2001) of mathematical analytic, survey, archival, laboratory experimentation, case/field study, literature review, and multiple research methods.

Findings This section discusses the findings from articles reviewed and briefly compares with previous reviews. The topics, research settings, theoretical frameworks, methods used, and results in the sample articles are summarised and analysed.

Topics As mentioned above, the articles for the review are categorised into two: management accounting innovations in general; and management accounting innovations as specific practices. Table 3 reports the frequency of topics in the articles which shows that 18 articles are on the management accounting practices as a whole, while 71 are specific to the 11 practices of management accounting and control system and operations management.

INSERT TABLE 3 HERE As can be seen from Table 3, the reviewed articles are dominated by the research on the innovation of management accounting and control system. Researches within this ambit concentrated on non-financial measures of

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organisational and manufacturing performance measure (17), employees’ performance measures (11) and activity-based costing and management (ABCM) (19). Other contemporary techniques of MACS are balanced scorecards (8), strategic management accounting (3), value-based management (3), benchmarking (1), and target costing (1). The articles on operations management include total quality management (5), lean manufacturing (2) and supply-chain management (1).

As Shields (1997) found few articles on non-financial performance measures, the current review observed the increasing trend of the researches on those areas, especially on 1998 thereafter. This is consistent with Hesford et al. (2007) reported that the significant shifts of control literature from budgeting and organisational control to performance measurement and evaluation topics. We find that, in the sampled articles, studies in earlier years generally discuss the importance and performance consequences of non-financial measures. Towards recent years, researches tend to examine the way by which the non-financial measures being designed and used to improve performance. Research in ABCM received considerable attention and concentrated on implementation and contextual issues such as top management’s support and resource constraints. Our review also reveals an inconclusive debate on the mixed results in previous studies regarding the adoption of ABCM, despite its widely claimed benefits. In this light, it has been observed that the articles under review attempted to identify various variables that are associated with the adoption, use and effectiveness of ABCM. Recently, Kaplan and Anderson (2007) introduced a new innovation of ABC, namely time-driven activity-based costing to overcome the subjectivity and complexity of conventional ABC. In the revised model, time is used to drive costs directly from resources to cost objects, thus skipping the activity-definition stage and allocation of resource costs to activities as in conventional ABC (Kaplan and Anderson, 2007) In contrast to ABC, the other innovation by Kaplan and Norton (1992, 1996, 2001), the balanced scorecard (BSC) has been much less researched. Reason for this might be due to its application does not explicitly indicate the use of BSC, but the use of financial and non-financial information or, by other names. According to Malmi (2001), the determination of a measurement system as a BSC is always far from clear. The BSC has similar attributes as France’s Tableaux de Bord (Lebas, 1994) and often supplemented with other management techniques (Ax and Bjornenak, 2005). Researchers usually presume a BSC when it involves both financial and non-financial measures whereby other frameworks also constitute the same elements. The distinctive features of the BSC are that it should contain the perspectives derived from the original four; built from financial and non-financial measures; the measures are derived from organisational strategy and impose cause-and-effect relationships (Chenhall, 2005; Malmi, 2001). Overall, the current review agrees with Shields (1997) that recent research tends to extend the topics that have already been studied. Researchers incline to focus on popular tools in management accounting and control systems which could lead to lack of diversity of the topics studied. In the current review, research

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in value-based management, benchmarking, life cycle costing, and target costing has received little attention (see also Hesford et al., 2007; Selto and Widener, 2004; Shields, 1997). Despite the continuing concern on the correspondence of management accounting practices to manufacturing technology, not much study incorporates different operations management techniques in accounting journals. TQM and JIT are common operations management techniques tested in management accounting literature, whereas lean manufacturing, supply chain management, business process reengineering, and theory of constraints are relatively rare. According to Ittner and Larcker (2001), the research on the interface of accounting and operations management has substantially reduced due to increase interest on “new” topics such as BSC, intangible assets and economic value added. This underdeveloped body of research has resulted in many research topics unexplored and conflicting results remain unresolved (Ittner and Larcker; 2001).

Settings Table 4 reports the distribution of research settings in the sampled articles. The classification of the settings is based on Scapens and Bromwich (2001) and Shields (1997). From the table, research in management accounting innovations is centered on manufacturing industry (29), comprises of production and services activities of manufacturing companies. Other setting of single industry is services (6) which comprises of retailing, banking, financial service, hotel and health care whereas specific industry (2) comprises of telecommunication and airline industries.

INSERT TABLE 4

Thirteen studies were conducted in multiple industries almost exclusively involve survey and archival methods. Six studies conducted in the public sector and nine employed generic settings.3 Researches in inter-organizational, international, and multinationals companies are very limited in this sample, consistent with Shields (1997). Nineteen studies that do not involve research settings are conceptual/practice-oriented papers. Heavy emphasis on manufacturing industry is consistent with the traditional involvement of management accounting practices (Scapens and Bromwich, 2001; Shields, 1997). Studies in manufacturing settings mainly related to the cost management and management control such as activity-based costing and activity-based management, performance measures and quality-related measures as well as operations management tools. Further, the current review shows that research in management accounting innovations places similar importance on non-manufacturing settings. The performance measurement initiatives and ABCM are widely studied in service industry and

3 Generic setting involves general, abstract or simplified setting for analytic modeling or experimental hypotheses testing (Scapens and Bromwich, 2001; Shields, 1997) .

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public sector organisations. This indicates that innovations of management accounting are also applicable to non-manufacturing settings, which might be explained by the high intensity of competitive pressures in the service industry (Hussain and Hoque, 2002) and public sector reform (Lapsley and Wright, 2004).

Theories Table 5 provides the distribution of theories used in the articles reviewed. There are 18 articles which are based on sociological theories, 13 articles based on economics theory, 11 articles on contingency theory, and 9 articles based on organisational behaviour perspectives. Others rely on production and operations management (2), strategic management (1), psychology (1) and the combination of multiple theories (13). The other 2 articles were based on Simon’s levers of controls.

INSERT TABLE 5 HERE

Within these 89 articles, there are a number of articles that do not explicitly indicate the theory used; with most of them develop the hypotheses from the findings of previous researches. Usually, these articles using survey method and some are conceptual papers. According to Scapens and Bromwich (2001), as the theory is used implicitly in many studies, they suggested to infer the underlying theories from the content of the papers. However, as expected, 19 articles in practitioner or professional journals have not grounded on any theoretical framework. In management accounting innovations research, sociology theories are derived from institutional theory, theory of translation, actor-network theory, innovation diffusion theory, stakeholder theory, structuration theory, trust theories, and enabling vs. coercive formalisation. Economics theories mainly involve principal-agent relationship with some articles based on classical utility theory, production cost economics, and Marxian economics. Researches grounded on organisational behaviour are associated with motivational theories namely goal theory, expectancy theory and X and Y theory Researches based on production and operation management theories incorporate quality and production process layout whereas strategic management deals with strategy typologies and strategy process. Psychology theories include conflicts and social psychology. Shields (1997) documented that half of the studies from North American were built on economics theory. The current review, however, indicates that research in management accounting innovations also heavily sourced from other disciplines namely sociology, organisational behaviour, and contingency theory. As the current review is on management accounting innovations, the sociology theory such as institutional theories and innovation diffusion theories prevail. These theories are mainly used in the diffusion and adoption studies to identify the factors that influence the phenomenon. Besides that, the theories stemmed

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from alternative management accounting stance (Baxter and Chua, 2003) has received a particular interest in the sampled articles. With regard to management accounting change, the alternative approach emphasises the research on micro context and recognises the influence of individual. Old institutional economics and new institutional sociology are notable in analysing the process especially in field studies. Nevertheless, these theories are restricted to the abstract process of stability and change (e.g. Burns and Scapens, 2000) besides the notion of isomorphism (e.g. DiMaggio and Powell, 1983; Meyer and Rowan, 1977). They appear to overlook the technical rationality and the implementation outcome. Therefore, Lounsbury (2008) highlighted the institutional rationality as a new direction for research to divert away from conventional neoinstitutionalism. The institutional frameworks further developed to embrace organisational diversity, for instance, the concept of institutional entrepreneurship that explores the roles of powerful actors that bring about change (Garud, Hardy and Maguire, 2007). However, the actor-network theory constitutes the similar element of actor, thus clear distinction is necessary to justify the theory chosen. The difference between these theories could be seen in the definition of actor and the roles of power. According to Battilana (2006), institutional entrepreneurship emphasises the role of powerful actors that have certain social position which enables them to conduct divergent organizational change despite the institutional pressures. This theory focuses on human actors that have the ability to control resources to shape new institutions or transform existing ones (Maguire, Hardy and Lawrence, 2004). On the other hand, actor-network theory does not differentiate between people and objects and it treats society, organisations, agents and machines as interactive effects (Law, 1992). These elements are embedded in heterogeneous network that influence the change. This theory is concerned with issues of power but not related to heroic or powerful individual; instead, it is affected through the production and reproduction of the network (Hassard, Law and Lee, 1999).

Research methods Table 6 shows the distribution of research methods used in the sampled articles. The most frequent method used is survey (30), followed by case study/field study and conceptual/practical insight, each with 18 articles, 8 articles using multiple research methods and 8 using archival. Other methods are experimentation (4), mathematical analytic (3), literature review (1), and action research (1).

INSERT TABLE 6 HERE

It appears from our review that quantitative methods of survey, experimentation and mathematical analytic are dominant in these articles. Survey method that is employed in descriptive studies particularly to identify the factors that influence the degree of adoption of management accounting practices and

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the reason they were used, apart from the extent of financial and non-financial information was utilised. Explanatory-based studies using survey method seek to find optimal relationship engaged with the implementation of the practices with the outcome variables and contextual variables. However, survey methods often associated with the controversial of biasness, response rate, collection procedures, and inconsistency of findings with theory and previous researches. As the survey method is imperative in management accounting research, researchers need to follow the guidelines on the appropriate survey procedures (e.g. Sekaran, 2003; Neuman, 2000). For example, to improve the response rate, Dillman (1983) suggested the use of Total Design Method (TDM), which focuses on the design and the procedures of the survey. According to him, among the principles of TDM in the design of the instrument are to avoid the question in cover page and in last page, the first question applies to everyone, interesting and easy to answer and place the most-interesting and topic-related questions first, followed by potentially objectionable question and finally demographic information. For the implementation procedures, among the suggestions by Dillman (1983) are regarding the appropriate content of cover letter with printed mailing date, individual names and addresses and signed by researcher with a blue ballpoint using sufficient pressure. He suggested a postcard follow-up reminder be sent 1 week after first mailout, after 3 weeks a second cover letter and questionnaire to non-respondent and after 7 weeks another cover letter and replacement questionnaire. Mathematical analytic that primarily involves modelling was used in testing principal agent relationship associated with compensation and determination of the effect of multiple cost drivers. As opposed to the other review papers, this method is relatively rare in this review. Archival method involves the collection of quantitative and qualitative data. Quantitative data is related to firms’ financial and non-financial information retrieved from the firms’ databases and public database. Qualitative data is obtained from publications and firms’ documentations. The quantitative archival research, mathematical analytic and experimentation almost entirely coming from North American journals and the authors are affiliated mainly with North American institutions. This might hold true as due to the education system especially in research programme. The doctorate programme in the U.S. is more rigorous that consists of coursework, comprehensive examinations, internship and a thesis. For the first two years normally the students need to complete the coursework on accounting subjects, research methods and various quantitative research tools such as statistics and econometrics before commencing their research. In the U.K. and Australia, usually there is little or none course components in many universities and the programme tends to be shorter period than in the U.S. On the other hand, the qualitative analysis appears mostly in U.K. journals, AOS and MAR (Selto and Widener, 2004). In this review, the percentage of case study/field study research is increasing by comparison to Shields (1997). Case study/field study methods are paramount in understanding management accounting innovations and change. As the respond to change is unique to different organisations, these methods can explore many aspects

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depending on the research questions and theory chosen. In the sampled articles, case study/field study research is centred on the implementation of management accounting practices, ranging from the reasons of the design and adoption, to the multiple aspects of application and implementation processes. As survey is likely to be individual perception on predetermined variables, case study primarily involve abstract and vast area of social reality (Morgan and Smircich, 1980; Yin, 1994). The reliability of data could be improved through field study whereby the information obtained from one source (e.g. interview) could be supported by other sources (e.g. documentation analysis and survey). To further enhance the external validity and reduce observer biases, Yin (1994) suggested multiple cases being studied. Normally, the pitfall of these methods is regarding the aggregation of the findings as they are fragmented to particular settings. Nevertheless, the case study/field study often exploratory in nature and present alternative perspectives (Yin, 1994) and the findings could suggest emergent variables to be tested empirically. In innovation action research, researchers are actively involved in organisations to implement the idea, with their role as change agent in creating something new (Kaplan, 1998). As opposed to the case study/field study that investigates the existing practices, innovation action researcher is experiencing the development process which may provide new insight into the literature. In this review, action research by Liu and Pan (2007) reported the implementation of ABC from technical, behavioural and organisational perspectives by which they have identified new phenomena of internal barriers to change. Conceptual papers in this review are similar to the definition of framework studies by Hesford et al. (2007). The studies involve the development of new conceptual frameworks to provide new perspectives, drew from multiple information sources and authors’ own synthesis (Hesford et al. 2007). Practical insight, on the other hand, is not associated with theoretical testing; instead, it encompasses the description of the management accounting practices that usually is based on practical experiences. This type of research normally appears in applied research and practitioner literature and adopts informal research style that does not rely on theory (Shields, 1997).

Results of prior research This section briefly discusses the results of prior research studies on management accounting innovations in general and articles on balanced scorecard, total quality management, activity-based costing and management, organisational/ manufacturing and employees’ performance measures. The review of the findings will focus on the abovementioned practices as they are relatively dominant in the sampled articles. Appendix 1 summarises the key issues addressed and the key findings of the 89 articles reviewed.

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Management accounting innovations in general There are a number of researches on management accounting innovations that consider different management accounting practices as a whole. These articles analyse the development of management accounting practices, individual perceptions on innovation and change, accounting lag, the determinants and trends of adoption, the processes of change and the unbundling of management accounting models.

Two articles by Kaplan provide the review of the development of management accounting before and after 1984. In the article published in 1984, Kaplan concluded that the traditional cost accounting models prior to 1984 are no longer adequate for new organisations with advanced manufacturing technology and competitive business environments. Following the remarks, the ABC and BSC have been developed by which the path of the development is reported in his article published in 1994. Kaplan documented how the ABC, operational control systems and BSC by describing how these practices were initially documented, elaborated and disseminated through publications for the period of 1984 to 1994.

Similarly, Bjornenak and Olson (1999) followed the development of management accounting literature to understand the changes in the characteristics of management accounting models. They unbundled the models into scope and systems dimensions, and found that the contemporary management accounting models have experienced significant changes such as increased user-involvement and use of non-financial, external, disaggregated and ex ante data.

Studies on the determinants of management accounting innovations and change found various organizational, technical and economics factors that influence the diffusion and adoption of the practices. The prevailing factors found in the studies are the global competition and changes in technology (Waweru, Hoque and Uliana, 2004), performance gap (Lin and Yu, 2002), organisational structure (Abernethy and Bouwens, 1995; Cavaluzzo and Ittner, 2004), training and top management support (Cavaluzzo and Ittner, 2004) and the influence of government (Lapsley and Wright, 2004). Contradictory, Libby and Waterhouse (1996) found that the organizational structure, size and competition did not predict the changes in management accounting systems. Cavaluzzo and Ittner (2004) indicated that the difficulties in selecting and interpreting performance metrics inhibit the implementation of innovations of performance measurement systems in government agencies. The other factors that inhibit the innovations are related to individual attitudes (Jones, 1962; Waweru et al., 2004) and the disruptions to internal labor market (Foster and Ward, 1994). In addition, the negative perceptions on technical efficiency of administrative innovations are likely to induce accounting lag (Dunk, 1989) In international setting, Grandlund and Lukka (1998) observed the convergence of management accounting practices in the world is the results of global competition, advanced information technology and multinational institutions and consultancy firms. Similarly, Firth (1996) found that joint venture

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with foreign firms influence more changes in management accounting systems to the local companies in China. With regard to the use of management accounting systems, Libby and Waterhouse (1996) found high rate of change in sampled organizations with the practices that support decision making and control were favoured by the organizations. Their study however does not indicate specific management accounting practices being implemented in the organizations. Szendi and Elmore (1993) drew a distinction between contemporary and traditional management accounting practices. They found that the new management accounting techniques are being adopted while traditional systems are being maintained, thus suggesting the management accounting is in a transitional stage. The inclination of organizations towards new management accounting techniques might be explained by a study of Emsley, Nevicky and Harrison (2006). They suggested that the behavior of management accountants which is innovative cognitive style is more likely to initiate radical changes to the practices of their organizations.

Balanced scorecard The articles on BSC found in this review generally focus on the design and use of BSC. A conceptual paper by Kaplan and Norton (2001) suggested the strategy map in BSC could manifest the critical elements and their linkages between organisation’s strategies. However, as discussed by Johanson, Skoog, Backlund and Almqvist (2006), the organisation adopting BSC approach might face dilemmas in the implementation and employee mobilisation, one-size-fits-all problems, the time dimension, and various organizational logics. They further suggested the organisation to maintain the balance in two aspects namely in control process by means of connectivity, regularity and stability and in BSC approach such as in perspectives, measures and individuals’ different interests. Notwithstanding, both articles agree that balanced scorecard is a holistic and balanced performance management approach, but might subject to various interpretations and modifications to adapt with different settings. This is consistent with Funck’s (2007) study which shows how the BSC is translated to equate the interest of different logics in public healthcare environment. He found that the concept of balance4 is being translated as a balance between the perspectives, the top-down control is mixed with a decentralized design and placed less importance on the cause and effect relationship. In addition to that, Ax and Bjornenak (2005) observed the BSC has been integrated with other administrative innovations to appear attractive by which they describe as a fashion-setting process. With regard to the use of BSC, Malina and Selto (2001) reported that it is an effective approach for strategy communication and management control. They found that managers respond positively to BSC measures by reorganizing resources and activities in order to improve performance on those measures. 4 Funck (2007) argued that the concept of balance between measures in Kaplan’s (1996a, 1996b) publications and the hierarchy between the four perspectives was perceived as contradictory.

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Tuomela (2005) found, in his case company, that BSC was used for diagnostic and interactive control purposes and had specific implications for beliefs systems and boundary systems. Joseph (2008) observed that the BSC is used to implement stakeholder-based management strategy by addressing the stakeholder issues while providing long-term growth and profitability. The BSC has also been used for capital investment decision-making in a healthcare organisation through matrix approach (Lyons, Gumbus and Bellhouse, 2003). Other studies on BSC outside the domain of management accounting innovations are by Hoque and James (2000) and Davis and Albright (2004). A quasi-experimental study by Davis and Albright (2004) found that the improvement in financial performance after the implementation of BSC resulted in superior financial performance than non-BSC implementing organisations. Similarly, Hoque and James (2000) found from their survey that organizational performance increased with increased usage of BSC type measures. They also reported that the BSC adoption is positively associated with the firm size and early product life cycle stage, but not with firms’ market position. Overall, the empirical data based study on BSC is limited despite its widespread benefits (Ittner and Larcker, 1998, Malmi, 2001). In particular, Davis and Albright (2004) regarded that the research on the benefits of BSC is lacking though it is the primary research question in this area (Ittner and Larcker, 1998).

Total quality management Similar to BSC, the study on TQM in this review is relatively limited. One stream of studies is focusing on cost of quality and quality-related outcomes. Using a survey, Dunk (2002) documented that quality performance is significantly associated with product quality and environmental accounting. Emsley (2008) studied two manufacturing plants of an organisation and found the different ways the plants developed Juran’s cost of quality technique resulted in different outcomes. A descriptive study by Sjoblom (1998) indicate the widely used of non-financial quality indicators because they are good proxies for the financial impact, timelier, more reliable and more relevant. The other stream is related to the management accounting system in a TQM setting. Gurd, Smith and Swaffer (2001) suggested the factors that reduce the accounting lag following the implementation of TQM are management commitment, strong leadership, education and training programs. Second, by Ittner and Larcker (1995) documented the association between TQM and non-traditional performance measures and reward systems. Similarly, previous research reported that the changes in management accounting are necessary for manufacturing practices. For example Hoque and Alam (1999) observed that the management accounting system in the case organisation changed to become more decentralised and project-oriented to complement with TQM. However, in wider context, research on the effect of the interaction between the manufacturing practices and management accounting system on performance has mixed results. While Abernethy and Lillis (1995) found that the association between these two practices affect the performance,

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Ittner and Larcker (1995), Perera, Harrison and Poole (1997) and Sims and Killough (1998) found no positive association with performance. Abernethy and Lillis (1995) thus suggested that the different results are due to the other factors are not tested in the study and the dynamic nature of organisations experiencing different phases of change has been overlooked.

Activity-based costing and management By and large, the ABCM research falls into 4 groups, namely descriptive study to identify the extent of ABCM adoption, the benefits of ABCM and its effect on managers’ and employees’ satisfaction, the factors influencing the adoption of ABCM and the factors affecting the successful implementation of ABCM. Studies showed that the ABCM generate the characteristics of information that superior than traditional systems (McGowan, 1998), but would be less beneficial with the present of information asymmetry (Mishra and Vaysman, 2001). The expected benefits however depending on the interaction of behavioural and cognitive conflict factors (Chenhall, 2004). The implementation of ABCM is found to improve firm performance (Banker and Potter, 1993, Ittner and Larkcer; 2002) and increased managers’ and employees’ satisfaction (Swenson, 1995; McGowan and Klemmer, 1997). Several studies attempted to investigate that factors that trigger the adoption of ABCM. Among the factors found to be common for the reasons of adoption are the institutional isomorphism (Adebayo, 2006; Malmi, 1999), technical efficiency of the system (Al-Omiri and Drury, 2007; Baird, 2007; Malmi, 1999), firm size (Baird, 2007; Brown et al., 2004; Krumwiede, 1998) as well as top management support (Brown et al., 2004). Studies found that there are variations of the level of successful implementation of ABCM in the U.S. (Shields, 1995) and in Canada, France, Germany, Italy, Japan, the U.S. and the U.K. (Bhimani, Gosselin, Ncube and Okano, 2007) The factor that mostly associated with the successful implementation of ABCM or the subsequent progression of the adoption is related to the top management support (Adebayo, 2006; Al-Omiri and Drury, 2007; Brown et al., 2004; Liu and Pan, 2007; Krumwiede, 1998; Shields, 1995) and adequate training (Al-Omiri and Drury, 2007; Krumwiede, 1998; Shields, 1995).

Organisational/manufacturing performance measures The research on organisational/manufacturing performance measures are

categorised into several prevalent issues. First, is on the performance consequences of non-financial measures. Studies found that the non-financial measures of customer satisfaction (Ittner and Larcker, 1998) and the use of both financial and non-financial measures in compensation contracts (Said, Hassab-Elnaby and Wier, 2003) as the leading indicators for financial performance.

A conceptual paper by Cote and Latham (2004) emphasized the needs to incorporate quality-related measures in performance measurement systems.

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Using a survey, Maiga and Jacobs (2005) proved that the importance of quality-related measures in management control systems will influence quality performance and subsequently financial performance and customer satisfaction. In addition, clear definition and measurable goals are also crucial to affect quantity performance and quality performance (Verbeteen, 2007).

Second type of research is on the attributes of performance measures within manufacturing context. According to Kaplan (1983), in order for manufacturing firms to remain competitive, he suggested that the firms’ management accounting systems be able to support new manufacturing strategies. Specifically, the firms need to strengthen the measures on quality, inventory cost, productivity, new product technologies, discounted cash flows and incentive schemes. Further, based on Banker, Potter and Schroeder (1993), the firms that implement JIT, TQM and teamwork practices may need to report the manufacturing performance to the shop floor workers to improve the employees’ morale. Two articles showed that non-financial performance measures are used in tandem with manufacturing strategies. Survey by Fullerton (2003) found that the JIT firms use more non-financial performance measure and reward system as well as TQM measurement tools than non-JIT firms. Particularly, the extensive use of subjective non-financial measures within quality-based strategies firms may lead to higher performance (Van der Stede, Chow and Lin, 2006).

Third research stream is related to the design and use of non-financial measures. In banking firms, the design and use of performance measures are influenced by institutional forces of coercive, mimetic and normative aspects together with economic constraints (Hussain and Hoque, 2003).

Fourth type of research is regarding the use of non-financial measures to influence the on behaviour of managers and employees. Webb (2004) reported that the use of strategic performance measurement systems have positive impact on managerial commitment to assigned performance goals. When involving comprehensive reporting systems and incentives tied to goals, managers tend to spend more time working on non-financial measures than the financial areas (Ullrich and Tuttle, 2004). To improve employee selection and motivate the employees to provide goal-congruent effort, less distorted performance measures and higher cash bonuses must be maintained (Bouwens and van Lent, 2006). In addition, in order for the performance measurement systems to be perceived as enabling by the employees, it is need to be built on experienced and professional employees with the experimentation being allowed (Wouters and Wilderom, 2008).

Employees’ performance measures Studies of incentives systems mostly attempted to determine the optimal incentive and mechanisms that are resulted in positive outcomes. The use of non-financial measures (Banker, Potter and Srinivasan, 1998) and financial controls (Kihn, 2007) were found to be associated with improved firm performance. There is improvement of organisational trust through gain-sharing

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system (Chenhall and Langfield-Smith, 2003) and improved creativity through emphasis of quantity measures in creativity-weighted pay scheme (Kachelmeier and Williamson, 2008). To encourage innovation, Kennedy and Schleifer (2007) proposed a team performance measurement system that balances innovation and empowerment with control. Besides, the controllability of measures (Ghosh, 2005) and job-relevant information and role ambiguity (Burney and Widener, 2007) found to have moderating effect on the relationship between performance measurement system and the outcome. The optimal contract weights in performance measures could maximise the congruity between agent’s compensation and firm’s outcome (Datar, Kulp and Lambert, 2001). According to Ittner, Larcker and Rajan (1997), the weight placed on the choice of non-financial measures over financial measures depends on the level of regulation, the implementation of innovation-oriented strategy and strategic quality initiatives. In evaluating the performance measures to be used, Merhant (2006) suggested 6 criteria namely congruent with the organization’s objectives, controllable by the manager whose behaviors are being influenced, timely, accurate, understandable, and cost effective to produce. However, in measuring general manager’s performance, he found that none of the market measures, accounting measures, and combinations of measures provides a perfect solution In conclusion, the summary of the findings on the five topics implies a likely pattern of research in the sampled articles. Although it provides only a fraction of management accounting literature, one could illuminate the debate in those topics, thus identify the gap for future research. The next section will summarise the review of the articles, discuss the management accounting literature and suggest the opportunities for future research

Future research In the current paper, most studies on management accounting innovations were published after year 2000, the period which has not been covered in prior reviews. This might indicate that the research on this area has intensified during the period. However, from the analysis of the studies, it is found that the research is experiencing a slow pace of development whereby novel idea is rather rare. A few new frameworks and techniques, for example, the measure network and time-driven activity based costing, are mostly appear in the practitioner journals. In addition, previous reviews report studies on management control topics in general and performance measurements in particular. The current review provides additional input by focusing on the studies that incorporate researches on management accounting innovations such as balanced scorecard, ABC/ABM and non-financial measures of performance, which have received increasing interest by the researchers in recent years. Further recently, research in management accounting is proliferated, as observed by Hesford et al. (2007). They found that the number of management accounting articles has increased especially after the introduction of new accounting journals. Therefore, the challenge to the researchers is to find an

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unexamined research questions which are worth researched. The idea could be from existing literature and managers’ perceptions (Foster and Young, 1997), as well as by observing changes in the environment. The other challenge is to determine whether the research and theoretical assumptions reflect the real practice. This ever-debated issue comes into conclusion that in certain aspects the researches seems to place different emphasis from the needs of practitioners (Foster and Young, 1997; Johnson and Kaplan, 1987; Selto and Widener, 2004). The innovation in management accounting system is important particularly to the organisations prone to the globalisation. The research on this area could assist the organisation in suggesting the optimal contexts, while enhances the understanding of the real practice within theoretical domain. The following subsections attempt to identify the areas for future research pertaining to the management accounting innovations.

Environmental uncertainty In today’s global market, managers need to be responsive to the environmental change and maintain a proactive management control system. In similar vein, researchers may formulate the dynamic model of environmental uncertainty to be incorporated in management control and operations management researches. Environmental uncertainties encompass the organisation’s industrial, economic, technological, competitive, and customer environment (Gordon and Narayanan, 1984). However, now-a-days recent global issues such as oil price fluctuation, soaring commodities price, climate change, scarcity of natural resources and political and economic uncertainties may exert pressure to the business. Therefore, research could be conducted to explore how these factors will affect an organisation’s strategies as well as management control system and supply chain management.

Information technology Similarly, the advancement in information and communication technology could significantly shape the way of doing business. The practice of management control may change as various aspects of the firm could be integrated via information technology (Dechow, Grandlund and Mouritsen, 2007). Research to further investigate the changing roles of management control system could be preceded by incorporating different information technology application. It can also be suggested to conduct research on the interrelationship of different management accounting practices and information system. However, a clear boundary should be established between management accounting practices and accounting information system. This is due to the accounting software that seems to embrace the functions on management accounting practices related to cost management and management control (Grandlund and Mouritsen, 2003; Lodh and Gaffikin, 2003). It is expected that these functions might gradually diminish the visibility of particular management accounting

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practices. Perhaps, future research is needed in this area to further investigate this issue.

Control package Extensive researches have been carried out to study the link between the management control system and organisational characteristics which were mainly based on contingency theory (Chenhall, 2003). The literature has identified the contextual factors that affect the use and usefulness of management control systems such as environmental dimensions, technology, size, strategy, and organisational structure. Researches also examined the various tools of management control system, for example, budgeting, economic value added, costing system, financial and non-financial performance measures, and the BSC. However, considering separately certain components of management control system of an organisation could lead to model underspecification (Chenhall, 2003; Dent, 1990; Langfield-Smith, 1997). The reliability of the findings could be questioned as the results might also be affected by other control systems excluded in the study. Thus, it is important for future study to incorporate the integration of broader set of control practices (Chenhall, 2003). Another area of possible research is the interface between TQM and BSC. Firms that have TQM in place need to implement BSC to identify appropriate multidimensional, non-financial and financial, to signal to managers the focus for their day-to-day work as well as to motivate and reward the employees (Hoque, 2003). However, the emphasis given on employee satisfaction in TQM (Hoque, 2003) while BSC is generally hierarchical-orientated (Modell, 2007) could be examined whether it acts as complementary or conflicting to each other. Subscribing to Hoque’s (2003) suggestion, the optimal progression of organization adopting BSC followed by TQM, or vice versa could be investigated, besides their fit with contingent factors. Other integration could be analysed is between formal and informal control systems. As formal control has been widely researched, the research of informal control practices is still lacking. Informal controls could be organizational culture (Langfield-Smith, 1997) and organisational structure (Otley, 2003). Other factors that might act as informal controls including trust to organisation and between organisation’s members and job security could be investigated. In addition, the examination of the interaction between the formal control system and other areas such as corporate governance, human resource management, internal control and financial management is also worthwhile.

Management accounting change and innovation In explaining management accounting change, the research could also take perspective from theories of innovation diffusion. Innovation diffusion approach provides different view of management accounting studies whereby it takes the perspectives of the potential adopter to show that firms will not always

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attempt to imitate resources that produce competitive advantage (Powell, 1995). The aspects being studied using this approach are the efficiency, the characteristics of innovation and the role of propagators (Ax and Bjornenak, 2007). However, in management accounting field, this approach is relatively lacking with only brief discussion on the process of adoption and diffusion (Firth, 1996). The researcher could also consider a study using triangulation of theories to capture different dimensions of a phenomenon. Complementing different theories could provide more comprehensive understanding of the study. For example, the principles of innovation diffusion theory that emphasize on the effectiveness of innovation could be complemented by institutional theory that presumes the socials legitimisation. Besides, researchers could examine the recent management tools utilised in practice such as the financial application for problem solving. Neural networks system as well as time series analysis are started to be used for forecasting, budgeting and cost determination (Brown and Phillips, 1995; Vellido, Lisboa and Vaughan, 1999).

Concluding remarks The purpose of the review is to infer the development of research in

management accounting innovations. The innovation in this paper is signified by the advanced management accounting and control systems practices and operations management techniques. In a nutshell, research in management accounting innovations inclined to the design and implementation aspects. Within the implementation-based research, descriptive studies generally identified the extent of adoption and use of the practices. Meanwhile, empirical and field studies usually sought to explain various factors associated with the implementation and the outcome of an innovation.

This review includes the prestigious accounting journals from main continents namely North America, Europe and Australia, whereby the diversity of research methods and theoretical frameworks used is apparent. There is increasing used of field studies, while sociology theories are prevalence in the management accounting innovations researches. The sociology theories such as institutional theory and actor-network theory provide alternative perspectives to research by recognizing the individuals’ power and highlighting the transition process of the innovations.

Our review suggests a number of gaps in the literature. With regards to the evolution of these practices, it is plausible to conclude that the innovations seem stagnant, with the research tend to extend the existing ones. Certain management accounting practices such as ABCM and performance measurement systems have received considerable interest in the literature involving various technical, behavioural and sociological aspects. Therefore, comprehensive review of these studies is needed to provide overall understanding on what have been known in the literature and to reach consensus on conflicting findings.

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On the other hand, studies on target costing, benchmarking, value-based management, and life-cycle costing are still lacking. Whether the management accounting practices are in the same pace with operations management techniques, more research is needed to conform to different techniques. What has been known, within the TQM and JIT setting, management accounting systems have been improved with more emphasis given on non-financial information.

This paper is believed to add to our understanding on the management accounting literature by providing the attributes of management accounting practices and operations management researches. The review involves a small sample size of the research papers, thus caution must be applied as the findings might not be generalized to the management accounting literature as a whole. Nevertheless, this paper has provided a number of questions to be considered for further investigation.

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Young, S. M., & Selto, F. H. (1991). New manufacturing practices and cost management: A review of the literature and directions for research. Journal of Accounting Literature, 10, 265-298.

Zaltman, G., Duncan, R., & Holbek, J. (1973). Innovations and Organizations. Toronto: John Wiley & Sons.

28

Table 1: Summary of selected prior reviews

Author Title Journal Scope Coverage Timeline Young & Selto (1991)

New manufacturing practices and cost management: A review of the literature and directions for research

JAL Modern cost management Empirical study Prior 1991

Otley et al. (1995)

Research in management control: An overview of its development

British Journal of Management

Management control Literatures which sees management control as practical activity of managers

1954-1995

Shields (1997) Research in management accounting by North Americans in the 1990s

JMAR General Research published by North Americans

1990-1997

Ittner & Larcker (1998)

Innovations in performance measurement: Trends and research implications

JMAR Modern performance measures Surveys by consulting firms and government organisations

Prior 1998

Scapens & Bromwich (2001)

Management accounting research: the first decade

MAR General Research published in MAR, compared with Shields (1997)

1990-1999

Selto & Widener (2004)

New directions in management accounting research: Insights from practice

AMA Conventional management accounting topics and prominent topics in professional finance and accounting literature

Research journals and professional publications

1996-2000

Hesford et al. (2007)

Management accounting: A bibliographic study

Handbook of Management Accounting Research

General Management accounting articles

1981-2000

Current review Management accounting innovations research: A literature review

N/A Management accounting innovations

Both qualitative and quantitative researches

1926-2008

29

Table 2: Data-base search results

Journals Website Coverage Management Accounting Innovations

Articles Selected Rank

ABACUS http://www.blackwellpublishing.com/journal.asp?ref=0001-3072 1965-2008 4 2 15

Accounting and Business Researcha www.abr-journal.com 1973 -

2008 2 1 20

Accounting and Financea http://www.blackwell-synergy.com/loi/acfi 1979-2008 7 3 12

Accounting Horizons http://aaahq.org/pubs/horizons.htm 1987-2007 12 3 10 Accounting, Auditing and Accountability Journalb

http://www.emeraldinsight.com/info/journals/aaaj/aaaj.jsp 1988-2008 115 7 2

Accounting, Organizations and Society

http://www.elsevier.com/wps/product/cws_home/486 1976-2008 15 9 8

Advances in Management Accountinga

http://info.emeraldinsight.com/products/books/series.htm?id=1474-7871 2003-2007 4 3 16

Behavioral Research in Accountinga

http://aaahq.org/abo/BRIA/BRIAHOME.HTM 1991-2008 9 6 11

British Accounting Reviewa http://www.baa.group.shef.ac.uk/publications/bar.htm 1988-2008 4 2 17

Contemporary Accounting Researcha http://www.caaa.ca/CAR/ 1991-2007 3 1 19

Critical Perspectives on Accounting

http://www.elsevier.com/wps/product/cws_home/622813 1990-2008 7 1 13

European Accounting Review http://www.eaa-online.org/r/default.asp?iId=JEKEJ 1992-2008 26 1 5

Journal of Accounting and Economics

http://www.elsevier.com/wps/product/cws_home/505556 1979-2008 0 0 22

30

Continued from Table 2

a As the search conducted on the journals published on online database, earlier issues of some journals are unavailable. These journals are ABR which starts from volume 4 onwards, AF (volume 19), AMA (volume 11), BRA (volume 3), BAR (volume 20), CAR (volume 8), CM (volume 6), JMAR (volume 4) and MAR (volume 4). b The search result indicates a relatively large amount of articles due to the search operation of certain online databases that identify the articles when the words ‘management’, ‘accounting’ and ‘innovation’ are found individually in the text.

Journals Website Coverage Management Accounting Innovations

Articles Selected Rank

Journal of Accounting and Organisational Change

http://info.emeraldinsight.com/products/journals/journals.htm?id=jaoc 2005-2008 17 3 7

Journal of Accounting Education http://www.elsevier.com/wps/product/cws_home/840 1983-2008 1 1 21

Journal of Accounting Literature http://www.cba.ufl.edu/fsoa/faculty/jal.asp 1982-2006 4 0 18

Journal of Accounting Research b http://www.blackwellpublishing.com/journal.asp?ref=0021-8456&site=1

1963-2008 67 5 3

Journal of Cost Management / Cost Managementa

http://ria.thomson.com/EStore/detail.aspx?ID=ZMCMP 1992-2008 20 11 6

Journal of Management Accounting Researcha

http://aaahq.org/mas/JMAR/JMAR.cfm 1992-2007 32 16 4

Management Accounting Researcha

http://www.elsevier.com/wps/product/cws_home/622911 1993 -2008 13 8 9

Review of Accounting Studies http://www.springer.com/business/accounting/journal/11142 1996-2008 5 0 14

The Accounting Review b http://aaahq.org/pubs/acctrev.htm 1926-2008 299 6 1 Total 666 89

31

Table 3: Distribution of topics

Topics FrequencyManagement accounting innovations in general 18Management accounting and control system 63 Organisational/manufacturing performance measures 17 Employees’ performance measures 11 Activity-based costing and activity-based cost management 19 Balanced-scorecard 8 Strategic management accounting 3 Value-based management 3 Benchmarking 1 Target costing 1 Operations management 8 Total quality management 5 Lean manufacturing 2 Supply-chain management 1 Total 89

32

Table 4: Distribution of Settings

Topics Frequency

Single industry Manufacturing 29 Service 6 Specific industry 2Multiple industries 13Generic 9Public sector 6Inter-organisational 2International 1Multinationals 1Specific country 1No setting or other settings 19Total 89Source: Adapted from Shields (1997) and Scapens and Bromwich (2001)

33

Table 5: Distribution of Theories

Theories Frequency

Sociology5 18Economics 13Contingency theory 11Organisational behaviour 9Production and operations management 2Psychology 1Strategic management 1Economics and organisational behaviour 3Organisational behaviour and sociology 2Economics and sociology 2Economics and POM 1Economics and contingency theory 1Organisational behaviour and POM 1Organisational behaviour and psychology 1Sociology and psychology 1Strategic management and contingency theory 1Others 2No explicit theory 19

Total 89

5 While Shields (1997) put in contingency theory under the category of sociology, it is believed that contingency theory is more aligned to organisational theories. Considerable accounting research has used contingency theory to study the linkage between management control systems and contextual factors (see Chenhall, 2003). As a result, this theory is listed as a separate item.

34

Table 6: Distribution of Research Methods

Research method Frequency

Survey 30Conceptual/practical insight 18Case study/Field study 18Multiple research methods 8Archival 6Experimentation 4Mathematical analytic 3Literature review 1Action research 1

Total 89

35

Appendix 1: The attributes of management accounting innovations research articles

Management accounting innovations in general

Author/ Year Article Title Journal Article

type Key issues addressed Setting Theory Research method Key findings

Jones (1962)

Accounting innovation and the psychology of change

TAR Conceptual People’s reaction to change and how managers deal with the resistance

No setting

No explicit theory

Conceptual People’s negative reaction is due to personal and group attitudes and organizational condition. Overcoming the resistance through preventive and curative actions.

Hicks (1978)

An examination of accounting interest groups' differential perceptions of innovations

TAR Empirical The extent to which differences occur among accounting interest groups' perceptions of the need for and future rate of adoption of accounting innovations.

Different account-ing profession

Sociology Survey Accounting academicians perceive a higher need for adoption and future rate of adoption of innovations. System effects are determinant of the rate of change. The system effects of accounting academicians are oriented towards a higher need for change than those of CPAs and financial executives.

Kaplan (1984)

The evolution of management accounting

TAR Practical insights, review

Survey the development of cost accounting and managerial control practices and assesses their relevance to the changing nature of industrial competition in the 1980s.

No setting

No explicit theory

Practical insights

The traditional cost accounting model no longer adequate for new organisation and manufacturing technology. Problems of using profits for evaluating performance

36

Dunk (1989)

Management accounting lag

ABACUS Conceptual To develop a framework to explain why changes in management accounting systems may have tended to lag behind changes in manufacturing operations.

No setting

Sociology Conceptual A major cause of accounting lag in organizations is the perceived greater complexity and lesser relative advantage, compatibility, trialability and observability of administrative innovations as compared to technical innovations.

Szendi & Elmore (1993)

Management accounting: Are new techniques making in-roads with practitioners?

JAEd Empirical To examine trends in the adoption of the new managerial accounting techniques by manufacturing firms.

Survey to practitio-ners

No explicit theory

Survey New techniques are being adopted while traditional systems are being maintained; suggesting management accounting is in a transitional stage.

Foster & Ward (1994)

Theory of perpetual management accounting innovation lag in hierarchical organizations

AOS Conceptual To examine the causes of resistance to MA innovation in hierarchical organizations.

No setting

Sociology, organisatio-nal behaviour

Conceptual Developed perpetual management accounting innovation lag theory that suggests the disruptions to internal labor market operations within a hierarchical organization caused by management accounting innovations may slow innovation adoption.

Kaplan (1994)

Management accounting (1984-1994): Development of new practice and theory

MAR Practical insights, review

Review the development of ABC, operational control systems and BSC

No setting

No explicit theory

Practical insights

Describes how these practices were initially documented, elaborated and disseminated through publications. Suggests the academicians to have close interaction with implementing organizations.

37

Abernethy & Bouwens (1995)

Determinants of accounting innovation implementation

ABACUS Empirical Identify the determinants of accounting innovation

Manufac-turing

Contingency theory

Survey A positive relation between the influence on MAS design and decentralization. When subordinates are actively involved in designing and implementing these systems, acceptance is significantly increased.

Firth (1996)

The diffusion of managerial accounting procedures in the people’s republic of china and the influence of foreign partnered joint ventures

AOS Empirical To examine the diffusion of MA practices, amount of diffusion and factors associated with the spread of accounting ideas.

Interorga-nisational (Joint venture)

Sociology Survey The Chinese enterprises involve in joint venture with foreign firms made more changes in management accounting system that those which do not.

Libby & Waterhouse (1996)

Predicting change in management accounting systems

JMAR Empirical The extent of management accounting and control system (MACS) change its relationship between organizational and contextual variables

Manufac-turing

Contingency theory

Survey The MACS that support decision making and control changed more frequently than components that support planning or directing, or product costing. Organizational size, structure and intensity of competition did not predict changes in management accounting systems

Grandlund & Lukka (1998)

It’s a small world of management accounting practices

JMAR Empirical The forces of convergence and divergence in management accounting practices around the world

Multiple industries

Sociology Multiple methods

Some of the most prominent drivers of convergence are global competition, the application of advanced information system and software packages, transnational institutions, global consultancy industry and globally applied textbook.

38

Bjornenak & Olson (1999)

Unbundling management accounting innovations

MAR Conceptual Identify and discuss elements of management accounting models (ABCM, BSC, life-cycle costing, target costing, SMA) design by unbundling the models

No setting

Generic framework

Conceptual The new models represent important changes in the type of elements or design characteristics that have been used earlier.

Reid & Smith (2000)

The impact of contingencies on management accounting system development

MAR Empirical Whether contingency theory is applicable to small firms as well as to the large firms.

Multiple industries (micro-firms)

Contingency theory

Multiple methods (interviews and survey)

Cashflow crisis, funding shortage and innovation had timings which corresponded with information system development. Three firm types identified; adaptive, stagnant and running blind. Production systems, technology uncertainty, strategy and the market determine the organisational form of the small firm. The complexity of the MAS is explained by sub-unit interdependence, market dynamics, and work methods.

39

Lin & Yu (2002)

Responsibility cost control system in China: A case of management accounting application

MAR Case study To investigate why business enterprises in a developing country like China adopt innovative accounting practices, and how these practices can be effectively applied under the specific Chinese business environment.

Manufac-turing

Sociology Field study The responsibility cost control system is an effective tool for cost control. The economic shock and performance gap are necessary conditions for diffusion of the practices. Professional qualification of management teams and a balance of decentralization and centralization in business administration structure influence the implementation success.

Cavalluzzo & Ittner (2004)

Implementing performance measurement innovations: Evidence from government

AOS Empirical To examine the factors influencing the implementation, use and perceived benefits of results-oriented performance measurement system

Public sector

Economics, Sociology

Survey Top management commitments, decision-making authority to users, and training have significant positive influences on measurement system development and use. The difficulties in selecting and interpreting performance metrics are the major impediment.

Lapsley & Wright (2004)

The diffusion of management accounting innovations in the public sector: A research agenda

MAR Empirical The manner and means of diffusion of MA practices in public sector and the obstacles to the adoption

Public sector

Sociology Survey Management accounting innovations are mainly originated in the private sector. The adoption by public sector organization is largely affected by government influence.

40

Waweru, Hoque & Uliana (2004)

Management accounting change in South Africa: Case studies from retail services

AAAJ Case study To understand the processes of MAS change and to explore the rationales for such change processes

Retailing Contingency theory

Field study Increased used of contemporary management accounting techniques. Increasing global competition and changes in technology affect management accounting change. Lack of resources, ‘no need for change’ attitude and fear of change inhibit the change.

Emsley, Nevicky & Harrison (2006)

Effect of cognitive style and professional development on the initiation of radical and non-radical management accounting innovations

AF Empirical To examines the effects of adaptive/innovative cognitive style, and professional development on the initiation of radical and non-radical innovations by individual management accountants.

Survey to manage-ment account-ant

Psychology Multiple methods (survey and interviews)

Management accountants with more innovative cognitive style are more likely to initiate radical changes to the practices of their organizations. However, organisation should have balance innovators and adaptors to balance the radical and non-radical changes.

41

Total Quality Management (TQM)

Author/ Year Article Title Journa

l Article type Key issues addressed Setting Theory Research

method Key findings

Ittner and Larcker (1995)

Total quality management and the choice of information and reward systems

JAR Empirical The association between TQM, the choice of information and reward systems, and the impact of these choices on organizational performance.

Manufac-turing

POM Survey TQM is associated with greater use of non-traditional performance measures and reward systems. Less extensive formal quality program, greater reliance on non-traditional performance measures and reward systems are associated with higher performance.

Sjoblom (1998)

Financial information and quality management – is there a role for accountants?

AH Descriptive The usefulness of Cost of Quality and quality-related financial information for quality management.

Manufac-turing

No explicit theory

Survey Financial information can be used to flag quality problems, to select and prioritize quality improvement projects and to choose corrective action. However, non-financial quality indicators are widely used because of good proxies for the financial impact, timelier, more reliable and more relevant.

Gurd, Smith & Swaffer (2001)

Factors impacting on accounting lag: An exploratory study of responding to TQM

BAR Descriptive The responses of accounting systems to TQM implementations and factors that encourage or inhibit accounting lag following an innovation.

Multiple industries

Organisatio-nal behaviour

Multiple case studies – assume site visit

Management commitment, strong leadership, education and training programs and customer focus reduce accounting lag, and fear of change will increase accounting lag.

Dunk (2002)

Product quality, environmental accounting and quality performance

AAAJ Empirical The extent of product quality and the implementation of environmental accounting positively affect quality performance.

Manufac-turing

POM Survey Product quality and the implementation of environmental accounting significantly effect quality performance

42

Emsley (2008)

Different interpretations of a “fixed” concept: Examining Juran’s cost of quality from an actor-network perspective

AAAJ Case study

The reasons why introducing a “fixed” management accounting technique, such as Juran’s cost of quality technique, results in different, rather than similar outcomes in two manufacturing plants of an organisation

Manufac-turing

Sociology Case study Significant different ways of how both plants developed Juran’s cost of quality technique.

Value-based management

Author/ Year Article Title Journal Article

type Key issues addressed Setting Theory Research method Key findings

Reilly & Reilly (2000)

Using a measure network to understand and deliver value

JCM Conceptual

The measurement of the extent a firm create value for stakeholders using the Measure Network

Manufac-turing

No explicit theory

Conceptual The Measure Network represents the relationships between the firm’s business and management processes and the stakeholders’ goals.

Bourguignon (2005)

Management accounting and value creation: the profit and loss of reification

CPA Conceptual

The process by which value creation is reified

None Economics Conceptual Value creation is commonly reified through its objectification, which prevents any dispute and further maintains social domination.

Ezzamel, Willmott & Worthington (2008)

Manufacturing shareholder value: The role of accounting in organizational transformation

AOS Case study

The role of accounting calculations in constructing shareholder value within the context of organizational transformation in work organization.

Manufac-turing

Economics

Case study Accounting metrics enable a process of translation and control with regard to the realization of share price targets.

Activity-based costing (ABC) / Activity-based management (ABM)

Author/ Year Article Title Journal Article

type Key issues addressed Setting Theory Research method Key findings

43

Banker & Potter (1993)

Economic implications of single cost driver systems

JMAR Conceptual

The impact of single cost driver and multiple cost driver systems on optimal expected profits of monopoly and oligopoly firm

Generic Economics Mathemati-cal analytic

A monopolist and oligopoly firm can expect higher profit using multiple cost driver system.

Shields (1995)

An empirical analysis of firms’ implementation experiences with activity-based costing

JMAR Empirical The degree of behavioural, organisational and technical factors associated with the success of ABC implementation

Multiple industries (firms using ABC)

Contingency theory

Survey Variation in the degree of success and financial benefit. Behavioral and organizational implementation variables are associated with ABC success.

Swenson (1995)

The benefits of activity-based cost management to the manufacturing industry

JMAR Empirical, descriptive

The association of ABC implementation and manager’s satisfaction on cost management systems. And how they use ABC for decision making.

Manufac-turing

No explicit theory

Survey Significant satisfaction with cost management systems following the ABC implementation. Example of the use of ABC for decision making.

McGowan & Klemmer (1997)

Satisfaction with activity-based cost management implementation

JMAR Empirical The association between employees’ satisfaction with ABCM implementation and behavioural, situational and technical variables.

Multiple industries (manufac-turing & service)

Contingency theory

Survey The behavioural, situational and technical variables correlate positively with the users’ satisfaction with ABCM implementation.

McGowan (1998)

Perceived benefits of ABCM implementation

AH Empirical Prepares’ and users’ perceptions of the benefits of ABCM implementation

Multiple industries (manufac-turing & service)

No explicit theory

Survey More benefits with ABCM in terms of accounting information characteristics, but ABCM information is less accessible. Preparers respond more favourably than users on ABCM implementation

Krumwiede (1998)

The implementation stages of ABC and the impact of contextual and organizational factors

JMAR Empirical The impact of contextual and organizational factors in stages of ABC implementation process.

Manufac-turing

Sociology Survey The model of ABC implementation stages. Cost, firm size and job shop influence the adoption, top management support, training, IT affect the higher level of implementation stages.

44

Malmi (1999)

Activity-based costing diffusion across organizations: An exploratory empirical analysis of Finnish firms

AOS Empirical The forces innovation diffusion in MA during its various phases. The applicability of Abrahamson’s typology in management accounting innovation

Manufac-turing

Sociology Survey, archival, interviews

Efficient choice explains the earliest adoptions, fashion-setting influence the take-off stage. Subsequent diffusion is explained both by mimetic behaviour and efficient-choice.

Mishra & Vaysman (2001)

Cost-system choice and incentives – Traditional vs. activity-based costing

JAR Conceptual

The benefits of ABC relative to traditional considering information asymmetry and managerial incentives

Generic Economics Mathemati-cal analytic

ABC provides less benefit than traditional method to the owners due to information asymmetry.

Ittner & Larkcer (2002)

The association between activity-based costing and manufacturing performance

JMAR Empirical Extensive use of ABC on operational and financial performance.

Manufac-turing

Economics Survey Extensive use of ABC associated with improvement in quality and cycle time thus reduces manufacturing cost, not in ROA

Sisaye (2003)

Process innovation and adaptive institutional change strategies in management control systems: Activity based costing as administrative innovation

AMA Conceptual

The process of the diffusion of innovation, how the process impacts the successful adoption and implementation of management accounting innovations

None Organisatio-nal behaviour

Conceptual Process innovation framework: mechanistic, organic, organisational development (OD) and organisational transformation (OT) to understand management accounting innovation. When ABC is integrated into OD or OT the technical and administrative innovation aspects of ABC can be utilized to manage the operating activities

Brown, Booth & Giacobbe (2004)

Technological and organizational influences on the adoption of activity-based costing in Australia

AF Empirical The organizational and technological factors that influence the initial adoption of ABC and on the movement through the stages of adoption.

Multiple industries (manufac-turing & service)

Sociology Survey Top management support, internal champion support and larger organizational size leading to initiation of interest in ABC activities. Support from organizational factors is the main driver for progression of adoption decision stages, rather than the technological factors.

45

Chenhall (2004)

The role of cognitive and affective conflict in early implementation of activity-based cost management

BRA Empirical The effect of the relationship between cognitive and effective conflict with ABCM behavioural implementation factors on the usefulness of ABCM.

Manufac-turing

Organisatio-nal behaviour and Psychology

Survey Association between ABCM behavioural implementation factors with cognitive conflict affect beneficial outcomes.

Adebayo (2006)

Motivation for activity-based costing implementation: Administrative and institutional influences

JAOC Case study

How different motives for change may affect the process of ABC implementation and determine the important factors that may affect the success of implementation at different stages in 2 business unit of a company

Manufac-turing

Sociology

Multiple case studies

The type of motivation for change is classified as coercive for FIMIT-H, and normative and economic for FIMOT. Management support, education, and information technology as significant factors that affect different stages of implementation.

Baird (2007)

Adoption of activity management practices in public sector organizations

AF Descriptive, Empirical

The extent of adoption of each level of activity management (Gosselin, 1997) and the factors affect the adoption.

Public sector

Sociology Survey The adoption of activity cost analysis and ABC is less prevalent in public sector but the adoption of activity analysis is the same extent with private sector. Decision usefulness of cost information and size are associated with the adoption.

Liu & Pan (2007)

The implementation of activity-based costing in China: An innovation action research approach

BAR Innovation action research

Key success factors of ABC implementation

Manufac-turing

Contingency theory

Action research

Top management support, top-down culture, hierarchical command and communication structure, involvement of professional identified as the success factor of ABC implementation

Alcouffe, Berland & Levant (2007)

Actor-networks and the diffusion of management accounting innovations: A comparative study

MAR Case study

The diffusion of the Georges Perrin Method (GPM) and Activity-Based Costing (ABC) in France

Specific country - France

Sociology Archival, interviews

Problematization, interessement, enrolment and mobilization explain the processes of diffusion

46

Al-Omiri & Drury (2007)

Organizational and behavioral factors influencing the adoption and success of ABC in the UK

CM Descriptive

The organisational and behavioral factors influencing the adoption and non-adoption of ABC and the degree and determinants of the success of ABC

Multiple industries

Contingency theory

Survey The main influences of adoption are deficiencies of existing costing system and factors related to changing environment; non-adoption is mainly related to the perceived benefits of ABC that do not justify the cost of adoption. Perceived “moderately successful” of ABC implementation. Major determinants of success are widespread support, adequate training, managers’ understanding and knowledge.

Bhimani, Gosselin, Ncube & Okano (2007)

Activity-based costing: How far have we come internationally?

CM Descriptive

The extent of ABC adoption in Canada, France, Germany, Italy, Japan, USA and the UK.

Internatio-nal

No explicit theory

Survey Significant difference in the implementation rates, speed, and extent across countries. Variation in perceived ACB success between countries.

Kaplan & Anderson (2007)

The innovation of time-driven activity-based costing

CM Practical insight

How time-driven activity based-costing overcome the pitfalls of conventional ABC?

Generic No explicit theory

Practical insight

Time-driven activity based-costing easier and faster and avoids subjectivity activity of surveying task of conventional ABC. It uses time equation to drive cost directly from resources to cost objects.

Supply-chain management

Author/ Year Article Title Journal Article

type Key issues addressed Setting Theory Research method Key findings

47

Free (2007) Walking the talk? Supply chain accounting and trust among UK supermarkets and suppliers

AOS Case study

The relationship between trust and category management practice between a large UK retailer and a multinational supplier

Inter-organisatio-nal (retailers and suppliers)

Sociology Longitudinal case study

Trust constructs that reflect institutional phenomena (system trust) and personal and interpersonal forms of trust (trust, trusting behaviours, trustworthiness and trusting disposition). The diffusion of category management was assisted by calculative practices that promote trustworthiness and enhanced system trust.

Organisational/Manufacturing performance measures

Author/ Year Article Title Journal Article

type Key issues addressed Setting Theory Research method Key findings

Kaplan (1983)

Measuring manufacturing performance: A new challenge for managerial accounting research

TAR Conceptual

On why American manufacturing is being outpaced by foreign firms.

None No explicit theory

Conceptual Suggest for more flexible measurements to manage their manufacturing processes of quality, inventory cost, productivity, new product technologies, discounted cash flows and incentive schemes.

Banker, Potter & Schroeder (1993)

Reporting manufacturing performance measures to workers: An empirical study

JMAR Empirical Whether the choice of manufacturing performance reporting system is influenced by firm’s manufacturing practices.

Manufac-turing

Organisatio-nal behaviour

Survey The reporting of manufacturing performance measures to shop floor workers positively related to the implementation of JIT, TQM, and teamwork practices. Employee morale positively related to JIT, TQM, and teamwork practices and the provision of shop floor performance information.

48

Ittner & Larcker (1998)

Are nonfinancial measures leading indicators of financial performance? An analysis of customer satisfaction

JAR Empirical Value relevance of customer satisfaction.

Telecom-munica-tion

Economics and POM

Archival Customer satisfaction measures positively associated with future accounting performance and economically relevant to stock market reflected partially in current accounting book values.

Ittner & Larcker (1998)

Innovations in performance measurement: Trends and research implications

JMAR Review, descriptive

Researches on emerging performance measurement practices.

None No explicit theory

Literature review, archival

Researches on the use and performance consequences of EVA, non-financial performance measures and BSC, and performance measurement initiatives in government agencies. Suggesting directions for future research.

Thor (2000)

The evolution of performance measurement in government

JCM Case study How performance measurement was used in government

Govern-ment agencies

No explicit theory

Longitudinal case study

Performance measures used in government

Hussain & Hoque (2002)

Understanding non-financial performance measurement practices in Japanese banks: A new institutional sociology perspective

AAAJ Case study, descriptive

To explain and understand the institutional factors influence the design and use of non-financial performance measurement systems in four Japanese banks.

Service (Banking)

Sociology Case study The influence from institutional forces are of economic constraints, regulatory control, accounting standard/financial legislation, management’s strategic focus, bank size, competition and organizational tendency to copy best practices from others.

Fullerton (2003)

Performance measurement and reward systems in JIT and non-JIT firms

CM Descriptive, Empirical

The differences in the performance measurement and reward systems in JIT and non-JIT firms

Manufac-turing

No explicit theory

Survey JIT firms use non-financial performance measure and in reward system and use more TQM measurement tools than non-JIT firms.

49

Said, Hassab-Elnaby & Wier (2003)

An empirical investigation of the performance consequences of nonfinancial measures

JMAR Empirical The implications of non-financial performance measures included in compensation contracts on current and future performance, and its fit with operational and competitive factors.

Multiple industries

Economics and Contingency theory

Archival Financial and non-financial measures lead to higher ROA and market returns. Non-financial measures associated with innovation-oriented and quality-oriented strategies, length of the product development cycle, industry regulation, and level of financial distress. Association between non-financial measures use and firm performance contingent on firm’s operational and competitive characteristics

Webb (2004)

Managers’ commitment to the goals contained in a strategic performance measurement system

CAR Experimen-tal

The effect of perceived cause-effect strength of SPMS on managerial commitment to assigned performance goals.

Service (Financial service)

Organisatio-nal behaviour

Experiment Positive impact of SPMS on goal commitment. Impact of SPMS on goal commitment mediated by manager’s self-efficacy and goal attractiveness.

Cote & Latham (2004)

Relationship quality: A critical link in management accounting performance measurement systems

AMA Conceptual Key mediating variables, antecedents and outcomes and direction of effects of model of relationship quality

Generic POM and Organisational behaviour

Conceptual Model of relationship quality incorporates relationship constructs that drive a series of financial and non-financial performance outcomes

Ullrich &Tuttle (2004)

The effects of comprehensive information reporting systems and economic incentives on managers’ time-planning decisions

BRA Experimen-tal

How comprehensive control systems influence managers as they allocate their time among multiple areas of responsibility.

Generic Economics Experiment Subjects planned to spend more time working on non-financial areas and less time on the financial area when reporting multiple areas of performance and incentives tied to achieve goals in all areas.

Liedtka (2005)

Analytic Hierarchy Process and multi-criteria performance management systems

CM Practical insight, Case study

How AHP is applied in designing and implementing performance measures

Airline No explicit theory

Case study Four techniques in implementing the AHP. The AHP-based performance scores correlate highest with annual stock market return indicate that it link strategy to shareholder wealth most accurately.

50

Maiga & Jacobs (2005)

Antecedents and consequences of quality performance

BRA Empirical The influence of management control systems (i.e. quality goal, quality feedback and quality incentives) on quality performance, consequently on financial performance and customer satisfactions

Manufac-turing

Economics and Organisatio-nal behaviour

Survey

MCS factors associated with quality performance. Quality performance positively associated with financial performance and customer satisfaction. Quality performance mediates the relationship between MCS and performance and customer satisfaction.

Bouwens & van Lent (2006)

Performance measure properties and the effect of incentive contracts

JMAR Empirical How performance measure properties and available cash bonuses impact the efficacy of incentive contracts in selecting a qualified workforce and motivating employees to provide goal-congruent effort.

Multiple industries

Economics Survey – by third party

Less noisy or distorted performance measures and higher cash bonuses are associated with improved employee selection and better-directed effort.

Van der Stede, Chow & Lin (2006)

Strategy, choice of performance measures, and performance

BRA Empirical The relationship between quality-based manufacturing strategy and the use of different types of performance measures.

Manufac-turing

Contingency theory

Survey Objective and subjective non-financial measures used associated with higher firm performance. Quality-based strategies firms to use more of both objective and subjective non-financial measures, but not with objective measures alone. Quality-based strategies firms have higher performance when use more extensive PMS of subjective measures.

Verbeteen (2007)

Performance management practices in public sector organizations: Impact on performance

AAAJ Empirical Whether performance management practices affect performance in public sector organisations

Public sector organisa-tion

Economics and Organisatio-nal behaviour

Survey The definition of clear and measurable goals is positively associated with both quantity performance (efficiency, production targets) and quality performance (accuracy, innovation, employee morale).

51

Wouters & Wilderom (2008)

Developing performance-measurement systems as enabling formalization: A longitudinal field study of a logistics department

AOS Case study, empirical

How the development process for designing and implementing the performance-measurement system affects the extent to which the PMS will be perceived by employees as enabling.

Manufac-turing

Sociology Field study (longitudinal case study, action research, survey)

Building on existing performance-measurement experience of employees, their professionalism, and allowing experimentation with measures contribute to the enabling nature of the PMS.

Employees’ Performance Measures

Author/ Year Article Title Journal Article

type Key issues addressed Setting Theory Research method Key findings

Ittner, Larcker & Rajan (1997)

The choice of performance measures in annual business contracts

TAR Empirical

The factors influencing the relative weights placed on financial and non-financial performance measures in CEO bonus contracts.

Multiple industries

Economics Archival The use of non-financial measures increases with the level of regulation, the extent to which the firm follows an innovation-oriented strategy, the adoption of strategic quality initiatives, and the noise in financial measures

Ezzamel & Willmott (1998)

Accounting, remuneration and employee motivation in the new organisation

ABR Case study

The role of accounting in the development of remuneration systems in management practices change (delayering and multiskilling, team working and employee empowerment)

Manufac-turing

Organisatio-nal behaviour

Case studies

In the event of organisational change, accounting were deployed to discredit earlier reward system and facilitate the launching of new reward system

Banker, Potter & Srinivasan (2000)

An empirical investigation of an incentive plan that includes nonfinancial performance measures

TAR Empirical Whether non-financial performance measures are leading indicators of financial performance. Whether the increased emphasis of non-financial indicators in incentive compensation improve financial and non-financial performance.

Service (Hotel)

Economics Archival Customer-satisfaction measures are associated business unit revenues and operating profit, but not with operating costs. Incentive plan that include non-financial measures improve financial and non-financial measures.

52

Datar, Kulp & Lambert (2001)

Balancing performance measures

JAR Conceptual

To analyze the optimal weights to apply to performance measures in a compensation contract.

Generic Economics Mathemati-cal analytic

The optimal contract weights the performance measures to maximize the congruity between the agent's overall compensation and the firm's outcome.

Chenhall and Langfield-Smith (2003)

Performance measurement and reward systems, trust, and strategic change.

JMAR Case study The history of strategic change and the development of performance measurement and gain-sharing reward system.

Manufac-turing

Psychology and Sociology

Field study (Case study, archival)

Gain-sharing systems supported the development of continuous improvement and encouraged organizational trust, but inhibited personal trust.

Ghosh (2005)

Alternative measures of managers’ performance, controllability, and the outcome effect

BRA Experimen-tal

The degree of outcome effect using financial and non-financial performance measures depends on measures’ controllability

Retailing Economics Experiment The outcome effect increased with the controllability of the manager's performance measure, with the increase being more for non-financial measures than for financial measures. Controllability assessment of the outcome measures prior to the actual evaluation reduced the outcome effect across all measures.

Merchant (2006)

Measuring general managers’ performances: Market, accounting and combination-of-measures systems

AAAJ Review How to choose a measure or set of measures for the purposes of evaluating and rewarding general managers’ performances.

None Sociology, Economics and Organisatio-nal behaviour

Literature review

Criteria for evaluating measurement alternatives. Major limitation of the market measures is controllability whereas for the summary financial measures is congruence. The quality of combinations-of-measures systems is potentially highly varied.

Burney & Widener (2007)

Strategic performance measurement systems, job-relevant information, and managerial behavioral responses - role stress and performance

BRA Empirical The relation between an SPMS and individual behavioral responses. job-relevant information (i.e. role ambiguity and role conflict)

Multiple industries (survey on managers)

Economics and Organisatio-nal behaviour

Survey SPMS positively affects performance through its relations with job-relevant information (JRI) and role ambiguity (RA). When SPMS closely linked to strategy, higher levels of JRI and lower levels of role conflict (RC) and RA. Performance is higher when RA is lower.

53

Kachelmeier, Reichert & Williamson (2008)

Measuring and motivating quantity, creativity or both

JAR Experiment The effects of performance-based compensation schemes that are contingent on explicit measures of quantity, creativity, or both.

Generic Economics Experiment Combining quantity and creativity measures in a creativity-weighted pay scheme results in creativity-weighted productivity scores significantly lower than quantity incentives alone. In creativity-weighted condition approximately the same number of high-creativity puzzles produced, but in overall significantly fewer puzzles produced.

Kennedy & Schleifer (2007)

Team performance measurement: A system to balance innovation and empowerment with control

A MA Conceptual The influence of performance measurement on innovation. Propose team measurement system that seeks to balance innovation and empowerment with control.

Generic Organisatio-nal behaviour

Conceptual Assessment of TPMS impact on innovation and empowerment. Four categories of metrics in the TPMS framework to provide a broad view of team performance; financial measures, operational measures, project effectiveness index and team effectiveness index.

Kihn (2007) Financial consequences in foreign subsidiary manager performance evaluations

EAR Empirical Financial impacts of using multiple forms of controls in managerial performance evaluations.

Multi-nationals (manufac-turing)

Organisatio-nal behaviour and Sociology

Survey, Archival

Emphasis on financial controls improves short-term profitability more than non-financial or behavioral controls, and even higher than simultaneous emphasis of all controls. Perceived environmental changes moderate the relationship between emphasis on non-financial controls and short-term profitability.

Balanced Scorecard (BSC)

Author/ Year Article Title Journal Article

type Key issues addressed Setting Theory Research method Key findings

Kaplan & Norton (2001)

Transforming the balanced scorecard from performance measurement to strategic

AH Conceptual

BSC framework for describing value-creating strategies that link intangible and tangible assets.

Generic Strategic management

Concep-tual

Developing strategy map and applying BSC in non-profit and government organizations.

54

Malina & Selto (2001)

Communicating and controlling strategy: An empirical study of the effectiveness of the balanced scorecard

JMAR Empirical, descriptive

Whether BSC is an effective organisational communication and management control device and that of causally related to goal alignment, motivation, and reported process or decision changes.

Manufac-turing

Organisatio-nal behaviour

Archival, survey

BSC is an effective approach for strategy communication and management control. Improvement in BSC’s performance may improve business efficiency and profitability. However, inaccurate or subjective measures, one-way communication and inappropriate benchmark cause significant conflict and tension between the company and its distributors

Lyons, Gumbus & Bellhouse (2003)

Aligning capital investment decisions with the balanced scorecard

JCM Case study

How BSC was used to translate strategy into actions and how BSC was linked to capital budgeting process.

Health care

No explicit theory

Case study Capital investment decision-making was integrated into BSC using a matrix approach. Strategic goals were assigned weights and projects were evaluated based on its ability to impact the strategic goals.

Ax & Bjornenak (2005)

Bundling and diffusion of management accounting innovations—the case of the balanced scorecard in Sweden

MAR Descriptive

Communication, diffusion and transformation of BSC from supply side perspective

None Sociology Archival BSC has been supplemented with other administrative innovations and adapted to the existing business culture to appear more attractive. The Swedish BSC package includes BSC and non-budget management; BSC and the intellectual capital model; and BSC and the stakeholder model).

Tuomela (2005)

The interplay of different levers of control: A case study of introducing a new performance measurement system

MAR Case study

The role of strategic performance measurement systems in respect of the interplay between different control levers.

Manufac-turing

Simons’ levers of control

Field study The 3K Scorecard was used for both diagnostic and interactive control purposes at the case company and had specific implications for both beliefs systems and boundary systems.

Johanson, Skoog, Backlund & Almqvist (2006)

Balancing dilemmas of the balanced scorecard

AAAJ Conceptual

Debate on critical issues in the implementation and use of the BSC as a management control tool

None Organisatio-nal behaviour

Concep-tual

The dilemma of balancing different perspectives in implementation and employee mobilization, one-size-fits-all problems, the time dimension, and various organisational logics

55

Funck (2007)

The balanced scorecard equates interests in healthcare organizations

JAOC

Case study

How BSC has been translated and edited to fit the public healthcare environment. How politicians, administrators, and medical professionals has influenced the design and function of the BSC

Public sector

Sociology Case study Concept of balance being translated as a balance between the perspectives, results in the BSC balancing the different interests within the organization. The cause and effect relationship ineffective in the context studied.

Joseph (2008)

A rationale for stakeholder-based management in developing nations

JAOC Case study and Conceptual

To provide a rationale for stakeholder-based management in developing countries whether based on agency theory or stakeholder theory

Manufac-turing

Economics, sociology

Case study The stakeholder-based management strategy is implemented using BSC and strategy map. Stakeholder-based management is consistent with the normative stakeholder theory, results in “total wealth creation,” rather than “shareholder wealth” alone

Benchmarking

Author/ Year Article Title Journal Article

type Key issues addressed Setting Theory Research method Key findings

Elnathan, Lin & Young (1996)

Benchmarking and management accounting: A framework for research

JMAR Conceptual

The roles that benchmarking plays within the management accounting function

None Contingency theory

Conceptual Framework for benchmarking research that discusses antecedent, contextual and outcome variables when researching benchmarking. How the framework is applied to illustrate the benchmarking of an activity based cost management system.

56

Strategic management accounting

Author/ Year Article Title Journal Article

type Key issues addressed Setting Theory Research method Key findings

Chenhall & Langfield-Smith (1998)

The relationship between strategic priorities, management techniques and management accounting: An empirical investigation using a systems approach

AOS Empirical Whether the combinations of management techniques and management accounting practices enhance the performance of organizations, under particular strategic priorities.

Manufac-turing

Strategic management and Contingency theory

Survey Quality systems, integrating systems, team-based structures and human resource management policies, improving existing processes, manufacturing systems innovations and activity-based techniques enhance performance of firms emphasizing product differentiation strategies. Integrating systems, benchmarking, strategic planning techniques activity-based techniques enhance organisational performance in low price strategies.

Naranjo-Gil & Hartmann (2006)

How top management teams use management accounting systems to implement strategy

JMAR Empirical How top management teams (TMTs) use management accounting systems (MAS) for strategy implementation.

Public hospitals

Organisatio-nal behaviour

Survey As TMTs have a more professional (administrative) orientation, they make more interactive (diagnostic) use of MAS, and the use of non-financial (financial) information.

57

Cadez & Guilding (2008)

An exploratory investigation of an integrated contingency model of strategic management accounting

AOS Empirical The effect of strategic choices, market orientation, and company size on two dimensions of strategic management accounting (SMA) and, in turn, the mediating effect of SMA on company performance 2 dimensions of SMA; SMA as a set of strategically oriented management accounting techniques and the accountant’s role in strategic management process.

Multiple industries

Contingency theory

Survey, archival

Accountants’ strategic decision making participation is positively associated with the application of a prospector strategy and deliberate strategy formulation. SMA usage is positively associated with adopting a prospector strategy, deliberate strategy formulation, company size, and accountants’ strategic decision making participation. SMA usage, in turn, positively affects performance.

Target costing

Author/ Year Article Title Journal Article

type Key issues addressed Setting Theory Research method Key findings

Ansari, Bell & Swenson (2006)

A template for implementing target costing

CM Practical insight

Processes and steps to implement target costing

Manufac-turing

No explicit theory

Practical insight

Steps involved relate to top management support, pilot project, planning, form teams, training, tools set up and institutionalisation process.

Lean manufacturing

Author/ Year Article Title Journal Article

type Key issues addressed Setting Theory Research method Key findings

Grasso (2006)

Barriers to lean accounting

CM Practical insight

Why it is difficult for management accounting to support lean transformation?

None No explicit theory

Practical insight

Cultural compatibility issue, accountants’ education, professional orientation and personal traits. The resistance to lean accounting. Accounting change is not the major barrier to accounting.

Huntzinger (2006)

Economies of scale are dead: Right-sizing for effective cost management and operation

CM Case study

How lean principles and methods create right-designed systems for more effective manufacturing?

Manufac-turing

No explicit theory

Case study Lean manufacturing requires effective design and implementation of operational flow, best cost efficiency whilst less dependent on economies of scale.