تاثیر ویژگی های شرکت بر شیوه های حسابداری مدیریت: تجزیه و تحلیل تجربی بر اساس انگلستان

There has been sustained interest in explaining why firms adopt different management accounting practices (MAPs). This paper applies contingency theory to respond empirically to calls by Gerdin [2005. Management accounting system design in manufacturing departments: an empirical investigation using a multiple contingencies approach. Accounting, Organizations and Society 30, 99–126], Tillema [2005. Towards an integrated contingency framework for MAS sophistication: case studies on the scope of accounting instruments in Dutch power and gas companies. Management Accounting Research 16, 101–129] and Chenhall [2007. Theorizing contingencies in management control systems research. In: Chapman, C., Hopwood, A., Shields, M. (Eds.), Handbook of Management Accounting Research. Elsevier, Amsterdam.] to increase understanding of factors that explain management accounting (MA) sophistication. We examine the impact of a range of potentially contingent variables on a broad set of MAPs in a sample of companies selected from the UK's largest industry sector. The variables relate to external characteristics, organisational characteristics, and manufacturing or processing characteristics. The method differs from prior studies in not testing association between contingency factors and a single, or a limited number of, accounting practice(s) but in looking for relationships with aggregate levels of sophistication based on the emphasis that respondents place on 38 practices and techniques. Furthermore, the 10 contingency factors considered in this study include two constructs (product perishability and customer power) not previously explored. The results, derived from a large scale questionnaire survey, indicate that differences in MA sophistication are significantly explained by environmental uncertainty, customer power, decentralisation, size, AMT, TQM and JIT. The data confirm that customer power should be considered as an added external variable in the contingency theory paradigm. Expectations of relationships between competitive strategy, processing system complexity and product perishability, and MA sophistication were not, however, supported by the data. The improved understanding of the relationships between 10 contingency factors and MA techniques employed contributes to the further development of an integrated contingency framework explaining variations in the investment in MA.

Over the last three decades a number of innovative management accounting (MA) techniques have been developed across a range of industries. Notable contributions include activity-based techniques, strategic MA and the balanced scorecard. Many scholars1 argue that the ‘new’ techniques have affected the whole process of MA (planning, controlling, decision-making, and communication) and have shifted its focus from a ‘simple’ or ‘naive’ role of cost determination and financial control (CDFC), to a ‘sophisticated’ role of creating value through improved deployment of resources. For example, Ittner and Larcker (2001) argue that “companies increasingly are integrating various [innovative] practices using a comprehensive ‘value-based management’ … framework” (p. 350). It has been argued that these ‘new’ accounting techniques have been designed to support modern technologies and new management processes, such as total quality management (TQM) and just-in-time (JIT) production systems, and the search for a competitive advantage to meet the challenge of global competition. As firms adapt to these technological and management developments, they must design a management accounting system (MAS) congruent with the new requirements (Gerdin, 2005). However, Tillema (2005) reports that many organisations have not adopted the ‘advanced’ techniques. She explains that “the appropriateness of using sophisticated techniques may depend on the circumstances in which these techniques are being used (and this) … gives rise to the need to adopt a contingency theory perspective” (p. 102). The contingency theory literature indicates that factors such as technology and environment affect the design and functioning of organisations (Covaleski et al., 1996). Its central theme is that there is no unique best structure to all organisations under all circumstances; instead each organisational structure is a response to a set of contingencies. A company's accounting system is a significant element of its organisational structure and the particular features of an appropriate system will depend upon the circumstances that the company faces (Otley, 1980). The literature shows that important characteristics (contingencies) affecting organisational structure include size, environmental uncertainty, production technology, corporate strategy and market environment (Otley, 1995; Covaleski et al., 1996; Mitchell, 2002; Reid and Smith, 2000). In this paper, we follow this tradition arguing that MASs evolve partly in response to the firm-specific and environmental contingencies confronted by individual firms. Our central aim is to determine which characteristics are helpful in explaining the variation between firms adopting different levels of advancement of MA techniques and practices. In particular, we empirically investigate whether ‘sophistication’ levels of management accounting practices (MAPs) are significantly influenced by firm characteristics. In this context, and to be consistent with previous use of the concept (e.g. Chenhall and Morris, 1986; Tillema, 2005; Guilding et al., 2005), sophistication refers to the capability of an MAS to provide a broad spectrum of information relevant for planning, controlling, and decision-making all in the aim of creating or enhancing value. In an innovation to previous research we locate the sophistication of firms’ MAPs by reference to four levels derived from the IFAC (1998) statement on Management Accounting Concepts. Our paper further contributes to the tradition of contingency theory research by, unusually, considering a broad range (38) of MA techniques rather than concentrating on narrow issues such as activity-based costing, and by incorporating a number of contingent variables rather than considering, for instance, simply strategy, decentralisation, or environmental uncertainty. Furthermore (in contrast to a high proportion of empirical contingency studies) the research is prosecuted on a large sample of UK companies—the sample size and the respondents’ location convey greater British relevance than previous smaller studies or those based on data from other countries. Three categories of firm characteristics are examined in this study. These are: external characteristics (environmental uncertainty, customers’ power); organisational characteristics (competitive strategy, structure, size); and processing characteristics (system complexity, extent of implementation of advanced manufacturing technology (AMT), implementation of TQM techniques, implementation of JIT techniques, and product perishability). Fig. 1 depicts these variables and their potential relationships with the sophistication of individual companies’ MAPs. Full-size image (44 K) Fig. 1. Firm characteristics and their relationships with management accounting practices. Figure options The paper is a response to recent calls by Gerdin (2005), Tillema (2005) and Chenhall (2007) for additional research “to increase our understanding of the organisational and environmental factors that explain [management accounting systems] MAS sophistication.” (Tillema, 2005, pp. 123–124). Section 2 provides an overview of the relevant literatures and develops the hypotheses. This is followed by details of the research design and data collection. The survey findings are then presented and discussed. The final section contains a summary and the conclusion.

In this paper we have examined the effect of 10 aspects of firms’ internal and external characteristics on individual firms’ MAPs. In particular, we have sought to ascertain the extent to which characteristics relating to a firm's external environment, its organisational strategy, structure and size, and the nature of its production processes, explain the sophistication level of its MA. The literature, albeit from more narrowly drawn and largely non-UK studies, together with our preliminary fieldwork led us to expect that variation in MA sophistication (a composite based on the emphasis on 38 individual accounting practices) would partly be explained by identified potentially influential firm-characteristics (contingent variables). In order to provide a theoretical framework for modelling the sophistication of MAPs we operationalised the IFAC statement of MA evolution. In this framework the sophistication of MA increases when more recently developed MAPs are emphasised by the firm. We first categorised each MAP into one of the four levels based on the IFAC stages. Then we developed an emphasis score for each category of MAPs in each firm and this score was used to cluster the responding firms into four groups. Each group represents a level of MA sophistication. Finally, we examined the differences between these four groups of firms in terms of the 10 contingent variables to find out which of these characteristics differentiate adopters from non-adaptors of sophisticated MAPs. The results (summarised in Table 4) show that differences in MA sophistication are significantly explained by environmental uncertainty (Hypothesis H1), customer power (H9), decentralisation (H2), size (H3), AMT (H5), TQM (H6) and JIT (H7). Furthermore, from the mean ranks in Table 3 we can conclude that, for these variables, the direction of the significant relationships confirms the a priori expectations. On the other hand, our expectations of significant relationships between competitive strategy (H8), processing system complexity (H4) and product perishability (H10), and MA sophistication were not supported by the data. Table 4. Summary of relationships between contingent factors and management accounting sophistication Significantly positive Significantly negative No significant relationship at 0.05 at 0.10 External characteristics Perceived environmental uncertainty ✓ Customers’ power ✓ Organisational characteristics Competitive strategy ✓ Decentralisation ✓ Size (total assets) ✓ Processing characteristics Complexity of processing system ✓ AMT ✓ TQM ✓ JIT ✓ Product perishability ✓ Note: The directions of the significant differences shown above are based on the mean ranks for each group reported in Table 3. Table options The finding that firms facing relatively high environmental uncertainty place greater emphasis on their MA information confirms earlier, non-industry-specific, studies that have looked at individual techniques. We extend this by finding that MA is more highly evolved in companies facing powerful customers. Customer power is particularly relevant to food and drinks processors because of the concentration of the food and drink retail sector. Producers dominated by their supermarket chain customers appear to find it necessary to invest in advanced MA. Turning to organisational characteristics, we surveyed the relationship between alternative strategies of product differentiation and cost leadership on MA. Various authors have argued persuasively that differentiators require more sophisticated MA. However, in common with Drury and Tayles (2000) we found no evidence that competitive strategy had any influence. A second potentially influential organisational factor that was investigated was the extent of firms’ decentralisation and delegation. We anticipated that more delegated managerial structures may need more sophisticated MAPs to provide managers with enhanced relevant information for the planning, controlling and decision-making for which they are responsible. This expectation was strongly endorsed by the statistics. MAPs are subject to economies of scale, and investment in sophisticated systems was expected to be more readily justified in large businesses. Again, this expectation was upheld. Our final category of characteristics relates to companies’ processing technologies. Prior research has shown that relationships may exist between the application of new manufacturing technologies and the sophistication of MAPs. From the data we conclude that more sophisticated MAPs exist in companies which have made significant investment in processing automation, in TQM and in JIT. We did not, however, find that either processing complexity or product perishability influenced the level of advancement of MA. The improved understanding, that this paper offers, of the relationships between 10 contingency factors and MA techniques employed, contributes to the further development of an integrated contingency framework explaining variations in the sophistication of MAPs (Tillema, 2005). Overall, the results of this study have showed that sophisticated MAPs are emphasised in firms that have the following characteristics: – a highly uncertain environment, – powerful customers, – a decentralised structure, – relatively large size, and those which – employ AMT, TQM and JIT. In reflecting upon the findings we recognise that specific research limitations might reduce their generalisability. By focusing on four levels of sophistication or advancement, as opposed to individual MAPs, we have unavoidably sacrificed the ability to make more detailed prescriptions. We also acknowledge the unsuitability of contingency theory for exploring nuanced and dynamic processes relating to the adoption of accounting techniques and, of course, the well rehearsed limitations of data from postal questionnaires. Cross-sectional surveys are subject to criticism for lacking specificity (Ittner and Larcker, 2001). We maintain that this concern has been mitigated by including, along with each item in the questionnaire, a brief description of each MAP or MA technique thereby reducing possible misunderstandings of terms. This study also differed from previous cross-sectional surveys by targeting both a management accountant and a PM in each firm, thereby enhancing the appropriateness of the respondents. The contribution of the paper derives from its exploration of factors, other than industry sector, that may explain differences in the sophistication of MA in UK production companies. Such contingency studies have two-fold relevance; first, they are interesting from what Tillema (2005, p. 102) describes as “the purely scientific point of view” and second, they can provide organisations with practical information about the accounting practices that others, in similar circumstances, have adopted. The 20-year period since the mid-1980s has been notable for the high profile of novel MA techniques and, as Roslender (1995) observes, accountants and managers may have difficulty deciding which of the numerous novel techniques to embrace. In this study, to normalise for inter-sectoral influences, we concentrated on the very large but under-researched UK food and drinks industry. While we have not formally ascertained the extent to which the sector is representative of other British industry we nevertheless believe that our large sample empirical findings have broad relevance and contribute to the understanding of the determinants of companies’ MA activity. Our method differs from prior studies in not testing association between contingency factors and a single, or a limited number of, accounting practice(s) but in looking for relationships with aggregate levels of sophistication based on the emphasis that respondents place on 38 practices and techniques. This overcomes the concern articulated by Chenhall (2003, p. 131) that examination of a specific element of management control systems in isolation, without linking it to other elements, can lead to ‘serious model underspecification.’ The use of the non-parametric Kruskal–Wallis test in this study (unlike the more traditional use of regression analysis in most contingency theory studies) and the categorisation, using cluster analysis, of firms into four groups according to their level of MAP sophistication allowed us to identify the point at which each contingent variable leads to a change in the level of MAP sophistication. For example, the results in Table 3 show no significant difference regarding PEU faced by firms at Levels 1 and 2 of MAP sophistication, but that a significant difference does exist between Level 1 firms and those at Level 3. This might lead one to expect that further sophistication (exhibited by Level 4 firms relative to those at Level 3) would be associated with even greater uncertainty but this is not borne out by the data. The implication is that while it may be rational for firms to invest in enhanced MA such as probability analysis, computer simulation and ‘what if analysis’ in their decision-making process, in response to moderate uncertainty it is not necessarily appropriate to adopt ‘value creation’ (Level 4) practices in even more uncertain situations. Likewise similar conclusions, about the distinction between Levels 2 and 3—but non-distinction between Levels 3 and 4—can be extended to five16 of the six other significant contingent variables—in fact all except ‘decentralisation’. This discontinuity between the responsiveness of ‘waste reducing’ practices and ‘value creating’ practices invites speculation that the latter are not so much evolutionary developments ‘pulled through’ by a range of established intrinsic contingent variables but more concepts that have been more actively ‘pushed through’ by consultants and other agents of change. Exploration of this theme is beyond the scope of this paper but presents an opportunity for future research. Importantly, the 10 contingency factors considered in this study include two constructs (product perishability and customer power) not previously explored. We submit that the ‘grounding’ of this questionnaire-focused study in fieldwork visits to a sample of research targets has enhanced the outcomes by allowing identification of new potential variables and by allowing useful contextualisation of the statistical findings. The quantitative results confirm that customer power should be added to the contingency theory paradigm as an external variable in certain circumstances. As an innovation the relationship between customer power and MA sophistication certainly merits further in-depth investigation. The potential explanatory usefulness of ‘product perishability’ has, however, not been supported by the data. Nevertheless it remains an avenue that could be investigated more thoroughly. The large size of the sample and the location of the respondents make the findings particularly apposite to an understanding of MA in British production companies. We believe that there is potential for further fruitful work mobilising the concept of levels of sophistication and also submit that industry specific studies, combining both fieldwork and large sample data, can prove helpful in identifying new relevant contingent factors such as customer power.