MANAGEMENT ACCOUNTING

Management Accounting

Management Accounting

Strategic Management Accounting

Strategy is generally viewed as “as a pattern of important decisions that (1) guides the organization in its relationship with its environment, (2) affects the internal structure and processes of the organization, and (3) centrally affects the organization's pefrormance” (Hambrick, 1980, p. 567). Although Hambrick sees strategy as worthy of empirical investigation due to its linkages with many other organizational facets, he feels there is a major problem revolving around the challenge of operationalizing the concept. The focus of this study is on business strategy which refers to how firms compete in an industry or market (Slater in Olson, 2001; Olson et al, 2005).

While interest in SMA is growing (see Tomkins and Carr, 1996; Hoque, 2001; Roslender and Hart, 2003; Bhimani and Langfield-Smith 2007; Cadez and Guilding, 2007; Lanfield-Smith, 2008), there is still limited consensus with respect to what constitutes SMA. One of the more comperehensive empirical investigations of the field was conducted by Cadez and Guilding (in press). Cadez and Guilding focused on two distinct, yet complementary, dimensions of SMA. These are:

(1) the adoption of strategically-oriented management accounting techniques and

(2) accountant's participation in strategic management processes.

In their study, Cadez and Guilding supplemented Guilding et al's (2000) distillation of 12 SMA techniques with four additional techniques concerned primarily with customer accounting. These techniques are seen to manifest two orientations: environmental (outward-looking) and/or long- term (forward-looking). Cadez and Guilding subsequently classified these 16 SMA techniques according to the five categories outlined in Table 1.

Strategy and strategic management accounting configurations

Organizational configurations are sets of organizations that share a common profile with respect to key characterictics such as strategy, structure and decision processes (Ketchen et al, 1993; Ferguson and Ketchen, 1999; Moores and Yuen, 2001). The configurational approach suggests that insights into organization behaviour can be achieved by viewing organizations as clustered around particular characteristics, rather than modular entities to be viewed in isolation (Fiss, 2007).

In configurational research, the focus is typically on the link between organizational configurations and performance (Ketchen et al, 1997; Ferguson and Ketchen, 1999). Configurational theory differs from universalistic and contingency theories because it is guided by a more holistic principle of inquiry and adopts the systems assumption of equifinality (Delery and Doty, 1996).

In general, the theory is concerned with how a pattern of multiple independent variables (e.g., strategy and SMA) is related to a dependant variable (e.g., performance), rather than how individual independent variables are related to a dependant variable. The central assumption embodied in configurational theory is equifinality. Equifinality occurs when a sample of organizations using different strategic and structural alternatives achieve equivalent levels of performance (Payne, 2006). Gresov and Drazin (1997) suggest three forms of equifinality: suboptimal, trade-off, and configurational.

A suboptimal equifinality situation arises when an organization attempts to satisfy multiple and conflicting functional demands (e.g. innovation in product design versus operating efficiency) with a limited repertoire of structural options. A trade-off equifinality situation is characterized by a single or dominant functional demand, whereas ...