MANAGEMENT ACCOUNTING CONTROL SYSTEMS

MANAGEMENT ACCOUNTING CONTROL SYSTEMS



MANAGEMENT ACCOUNTING CONTROL SYSTEMS

Introduction

Despite several recent studies (eg. Emsley, 2005; Bouwens & Abemethy, 2005), our collective knowledge on the factors that drive change in management accounting & control systems (MACS) at the business unit level is limited. This is rather surprising, considering the fact that business units tend to vary considerably with regard to the accounting changes that they adopt and implement (cf. Bouwens & Abemethy, 2005; Kasurinen, 2002). Several studies have empirically investigated the impact of contextual and structural variables at the firm level in different countries (cf. Williams & Seaman, 200 1 ; Libby & Waterhouse, 1 996); however, general management literature suggests that theoretical models on change may not be transferable to other organizational levels or social-economic environments (see Pettigrew et al, 2001 ; Armenakis & Bedeian, 1999).

Other empirical studies on change in MACS at the business unit level have focused on the relation between structure and the adoption of specific MACS-inno varions (for example, Activity Based Costing, ABC; see Gosselin, 1997). However, structural arrangements may drive the adoption of a specific change in MACS yet may not drive change in MACS more generally (Emsley, 2005). In addition, studies that focus on the adoption of specific MACS-innovations may not provide insight in the factors that drive important changes in MACS; the importance of change in MACS is explicitly considered in this study.

Background

The objective of this study is to investigate whether strategy and structure drive (major) change in MACS at the business unit level. The model that is developed in the theoretical section is subsequently tested using survey data from 61 business unit managers in the Netherlands. The results indicate that consistent with the results from studies at the corporate level (cf. Williams & Seaman, 2001 ; Libby & Waterhouse, 1 996), the planning, controlling and reporting components of the MACS are changed more frequently than the costing and reward system components of MACS. The administrative capacity of the business unit appears to be the main driver of change in MACS; in addition, strategy and structure drive change in specific components of MACS. Finally, industry and size indirectly affect change in MACS through their impact on the administrative capacity of the business unit Overall, change in MACS appears to be related to the function of the MACS-component; i.e., organic business units appear to initiate (major) change in the decision-making components of MACS while more mechanistic business units seem to initiate (major) change in the decision-influencing components of MACS.

Discussion

Change in MACS

The focus of this research project is on change in the management accounting & control system (MACS). Many studies focus on change (see Pettigrew et al, 2001; Armenakis & Bedeian, 1999; and Damanpour, 1991; for reviews), yet what constitutes change is often taken for granted and its definition is often avoided (Quattrone & Hopper, 2001). According to Quattrone & Hopper (2001 , p. 408), ' . . . organizations 'change' when they transform their structure and operations; or MACS ...