Collected Abstracts: Full Parallel Sessions

MAN

Management Accounting Code: MAN001 Day: Wednesday Code: MAN003 Day: Wednesday Abstract ID: 0032 Time: 16.00-17.30 Abstract ID: 1001 Time: 16.00-17.30 Room: Theatre O Room: Theatre O Accounting for the Fashionable Figure: Deliberate Forms Versus Evolutionary Forms of Advocating a Case for Redress Performance Measurement Systems: Comparative Case Studies Ingrid Jeacle ([email protected]) Danture Wickramasinghe University of Edinburgh ([email protected]) University of Manchester Fashion is an inherent component of contemporary life. The Co-author(s): Mostafa Jazayeri giant high street fashion chains with their recognisable logos and replicated store facades have spawned a branded Research on different forms of Performance Measurement globalization that is stamped on every urban space. However, Systems (PMSs) is flourishing (see Tuomela, 2005). Using despite the sheer magnitude of the industry and its dominance Simon’s (1995) framework of levers of control, this paper in the identity construction of both individual and streetscape, provides a comparative analysis of two intensive case studies: the role of accounting within the fashion domain has remained Alpha and BA. Adding empirical details to reflect more on remarkably unexplored. This paper advocates the redressing of Simon’s framework, the case studies illustrate how some such scholarly neglect. It explores the importance of interfirm internal and external factors give shapes to PMSs. In Alpha, the relations in the innovative domain of high street fashion and PMS tended to be more diagnostic and constrained by a suggests the potential role of accounting information in their boundary system. The owner-manager, who was motivated by facilitation. In particular, as rapid change characterises the a Knowledge Diffusion Programme of Chartered Institute of industry, it investigates the part accounting may play in the Management Accountants, deliberately introduced a Balanced quick response of information and product along the fashion Scorecard project. The underlying assumption was that PMSs supply chain. More generally, the paper seeks to broaden the operate on predetermined rules and plans. However, the project arena of management accounting research into a dynamic field became frustrated with rivalries between functional managers of both organisational and contemporary consumer life. and was diluted with some ensuing managerial fads: TQM, six- Sigma, and ERP. In contrast, the PMS in BA tended to be interactive and developed through a belief system alongside some dimensions of diagnostic controls and boundary systems. Its Business Value Scorecard developed from a Culture Change Programme, a management strategy devised to tackle a firm’s financial crisis, and evolved over a period of 20 years responding to organisational resistance. BA system also encompassed non-financial measures and took proactive actions. The assumption was that a PMS has to develop through such interactions and responses, and by considering all levers of controls.

Code: MAN002 Day: Wednesday Code: MAN004 Day: Wednesday Abstract ID: 0241 Time: 16.00-17.30 Abstract ID: 0089 Time: 16.00-17.30 Room: Theatre O Room: Q015 What gets measured gets …on indicating, An examination of the relationship between trust and mobilizing and acting control in international joint ventures: Evidence from the airline industry Bino Catasús ([email protected]) David Emsley Stockholm University ([email protected]) Co-author(s): Sofi Ersson, Jan-Erik Gröjer University of Sydney Co-author(s): Filip Kidon The adage “what gets measured gets managed” is often used as a fact or as conventional wisdom. We put the adage to a test The management accounting system is a significant part of the based upon a survey of 109 managers in 41 organisational management control system and this study examines the entities. In that test we introduce a new variable, mobilizing. relationship between controls and trust in managing Mobilizing is understood as the as the process of moving an organizational uncertainties. Previous studies have often treated organization from a state of passiveness to activeness without trust as part of the control system but this paper differentiates the participation in the production process; to mobilize is to trust from control even though the two remain closely related marshal resources (of all kind) for action. Further, we discuss with information from the control system often being used to different versions of casual forms of the adage. assess levels of trust. In particular, the paper examines the role As a result of we can restate the adage to: what gets mobilized information from three types of control (output, behavioural gets managed, especially if it gets measured. and social controls) plays in determining two types of trust (goodwill trust and competency trust). The findings of a case study of a joint venture between two international airlines indicate that management accounting controls tend to produce information that reinforces competency trust rather than goodwill trust that, in turn, supports operational level activities but leaves executive level activities relatively vulnerable to a betrayal of goodwill trust. The implications for the design of management accounting systems are discussed.

Code: MAN005 Day: Wednesday Code: MAN007 Day: Wednesday Abstract ID: 0564 Time: 16.00-17.30 Abstract ID: 0120 Time: 16.00-17.30 Room: Q015 Room: Q014 Controlling international joint ventures from a distance An Assessment of the Effects of Product Quality and Environmental Accounting on the Francesco Giacobbe Competitive Advantage of Firms ([email protected]) University of Technology, Sydney Alan Dunk Co-author(s): Peter Booth ([email protected]) University of Canberra This paper presents the preliminary results of a study on Arguments have been made in the literature that that product determinants of parent partner’s control of international joint quality provides a basis for establishing and maintaining a ventures (IJVs) and their relationship to the performance of firm’s competitive advantage. Although it is generally expected IJVs. IJVs are increasingly used as an important strategic to contribute to competitive advantage, it is likely that option for pursuing international strategies as they represent an environmental accounting plays an influential role in that effective way of competing globally able to cope with the relation. Proposals suggest that the framework provided by increasing challenges of the globalization of world's environmental accounting facilitates product quality having the economies. IJVs are perceived as strategic weapons for attributes that are likely to contribute to competitive advantage. competing within a firm's core markets and technologies and as The purpose of this study is to examine empirically whether facilitators of inter-firm learning. Research suggests that IJVs there is evidence for environmental accounting impacting on are dynamic entities, different from fully owned subsidiaries. the relation between product quality and competitive Traditional management control systems, performance advantage. These findings support the view that environmental evaluation procedures and accounting information used to accounting has an important role to play in firms. Specifically, control and evaluate fully owned subsidiaries may not therefore the results of the study suggest that product quality contributes be applicable to modern IJVs. This study contributes to better to a firm’s competitive advantage when the reliance on understanding control and performance of IJVs by investigating environmental accounting is high. In contrast, environmental (i) factors influencing parent partner’s management control accounting does not play a moderating role when system choices, (ii) the relationship of management control organizational reliance is low. system choices and perceived performance of IJVs, and (iii) factors related to perceived performance of IJVs. The following factors are investigated: objectives, relative bargaining power, international experience and interpartner working relationship.

Data was collected by way of survey questionnaire from Code: MAN008 Day: Wednesday Australian companies involved in IJVs operating outside Abstract ID: 0832 Time: 16.00-17.30 Australia. Room: Q014 The relationship between a managerial focus on efficiency, inventory reduction, and value added Code: MAN006 Day: Wednesday Abstract ID: 1166 Time: 16.00-17.30 Lawrence Weiss Room: Q015 ([email protected]) Legitimising budget flexibility whilst maintaining HEC University of Lausanne budgetary control: Co-author(s): Ari-Pekka Hameri, Vedran Capkun Evidence from a multi-national organisation

This paper examines the relationship between a managerial Natalie Frow focus on improvements in efficiency and value added. We ([email protected]) analyze financial information on 915 non-service US firms University of Warwick with total assets over US $100 million over the 25 year period Co-author(s): David Marginson, Stuart Ogden from 1980 to 2004. Our results show a very strong correlation

between the increase in value added and the increase in Budgets are not renowned for their flexibility. Yet, it is clear inventory speed across all manufacturing industries. The results that budgets must increasingly operate in circumstances which strongly support the operations management literature which demand flexibility; not least at the level of the individual claims a managerial focus on efficiency, in particular increases responsibility centre where the manager may be obliged to to the speed of operations, will result in significant value sacrifice budgetary targets for ‘strategic reasons’, given that creation for firms. The results also imply that the concept of increasingly competitive conditions demand a high rate of competition based on operational speed has not been strategic adaptation and change. At the same time, however, transferred across all firms and the potential for improvement these conditions also demand ‘tight’ cost control. Thus, many still exits in most industries. firms today appear to confront a difficult conundrum: how to achieve budget flexibility without undermining budgetary control. Drawing on case study evidence, our aim in this paper is to contribute to accounting literature by providing insight into how multinational organizations may seek to address this conundrum through the management control process. We report what we describe as the legitimisation of budget flexibility, where managers are able to forgo short-term budgetary targets, given estimates that doing so will yield greater financial benefit over the longer-term. Budgetary control in this context is viewed more as a process of maintaining ‘global control’ over expenditures and profit margins at the level of the organisation, rather than as the need to meet pre-set and absolute levels of expenditure at the level of the individual responsibility centre. As we aim to explain, this change in the point of control requires a shift in both the theory and practice of budgetary control.

Code: MAN009 Day: Wednesday Code: MAN011 Day: Wednesday Abstract ID: 1002 Time: 16.00-17.30 Abstract ID: 0619 Time: 16.00-17.30 Room: Q014 Room: Q005 Performance measurement, causality and operational Institutional theories and management accounting change: decision making – A case study of value creation in a new Complementarities, issues and paths for development product development process Joao Ribeiro Allan Hansen ([email protected]) ([email protected]) Faculty of Economics, University of Porto Copenhagen Business School Co-author(s): Robert Scapens

The causal relations among multiple performance measures are Institutional theories have been prominent in extending the often presumed to provide information about the creation of study of management accounting to include the social and firm value. So far, the debate about causality has primarily institutional dimensions of organisations and their focussed upon relations among ‘firm level’ performance environments. The emphasis of institutional research is on the measures, the causal mapping of strategic performance symbols, beliefs, values and cognitive systems that measures and their significance in terms of top managers’ predominate in a social setting. These aspects often attain an decision making. This paper focuses upon the causal institutionalised status and thus tend to underlie the rules that relationships between multiple performance measures structure and shape the actions of the individuals, seen as social presumed to translate strategy into the operational level of the beings, and of the organisations, seen as social systems. From organisation. By means of a case study of the mobilisation of, an institutional perspective, management accounting systems and interrelations among, four operational performance criteria and their change are seen as intimately linked with the in a new product development process, the paper illustrates predominant institutions and institutionalised rules. In this how causal relationships among these criteria were in a state of paper, we look at the contributions made by two strands of constant flux, rather than being regular in nature. These institutional research that have been applied to the study of findings might have implications for the issue of mapping value management accounting change: ‘Old Institutional Economics’ creation at the operational level, as the constituents of value and ‘New Institutional Sociology’. We note some creation are not given a priori, but are mobilised and related in complementarities between these two strands of institutional situ . The paper contributes by being one of few studies that theorising, and suggest how they can be developed by drawing addresses the conditions for causal mapping of operational on insights from the ‘circuits of power’ framework (Clegg, performance measures. Secondly, the paper addresses the 1989). We illustrate this discussion with some observations limitations and complexities that are related to mapping causal made during a case study of an organisation in which attempts relationships among operational performance criteria, and to promote change in management accounting were conducted discusses the implications this might have for communicating in recent years. strategy, guiding action and weighting performance measures in operational managers’ pay-for-performance contracts.

Code: MAN012 Day: Wednesday Abstract ID: 0749 Time: 16.00-17.30 Room: Q005

Code: MAN010 Day: Wednesday The Impact of Organizational Characteristics on Abstract ID: 0129 Time: 16.00-17.30 Management Accounting Change Room: Q005 Management Accounting Change in a Subsidiary Frank Verbeeten Organization ([email protected]) RSM Erasmus University, Rotterdam Hassan Yazdifar ([email protected]) Despite several recent studies, it is still unclear what factors University of Sheffield drive organizations to change their management accounting & Parent-subsidiary relationships are commonplace nowadays, control system (MACS). Drawing on organizational innovation yet surprisingly little research analyses their dynamics over literature and using data from a survey amongst 72 business time. The paper presents a (longitudinal) case study, unit managers in the Netherlands, I find that the extensiveness illuminating the dynamics implicated when a UK chemicals of MACS (the ‘accounting knowledge resources’, AKR, of the organisation imposes its systems and rules on a new subsidiary business unit) and the complexity of the organization are the organisation. In particular, and drawing on observations of a main determinants of change in MACS. In addition, size and longitudinal case study, the study considers: (1) the extent to industry have indirect effects on change in MACS: large which a parent dictates its (management accounting) systems, organizations have more extensive MACS, which is associated rules and procedures to a subsidiary, (2) the role which (local) with change in MACS. On the other hand, public sector political, cultural and institutional factors in a subsidiary play organizations have less extensive MACS, which results in in shaping the dynamics of such change implementation, and fewer changes. The determinants of change differ somewhat for (3) how new systems and practices become accepted and take the different components of the MACS: for example, business root as values and beliefs and how they supplement earlier units in the service industry appears to change their directing norms? The study provides insight for the questions above, and systems more frequently, while environmental uncertainty is draws on institutional theories and a power mobilization positively associated with change in the decision making framework to assist in the interpretation of observations. components of MACS. Finally, the results from this study are fairly similar to studies in other countries and at other organizational levels. This suggests that change in MACS depends upon industry-specific and component-specific characteristics.

Code: MAN013 Day: Wednesday Code: MAN015 Day: Wednesday Abstract ID: 0136 Time: 16.00-17.30 Abstract ID: 0918 Time: 16.00-17.30 Room: Q004 Room: Q004 Exploring the Role of Management Accounting Systems in Cost estimation: A role too far Strategic Sensemaking for management accountants?

Marcus Heidmann Paul M. Collier ([email protected]) ([email protected]) European Business School, Oestrich-Winkel Aston Business School, Birmingham Co-author(s): Utz Schaeffer Co-author(s): Cathy Knight

Survival in a competitive environment requires managers to The study described in this paper is of the role and function of identify and make sense of strategic issues as a prerequisite for an estimating department of a major global automotive strategic change. MAS can support the strategic sensemaking assembler. The paper describes the cost estimation function, the process. Accounting research has mostly focused on the role of the department and how tensions emerge in attempting perceived usefulness of MAS information characteristics and to achieve improved value for money in design and purchasing, has only recently begun to recognize the importance of and in the accuracy of the estimating process itself. The core different styles of MAS use. Following this line of research, the competence of the estimating department was found in the case interactive use of MAS can contribute positively to study to be its ability to construct estimates from first principles performance during strategic change and moderate the impact using databases and estimating systems. However, although of innovation on performance (Abernethy and Brownell 1999; estimators were engineers and were part of the Finance Bisbe and Otley 2004). In order to improve understanding on department, management accountants appeared to have little the mechanisms how MAS can improve performance, the understanding of their actual or potential role. While the objective of this study is to explore the role of MAS in strategic accounting function has a clear role to play in every sensemaking and understand which MAS dimensions shape organisation, the role of estimating is ambiguous, being ill- this role. Following a literature review on the impact of MAS defined and advisory. While estimating in this organisation is on sensemaking processes of managers, results from part of the Finance function, its skill-set is sufficiently different information systems research are used to develop a for it to be marginalised in terms of being able to leverage the comprehensive set of information and system quality power of the Finance department. This research sought to better dimensions that influence the role of MAS in strategic understand the inner workings of cost estimation and how and sensemaking. 30 interviews with TMT members and middle why, despite its location with a Finance department, non- managers from 7 large high-tech and aeronautics/space accountants are intimately involved in costing. The case study companies suggest that it is helpful to distinguish the use of highlighted the success of multi-disciplinary teams in cost MAS into adaptation, preparation and utilization. Shortcomings reduction and the opportunity to accelerate the company wide in prior phases can cause problems in subsequent phases. use of cost and rate data mostly retained within estimating and Especially system quality dimensions shape these phases and for the estimators themselves to raise the level of cost analysis seem to be associated with an interactive use of MAS. skills elsewhere within the company. A stronger role could be played within the product design phase, where the estimating Code: MAN014 Day: Wednesday resource could be prioritised according to higher spend Abstract ID: 0261 Time: 16.00-17.30 Room: Q004 components. An exploratory investigation of management accounting roles in Irish manufacturing firms Code: MAN016 Day: Wednesday Abstract ID: 0203 Time: 17.30-18.30 Sean Byrne Room: Q015 ([email protected]) Valuing patents on cost-reducing technology Waterford Institute of Technology Co-author(s): Bernard Pierce Sander van Triest ([email protected]) The characterisation of the management accountant (MA) as a University of Twente, Enschede, Netherlands business partner or hybrid accountant, typically associating the Co-author(s): Wim Vis MA with high levels of involvement in commercial decision making, has been receiving increasing attention in the We present an approach for valuing patents on production professional and academic literature. Against a background of process improvements. Specifically, we focus on valuing a US-led criticism of dated management accounting practices, patent on cost-reducing process improvements from the coupled with inconclusive survey research on innovation viewpoint of the patent-holding firm. We do this by adoption and uncertain career trajectories, this study set out to considering the relevant cash flows that result from owning the examine the nature of management accounting roles in patent. The patent value is determined by (1) licensing fees and contemporary settings employing a qualitative methodology. royalty income, (2) competitive advantage resulting from the The purpose of this paper is to present empirical data collected patent, (3) patent maintenance costs. We discuss a case study from 36 interviews, equally split between senior financial and that presents the difficulties and challenges in finding the operating managers, in medium to large manufacturing firms in relevant information that is needed to estimate the factors. The Ireland. The specific aim of the research was to investigate the main message is that valuation of patents on production process management accounting role influences, characteristics and improvements cannot be done without good knowledge of management control consequences. While the study identifies technology, markets and competitors. many influences, characteristics and consequences, the major themes emerging are the influence of management on the involvement role, the characteristics required of MA to sustain such a role and the potential for MA to experience role conflict or ambiguity as a result. The findings indicate that some operating managers attribute conditions to the nature of involvement sought from MA. Role theory provides a useful framework to illuminate the exploratory findings and sets the agenda for proposed follow-on case research.

Code: MAN017 Day: Wednesday Code: MAN019 Day: Wednesday Abstract ID: 0788 Time: 17.30-18.30 Abstract ID: 0513 Time: 17.30-18.30 Room: Q015 Room: Q014 Value Based Management – Strategic Financial Management and its Information an issue for Small and Medium Enterprises? Support in the Czech Republic Evidence from an empirical study on German SMEs Bohumil Kral Klaus Flacke ([email protected]) ([email protected]) University of Economics, Prague University of Munster Co-author(s): Libuse Soljakova Co-author(s): Andreas Hoffjan, Jan Oliver Piontkowski

Value Based Management (VBM) as a management approach Specialists recently discuss increasing importance of for SMEs has hardly been studied. This study examines companies´ strategic management as one of the important whether German SMEs in general tend to be value oriented, indicators of their long term prosperity. This research focuses and it analyzes factors influencing the extent to which VBM is on application of the methods and tools of the strategic implemented among German SMEs. To carry out the study, we financial management and its information support in the Czech derive a set of three criteria: value orientation of management Republic. This country has gone through large economic accounting, communication behaviour, and leadership, which transformation from central planned to modern market indicate the use of VBM. These criteria represent the dependent economy in the last 15 years. variables. Following the tradition of former survey-based management accounting studies (see Luft and Shields 2003 for an overview), we adapt a contingency approach. We test several external and internal structural variables such as size, entrepreneurial characteristics, or environmental dynamic as independent variables on whether they show an effect on the chosen indicators of VBM. This is done by employing cluster analysis and ordinal regression. The data basis for the analysis came from a survey of German SMEs conducted in 2004 and comprising 159 companies. In general, the results show only a limited use of VBM in SMEs. At the same time, they indicate that there are structural variables such as the use of external advice by consultants or the employment of non-stake-holding management staff that enhance the value orientation of SME; i.e., firms showing these characteristics tend to have a significantly higher indication of VBM approaches.

Code: MAN020 Day: Thursday Code: MAN018 Day: Wednesday Abstract ID: 0036 Time: 9.00-10.30 Abstract ID: 0472 Time: 17.30-18.30 Room: Theatre O Room: Q014 Capital Structure and Performance of Privatised Firms in Degree of reliance on management accounting EU Countries in turbulent and developing economies Patricia Bachiller Mike Tayles ([email protected]) ([email protected]) University of Zaragoza Hull University Business School Co-author(s): María José Arcas Co-author(s): Richard Pike, Fadi Kattan The objective of this paper is to analyse whether there are Prior studies suggest that changes in the environment and its differences in performance between private firms and recently associated information needs have considerable effect on the privatised firms in the EU, as well as to determine whether role of management accountants in organisations. ownership (state-owned versus private) and regulation affect Environments are viewed as complex systems of interrelated capital structure. Focusing on economic reasons that justify economic, market, technological, social and political variables. privatisations, we analyse whether there are differences It has been highlighted that in cases of low environmental between recently privatised SOEs and private firms in their uncertainty, variables and rules that make up the environment profitability, leverage and efficiency during the period 1999- are well understood. In contrast, high environmental 2002. Also, we analyse the determinants of the capital structure uncertainty is characterised by dynamic, rich environments that of these firms. We have found evidence that, generally, manifest themselves in highly unpredictable changes. This privatised firms are more profitable, less leveraged and less study is concerned with the determination of the effect that labour intensive than private firms. Nevertheless, the results certain external and internal factors have on the design and show differences between zones, especially for the British and implementation of management accounting systems in a Eastern zones. We also have found evidence that privatisation developing economy bordering Europe. It has been suggested and regulation determines capital structure, the privatised and that the way of addressing these factors is through identifying a the regulated firms being significantly more leveraged. The variety of control taxonomies and considering how they relate relationship between leverage and profitability, size and to various aspects of management control systems. The tangibility is different in each zone. literature in this research area is discussed through the use of two detailed case studies. The expectations are that management accounting and control systems used are more mechanistic in the period of environmental stability, but become more organic in periods of uncertainty. This study is also important since it adds to the knowledge of management accounting and control systems as they are implemented in an environment of an underdeveloped country.

Code: MAN021 Day: Thursday Code: MAN023 Day: Thursday Abstract ID: 0547 Time: 9.00-10.30 Abstract ID: 0151 Time: 9.00-10.30 Room: Theatre O Room: Q015 Knowledge Practices in a New Zealand Strategic Investment Decision-Making Processes: Tree Farming Company: A Case Investigation Towards a Contingency Perspective

Alan Lowe Fadi Alkaraan ([email protected]) ([email protected]) Waikato Management School, Hamilton United Arab Emirates University, Al Ain Co-author(s): Deryl Northcott The paper reports research conducted in a single case organization during attempts by management to implement a Although a considerable body of literature has emerged in the technological solution to perceived failures knowledge area of organisational decision-making in general and strategic management. The setting is in a knowledge intensive primary decision-making in particular, it is still widely recognized that industry. Research was conducted primarily through our knowledge of strategic decision-making processes is based observation and interviews. The comments of organizational largely on normative and descriptive studies. In this study, the participants are discussed within the context of a number of relationship between contextual factors and strategic themes distilled from the contemporary literature on investment decision-making is explored and interpreted in the organizational knowledge. The research is theorized using a light of functional contingency theory. Drawing on findings processual view of the nature of organizational knowledge from a recent field study of 320 large UK companies, the study which gives a primary emphasis to day to day practice. It is offers insights into the influence of contextual factors on argued that research of this nature could contribute to a better strategic investment decision-making processes. The study understanding of the role and development of knowledge explores the relationships between three significant dimensions management practices of strategic investment decision-making and the contextual factors that are believed to influence strategic investment decision-making. The results suggest that strategic investment decision-making processes are best described by an Code: MAN022 Day: Thursday incremental/adaptive model. A contingency view of strategic Abstract ID: 1119 Time: 9.00-10.30 investment decision-making is proposed to show that each Room: Theatre O contextual dimension contributes in a unique manner to The use of hedge rates in performance evaluation of US- shaping strategic investment decision-making practices. based multinational corporations According to this perspective, there is no universal model that

explains the processes of strategic investment decision-making, Lee H. Radebaugh because its practice will vary according to the contextual ([email protected]) factors in which the organizational decision-makers operate Brigham Young University

Co-author(s): Monte R. Swain Code: MAN024 Day: Thursday Abstract ID: 0110 Time: 9.00-10.30 Shifting exchange rates complicates the management Room: Q015 relationship of MNCs and their foreign subsidiaries. Based on Strategic Management Accounting Innovations in Denmark past research, the majority of MNCs generally fall into one of four categories with respect to how exchange rates are handled Carsten Mejer in establishing foreign subsidiary operating budgets and ([email protected]) measuring and comparing subsequent performance results to Danish Institute of Technology, Taastrup budget: (1) Budget is based on the exchange rate at the time of the budget. Actual results are prepared using the same initial rate. (2) Budget is based on the exchange rate at the time of the In 1981, Simmonds introduced the concept of “Strategic budget. Actual results are prepared using the actual exchange Management Accounting” / SMA. Since then, this has become rates for the period. (3) Budget is based on a forecasted an umbrella term for a wide range of methods having a exchange rate. Actual results are prepared using the same strategic and financial focus. In Denmark, SMA has become forecasted rate. (4) Budget is based on a forecasted rate. Actual one of the new management and control concepts that have results are prepared using the actual rate during the been subjected to increasing interest, and the purpose of this performance period. Previous research establishes that the article is to give an account of the awareness and usability of potential for goal congruence and assessment equity should be the concept in Denmark. The discussion of the article takes its maximized when the budget is based on a forecast exchange outset in management accounting based on conventional rate and actual results are prepared using the same rate. This accounting theory and the area of strategy viewed from a financial perspective; this includes particular focus on paper presents a case study of a U.S. MNC and its practice with 1 respect to measuring and managing performance of its empirical results of a survey of 20 methods, including Brazilian subsidiary in a context of shifting foreign exchange management accounting and strategy. The survey focuses on rates. The current practice is compared with theory regarding the 524 largest businesses in Denmark that have an annual exchange rate fluctuations and management control of foreign turnover of more than DKK 500 million. The empirical results subsidiaries. Disparity between practice and theory is show that the methods most commonly used in Denmark are investigated to establish cause for departure. “Balanced Scorecard”, “Competitor Cost Analysis”, “Costdriver Analysis”, “Economic Value Added”, “Shareholder Value Analysis”, “Strategic Budget Planning”, “Strategic Pricing” and “Target Price/Target Profit”. It follows from this that most of the more recent SMA innovations are not widely used. However, a factor analysis shows the existence of multiple linking between several methods, and increasing international competition and complexity inside the business appear to present opportunities for the application of various methods.

Code: MAN025 Day: Thursday Code: MAN027 Day: Thursday Abstract ID: 0757 Time: 9.00-10.30 Abstract ID: 0828 Time: 9.00-10.30 Room: Q015 Room: Q005 Post-Completion Auditing of Capital Investments: The effects of contract design and implementation practices The Influence of Motives on Design on worker incentive plan outcomes

Jari Huikku Francesca Franco ([email protected]) ([email protected]) Helsinki School of Economics The Wharton School, University of Pennsylvania Co-author(s): Christopher D. Ittner, David F. Larcker This study provides a comprehensive discussion of how the motives for Post-Completion Auditing (PCA) of capital Key issues in the design of incentive plans include the choice investments influence its design, and proposes a framework for of performance measures, the level of pay-performance analyzing the relationship between motives and design. sensitivity, the breadth of plan coverage, and the use of According to prior studies, PCA can be a powerful vehicle for individual versus group payouts, among others. In addition, the companies for steering their ongoing investments and compensation literature suggests that implementation issues, especially for learning how to improve future planning and such as participant and management involvement in contract implementation of investments and the investment process in design, training, and ongoing communication of results, can general. Despite these apparent benefits, there is little academic also have significant effects on incentive plan outcomes. research on the motives and design of PCA, and specifically Existing compensation research, on the other hand, typically about the relationship between them. The aim of this study is to examines only one contract design element at a time and help fill the gap. The empirical evidence is mainly based on 34 ignores implementation issues. Moreover this research mainly interviews made in a large manufacturing company consisting focuses on incentive plans for executive and business unit of three relatively autonomous case units. The results indicate managers, with relatively little emphasis on worker-level plans. that though there are many commonalities in design that are Using data on 737 worker-level incentive plans, we examine a universally appropriate for any PCA system, there can be major wide variety of contract design choices and implementation design variations in PCA systems serving different motives. practices, and investigate their individual and joint effects on For example, communication aspects can play a major role plan outcomes. when serving performance measurement and learning for projects are motives. Interestingly, companies do not always intentionally design their PCA to serve the motives for PCA. Potential reasons for this can be ambiguous motives for PCA or several simultaneous motives for PCA. If a company has many simultaneous primary motives for PCA, the design of PCA can at best be a compromise serving the different motives.

Code: MAN026 Day: Thursday Code: MAN028 Day: Thursday Abstract ID: 0228 Time: 9.00-10.30 Abstract ID: 1171 Time: 9.00-10.30 Room: Q005 Room: Q005 In search of management accounting theory The relation between performance measures in CEO annual bonus contracts and CEO equity incentives Markus Granlund ([email protected]) Robbert-Paul Roomberg University of Technology, Sydney ([email protected]) Co-author(s): Teemu Malmi Maastricht University, Netherlands Co-author(s): Erik Peek, Frank Moers In this article we discuss management accounting theory. We discuss the motivation for and role of theory in management The structure of compensation packages of chief executive accounting, arguing that theories in an applied field such as officers (CEOs) has changed substantially over the last two management accounting should provide explanations that are decades. The use of equity incentives and stock-based useful for those we study - managers, organizations and compensation has increased significantly. In addition, many society. We evaluate the nature of theories currently used and CEO annual bonus contracts have incorporated non-financial developed. Those theories that are considered theories by the measures to evaluate and reward managerial performance. Prior research community are largely imported from other social research analyzes the determinants of these components sciences, but have hardly anything that makes them unique to independently. The purpose of this paper is to recognize management accounting. Those theories that do not currently interrelations between these two components. Our results deserve the status of theory attempt to explain how to apply suggest that prior empirical compensation studies in which the management accounting to achieve superior performance. We determinants of executive equity holdings and the use of non- argue that both forms of theories, at present, largely fail to financial measures are studied separately fail to capture provide valid support for practitioners. We contend that important relations between the two components. We also management accounting theory should help us to answer extend previous research by using more comprehensive questions of what methods we should apply, how, in what measures of equity incentives. We measure CEO incentives circumstances, and how to change management accounting. We from stock and options as the sensitivity of the CEO’s equity provide suggestions on how management accounting research portfolio incentives to stock price. Our measure of total equity could proceed to produce better theories. incentives encompasses both the total incentives from the CEO’s entire portfolio of options and the incentives of the CEO’s holdings of stock and restricted stock. This approach represents a departure from previous studies that use only grants of (restricted) stock and stock option awards as a proxy for CEOs’ equity holdings. We argue that failure to incorporate all components of CEOs’ equity incentives results in measurement error that can reduce the explanatory power of the researcher’s tests. Code: MAN029 Day: Thursday Code: MAN031 Day: Thursday Abstract ID: 0292 Time: 9.00-10.30 Abstract ID: 0994 Time: 9.00-10.30 Room: Q004 Room: Q004 The influence of multinational corporations’ corporate Towards “integrated governance”: control systems on subsidiaries’ innovative behaviour: An The role of performance measurement systems empirical investigation Elena Giovannoni , Klaus Derfuß ([email protected]) ([email protected]) University of Siena, Siena FernUniversität in Hagen Co-author(s): Cristiano Busco, Angelo Riccaboni, Co-author(s): Jörn Littkemann Robert Scapens

While the control of innovations on the company level has Over the last decade several codes and regulations on corporate been of some interest in literature, there is an apparent lack of governance have suggested that organizations should focus on research on the impact of a multinational holding company’s compliance with internal and external rules and principles. (MNC) control system on subsidiaries’ innovative behaviour. However, ensuring good governance also requires an Usually the headquarter designs a MNC’s control system. integration of performance measurement and knowledge Financial measures are dominant in the system, because the management. Drawing on case studies of global corporations, group’s performance is of primary interest to the headquarters’ we argue that when discussing issues of corporate governance management. Non-financial measures will play a smaller role, within complex organisations, an integrated governance but tend to be rather important for the subsidiaries’ framework is needed. In this context, Finance experts have the management. On this background an important question is how potential to play a key role as the access point to the “integrated the subsidiaries innovative behaviour will be influenced by a and measurement driven” language, which is spread MNC’s control system. We develop a set of research organization-wide, through global performance measurement hypotheses that we test by analyzing data we collected from systems be spread organization-wide. management accountants of 80 different national and international subsidiaries of large German companies. According to our results, a control system based strongly on financial control measures and short-term reporting is detrimental to innovative behaviour, thereby hindering innovations to emerge. On the other hand, a control system relying more on non-financial measures seems to support subsidiaries’ innovative behaviour. Further effects studied in our analysis are those of subsidiaries’ organization, size and perceived competition, but the main focus of our paper is to explain the influence of MNCs’ control systems on innovation.

Code: MAN032 Day: Thursday Code: MAN030 Day: Thursday Abstract ID: 0520 Time: 14.00-15.30 Abstract ID: 0373 Time: 9.00-10.30 Room: Theatre O Room: Q004 Management accounting: An informational tool or a Challenges for Coordination and Management Control in knowledge device? The managers’ perceptions Multinational Corporations Adel Beldi Katarina Østergren ([email protected]) ([email protected]) Dauphine University, Paris School of Economics and Commercial Law, Gothenburg Co-author(s): Walid Cheffi Co-author(s): Cecilia Lindholm, Katarina Lagerstrøm Most accounting researches seem to agree in the following The complexity of managing and controlling the operations functions of accounting information: informational, decisional within multinational corporations (MNCs) has increased along and relational. But, there are remarkably fewer studies that with the need to coordinate the flows of capital, products and investigate the manager’s perceptions of the importance of each knowledge across the interdependent and geographically role and explore the management accounting (MA) related to dispersed subsidiaries. The complexity is thus not only a result knowledge creation. This paper is structured in two parts. In the of geographical distance but perhaps even more so an issue of first, we undertake a discussion of the management the subsidiaries being part of both a corporate and a market accounting’s functions for managers as detailed in literature. network, implying the necessity of distinguishing between An important issue concerns the degree to witch MA can be hierarchical and lateral forms of accountability. The study of considered as a knowledge device. We claim that MA, in order Swedish MNCs was carried out in two phases. Data was during to constitute an aid in decision-making for the manager, should the first phase collected via a cases study of a large MNC. In carry more knowledge than simple information. The second the second phase acquired data was used for developing a part of this research suggests that MA would be perceived by questionnaire to be used in a survey. The questionnaire was the managers, rather as an informational and relational tool designed to collect a systematic and standardized body of than as a knowledge device which is useful in decision-making quantifiable data on among other items management control in and actions. To investigate this point of view, we based our MNCs. This set of data is used in this paper to portrait the use research in the analysis of 18 interviews with managers of large of different mechanisms for coordination in MNC dependent French companies. The analysis of qualitative data shows the on their organizational structure. The ambition of this paper is presence of three roles of MA (informational tool, relational to unfold the use of formal and informal mechanisms of control tool and knowledge device). However, a quantitative analysis for coordinating the flows of capital, products and knowledge of the properties of each theme reveals differences in their in MNCs. This is done by drawing upon empirical data respective importance. The perception of MA as an information emanating from 50 Swedish MNCs. A preliminary analysis of tool rather than a knowledge device remains to be the main the data shows the presence of both formal and informal representation in the managers’ discourses. mechanisms of management control as well as the dependence between these two mechanisms.

Code: MAN033 Day: Thursday Code: MAN035 Day: Thursday Abstract ID: 0909 Time: 14.00-15.30 Abstract ID: 0453 Time: 14.00-15.30 Room: Theatre O Room: Q015 Intensity of Creditor Reporting: Groves mechanism and collusion: Contrasting modelling Does Management Accounting Matter? progress with reality Results of an empirical analysis on German SMEs Bernd-O. Heine Klaus Flacke ([email protected]) ([email protected]) WHU - Otto Beisheim School of Management, Vallendar University of Munster Co-author(s): Matthias Meyer, Oliver Strangfeld Co-author(s): Klaus Segbers Formal models provide an important research method in The relationship between small and medium enterprises (SME) management accounting theory. However, this modelling and banks is changing greatly due to reinforced banking approach is often criticized for a tendency to become an end in supervision (e.g., Basel II). This leads to changing itself. As a result, progress in terms of explaining the relevant requirements for the companies’ communication towards their aspects of an observable phenomenon may be doubted. This creditors. This study examines whether German SMEs are paper presents the concept of stylised facts as a method to communicating appropriately (dependent variable) and to what address this issue systematically. It discusses how the concept extent contextual variables (independent variables) are of stylised facts can be used to establish a point of reference in affecting the intensity of this communication. In this context a order to measure and assess progress in management special focus is set on the influence of certain aspects of the accounting theory. Based on an elaboration of the concept, companies’ management accounting system (MAS). Therefore, originally developed by Kaldor (1961), a methodological case a sample consisting of 175 German SMEs surveyed in 2004 is study shows its applicability. The example chosen is the recent analysed. We conducted cluster analysis to create ordinal discussion about the susceptibility of the Groves mechanism, a variables for the communication intensity and for the three procedure for incentive compatible capital allocation, to MAS variables (value orientation, information availability, and collusion. In a necessary first step, stylised facts of collusion internal reporting culture). Then, using univariate tests and are identified on the basis of 110 empirical studies. These ordinal regression, we tested several hypotheses on the stylised facts provide the point of reference for the comparison contextual variables’ influence. In general, the communication of four models discussing collusion in the context of the needs are only met by a limited number of companies. The Groves mechanism. It is shown that currently only four out of results of our research indicate the influence of several six stylised facts can be linked to the models’ results, leaving variables tested: e.g., equity ratio, use of external consultants, two for future contributions. Additionally, the stylised facts are the motivation of entrepreneurs, or the strategy orientation of used to focus the assessment of model construction decisions, the company. There is also evidence for the influence of the identifying existing weaknesses such as arbitrary assumptions MAS variables, especially information availability, though it is or missing robustness in parameter settings in some of the only partially significant in the multivariate analysis and thus models. seems to be less than expected.

Code: MAN034 Day: Thursday Code: MAN036 Day: Thursday Abstract ID: 1180 Time: 14.00-15.30 Abstract ID: 0502 Time: 14.00-15.30 Room: Theatre O Room: Q015 The theorisation of change and subsequent de- Relevance of Financial and Non - Financial Measures to institutionalisation of accounting routines: Managers: An Empirical Investigation When accountants become invisible Ülle Pärl Julia Mundy ([email protected]) ([email protected]) University of Tartu University of Greenwich, London Co-author(s): Toomas Haldma, Stanley P James Co-author(s): Elizabeth Warren

This study examines the impact of a new regulatory pricing This paper examines the relationship between the usage of the regime on the accounting practices and routines of an financial and non-financial indicators and the success of the independent power plant (IPP) in the electricity industry. The company. The quantitative part of the research is based on a senior management engaged in a process of ‘theorization’ in survey of 72 Estonian small and medium size companies, which they recognized that the new regime represented a major which was conducted on the basis of a questionnaire. Managers threat to the organisation’s survival. A solution was developed were asked about their performance measures and performance consisting of significant changes in the IPP’s operational measurement systems. The goal was to clarify which kind of activities. A training programme and a new business indicators are important for them and which are most needed. vocabulary were implemented throughout the IPP in order to The main results of the study are the following: 1. Managers support the new practices. A longitudinal case study method consider monitoring financial accounting indicators very was used to explore the impact of these changes on the IPP’s important. 2. The managers of successful companies value existing accounting practices and routines. Data was collected more observing the clients` performance - customer cost and throughout the study by means of semi-structured interviews profitability related data, as well as non-financial quality - with the top managers and other employees, and supported with related indicators directed outward the company. 3. Important archival documentation from both the IPP and the regulatory information needs like the degree of customer satisfaction and body. The operational changes were achieved through the characteristics of competitors are not addressed. extensive training and accompanied by a new emphasis on commercial imperatives. However, these were implemented without reference to new accounting requirements. Commercial knowledge was transferred from the accountants to the operational engineers, who were forced to develop a financial awareness of the impact of their decisions. The accounting practices were thus de-coupled from the business practices and quickly became de-institutionalised. The findings suggest that training plays a key role in the institutionalisation of new business processes. Code: MAN037 Day: Thursday Code: MAN039 Day: Thursday Abstract ID: 0963 Time: 14.00-15.30 Abstract ID: 0412 Time: 14.00-15.30 Room: Q015 Room: Q005 Contribution to a relationship-based contingency theory - a Information systems supporting management accounting: study of business relations, management accounting The case of BSC in Danish Broadcasting Corporation systems, and performance in 125 Swedish companies Anders Rom Sten Ljunggren ([email protected]) ([email protected]) Copenhagen Business School Uppsala University

Co-author(s): Mats Karén, Ingemund Hägg, James Sallis Studies on the relationship between enterprise resource This study compares traditional contingency theory (TCT) with planning (ERP) systems and management accounting within what we call relationship-based contingency theory (RTC). the ‘theory of moderate effects’ indicate that ERPS to a TCT argues that organizations adapt structures in order to moderate extent support management accounting techniques maintain fit within an exogenous, and sometimes hostile such as the balanced scorecard (BSC). In this paper it is argued environment. These contingent environmental factors are that these findings might be due to i) too narrow a focus on exogenous in that they determine the structures management ERPS and ii) lack of in-depth case studies. The design and use should impose to attain fit, which in turn determines the of BSC in Danish Broadcasting Company is investigated. An performance of the organization. The assumptions being that information system (IS) developed in-house supports the BSC. causality is unidirectional, the environment is independent of The design of the BSC has a number of shortcomings when the process, contingent variables are mutually independent, and compared to the recommendations of the literature. As an through management of structure performance can be example, the causalities between KPIs are not systematically influenced. Drawing upon theories of relationships, interaction, investigated. This and other findings can to some extent be and networks we propose an extension of TCT where the explained by the IS that supports the BSC. It is the purpose of traditionally exogenous variables are brought into the model the paper to illustrate how the IS supports some aspects of BSC through reciprocal interaction. RCT views the environment as design while others are left behind. One finding is that analysis known through relations and as affected by interactions. of causalities simply isn’t supported by the BSC system. On the Contingency variables and structure are endogenous, thus basis of this and other findings it is discussed how BSC performance is determined by their interaction rather than by a systems can support BSC design and use. sequential causal ordering. We use competing models in structural equation modelling to test our hypotheses. Our data comes from a survey of 125 Swedish firms where we measured levels of turbulence, technology, business relationships, centralization, and performance. Our findings support the notion that a relationship-based contingency theory can provide a broader understanding of performance.

Code: MAN038 Day: Thursday Code: MAN040 Day: Thursday Abstract ID: 0311 Time: 14.001-5.00 Abstract ID: 0586 Time: 14.00-15.30 Room: Q005 Room: Q005 Judgmental effects of different balanced System Dynamic Modelling for a Balanced Scorecard: scorecard perspectives A Case Study

Paula van Veen-Dirks Steen Nielsen ([email protected]) ([email protected]) Tilburg University, Netherlands Aarhus School of Business Co-author(s): Eddy Cardinaels Co-author(s): Erland H. Nielsen

This study focuses on the importance that evaluators attach to For the last five years, there have been a tremendous number of the different balanced scorecard perspectives when assessing a articles and research discussions of the BSC, mostly based on business unit’s performance. Our experimental results suggest case studies and surveys based on the problem of the cause and that balanced scorecard usage leads to an unequal weighting of effect relationship of the BSC. However, to be able to evaluate perspectives with strong preferences for financial and outcome the financial effect of different kind of strategies, BSC must oriented information. Statistical test results also indicate that include and predefine a number of relationships based on– the organization of information in a balanced scorecard format, often–subjective factors. In this paper, we suggest a revised as compared to an uncategorized format without four approach for BSC by including uncertainty and stochasticity perspectives, significantly increases the general bias for for several performance measures. We also demonstrate financial measures. The results further show that a balanced through different scenarios how different time perspectives can scorecard presentation format, with explicit markers of good influence decision making, by making inferences about basic and bad performance for each measure, significantly increases relationships of the perspectives. Our model is based on a the weights of the non-financials and thus mitigates the bias for concrete company, using a simple BSC. We show the financials. Results are consistent for bonus allocation decisions, importance of the design of the BSC and demonstrate that it is but for career decisions equal importance is attached to all four possible to reach a kind of steady-state situation by using a perspectives regardless of scorecard presentation format. dynamic stochastic modelling approach. In the first step we defined a number of performance measures, in the second step we show the formulation of different algorithms to be able to integrate both financial and non-financial indicators, and in the third step, we combined these with the financial results in the financial perspective. By using a dynamic simulation approach we are able to evaluate different scenarios and time lags effect in more realistic situations and both in short and long term.

Code: MAN041 Day: Thursday Code: MAN043 Day: Thursday Abstract ID 0299 Time: 14.00-15.30 Abstract ID: 0911 Time: 14.00-15.30 Room: Q004 Room: Q004 Incentive Effects of Performance-vested Stock Options An Empirical Analysis of the Levers of Control Framework Flora Kuang ([email protected]) Sally K. Widener Tilburg University, Netherlands ([email protected]) Co-author(s): Jeroen Suijs Rice University, Houston

This paper assesses the incentive effects of stock options that The purpose of this study is to investigate how the role of the link vesting to firm performance. It is shown that such performance measurement system and how the importance of performance-vested stock options induce higher managerial the belief and boundary systems vary across differing strategic effort than traditional stock options (i.e. stock options that vest elements faced by the organization. Moreover, the purpose unconditionally) provided that performance targets are not too extends to an empirical test of the levers of control framework difficult. Furthermore, the principal is strictly better off when to determine how four control attributes impact organizational using performance-vested stock options. When introducing learning and the efficient use of managers’ attention. Using performance manipulation into the model, prior findings still data from a survey of 122 Chief Financial Officers, this study stand given the manager is risk neutral. Extending comparisons tests a structural equation model that relates strategic elements to cash bonus compensation schemes, the principal's preference to control attributes, which are hypothesized to affect depends on the manager's risk aversion and firm risk. The behavioral responses, and ultimately firm performance. The superiority of performance-vested stock options still holds study finds that strategic risk and uncertainty are associated when the manager is not too risk averse or the firm is not too with both the role of the performance measurement system and risky. the importance of the belief and boundary system. Managerial attention is facilitated by diagnostic controls and belief systems, while the interactive use of the performance measurement system consumes management attention. The efficient use of management attention and organizational learning is associated with higher levels of firm performance. Implications along with ideas for future research are discussed.

Code: MAN044 Day: Thursday Code: MAN042 Day: Thursday Abstract ID: 0163 Time: 16.00-17.30 Abstract ID: 0843 Time: 14.00-15.30 Room: Theatre O Room: Q004 Purchasing from equal SME networks: Balancing the Roles of Business Unit Controllers: The perspective of pricing and cost management An Empirical Investigation in the Netherlands

Harri Kulmala Hans ten Rouwelaar ([email protected]) ([email protected]) VTT Industrial Systems, Tampere Nyenrode Business Universiteit, Breukelen While management accounting and purchasing literature cover In this paper, I investigate the business unit (bu)-controller’s a wide variety of studies regarding networks' cost management, perception of two roles they can fulfill in business life: the most of these studies concentrate on hierarchical supplier base. support role and the control role. The support role is associated However, networks that are based on equal members may with supporting managerial decision-making in the business cause severe surprises for a network sourcing oriented buyer. unit; the control role focuses on providing reliable and timely While the nature of an equal network is not static, management financial accounting information for the corporate level and accounting tools based on long-term relationships may lose insuring that the financial function complies with relevant their effectiveness and efficiency. This study provides literature regulations. This paper contributes to the Management with an empirical in-depth case study illustrating emerging Accounting literature by documenting and explaining the roles problems in a Finnish equality-based network regarding pricing of bu-controllers. Survey data from 119 bu-controllers in Dutch and utilization of management accounting information. The organizations indicate that bu-controllers spend more time on worst case scenario took place: There were direct competition the control role when their organization has a hierarchical or between network members, replacement of members, and adhocracy culture and fewer employees. On the other hand, incapability to create win-win solutions at the same time. The controllers spend more time on support activities when their study introduces potential pitfalls into which a buyer can fall in organization is decentralized and when their organization is this kind of situations. Vague power relationships in equal operating in the service or not-for-profit sector. Finally, networks seem to make modern cost management approaches controllers that are open to new experiences spend less time on almost non-usable for a buyer. For example, open-book their control role, while controllers with a more agreeable accounting did not work at all within this context which had an personality spend more time on their control role. This study influence on pricing mechanisms as well. The study ends up provides some interesting opportunities for additional research, with analysis of pricing mechanisms and managerial including the questions whether controllers are selected for suggestions regarding negotiations with equal supply networks. their job or whether they shape their job.

Code: MAN045 Day: Thursday Code: MAN047 Day: Wednesday Abstract ID: 0257 Time: 16.00-17.30 Abstract ID: 0069 Time: 16.00-17.30 Room: Theatre O Room: Q012 The impact of accounting hybridisation to ERP Management accounting system and cost reduction: implementation. Case Finnish Defence Forces A longitudinal case study

Antonio Lobo-Gallardo Timo Hyvönen ([email protected]) ([email protected]) University of Seville University of Tampere Co-author(s): Jose Maria Gonzalez-Gonzalez, Bernabe Co-author(s): Janne Järvinen, Jukka Pellinen, Escobar-Perez Tapani Rahko In today’s environment, one of the top priorities for

organisations is to reduce costs without affecting dramatically The purpose of this paper is to investigate the relationship organisation survival. The aim of this paper is to provide between SAP R/3 implementation and professional roles of evidence on (1) the importance of Management Accounting accountants in the Finnish Defence Forces. Starting from 1996 information for cost reduction purposes and (2) the role of the case organization began the planning of ERP certain Control System elements for the implementation of implementation aimed at replacing the existing local such a strategy. A longitudinal case study has been conducted information systems specific to the military branches (Army, for this purpose at the Spanish subsidiary of a multinational Navy, Air Force). Data for this longitudinal case study covers chemical group. This chemical processing company introduced the years between 1996 and 2005, and consists of interviews a cost reduction project in the mid-1990s. The most salient and extensive archival data. The study is informed by the results were, on the one hand, the implementation of quality concepts of institutional isomorphism (DiMaggio & Powell circles and internal benchmarking practices based on 1983) and professional encapsulation (Tool 1993; Burns & information provided by Management Accounting, and, on the Scapens 2000), which are employed in explaining the other hand, the important contribution of both formal and non- interaction between scope of ERP implementation and the roles formal Control System elements to the successful achievement of military and accounting professions. Previous studies of the project’s objectives indicate that ERP systems can have at least moderate impact on the roles of accountants (Granlund & Malmi 2002; Caglio

2003). In military organizations, accountants’ tasks have traditionally consisted of financial accounting and reporting, while other accounting tasks (e.g. planning and control) have been performed by military personnel, who act as so-called hybrid accountants. However, in different parts of the organization this hybridisation can exist in varying degrees. We found the extent of this hybridization to influence both the scope of ERP implementation and the actual use of the ERP system.

Code: MAN048 Day: Thursday Code: MAN046 Day: Thursday Abstract ID: 0884 Time: 16.00-17.30 Abstract ID: 0781 Time: 16.00-17.30 Room: Q015 Room: Theatre O Linking the quality of management control systems to their Management Accounting in Small Businesses: users' competencies: An empirical study The Case of Arts and Crafts

Fabien de Geuser Erling Emsfors ([email protected]) ([email protected]) University of Lausanne University, Kristianstad Co-author(s): Daniel Oyon, Kristof de Maeyer According to earlier research, knowledge experience is of greater importance for management control in small businesses Practitioners have criticized management control systems than in large corporations. At the same time, it has been (MCS) and most of them have proposed to improved their observed that small businesses have less developed functionalities, i.e. to increase their possibilities. However only management accounting systems and knowledge of a few studies have focused on the competencies of the users of management control. Furthermore, small businesses rely more these MCS. This paper proposes a theoretical framework for on guidance from external sources. It can also be assumed that integrating a user-perspective into the explanation of MCS small businesses rely on informal information to a greater deficiencies and also provides an empirical assessment of this extent than large corporations do. Based on contingency theory, model by examining the issue of budget forecasting accuracy. the assumption is that there is no information system that is The paper concludes on the necessity to develop competence- generally more effective than another. But, for individual based research on MCS. companies there are information systems that are more useful and effective than others. The aim of this study is to examine what kind of information successful small businesses use in financial decision making and what circumstances affect the selection of the information used. Data is collected through multiple case studies and focused on economic information and uncertainty. The results show that the majority of the companies do not use cost estimates and other components of the management control systems usually considered important in large corporations. Instead they compensate for this lack of management control by focusing on cash management, tacit knowledge and external information. Information exchange with competitors is also proved to be of significant importance

Code: MAN049 Day: Thursday Code: MAN051 Day: Thursday Abstract ID: 0892 Time: 16.00-17.30 Abstract ID: 0591 Time: 16.00-17.30 Room: Q015 Room: Q005 The use of cost information in pricing decisions: The association between cost system design, usage for Empirical evidence different purposes, and cost system effectiveness

Sylvia Hsu Martijn Schoute ([email protected]) ([email protected]) University of Wisconsin- Madison Vrije Universiteit Amsterdam

This paper examines the use of cost information in pricing This paper uses survey data from 133 Dutch, medium-sized decisions. I investigate how firms with long-term capacity manufacturing firms to empirically investigate the alignment commitment determine allocated costs in negotiating prices (or ‘fit’) between the design of cost systems, their usage for when they experience different levels of capacity utilization different purposes and their (perceived) effectiveness, with and demand stochasticity. This study provides empirical effectiveness proxied by the level of usage of and satisfaction evidence on the debates of full cost pricing versus variable cost with the cost systems. Concentrating on firms using a full pricing. Empirical analysis using service prices of California product costing system, the number of cost pools and cost hospitals demonstrates that the level of capacity utilization allocation bases used in the cost system are used to positively affects the association between price and unit operationalize cost system design (or complexity) choices. The allocated cost. The use of full-cost pricing depends on the results suggest that the purposes for which cost systems are existence of opportunity costs on capacity resources. Hospitals being used depend on environmental, organizational and with a high level of capacity utilization put a large weight on technological circumstances confronting the firm. Also, two allocated costs, which measure an opportunity cost of capacity dimensions are found to be underlying cost system usage for usage. In contrast, when firms have idle capacity, allocated nine widely used general purposes, which are related to cost capacity costs are irrelevant to pricing decisions. Hence, system usage for strategic and operational purposes, hospitals with a high level of excess capacity put no weight on respectively. Finally, the results suggest that cost system allocated costs. However, the results do not suggest that the complexity and usage for strategic purposes are negatively level of demand stochasticity affects the use of full cost pricing. interacted in their influence on its effectiveness, whereas cost system complexity and usage for operational purposes are positively interacted, which implies that cost system design choices and the purposes for which they are being used are indeed aligned.

Code: MAN052 Day: Thursday Code: MAN050 Day: Thursday Abstract ID: 1097 Time: 16.00-17.30 Abstract ID: 0535 Time: 16.00-17.30 Room: Q005 Room: Q005 Costing systems and the cost of spare capacity - is the The conditions of the reliability of a cost accounting capacity issue given adequate consideration? method. The case of the UVA method Ken Bates Yves Levant ([email protected]) ([email protected]) Warwick Business School University of Rennes 1 Co-author(s): John Bradshaw Co-author(s): Michel Gervais In the increasingly competitive environment of the 21 st century This article shows that the principal source of error in the UVA we hear how firms have to become lean, eliminate non-value method is the error of aggregation, then it looks further into the added activities and strive to maximise asset utilisation, but conditions which prevent that one from being too significant. there are inevitably firms with excess capacity and their The analysis concludes that if the operational ranges are held management need relevant information on the under utilisation about up to date by the adequate software and if there is a of resources. In this paper we question whether cost system follow-up of the variation in the price of the resources, the designers have been taking appropriate account of the capacity UVA method is a convenient tool to calculate costs. issue and ask whether costing systems are sufficiently adaptable for fluctuating levels of capacity utilisation. We highlight that the capacity issue has received diminishing attention in the literature since the 1960s and then identify the dangers of not identifying the cost of spare capacity and describe two cases that demonstrate alternative approaches to this issue. The manufacturing case is an SME with a traditional costing system that was hindering management’s pricing and product mix decisions because it was using budgeted volumes as the denominator for overhead absorption rate calculations when there was significant spare capacity. The second case relates to a large financial services company that implemented a complex activity based costing system and gained a much greater understanding of resource consumption, and hence tighter cost control in their back office operations.

Code: MAN053 Day: Thursday Code: MAN055 Day: Thursday Abstract ID: 0570 Time: 16.00-17.30 Abstract ID: 0848 Time: 16.00-17.30 Room: Q004 Room: Q004 Organisational control as subcultural practice: Rational or normative control – What’s happening today? A shop floor ethnography of a Sheffield steel mill Göran Nilsson Thomas Ahrens ([email protected]) ([email protected]) Stockholm School of Economics Warwick Business School Co-author(s): Massimiliano Mollona Barley & Kunda (ASQ, 1992) argue that there is alternating waves of rational and normative rhetorics of control. An Studies of organisational culture and control have often example of rational control is Scientific management and an emphasised the ideational qualities of culture, presenting it as example of normative control is Organizational culture and relatively homogeneous. Recent field studies, by contrast, have quality , the latter still proceeding when they publish their tended to study organisational meaning through practices. They paper. The main purpose of the paper is to discuss whether have also viewed organisational control as dependent on there has been a change in the dominating rhetorics of control temporary assemblages and thus prone to change. In this paper, since 1992. This is addressed in two ways. First I conduct a we seek to build on those field studies of accounting and general discussion regarding what kind of management trends management control practices to reaffirm the usefulness of we see today and whether they lean more towards normative or culture for the study of control. Our ethnography of a steel mill rational control. I conclude that culture and quality does not in Sheffield is based on eleven months of participant appear to be as important today as they used to be. Instead we observation on the shop floors of the hot and cold departments. can see concepts such as shareholder value and the audit We argue that the subcultures of different shop floors were society that appears to be more influential today. I then present constituted in practices, particularly practices of control. my cases which consist of two organizational changes, both Organisational culture could not be understood as simply striving towards increased flexibility, customer satisfaction, ideational. We found considerable diversity between and profitability. One of the changes took place between 1985- subcultures. Equally, however, we found that individual 1992, while the other one took place between 1998 and 2001. subcultures, and the tensions and contradictions within them, The older case seems to have much in common with normative exhibited much historical continuity. The ability of studies of control whereas the other is more in line with rational control. organisational subcultures to bring out the diversity as well as Both the general discussion and the cases seem to imply that continuity of practices holds considerable potential for our there has been a change from normative to rational control in understanding of accounting and management control. the late nineties. I therefore suggest that we now are in a period of rational rhetorics of control that we might call Shareholder value and the audit society .

Code: MAN054 Day: Thursday Code: MAN056 Day: Friday Abstract ID: 0751 Time: 16.00-17.30 Abstract ID: 0596 Time: 9.00-10.30 Room: Q004 Room: Q015 Management control as a governance mechanism Balanced Scorecard Content, Use, and Performance Impacts: Some Australian Evidence Benoit Senaux ([email protected]) Teemu Malmi ESSEC Business School, Paris ([email protected]) Helsinki School of Economics Though essentially part of the same whole –organisational Co-author(s): David Bedford, David Brown control- corporate governance (CG) and management control (MC) tend to be clearly separated and are traditionally studied In recent years academic literature has given increased independently. Corporate governance is seen as dealing with consideration to the adoption and use of performance the external actors while management control is directed measurement systems, notably the Balanced Scorecard (BSC). towards the internal agents. Very few works, if any, try to However, there has been limited empirical investigation into articulate both. However, the evolution of organisations asks the particular benefits that result from the use of the BSC for a combined analysis. Among the various stakeholders CG is (Ittner & Larcker, 1998). Furthermore, while the normative dealing with are the employees of the organisation while literature has seen a shift in the conceptualisation of the BSC modern forms of organisation are challenging the traditional from an information system towards one of strategic control, boundaries and lead to closer interrelation or interpenetration little is known about whether these normative developments are with suppliers and/or customers. As a consequence, the being mirrored in practice and if so, are these developments boundaries between what is internal and external become reflected in benefits BSCs produce. This study empirically blurred and maintaining an artificial disconnection between examines firstly how the BSC has been applied in practice and corporate governance and management control appears secondly whether different uses of the BSC result in varying meaningless. Through a comparative case study of professional performance outcomes. Data is from a cross sectional survey, football clubs in France, England and Denmark, this paper which provided a sample of 92 Australian firms using BSC. sheds a new light on the relationship between CG and MC. It Firms are classified into six groups representing different uses shows how, in a complex and turbulent environment, MC can of the BSC. We then hypothesise that the BSC provides greater fashion the organisation’s culture, which transcends the benefits when 1) it is tied to compensation 2) it is implemented organisational boundaries. It finally suggests that management at multiple levels within the organisation and 3) cause and control have a role to play as a corporate governance effect logic is used between measures. Results support the third mechanism in stabilising the environment and helping to proposition, but it appears to be more important if the BSC is reconcile diverging stakeholders. tied to compensation. These results are discussed, and implications for practice and future research are presented.

Code: MAN057 Day: Friday Code: MAN059 Day: Friday Abstract ID: 0841 Time: 9.00-10.30 Abstract ID: 0896 Time: 9.00-10.30 Room: Q015 Room: Q005 Balanced Scorecard Adoption in SMEs: The role of information in explaining the relation between Empirical Evidence from a German Perspective trust and controls in inter-firm setting

Thomas Rautenstrauch Alexandra Van den Abbeele ([email protected]) ([email protected]) University of Applied Sciences Bielefeld, Germany Katholieke Universiteit Leuven Co-author(s): Filip Roodhooft, Luk Warlop Since the Balanced Scorecard (BSC) was introduced in 1992 by Kaplan and Norton as a concept that supports performance In this paper, we argue that prior studies on the relation measurement and strategic planning activities, its application between trust and controls in inter-firm settings have failed to mainly focuses on large, multi-national organisations. fully explore the way in which trust is built at the level of the Although, the management attention towards strategic issues is relationship, and, more importantly, the role that information important for both small and large organisations in their efforts plays in this process. Using the foundations of exchange theory, to strengthen competitive advantages, the BSC approach can we posit and find evidence of the crucial role of the negotiation hardly be used and implemented in small and medium-sized process in explaining inter-firm negotiation outcomes. We use enterprises (SMEs) without regard to their specific a 3 (no, weak or strong control system) X 2 (detailed versus characteristics. However, despite a large number of papers less detailed cost information) experimental design to test our since 1992 that have examined how the BSC can be hypotheses on the influence of the inter-firm control system successfully used in large organisations, comprehensive and its interaction with cost information on buyer-supplier publications and empirical research on this topic can only negotiations and resulting outcomes. Our results indicate that, barely be found in European SMEs. Thus, the purpose of this in an early stage of a relationship, controls and refined paper is to investigate the application of the BSC in German information have a positive impact on a trust and on joint SMEs as well as to identify potential reasons of SMEs not to profit. However, once controls have been removed, we find that adopt the BSC concept. The arguments presented in this paper it is not so much trust or information that determines are based on a survey of 1.568 SMEs (here German enterprises negotiation outcomes, but rather the problem solving behaviour with more than 20 and fewer than 500 employees located in the of the people involved. German federal state of North Rhine-Westphalia). The data set covers only firms in manufacturing and includes a set of variables relating also firm specific characteristics that can be used to test various hypotheses. The findings show that many SMEs either don’t know the merits of the BSC or that the design and implementation of the BSC in SMEs needs to be facilitated.

Code: MAN058 Day: Friday Code: MAN060 Day: Friday Abstract ID: 1184 Time: 9.00-10.30 Abstract ID: 0947 Time: 9.00-10.30 Room: Q015 Room: Q005 The Shared Service Centre and the routinization of Open-book accounting and real options analysis in inter- management accounting change firm decision making

Will Seal Tero Haahtela ([email protected]) ([email protected]) Loughborough University Helsinki University of Technology, Espoo Co-author(s): Ian Herbert Co-author(s): Jouko Karjalainen

There are a number of alleged advantages of the Shared Service Many firms today outsource some of their operations and Centre (SSC) model. Perhaps the most obvious advantage from collaborate closely with suppliers and customers. As a result, the point of view of the parent company is that by new collaborative cost accounting methods and principles have concentrating service activities in one site, specially chosen for been developed, most of them being founded on the theory of the purpose, the company can reduce costs. The SSC can focus open-book accounting with mutual information, profit, and risk its core competencies, standardise processes and apply the best sharing. On the other hand, real options analysis is often technology appropriate to a service business. But is the SSC regarded as a method for taking into account the value of model just a technical matter or is it that so far only certain flexibility under uncertainty. However, if applied separately, voices are heard, namely the consultants and head office open-book accounting and real options analysis may provide perspectives? With these questions in mind we interpret contradictory decision recommendations for a company. Real evidence from the UK division of a German-owned options analysis can provide multilateral benefits to firms, but multinational company using a narrative approach to it may also result in making myopic decisions that have organizational analysis. significantly negative impact on other parties. This paper discusses how open-book accounting and real options analysis can be combined into a common valuation framework. The use of this framework is illustrated through a new product development example. The results indicate that when applied together correctly, open-book accounting and real options analysis may foster value maximization with fair risk and profit sharing between parties.

Code: MAN061 Day: Friday Code: MAN063 Day: Friday Abstract ID: 0951 Time: 9.00-10.30 Abstract ID: 0968 Time: 9.00-10.30 Room: Q005 Room: Q004 Open Book Accounting In Practice – Do the Determinants of Performance Measures Used for Contradictory Empirical Evidence Evaluation Differ Across Four Categories of Measures? Evidence From High-Tech Firms Tommi Lahikainen ([email protected]) Elizabeth Demers Tampere University of Technology ([email protected]) Co-author(s): Jouni Lyly-Yrjänäinen , Petri Suomala, University of Rochester Co-author(s): Margaret Shackell, Sally Widener Jari Paranko The use of performance measures in evaluating subordinate Inter-organizational cost management (IOCM) and open-book performance is an important aspect of organizational design. accounting (OBA) have been seen as a response of Yet despite the prevalence of multi-dimensional performance management accounting to the evolution taking place in many measurement systems in practice (e.g., balanced scorecard or supply chains. However, there is surprisingly little evidence on strategic performance systems), the literature has provided the success and failure of these tools in real-life settings and limited understanding of contingency factors that explain the how companies utilize these tools in their network use of various types of performance measures. We extend our relationships. Accordingly, literature suggests that even purely understanding of performance measures by examining strategic descriptive cases would be able to increase our understanding (i.e., competitive advantage) and structural (i.e., delegation of on IOCM practices. This paper reports a case study, which decisions and incentive compensation) factors that explain the focused on cost management development in a Finnish use of measures across four categories: customers, employees, machine construction network. The researchers had an active new products, and financial performance. We conduct a field and interventionist role in the process, which provided an study of 53 high-tech firms and find that, after controlling for excellent opportunity to observe and learn from a real-life entrepreneurial variables, strategic and structural factors application of IOCM and OBA. The evidence from this case explain the extent of use of measures in evaluating subordinate provides us with somewhat contradictory ideas. Taking a more performance in each of the four performance measure positive stance, one might say that the case illustrates quite well categories. We also find that different dimensions of strategy what is meant by IOCM. Two suppliers opened their books on and structure are significant in explaining the use of the basis of which the OEM and the suppliers were able to performance measures across different categories of measures discuss the costs on a detailed level resulting in lower (e.g., a competitive advantage based on product features and purchasing prices for the OEM. On the other hand, a more higher levels of stock options is associated with the use of new pessimistic stance is equally justified. The OEM employed a product development measures while a competitive advantage number of harsh and non-collaborative methods for squeezing based on service and employee knowledge and higher levels of the suppliers on the basis of detailed cost information. Thus, bonus compensation explain the use of employee measures). elements of competition were also present in an open-book setting, which is not typically discussed in the OBA literature.

Code: MAN062 Day: Friday Code: MAN064 Day: Friday Abstract ID: 0835 Time: 9.00-10.30 Abstract ID: 1136 Time: 9.00-10.30 Room: Q004 Room: Q004 The Role of Management Accounting in R&D Institutions Management Control Practices, the Organizational Life Cycle and Venture Capital Investors Aldonio Ferreira ([email protected]) Hanna Silvola Monash University, Melbourne ([email protected]) Co-author(s): Marta Barbas University of Oulu

The “third sector” is becoming increasingly important due to The paper investigates the management control practices from the growing number of not-for-profit (NFP) organizations. It is an organizational life-cycle perspective by using Miller and widely recognised that this type of organizations are singular in Friesen life-cycle model. The paper investigates how many regards. However, despite the increased importance and management control practices such as business planning and the peculiarities of the sector, a review of the literature shows budgeting vary across organizational life cycle stages. The aim that research involving not-for-profit organizations is rather of the paper is to explore how the life-cycle stages explain limited, particularly in what research and development (R&D) variations in management control practices. In addition, the institutions is concerned. This study was designed to contribute paper investigates if the power of venture capital investors to reduce this gap in the literature. This research work boosts the adaptation of the management control practices. We characterises the management accounting systems (MAS) of compare management control practices between the firms, Portuguese R&D institutions and examines their roles within which have or have not venture capital investors, because these organizations. The study investigates how MAS are used previous studies indicate that venture capital investors have an by R&D institutions and what are the main motivations for the important role in the firm in which they have invested. We use of the management accounting techniques. It explores, in check if the role of venture capital providers extends on particular, whether management accounting use is primarily management control practices and how these practices differ driven by rational decision making processes - that involve between the organizational life-cycle stages. The results more efficient and effective management of the funds - or by indicate that growth firms dominate other stages when using other type of reasons such as reporting. To analyse empirically the management control practices. In particular, the need for the research questions, a questionnaire was developed and sent management control practices rises in growth firms, which to 92 R&D institutions. The survey has generated 39 usable have venture capital investors. The results also indicate that the responses. This paper reports on the findings of this study. It education of CEO is an important factor in driving the indicates that budgeting and variance analysis are clearly the adaptation of new management control practices. The results most widely used techniques. However, the study found weak are based on the survey creating the description of the use of evidence of a relationship between the degree of sophistication management control practices during the different life-cycle of MAS and the organizational variables considered. stages.

Code: MAN067 Day: Friday Code: MAN065 Day: Friday Abstract ID: 1054 Time: 11.00-12.30 Abstract ID: 0416 Time: 11.00-12.30 Room: Q015 Room: Q015 The diversity of activity-based cost and management Aggregation in activity-based costing and the short run accounting systems in question activity cost function Frederic Gautier Samuel Pereira ([email protected]) ([email protected]) Université Paris X CEROS, Nanterre University of Porto Co-author(s): Béatrice de Séverac

This paper first identifies the conditions that support the This paper introduces the results of an exploratory field construction of an aggregate output, i.e. the conditions under research dealing with the characteristics of architecture and which a single measure of output can be used to accurately design of activity-based cost and management systems determine cost object incremental costs within a cost pool. This implemented in the service industry. The aim of this research is is a significant issue which has not been fully explored in the to answer questions on the content of cost accounting systems management accounting literature. Two conditions are jointly adopted, their internal nature and the inherent similarities and necessary and sufficient. The first one is the linear differences between organisations within the banking and homogeneity property associated with each cost object insurance sectors in France. After having shown that different production function. This condition ensures that costs are linear systems and modalities of design are possible, and having with output, which is essential if the cost reported by an introduced the research methodology, we will present what can activity-based costing (ABC) system is also to be a relevant be learned from this exploratory study. We first study the cost for decision-making. The second is that all (cost object) origins and analysis which may explain the diversity of ABC cost driver rates for a given cost pool are equal. This condition systems implemented. In spite of a very simple model, different guarantees that the cost function at a given activity depends on choices have to be made when designing an ABC system. only one cost driver. The short run structure of ABC is also Then, after having introduced the methodology (exploratory introduced. It is shown that the fundamental ABC property of case study methodology) and the sample of companies (in the linearly between costs and output does not generally hold in the French banking and insurance industry), we try to study if the short run, even assuming that technologies are linearly objectives of implementation (in terms of decision making) and homogeneous. Only under very particular conditions, such as the context may explain the choices of design features of the when inputs are combined in completely fixed proportions, are cost system. The study clearly showed that, in spite of a short run costs linear with output. common denominator, a strong diversity existed between ABC systems due to the different design features. This different design features are partially explained by the aims of the implementation, in particular decision making. The design features chosen by the companies don’t necessary lead to more accurate costs. These considerations imply further research should be done between the design features activity systems and the goals sought.

Code: MAN068 Day: Friday Abstract ID: 0507 Time: 11.00-12.30 Code: MAN066 Day: Friday Room: Q005 Abstract ID: 0970 Time: 11.00-12.30 Room: Q015 Indicators as negotiated reality The ‘fate’ of activity based costing: A changing context within and beyond organizational boundaries Sofi Ersson (sofi[email protected]) Gerardine Doyle Uppsala University ([email protected]) University College Dublin This paper investigates a development process of non-financial key performance indicators for internal use. A more profound This paper describes a 12-year longitudinal study, which understanding of how indicators are created is of great analyses the process of implementing a new management importance for the implementation and its inherent accounting practice, activity based costing, within a private consequences. The study is based on qualitative data collected hospital setting. The study explores the shifting ‘fate’ of from five public organizations designing performance activity based costing within a changing environment. The measurement systems aiming at lowering their internal sick capability initially sought by the hospital was a negotiation tool leave level. The analysis indicates that both technical issues with a health insurer. Over time this capability was extended to and social factors play central roles within the development include using the new management accounting practice to track process and that the creation of key indicators is an outcome of shifts in medical practice, to re-engineer hospital processes and negotiations and agreements. to form a product development strategy for the hospital. The study demonstrates how the hospital introduced activity based costing in an attempt to derive more accurate costs, which over time changed to using the activity based costing system to address strategic issues. This field study is a classic example of the shift from ABC to ABM. The longitudinal nature of the study allowed this shift to be revealed.

Code: MAN069 Day: Friday Code: MAN071 Day: Friday Abstract ID: 1011 Time: 11.00-12.30 Abstract ID: 0176 Time: 11.00-12.30 Room: Q005 Room: Q004 Management accounting change in the public sector: Cost management using target costing methodology across A French case study and a new institutionalist perspective the supply chain: A transaction cost economics perspective

Philippe Zarlowski Richard Chivaka ([email protected]) ([email protected]) ESSEC Business School, Paris University of Cape Town Co-author(s): Olivier Saulpic , Annick Bourguignon Target costing methodology, as a cost management tool along In the public sector management accounting change is often the supply chain, presents challenges related to inter-company associated with implementation of New Public Management management controls. This paper uses a transaction cost (NPM) principles. This article uses the new institutionalist economics approach (TCE) as a framework to explore the perspective to analyse the implementation of a new manner in which target costing is applied in a supply chain performance measurement and management system in a large relationship. The study focuses at the component-level target French public firm, thus contributing to documenting costing as it is at this stage that cost management using this tool implementation of NPM in France (which has rarely been involves key participants along a product’s supply chain. The addressed hitherto). We observed various forms of decoupling research paper addresses the following question: Which at the utilisation stage of the system. Findings contribute to management control mechanisms and processes can be used to suggesting three steps in the adoption of managerial support cost management using target costing in supply chain innovations (design, implementation, and utilisation) and relationships? The research revealed that the application of validate prior research regarding the impact of power, actors’ target costing, as a cost management methodology at the resistance and internal legitimacy concerns on decoupling . component-level can be well understood in the context of control devices take the form of trust-based and collaborative practices. The research empirically and theoretically contributes to the literature on inter-organisational cost management and management controls. Understanding the interplay between the technical aspects of target costing and the dynamics of inter-company controls facilitates the configurations of inter-company relationships to create a

supportive environment in which the full potential of target

costing in conferring cost management benefits can be realised.

Code: MAN072 Day: Friday Code: MAN070 Day: Friday Abstract ID: 1147 Time: 11.00-12.30 Abstract ID: 1143 Time: 11.00-12.30 Room: Q004 Room: Q005 Option Contracts in Supply Chains Multidimensional control systems for companies of water

public service: An international Ulf Schiller comparison between Italy and Spain ([email protected]) Universität Bern, Switzerland Francesco Badia Co-author(s): Sabine Böckem ([email protected])

University of Ferrara This paper considers optimal contracts in multi-party supply Co-author(s): David Ortiz Rodriguez chains. The key efficiency problem arises from the so-called hold-up problem, that is, incentive disalignments when the The public sector process of reform (Pollit & Bouckaert, 2000), parties must invest prior to the final agreement about prices and has involved even the local utilities. Some aims were to quantities. We show that option contracts may solve the optimise the use of public resources, increase quality of incentive problem. In a first step we modify the approach that services and improve management control. Local utilities were has been considered earlier in the literature by introducing a provided usually by public entities, but the EU context of self-enforcing version of the contract in a two-party setting. We privatisation and liberalisation has led private companies, even then provide case-study evidence from the semiconductor through Public-Private Partnerships, to access these markets. In industry. Our last step extends the setting to three parties. We the last years, literature has considered, with regard to control show that first-best allocations in supply chains are still systems, new fields like the relationship between strategic and possible if there is a particular order of renegotiations. We management control and the use of a multidimensional finally comment on the differences between supply-chain approach in performance measurement (Kaplan & Norton, contracting and internal exchange where a transfer pricing from 1992), i.e., considering not only the financial dimension, system is used. but other aspects like quality of the service, environmental sustainability and management of the intangibles. The paper considers the differences between two different countries: Italy and Spain, analysing in detail the water service, which is often provided with a private intervention. We develop an international comparison, based on two case studies of water service companies: Acosea-Hera (Ferrara) for Italy and Emasagra (Granada) for Spain. The aim is to examine the peculiarities of the control systems in these companies and consider the scope of a multidimensional control system, previously analysed from a theoretical point of view. Moreover, a part of the case will be dedicated to the external control systems, established by the public entities.

Code: MAN073 Day: Friday Code: MAN075 Day: Friday Abstract ID: 1155 Time: 11.00-12.30 Abstract ID: 0814 Time: 14.00-15.30 Room: Q004 Room: Q015 The use of suppliers product costing in three Swedish Cooperation, control and complementarity – Findings from interorganizational relationships an inter-organizational relationship in the international airline industry Ulf Nilsson ([email protected]) Kerstin Neumann Graduate School of Management, Sabanci University, Istanbul ([email protected]) Vienna University of Economics and Traditionally, product costing is assumed to support decision Business Administration making within an organization. However, recent studies indicate that a supplier’s product costing and other types of cost In extant literature little is written about the management data can also be used in supply chains and can accordingly also control and dynamics in inter-organizational relationships serve external purposes. This is occasionally referred to as between competitors. As this article discusses an exploratory “open books” and is normally seen as a tool for supporting the case study of an inter-firm cooperation between two firms of internorganizational cost management. The concept of open international airline industry the paper might add important books refers to the phenomenon that the supplier presents it’s issues to the research field. Alliances between firms operating accounting data for the buyer. The term open books relatively at the same level of the value chain pose vital management wide. This study focuses on the role of the supplier and it’s challenges. Compared to e.g. buyer-supplier-relationships product costing in interorganizational relationships. The aim of potential of serious conflict is always present because the the study is to identify, describe, and partly explain the partners often compete in markets outside the cooperation or situations in which the supplier’s product costing is used. even in fields covered by the alliance. This offers the Further, it elaborates the relationship between the supplier’s possibility of generating private and appropriating common product costing and interorganizational cost management. The benefits. We link this outcome to two control problems: moral issues are studied in three different relationships between hazard and hold up. Bargaining power and a high dynamic Swedish suppliers and buyers in the automotive industry. external environment strengthen these problems. As these Firstly, 15 different situations are identified where product findings influence the success of the alliance it is important to costing and other types of cost data are used between the buyer implement a detailed governance structure. Due to the and the supplier. The most important situations deal with the competitive position formal and informal management control development of the product. Secondly, it is suggested that the mechanisms are necessary; they are complementary. supplier’s product costing supports the interorganizational cost Furthermore sustaining resource complementarity between the management in a number of different ways not previously partners appears to be a vital mechanism to generate recognized. Thirdly, it indicates that the supplier discusses and cooperative behaviour which weakens the control problems questions its costing system due to the external use. The over time. The case study supports the theoretical propositions findings of the three cases are compared and interpreted based which try to link the rather static perspective of governance on the interorganizational context in which they occur. choice and a dynamic perspective of alliance success.

Co de: MAN074 Day: Friday Code: MAN076 Day: Friday Abstract ID: 0242 Time: 14.00-15.30 Abstract ID: 1065 Time: 14.00-15.30 Room: Q015 Room: Q015 A review and discussion of management control in hybrids: Performance measurement to coordinate Whence this inconclusiveness distribution chains about inter-organizational accounting? Anders Parment Angelo Ditillo ([email protected]) ([email protected]) LiU School of Management, Linköping Università Bocconi, Milan This study deals with performance measurement systems Quite some years have passed since A. Hopwood (1996) (PMS) and their ability to coordinate distribution chains. On proclaimed the need to explore the lateral processing of the car market, manufacturers use PMS to turn focus from sales information, transcending legal organizational boundaries. volume to a complex set of measures in identifying dealer Since then, many contributions in the management accounting performance. Car manufacturers sell their products through literature have been published in line with overcoming this franchised dealers or own outlets, the former being associated shortage. The aim of this paper is to investigate whether these with motivational advantages and higher performance. Both contributions have brought the full possibilities of that intuition manufacturers and dealers strive for maximizing profits, but to its full development. To this end, the paper provides a review have fundamentally different views on retailing, which makes of the theoretical and empirical literature on management coordination difficult. Through PMSs and economic incentives, control in inter-organizational contexts with the objective of manufacturers try to implement their ideas at the retail level. presenting the state-of-the-art in this field, critically evaluating However, the thinking behind the PMS is not accepted by the corresponding achievements and assisting in developing dealers. Thus, the PMS may produce confusion and negative new directions for future research. In our analysis, two tracks attitudes which dealers convey to customers. The PMSs are will be highlighted. Firstly, we will discuss the contributions on heavily focused on numbers, which mirrors strategies to reduce the use of control mechanisms across organizational complexity in order to facilitate control. Lack of feedback on boundaries; secondly, we will examine the forms and roles of markets and performance may restrict manufacturers’ accounting information exchanges in inter-firm relationships. knowledge of what is happening at the retail end. Even worse, Our paper concludes with the identification of a gap in the the PMS may not identify negative attitudes created by the literature concerning the wider functionings of inter- system itself. 102 interviews were conducted with organizational accounting information systems. As a proposal, manufacturers, importers and dealers across five countries. The we address this gap by referring to a novel theoretical study suggests strategies to find a balance between control and perspective (combinative), a new unit of analysis (Accounting motivation. In securing the efficiency of the PMS, there is a Information Network) and by identifying some coherent limit to the extent of variation and complexity that the system is research instruments (Social Network Analysis) to help able to handle in producing performance improvements at a answering questions unresolved by previous research. low control cost.

Code: MAN077 Day: Friday Code: MAN079 Day: Friday Abstract ID: 0073 Time: 14.00-15.30 Abstract ID: 1159 Time: 14.00-15.30 Room: Q005 Room: Q005 Budget Forecasting, Interim Accounts Reporting and Beyond budgeting towards lean and proactive control Forecast Accuracy systems? The results of an empirical research

Gavin Cassar Laura Zoni ([email protected]) ([email protected]) The Wharton School, University of Pennsylvania Università Bocconi, Milan Co-author(s): Brian Gibson Co-author(s): Gianfranco Stamerra

This study investigates the association between the accuracy of The rapid pace of innovation, competition between businesses, revenue forecasts and both budget forecasting and interim and increasingly greater customer demand have modified accounts reporting. While both budget forecasting and interim competitive dynamics. As part of the overall control system, accounts reporting are widely used, empirical evidence budgeting aims at supporting the key aspects of strategy concerning their influence on the prediction of future implementation, namely, the processes of allocating resources, performance is extremely limited. To investigate these linkages guiding management, limiting risk, and generating stakeholder we examine proprietary revenue forecasts and subsequent confidence. As Hope and Fraser, stated, however, budgeting actual revenue achieved of 3,618 firms utilizing the Australian has been undergoing a major change to meet most stringent Bureau of Statistics’ longitudinal Business Growth and control needs. The two authors, in fact, claimed that the cost of Performance Survey. The use of longitudinal data avoids budgeting -explicit as time and resources used to run the problems with recall biases or the use of subjective measures of exercise and implicit as non congruent behaviour - outweigh perceived forecast accuracy or usefulness. Consistent with the the benefits. Leaner and more proactive control systems would conjecture that formal accounting system feedback improves then replace the existing traditional systems. The paper seeks to predictive performance, we observe that interim accounts verify the actual evolution of budgeting into business reporting significantly improves forecast accuracy. However, organizations. By means of a structured questionnaire 109 the results provide limited support for linkages between companies, belonging to most innovative industries, were budgeting and forecast accuracy. The observed improvement in surveyed to detect the role attributed to budgeting in the forecast accuracy for firms that undertake both activities is context of organizations’ control systems. The main focus of approximately two percent of the forecast made, resulting at the the paper is on gaining insights into the relationships among mean in forecast errors approximately 13 percent lower in organizational complexity, environmental uncertainty and magnitude. While the results also indicate that the use of budgeting. budget forecasting and interim accounts reporting are a function of firms’ structural and environmental characteristics, the above findings are not contingent upon the forces which cause firms to adopt these accounting activities.

Code: MAN080 Day: Friday Abstract ID: 0869 Time: 14.00-15.30 Code: MAN078 Day: Friday Room: Q004 Abstract ID: 0456 Time: 14.00-15.30 Room: Q005 Organizational Structure, Market Competition and Budgets, Structures and “Beyond Budgeting” Balanced Scorecard Usage

Chia-ling Lee Steve Lyne ([email protected]) ([email protected]) National Chung Cheng University, Chia-Yi University of Bristol Co-author(s): Huan-Jung Yang Co-author(s): David Dugdale

The application of the Balanced Scorecard is worthwhile to A survey of 40 companies investigated whether companies still discuss in the newly industrialized economy. This paper, with use budgets, whether practice is changing and what were the listed companies in Taiwan as the research subject, mainly attitudes of financial and non-financial managers to budgets. investigates the influence of the organizational structure and Companies still use budgets, even intensifying their use and external competitors onto the Balanced Scorecard (BSC) usage the, virtually indistinguishable, attitudes of financial and non- This paper proxies the organizational structure as the financial managers are broadly positive. Contingency analysis decentralization, nature of formalization, level of vertical supports previous research with budgets generally perceived to differentiation, and level of horizontal integration. The survey be more effective in stable conditions and “top down” subjects were restricted to listed companies on the Taiwan budgeting correlates with perceptions of bureaucracy. Stock Exchange. The reasons for this selection were (1) their Interviews in 10 companies confirmed the prevalence of sizes were larger than publicly traded or small & medium sized budgeting and its importance. However, company visits enterprises and hence more representative in various industries; showed the importance of understanding budgeting contexts in (2) they, due to large sizes and complicated internal operation making sense of differing practices. In particular we identify & activities, focused more on management of the organization organisational complexity and degree of decentralisation as operation with the performance management system. After important contextual variables in evaluating the potential follow-up mailings and phone calls, there are 150 valid importance of and problems with budgeting. We draw on responses (21.5%). The empirical results indicate that an Mintzberg’s structural configurations, or “ideal types” of enterprise makes more use of BSC when its organization is organizational structure, concluding that budgets normally toward more decentralization, the nature of formalization work well within well-defined, stable, profit-oriented business encouraging innovation & spontaneous learning, the low level units. However, the use of budgets by top managers to control of vertical differentiation, and the high level of horizontal these independent divisional profit centres is more problematic. integration. In addition, when an organization is in a fierce We note that it is this second use of budgets that has been competition, it will make more use of BSC. generally highlighted in the “beyond budgeting” literature and this may explain the apparent contradiction between our results and those current in the “beyond budgeting” literature.

Code: MAN081 Day: Friday Abstract ID: 0877 Time: 14.00-15.30 Room: Q004 Management of intangible resources – using the balanced scorecard for managing internal processes

Rolf Bruehl ([email protected]) ESCP-EAP European School of Management, Berlin Co-author(s): Nils Horch

Competitive advantages stem mainly from the intangible capabilities of a company. The control of intangible resources, structural/organizational capabilities and customer relationships are the key factors for the future success of a company. Our theoretical background refers to the “resourced-based view” and the theory of “dynamic capabilities”, both of which allow insights into the characteristics of competitive intangible resources. The dynamic capability view stresses processes that enable companies to reconfigure existing processes and resources. Therefore, in the heart of dynamic capability lies innovative behaviour of the company. It seemed worthwhile to explore companies which are able to leverage their resources and integrate innovation and operational processes. In our research we want to analyse the different approaches to manage, and especially measure, the innovation and operational processes. Our aim is to gain more insight in the different (or common) possibilities to integrate these processes. We guess that companies which integrate those processes more closely than other companies have an established system of knowledge sharing. Since innovation is a general demand of market economy, no exclusive sector can be separated. Therefore, in our first interviews we strived to contrast capital-intensive companies against service companies.

Code: MAN082 Day: Friday Abstract ID: 0936 Time: 14.00-15.30 Room: Q004 Measuring the contribution of the Balanced ScoreCard and its drivers: An empirical assessment of the BSC

Fabien de Geuser ([email protected]) University of Lausanne Co-author(s): Daniel Oyon, Stella Mooraj

Replicating the ABC/ABM study by Foster and Swenson, our study provides a methodology that uses a means comparison of success measures to assess the contribution potential of the Balanced Scorecard. It also hypothesizes as to the potential drivers of contribution of the Balanced Scorecard, using Kaplan and Norton's Strategy-Focused Organization (SFO) framework. It then uses regression analysis to test the relationships between the drivers of contribution and the success measures on an international sample of 76 business units. The survey results demonstrate that the Balanced Scorecard does contribute. We conclude on remarks concerning the difficulties to assess the contribution of management systems.