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Journal of Management
Accounting Research
1998, Volume 10
Contents
Accounting and Organizations: Realizing the Richness of Field Research
Thomas Ahrens
London School of Economics and Political Science
Jeremy F. Dent
London School of Economics and Political Science
Abstract: Over the past 15 years, literature has seen a considerable growth in field work, motivated by the quest for rich descriptions of accounting in action. Despite a lively methodology debate on the topic, the question of how richness can be realized in field studies has not been directly discussed. This paper seeks to address this gap. It suggests a focus for rich studies of accounting and points to three issues that researchers need to consider to produce rich accounts. It then discusses six studies of accounting, showing how different decisions on these issues can inform different styles of research. It concludes with some observations on the research process itself.
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Standards for Field Research in Management Accounting
Anthony A. Atkinson
University of Waterloo
William Shaffir
McMaster University
Abstract: This paper begins with a discussion of the nature of qualitative research and then turns to consider the nature and characteristics of field research. The paper discusses the major insights and benefits of field research and three critical steps in field research: observing behavior, summarizing observations, and reporting results. Of particular concern in the observation step is the potential for bias being introduced either by the act of observation itself or through the observational framework that the researcher imposes on the fieldwork. In evaluating results, the researcher must be careful to ensure, to the extent possible, that the work has met the critical tests of validity and reliability. Finally in reporting results, the analysis, discussion, and conclusion should reflect the logical criteria of relevance, sufficiency and acceptability. The paper concludes with a summary of proposed field research standards organized by field research stage.
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Doing Field Research: Practice and Meta-Theory in Counterpoint
Jane A. Baxter
University of New South Wales
Wai Fong Chua
University of New South Wales
Abstract: This paper elucidates the craft of doing field research. Our discussion is presented in the form of two parallel texts. One text narrates the practical issues that surround our craft. Where possible, these issues have been illustrated from our own experience in doing management accounting field research. This text is intended to be a useful guide for novice researchers contemplating field research. However, even competent field researchers may practice this craft while only being vaguely aware of the larger philosophical currents that their research raises. We raise some of these larger "meta-theoretical" currents in a second parallel, but related, text. It is our hope that by raising both practical and meta-theoretical issues, a more critically constituted craft of management accounting field research may emerge.
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Innovation Action Research: Creating New Management Theory and Practice
Robert S. Kaplan
Harvard University
Abstract: Much research in social science and management develops and tests theories about existing phenomena and practice. Researchers who believe that existing practices can be improved, however, can attempt to develop and implement entirely new approaches. Action research engages the researcher in an explicit program to develop new solutions that alter existing practice and then test the feasibility and properties of the innovation. In developing two new management accounting approaches-activity-based costing and the balanced scorecard-my colleagues and I used a particular form of action research, referred to as "innovation action research." In this mode, we initially documented a major limitation in contemporary practice, then identified a new concept to overcome this limitation, and continued to apply and improve the concept through publication, teaching, and active intervention in companies. In this innovation action research cycle, the researcher enhances the underlying theory and, in the process, also becomes a skilled implementer of the new concept.
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The Effects of Monetary Incentives on Worker Learning and Performance in an Assembly Task
Charles D. Bailey
University of Central Florida
Lawrence D. Brown
Georgia State University
Anthony F. Cocco
University of Nevada, Las Vegas
Abstract: Accountants are concerned about the impact of incentive contracts on performance. Monetary incentives improve overall performance, but their effects on the components of performance are not well known. Performance on a repetitive task includes initial performance, subsequent improvement rate and performance after learning ceases. Monetary incentives can affect any of these factors. This study examines the impact of piece-rate and goal-contingent incentives vs. fixed-pay, on initial performance and subsequent improvement rate in an assembly task. Previous literature has not simultaneously examined these components, which are homologous with the components of the industrial learning curve model. Both overall and initial performance, but not improvement rate, are higher in the incentive-pay groups. Two factors may explain the lack of differential improvement rates: subjects' effort allocation, since improving initial performance may be easier than improving subsequent performance; and the nature of these typical incentive-pay plans, which do not reward improvement directly.
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Standard Estimation, Standard Tightness, and Benchmarking: A Method With an Application to Nursing Services
Rajiv D. Banker
University of Texas at Dallas
Hsihui Chang
National Chengchi University
Somnath Das
University of Illinois at Chicago
Abstract: This paper presents a new method for estimating standards. Prior accounting research suggests the need for flexibility in setting standards in order to allow managers to make trade-offs between efficiency and attainability, and also between inputs with different relative prices to minimize cost. Stochastic Data Envelopment Analysis (SDEA) is adapted to introduce flexibility in setting standards and deriving mix and yield variances relative to comparative data from historical records or from other organizations. This approach to relative performance evaluation and benchmarking has practical appeal since industry-level data is increasingly being shared, for example, in the health care sector. Hospital nursing cost data is used to illustrate this approach.
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It's a Small World of Management Accounting Practices
Markus Granlund
Turku School of Economics and Business Administration
Kari Lukka
Turku School of Economics and Business Administration
Abstract: We argue that there currently is a global tendency for management accounting system designs and general ideas to converge. After offering examples of such homogenization, the drivers of this development are distinguished and analyzed. For this end, a framework was developed, including both economic and institutional perspectives. The basic explanation for the claimed tendency to converge appears to be that the drivers of convergence have started to dominate those of divergence. It also is argued that firms probably do not intend to gain unique competitive advantage through their management accounting systems, but instead intend to use them to improve their operational, not strategic, effectiveness.
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Cost Analysis, Cost Reduction, and Competition
Stephen C. Hansen
University of California, Los Angeles
Abstract: Rising competition has been repeatedly mentioned as the reason many firms have invested in more extensive management accounting systems. I use a theoretical model to examine this link. In my model, firms (1) determine how much cost data to collect and then estimate costs, (2) use the cost estimate to guide their cost reduction investments, and (3) produce and sell output in a Cournot market. Contrary to the common view, my main result shows that increasing the number of competitors leads to a decreased investment in cost reduction subsystems. The intuition is that as competition rises, each firm's sales drop and any cost reduction investment can be recovered on fewer units. I also show that the highest cost firms need not invest the largest amounts in cost reduction. Finally, I demonstrate that a firm's demand for cost data displays a U shape. As competition rises, firms first decrease, then increase their demand for cost data.
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Innovations in Performance Measurement: Trends and Research Implications
Christopher D. Ittner
University of Pennsylvania
David F. Larcker
University of Pennsylvania
Abstract: The objective of this paper is to foster research on recent innovations in performance measurement by providing a rich description of emerging measurement practices and suggesting directions for future research. Using survey data collected by consulting firms and government organizations, we examine three measurement trends: (1) economic value measures, (2) nonfinancial performance measures and the balanced scorecard, and (3) performance measurement initiatives in government agencies. Existing research on these topics is reviewed and research opportunities
are highlighted.
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The Implementation Stages of Activity-Based Costing and the Impact of Contextual and Organizational Factors
Kip R. Krumwiede
Washington State Unviersity
Abstract Anderson (1995) suggests that the critical success factors change at different stages of implementation for information innovations such as ABC. Using mostly contextual and organizational factors found to be associated with ABC success in prior studies, this study tests how these factors affect ten stages of the ABC implementation process. Based on a survey of U.S. manufacturing firms, different factors become importance as higher stages of ABC implementation are reached. Evidence is also found that the direction and level of importance for many factors varies by stage. For instance, a high-quality information system may lead to rejecting ABC before adoption or abandoning it after implementation has started, but it also appears to enable reaching the highest implementation stage. Studies that combine ABC firms from several implementation stages to test certain success factors may distort their significance levels or reject other factors that are only important for certain stages.
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Cost Driver Analysis in Hospitals: A Simultaneous Equations Approach
John B. MacArthur
University of North Florida
Harriet A. Stranahan
University of North Florida
Abstract This paper extends recent cost driver research to the health care sector. In various case studies it has been suggested that overhead costs are driven by volume and complexity variables. This paper investigates the significance of these variables in determining hospital overhead costs, how they are structurally related and how the cost impacts of these variables can be estimated in practice. A unique feature of the research is the treatment of complexity as an endogenous variable. It is hypothesized that the level of hospital complexity, in terms of the number of services provided (i.e., "breadth" complexity), is simultaneously determined with the level of general services (overhead) costs needed to support the complexity. Two-stage least squares regression is used to estimate the model. The volume and complexity variables were all statistically significant drivers of hospital overhead costs.
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The Effects of Promotion Incentives on Delegated Investment Decisions: A Note
Todd L. Sayre
University of San Francisco
Frederick W. Rankin
Washington University
Neil L. Fargher
University of Oregon
Abstract: We report the results of an experiment designed to examine investment project selection under promotion incentives, modeled as tournament contracts. For a given expected return, the owner prefers investments with lower systematic risk. Therefore, to the extent managers select investments other than those yielding the highest risk-adjusted rates of return, they diverge from what the owner desires. In the presence of promotion incentives, we identify a situation in which the maximization of expected compensation by managers is incompatible with their selection of investment projects that maximize the risk-adjusted rate of return. The results indicate that subjects recognize the strategic implications of alternative promotion scenarios and respond to them in an opportunistic fashion.
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The Performance Effects of Complementarities Between Manufacturing Practices and Management Accounting Systems
Khim Ling Sim
Arizona State University West
Larry N. Killough
Virginia Polytechnic Institute and State University
Abstract: We investigate whether manufacturing practices and management accounting systems interactively affect performance. Specifically, hypothesized disordinal interactions between TQM or JIT and performance goals, performance measures, or performance-contingent rewards are tested. Support is found for four of the six hypotheses. Our results provide evidence that performance gains from complementarities (synergies) result from combing TQM or JIT along with performance goals. We, however, found no evidence that performance is an interactive function of production systems and performance measures. Findings also indicate that higher performance can be achieved when TQM or JIT practices are used along with performance-contingent incentive plans. Finally, the results show that management accounting systems that have incentive pay and more extensive performance goals coupled with high levels of TQM or JIT result in the highest performance.
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