Factors Influencing the Choice of Sophisticated Management Accounting Practices - Exploratory Evidence from An Emerging Market

Authors

DOI:

https://doi.org/10.5195/emaj.2021.211

Keywords:

Accounting, Management Accounting Practices, Emerging Market, Exploratory Research, Sophistication

Abstract

This study attempts to explore the factors that may lead to the choice behind sophisticated management accounting practices (SMAP) in an emerging economy, Bangladesh. A semi-structured questionnaire has been developed to capture the market data and different descriptive and inferential statistical tools have been used to test relevant hypotheses. The findings of the study are helpful for the management accounting practitioners, academics, and researchers to understand the current state of management accounting practices in an emerging market. In addition, the study brings an extension to existing literature by exploring potential causal relationship between sophistication in applying management accounting tools and satisfaction of management accounting practitioners. This study confirms that there is a missing link between practitioners’ satisfaction and SMAP. It gives a signal to the market that the critical decision-making process is not supported by tactical exercises and market lacks professionalism greatly which may act as an obstacle to develop a competitive business environment.

Author Biographies

Nikhil Chandra Shil, East West University

Associate Professor, Department of Business Administration & Coordinator, MBA & EMBA Programs

Mahfuzul Hoque, University of Dhaka

Professor, Department of Accounting & Information Systems

Faculty of Business Studies

Mahmuda Akter, University of Dhaka

Professor, Department of Accounting & Information Systems

Faculty of Business Studies

References

Abdel-Kader, M. and Luther, R. (2008), ‘The impact of firm characteristics on management accounting practices: A UK-based empirical analysis’, The British Accounting Review, Vol. 40, No. 1, 2-27.

Abernethy, M. A., Lillis, A. M., Brownell, P. and Carter, P. (2001), ‘Product diversity and costing design: Field study evidence’, Management Accounting Research, Vol. 12, No. 3, 261-280.

Albu, N. and Albu, C. N. (2012), ‘Factors associated with the adoption and use of management accounting techniques in developing countries: The case of Romania’, Journal of International Management & Accounting, Vol. 23, No. 3, 245-276.

Al-Omiri, M. and Drury, C. (2007), ‘A survey of factors influencing the choice of product costing systems in UK organizations’, Management Accounting Research, Vol. 18, No. 4, 399-424.

Bjornenak, T. (1997), ‘Diffusion and accounting: the case of ABC in Norway’, Management Accounting Research, Vol. 8, No. 1, 3-17.

Booth, P. and Giacobbe, F. (1998), ‘Predicting the adoption of activity-based costing in Australian manufacturing firms’ Paper presented at the 21st Annual Congress of the European Accounting Association, Antwerp, Belgium. April.

Brierley, J. A., Cowton, C. J. and Drury, C. (2001), ‘Research into product costing practice: a European perspective’, The European Accounting Review, Vol. 10, No. 2, 215-256.

Bruns, W. J. Jr. (1987), “A field study of an attempt to change and embedded cost accounting system”, Bruns, W. J. Jr. and Kaplan, R. S. (Eds.), Accounting and Management: Field Study Perspectives, Harvard Business School Press, 97-118.

Chenhall, R. H. (2003), ‘Management Control Systems Design within its Organizational Context: Findings from Contingency-Based Research and Direction for the Future’, Accounting, Organizations and Society, Vol. 28, No. 2-3, 127-168.

Clarke, P. J., Thorley Hill, N. and Stevens, K. (1999), ‘Activity-based costing in Ireland: Barriers to, and opportunities for change’, Critical Perspectives in Accounting, Vol. 10, No. 4, 443-468.

Cooper, R. and Kaplan, R. S. (1992), ‘Activity-based systems: measuring the costs of resource usage’, Accounting Horizon, Vol. 6, No. 3, 1-13.

Cooper R. (1988), ‘The Rise of Activity-Based Costing- Part Two: When Do I Need an Activity- Based Cost System?’ Journal of Cost Management, Fall, 41-48.

Davila, T. (2005), ‘An exploratory study on the emergence of management control systems: formalizing human resources in small growing firms’, Accounting, Organizations and Society, Vol. 30, No. 1, 223-48.

DiMaggio, P. J. and Powell, W. W. (1983), ‘The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields’, American Sociological Review, Vol. 48, No. 2, 147–160.

Drury, C. and Tayles, M. (2005), ‘Explicating the design of overhead absorption procedures in UK organizations’, British Accounting Review, Vol. 37, No. 1, 47-84.

Estrin, T. L., Kantor, J. and Albers, D. (1994), ‘Is ABC suitable for your company?’ Management Accounting, Vol. 75, No. 10, 40-45.

Fullerton, R. R. and McWatters, C. S. (2002), ‘The role of performance measures and incentive systems in relations to the degree of JIT implementation’, Accounting, Organizations and Society, Vol. 27, No. 8, 711-735.

Gosselin, M. (1997), ‘The Effect of Strategy and Organizational Structure on the Adoption and Implementation of Activity-Based Costing’, Accounting, Organizations and Society, Vol. 22, No. 2, 105-122.

Haldma, T. and Lääts, K. (2002), ‘Contingencies influencing the management accounting practices of Estonian manufacturing companies’, Management Accounting Research, Vol. 13, No. 2, 379-400.

Hannan, M. T. and Freeman, J. (1989), Organizational Ecology, Harvard University Press, Cambridge, MA.

Hoque, Z. (2008). Predicting change in management accounting and control systems: additional evidence from Australia (July 15, 2008). Social Science Research Network, available at https://ssrn.com/abstract=1160125

International Federation of Accountants (IFAC) (1998), International Management Accounting Practice Statement: Management Accounting Concepts, New York.

Ittner, C. D. and Larcker, D. F. (2001), ‘Assessing empirical research in managerial accounting: a value-based management perspective’, Journal of Accounting and Economics, Vol. 32, No. 1–3, 349-410.

Ittner, C. D. and Larcker, D. F. (2002), ‘Empirical managerial accounting research: are we just describing management accounting practice?’ European Accounting Review, Vol. 11, No. 4, 787 -794.

Johnson, H. T. and Kaplan, R. S. (1987), Relevance Lost: The Rise and Fall of Management Accounting, Harvard Business School Press.

Jørgensen, B. and Messner, M. (2010), ‘Accounting and strategizing: A case study from new product development’, Accounting, Organizations and Society, Vol. 35, No. 2, 184-204.

Joshi, P. L. (2001), ‘The international diffusion of new management accounting practices: the case of India’, Journal of International Accounting, Auditing and Taxation, Vol. 10, No. 1, 85-109.

Kaplan, R. S. (1984), ‘The evolution of management accounting’, The Accounting Review, Vol. 59, No. 3, 390-418.

Khandwalla, P. N. (1977), The design of organizations, Harcourt Brace Jovanovich, New York, NY.

Langfield-Smith, K. (1997), ‘Management control systems and strategy: a critical review’, Accounting, Organization and Society, Vol. 22, No. 2, pp. 207-232. Integration, rev. edn, Boston, MA: Harvard Business School Press.

Libby, T. and Waterhouse, J. H. (1996), ‘Predicting change in management accounting systems’, Journal of Management Accounting Research, Vol. 8, No. 1, 137-150.

Malmi, T. (1999), ‘Activity-based costing diffusion across organizations: an exploratory empirical analysis of Finnish firms’, Accounting, Organizations and Society, Vol. 24, No. 8, 649-672.

Mia, L. and Clarke, B. (1999), ‘Market competition, management accounting systems and business unit performance’, Management Accounting Research, Vol. 10, No. 2, 137-158.

Rieg, R. (2018), ‘Tasks, interaction and role perception of management accountants: Evidence from Germany’, Journal of Management Control, Vol. 29, No. 2, 183–220.

Szychta, A. (2002), ‘The scope of application of management accounting methods in Polish enterprises’, Management Accounting Research, Vol. 13, No. 4, 401-418.

Waweru, N. M., Hoque, Z. and Uliana, E. (2004), ‘Management accounting change in South Africa Case studies from retail services’, Accounting, Auditing & Accountability Journal, Vol. 17, No. 5, 675-704.

Williams, J. J. and Seaman, A. E. (2001), ‘Predicting change in management accounting systems: national culture and industry effects’, Accounting, Organizations and Society, Vol. 26, No. 4-5, 443-460.

Downloads

Published

2021-09-08

Issue

Section

Articles