Adoption of activity management practices: a note on the extent of adoption and the influence of organizational and cultural factors

We examine the extent to which activity management practices are adopted by Australian business units at each of Gosselin's [Gosselin, M., 1997. The effect of strategy and organizational structure on the adoption and implementation of activity-based costing. Acc. Organ. Society 22 (2), 105–122] levels of Activity Analysis, Activity Cost Analysis and Activity-based Costing. We also examine the association between extent of adoption and the organizational factors of size and decision usefulness of cost information, and the business unit culture dimensions of innovation, outcome orientation, and tight versus loose control.Data were collected by mail survey questionnaire of a random sample of business units, with questionnaire design and distribution based on Dillman's [Dillman, D.A., 2000. Mail and Internet Surveys: The Tailored Design Method. John Wiley & Sons Inc., New York] Tailored Design Method. Adoption rates are found to be higher than in prior studies, suggesting the continuing relevance of activity management practices and the advantage of using Gosselin's (1997) levels. All factors were found to be associated with all activity management practices. In particular, business unit size and all three business unit culture dimensions were found to be associated with extent of adoption of Activity Analysis (AA) and Activity Cost Analysis (ACA), while decision usefulness and the cultural dimensions of outcome orientation and tight versus loose control were associated with Activity-based Costing.     

Adoption of activity management practices in public sector organizations

This paper examines the extent to which activity management practices are adopted by Australian public sector organizations at each of Gosselin's (1997) levels of Activity Analysis, Activity Cost Analysis, and Activity‐based Costing. The present paper replicates Baird et al. (2004), thereby enabling a comparison of the extent of adoption of activity management in the public sector with that reported in the private sector in Baird et al. (2004). The results reveal that the adoption of higher level activity management practices (Activity Cost Analysis and Activity‐based Costing) is less prevalent in public sector organizations, whereas they adopt Activity Analysis to the same extent as the private sector.     

Technological and organizational influences on the adoption of activity-based costing in Australia

The present paper examines one set of potential reasons for the paradox as to why so few firms have adopted activity‐based costing (ABC) despite the demonstrated benefits of this costing system. A cross‐sectional survey of Australian firms is used to examine the influence of seven technological and organizational factors on firms’ initial interest in ABC and their decision to adopt it or not. The organizational factors of top management support, the support of an internal champion, and organizational size were shown to be associated with initial interest in ABC. The decision to adopt or reject ABC had one organizational factor associated with it, the support of an internal champion.     

The implementation of Activity-Based Costing in China: An innovation action research approach

Research on Activity-Based Costing and its applications has mainly been focused on organisations in developed countries. Little has been learnt as to whether ABC techniques can be implemented successfully in organisations in developing countries. With the adoption of an innovation action research approach, we have successfully developed an ABC system jointly with a large Chinese manufacturing company, Xu Ji Electric Co. Ltd. (Xu Ji), for the period 2001–2005. The research provides a unique opportunity to examine some key success factors pertinent to ABC implementation within a Chinese organisational and cultural setting. The findings indicate that top management support, which has been identified as an important success factor in ABC literature, is evidently the predominant success factor in this organisation. In addition, Xu Ji's corporate culture of “top–down” instigation of the adoption of a series of management innovations (e.g., Economic-Value Added^®, Balanced Scorecards and Six Sigma) and its hierarchical command and communication structure, coupled with active involvement of a high proportion of dedicated professionals, can be seen as another success factor in achieving a relatively high level of diffusion of this accounting concept within the organisation. This study also reveals a different insight of internal resistance to change, which is contrary to the evidence presented in the existing ABC literature.     

Sustainability,institutionalization and the duality of structure: Contradiction and unintended consequences in the political context of an Australian water business

This paper presents the results of a longitudinal case study of an Australian public sector water business in order to examine how, and to what extent, did the institutionalization and deinstitutionalization of internal sustainable and environmental management routines, practices and procedures occur over the period 2001 to the start of 2011. It adopts the Dillard et al. framework of institutionalization which incorporates institutional theory, Weber's axes of tension and structuration theory. In 2001, the criteria for costing and financial reporting practices and the criteria for environmental regulation and management practices were competing at the economic and political economic level, the organizational field level and the organizational level. An unintended consequence of this was no accounting for environmental costs. Environmental management criteria and practices were characterized by compliance with EPA regulatory requirements whilst financial management and costing criteria and practices were characterized by New Public Management criteria. Subsequent to 2001, an unintended consequence of the establishment of separate legislative and regulatory bodies has been the institutionalization of competing legitimating criteria with regard to water conservation, externalities, environmental regulation and financial reporting and costing. Within this context, the organizational field and the organizational level of the individual water business has been characterized by the development of new organizational practices and routines with regard to water conservation as well as unintended consequences and decoupling. At all three levels, the ontological security of agents has been evident in the development of new criteria and practices for sustainable development, whilst the routine procedures of the respective management systems were a source of ontological security to the relevant agents.     

The influence of change agents' behavioral intention on the usage of the activity based costing/management system and firm performance: The perspective of unified theory of acceptance and use of technology

This study adopts the viewpoint of the Unified Theory of Acceptance and Use of Technology (UTAUT) model to examine the change agents' behavioral intentions in the implementation of an activity based costing/management (ABC/M) system. ABC/M is an important management system that emphasizes the allocation of overhead costs on the basis of cost drivers, in order to provide relevant information for improved decision-making. A change agent is a person chosen to cause organizational change. Senior managers and often chief executives usually play the role that implements change. The behavioral intentions have been identified as a proactive attitude and action for promoting the ABC/M system in this study. Since there is little evidence of ABC/M adoption outside the United States and European countries, this research used Taiwanese companies as the sample. Questionnaires were used to investigate the factors influencing change agents' behavioral intentions to promote ABC/M systems and the type of facilitating conditions that affected the extent of usage of ABC/M systems. The questionnaires were carried out through the perspective of user acceptance of information technology (IT). Furthermore, the aim of this paper is also to explore whether use of the ABC/M system will produce an improved effect on performance. The empirical results from 100 valid responses collected indicate that performance expectancy and social influence directly affect change agents' behavioral intentions. Both change agents' behavioral intentions and facilitation conditions are important constructs that affect the extent of usage of ABC/M systems. The extent of ABC/M usage is also significantly associated with relative financial and non-financial performance. The results demonstrate that the adaptive UTAUT model is applicable for measuring change agents' behavioral intentions in current implementations of ABC/M systems. The study also reveals the positive effect of change agents on the performance of ABC/M systems.     

Towards explaining activity-based costing failure: accounting and control in a decentralized organization

Many of the activity-based costing (ABC) systems introduced in recent years are said to fail (e.g. Cooperet al., 1992; Argyris and Kaplan, 1994; Shields, 1995; Roberts and Silvester, 1996). The use of ABC for surveillance by the group management, with no consequent actions, leads us to propose that claims on ABC failure result, in part, from assessing the use and value of ABCs from the decision-making perspective. The decision-making perspective may be insufficient for capturing the multitude of uses to which ABCs are put in practise. As this study shows, in the context of strategic decision-making the success of ABC cannot depend on whether its results require any actions or decisions to be taken, but on its ability to make a correct diagnosis of the situation. Consequently, some of the so-called ABC failures may not be failures. They may merely reflect a limited appreciation of the uses of accounting and control systems in practise. Nevertheless, failures and resistance are real in a number of organizations. This study explored the origins of resistance to ABC in a case setting, looking at diverse interests of organizational stakeholders, and the role of existing control and information systems in ABC implementation. We show that the resistance may have several sources; some related to the cost and benefits of ABC, some associated with organizational power and politics, and some pertinent to organization culture. The practical implication of this study hinged on the notion that although the resistance to ABC may come from various sources, these sources appear fundamentally structural and are unlikely to be dealt with by employing implementation-based strategies.     

Investment decisions: The trade-off between economic and environmental objectives

While there are broader socio-political, psychological, and structural factors that influence investment decisions (see Harris et al., 2016), in line with the critical approach, this study provides an empirical insight into the notion that financialization, specifically the tendency to prioritise economic over environmental objectives, has a strong bearing on how managers view investment trade-off decisions in relation to sustainability issues. The study empirically investigates this notion by examining the investment trade–off preferences of Australian managers in relation to three decision attributes – economic outcomes (i.e. financial returns), environmental impact (i.e. carbon emissions) and stakeholder pressure to consider environmental issues. We use the discrete choice experimental method to quantify the trade-offs between the above mentioned three attributes. In addition, we also investigate the potential effect of three contingency factors on individual's preferences. Specifically, at the organisational level, we explore the effects of financial and environmental rewards and at the individual level, we explore the effect of environmental consciousness. In line with the financialization hypotheses our results indicate that managers prioritise financial returns over carbon emissions and stakeholder pressures with the preference for financial returns found to be positively associated with rewards for financial performance. However, in line with the pragmatic approach and despite the overall dominance of financial returns, there is evidence that manager's focus on financial returns can be influenced, with the preference for financial returns negatively associated with rewards for environmental performance and environmental consciousness. In addition, while stakeholder pressure was not found to be associated with any of the three contingency factors and, manager's emphasis on carbon emissions was not associated with financial rewards, manager's emphasis on carbon emissions was found to be positively associated with both rewards for environmental performance and environmental consciousness. Therefore, our findings suggest that corporate management have an important role to play, both in respect to the design of performance rewards systems and the recruitment of environmentally conscious managers, in order to promote the sustainability agenda.     

Management based critical success factors in the implementation of Enterprise Resource Planning systems

This study examines critical success factors for implementing Enterprise Resource Planning systems using the framework of classical management theory. The study is motivated by conflicting results in earlier studies examining critical success factors in Enterprise Resource Planning implementation, many of which are anecdotal in nature. Ten critical success factors in ERP systems implementation proposed in past literature are selected. The relationship between each of these factors and project success is examined. Project success is defined as organizational impact and on time and on/under budget project completion. Eight implementation projects were qualitatively analyzed using the case study method to examine the proposed relationships. The findings suggest that choosing the right full time project manager, training of personnel, and the presence of a champion relate to project success. The use of consultants, the role of management in reducing user resistance and the use of a steering committee to control the project do not appear to differentiate successful and unsuccessful projects. Integration of ERP planning with business planning, reporting level of the project manager, and active participation of the CEO beyond project approvals, resource allocation and occasional project review, are not found to be critical factors of success. Considering the financial cost and risk associated with these projects, a better understanding of critical success factors will enable practitioners and academics to improve the chance of success in the implementation projects. All organizations implementing ERP, especially small and mid-sized enterprises with limited resources, will benefit from this knowledge.     

Factors influencing the performance of activity based costing teams: a field study of ABC model development time in the automobile industry

This paper examines how the group dynamics of activity based costing (ABC) development teams and the level of organizational resources devoted to model development affect model complexity and development time. A theoretical framework is developed based on the organizational literature on teams. The framework is tested using objective data from 18 ABC projects in two automobile manufacturing firms and survey data from ABC team members. Results show that ABC team cohesion is the key determinant of the time it takes to develop the first ABC model. Further, ABC models become more complex in the presence of an external consultant and as the level of competition increases.     

Corporate Social Responsibility: The Link Between Sustainability Disclosure and Sustainability Performance

This paper explores the relation between sustainability performance and sustainability disclosure within the Australian extractive industries. The study utilizes Ullmann's (1985) stakeholder framework, which depicts sustainability disclosure and performance as two components of management strategy for dealing with stakeholder demands. Consistent with this framework, we predict a positive performance–disclosure relation. Extending prior research that has utilized problematic environmental performance indices such as CEP indices or toxic emissions levels, we develop a sustainability performance index based on the International Finance Corporation's Measuring Sustainability Framework (2001). Using data from 339 mining and energy firms listed on the Australian Securities Exchange in 2006, we find that corporate sustainability performance is strongly associated with disclosure as expected. Sustainability disclosure is also greater for firms with a proactive communication strategy as manifested through press release activity. Finally, asset age and firm size are both positively associated with sustainability, consistent with predictions from the stakeholder framework.     

Using Organizational Architecture to Lead Change

Effective leadership involves more than developing and communicating the right strategic vision for the company. To encourage employees to carry out the corporate vision, companies must ensure consistency among the following three main components of their organizational architecture: (1) the allocation of decision‐making authority; (2) performance measurement systems; and (3) reward systems. The authors illustrate the application of this framework with the case of Xerox's (eventually) successful attempt to create a customer‐oriented workforce in the 1980s. But a more effective demonstration of the importance of these principles, as the authors go on to suggest, might well be the same company's well‐known failure to harvest the commercial promise of the many inventions by its research group in Palo Alto, one of which became the basis for Steve Jobs' success at Apple. This organizational framework is especially useful for evaluating the likely effects of major corporate initiatives such as “Six Sigma” or the “Balanced Scorecard.” For example, it could be used to help top management determine whether, and under what circumstances, decentralization is likely to improve decision‐making and performance, as well as the changes in the firm's performance management and incentive systems that would be required to make decentralization work. Finally, the authors apply the framework to another important leadership issue: corporate ethics. Since the scandals of the early 2000s and the passage of Sarbanes‐Oxley, many, if not most, U.S. companies have issued formal codes of conduct, appointed ethics officers, and instituted training programs in ethics. But a key question for top management is whether the incentives established by the company's organizational architecture reinforce or undermine the code of conduct. Ensuring consistency in organizational design is an important leadership function—one that is critical to encouraging ethical behavior as well as the pursuit of shareholder value.     

The impact of contextual and process factors on the evaluation of activity-based costing systems

This paper investigates associations between evaluations of activity based costing (ABC) systems, contextual factors, and factors related to the ABC implementation process using interview and survey data from 21 field research sites of two firms. Structural equation modeling is used to investigate the fit of a model of organizational change with the data. The results support the proposed model; however, the significance of specific factors is sensitive to the evaluation criterion. The model is stable across firms and respondents, but is sensitive to the maturity of the ABC system.     

A multilevel framework to enhance organizational resilience

Abstract

Organizational resilience is a capacity that emerges at multiple levels. Although the multilevel character of organizations has been generally acknowledged in existing organizational studies, there is a lack of theoretical and empirical studies that address how it affects organizational resilience. To adress this gap, this article offers a multilevel framework applicable to enhance organizational resilience and presents an empirical study to probe the impact of multilevel elements on organization's capacity for responding to critical situations. More specifically, the new framework will help an organization to enhance its resilience through a process of self-assessment on crisis preparedness and response capacity. This process will allow the organization to identify and remedy potential vulnerabilities in the interaction between its organs as well as environment. We argue that crisis management and organizational resilience are mutually shaped across multiple levels, from individual, organizational, to environmental. These multiple levels are operationalized operationalization in four phases: (1) reviewing and monitoring context, (2) testing preparedness, (3) analysing and assessing responses, and (4) strengthening capabilities. In these phases, we underline that resilience management requires continuous embracing of the dynamic processes within an organizational system and its environment. To validate the framework, we present an empirical study on a security organization, and describe the results to demonstrate how to utilise the tool in practice. In conclusion, we discuss how the multilevel framework can be further applied towards building stronger resilience management.     

Regimes of risk management in corporate annual reports: a case‐study of one globalizing Australian company

An approach to the study of the ‘risks’ of ‘globalization’ that are increasingly the focus of global protest is outlined. By enrolling a blend of Mary Douglas' cultural approach to ‘risk’ and Ulrich Beck's theory of the ‘risk society,’ it is argued that three distinct ‘regimes of risk management’ are evident in corporate activity. After showing that corporate annual reports are useful for analysis of those effects, the argument is tested/illustrated through a case‐study of the reports of Amcor, a typically internationalizing Australian company. It is concluded that disputes over the ‘risks’ of ‘globalization’ are likely to become even more intense.     

Organizational change in an Australian university: Responses to a research assessment exercise

The objective of this paper is to explore the way internal organizational control processes are changed in response to external demands. It does this by investigating the organizational change undertaken by an Australian university in anticipation of, and in response to, an externally imposed research assessment exercise (RAE), specifically focusing on the university's internal research-related performance management system (PMS) and its impact on academics. It adopts a case study method, using data from publicly available documents, interviews with senior management, and a survey administered to academics. The data is interpreted and analyzed using Broadbent and Laughlin's organizational change model. The findings reveal that RAE was anticipated with the appointment of new senior leadership, a new vision, restructure of faculties and departments, and changes to the research PMS. The changes to both the university's mission (significant and longlasting, second order change) and its internal systems (less significant, first order change) are evident. In the context of the global proliferation of PMSs in the higher education sector, this paper contributes to the literature on PMSs, indicating its relevance to universities. Its empirics provide useful insights for university managers and regulators and, more broadly, the paper contributes to our understanding of organizational change.     

Note on a New Zealand replication of the Innes et al. UK activity-based costing survey

Activity-based costing (ABC) is a well known technique for costing products and providing management information. This note reports the results of a faithful replication in New Zealand (NZ) of Innes et al.’s 1999 UK survey of ABC usage and a comparison of the results of the two surveys.Adoption rates were found to be similar, with NZ companies showing slightly lower rates of implementation of ABC than UK companies. However, once they had implemented the method, NZ companies demonstrated greater commitment to ABC across more areas of the firm than UK companies. ABC systems in NZ tended to display less complexity than their UK counterparts. Strong correlations were found in the different uses of ABC by industry sector, but there were contrasting perceptions on the success and importance of some ABC applications.This study provides an insight into ABC in NZ, data on trends in ABC experiences between two countries of widely differing size and geographic location, and suggestions for further research.     

How to Evaluate Risk Management Units in Financial Institutions?

Based on the existing Enterprise Risk Management framework and current government regulations, “banks are required to establish risk management units (RMUs) to review and evaluate their risks, monitor them, and to advise top management.” Currently an integral part of the risk governance and management process, RMUs in financial institutions have become increasingly important since the 2007–2008 financial crisis. This article details the authors' creation of an index to evaluate the performance of risk management units in financial institutions, and then examines some of their findings. The index transforms twelve parameters into a simple and convenient index that isolates the RMU's activities from the rest of the organizational risk management process, its risk preferences and the activities of the rest of the units. The index's parameters are divided into three dimensions of the RMU's performance: professionalism, organizational status and relationship with top management and the board. The authors found a positive relationship between their RMUI and some important risk governance characteristics: CROs who are among the five highest paid executives at the bank, banks with at least one independent director serving on the board's risk committee having banking and finance experience and boards with greater efficacy.     

管理会计变革与创新的实地研究

本文在已有文献的基础上提出了管理会计变革的制度化模型,并通过我国上市公司ABC实施的实地研究进行理论检验和发展。该模型从一个全新的视觉,即新的管理会计规则和惯例的制度化的实现来衡量管理会计变革与创新的成功;强调制度化的实现要通过一个进化式的阶段变革过程来完成;每个阶段在不同程度上要受到外部环境、个人特征、组织、技术、任务特征等因素的影响;并通过三种分类方式对制度化后果进行评价。本文研究有助于我们深刻理解管理会计变革的过程本质和后果,并为我国企业引进和实施管理会计创新提供极其宝贵的经验证据。     

Organisational and professional commitment of early career accountants: do mentoring and organisational ethical climate matter?

This study assesses the effects of mentoring and organisational ethical climate (OEC) on the organisational and professional commitment (PC) of early career accountants (ECAs) (i.e. accounting graduate recruits with three or less years of working experience). The empirical data are based on a questionnaire survey from 86 ECAs in Australian public accounting firms, and hypothesis testing utilises partial least squares analysis. Our results indicate when a career development style of mentoring is adopted there is greater organisational as well as PC. By contrast, a social support mentoring style has no significant impact on organisational commitment (OC) and a negative effect on PC. Further, our data also reveal OEC to be positively associated with OC, and OC in turn having a positive impact on PC. The results imply that fostering a career‐focused mentoring environment and an OEC can increase an ECA's OC and PC. These results have various implications for human resource management at both the accounting firm and professional levels.