Management accounting systems, top management team heterogeneity and strategic change

Institutional and market changes force many organizations across economic sectors to reconsider their strategic position and engage in strategic change. Organizations differ in their ability to realize strategic change, however, which appears to depend on several factors in their strategic management process. In this paper we explore two such factors simultaneously, which are the composition of the top management team and the characteristics of the management accounting system. In particular, the paper investigates how top management team heterogeneity affects strategic change both directly, and indirectly, through the design and use of the management accounting system. Hypotheses are developed and tested through a survey study among 103 Spanish public hospitals. We find significant effects of top management team heterogeneity on the extent and direction of strategic change, and find that the use of the management accounting system partially mediates the relationship between top management team heterogeneity and strategic change. The paper contributes to the extant literature on the complex relationships between strategic change and MAS Gerdin, J., & Greve, J. (2004). Forms of contingency fit in management accounting research – a critical review. Accounting, Organizations and Society, 29, 303–326], by analysing both extent and direction of strategic change, and by recognizing the importance of top management teams’ use of the management accounting system for strategic change.