Management accounting change and stability: Loosely coupled rules and routines in action

A problematic practical situation, which had remained unsolved for a long period, was encountered in a case research project. The apparent problem of the case firm was the modest standardisation of its information systems and management accounting reporting. Though problems linked with standardisation seemed to chronically look for solutions in the firm, only few attempts to change the situation emerged. The immediate purpose of the paper is to explain why there appeared to be problems without solutions in the case firm, and, in particular, how it managed to cope with such a situation. The paper contributes to recent literature on management accounting change and stability, primarily by drawing on the framework, based on institutional theory, by Burns and Scapens [Burns, J., Scapens, R.W., 2000. Conceptualizing management accounting change: an institutional framework. Manage. Acc. Res. 11, 3–25]. The notion of loose coupling is mobilised and integrated with the framework, and thereby the many-sided relation between two of its central notions, rules and routines, is refined. Loose coupling between rules and routines was characteristic of the everyday management accounting life in the case firm: well-developed and flexible informal routines and knowledgeable actions by the organisation's participants had the capacity to smooth the frictions of the formal rule systems related to management accounting, saving them from pressure for major change. The findings support the argument of the possible coexistence of change and stability in management accounting, however pointing to the need of keeping clear what aspect of management accounting – formal or informal – we refer to in each instance. They also suggest that the legitimising relation between the formal and the informal domains of an organisation can be an inverse of that typically claimed in the new institutionalist theory.     

Examining Management Accounting Change as Rules and Routines: The Effect of Rule Precision

This study examines change in management accounting practices as change in rules and routines. Informed by the institutional theory‐inspired framework of Burns and Scapens (2000) , the rules and routines relating to capital expenditure controls in a capital‐intensive organisation are analysed. We explain how preciseness of rules affects not only the coupling of rules to routines, but also the emergence of multiple routines, enhancing the understanding of how management accounting practices remain stable and/or change over time. These results extend and refine recent research relating to management accounting change and offer new empirical insights into practice.     

Trust for accounting and accounting for trust

This paper combines insights from the sociology of knowledge and the emerging practice-based literature on learning and knowing to extend the institutional framework of accounting change developed by Burns and Scapens [Burns, J., Scapens, R.W., 2000. Conceptualising management accounting change: an institutional framework. Manage. Acc. Res., 11, 3–25]. In particular, it explores how management accounting systems (MAS) can be implicated in processes of learning and culture change, and used to identify ‘trustworthy’ solutions in the face of organisational crises. A case study of an Italian company, which was subject to massive change following its acquisition by General Electric, is used to discuss how, when crises arise and organisation members find themselves under intense pressure for change, their rationales and routinised behaviour, which are driven by the existing knowledge and cultural assumptions, are challenged. The case illustrates how MAS can act as sources of trust for the processes of change – i.e., accounting for trust; while at the same time being socially constructed objects of trust – i.e., trust for accounting. Drawing on the concept of personal trust and the notion of roles as access points to organisational (expert) systems, the paper discusses how, in this case, finance experts facilitated the acceptance and progressive sharing of new rationales and routines. Clearly, this does not guarantee that change will occur or occur in some ‘desired’ direction in other cases, but it increases the possibility of replacing trust in the predictability of routines with feelings of trust for change.     

Institutional contradiction and management control innovation: A field study of total quality management practices in a privatized telecommunication company

The purpose of this paper is to theorise the changes surrounding the introduction of a management control innovation, total quality management (TQM) techniques, within Telecom Fiji Limited. Using institutional theory and drawing on empirical evidence from multiple sources including interviews, discussions and documents, the paper explicates the institutionalization of these TQM practices. The focus of the paper is the micro-processes and practice changes around TQM implementation, rather than the influence of the macro-level structures that are often linked with institutional theory. The change agents used Quality Action Teams and the National Quality Council to introduce new TQM routines. The present study extends the scope of institutional analysis by explaining how institutional contradictions impact to create and make space for institutional entrepreneurs, who in turn, modify existing routines or introduce new routines in fluid organizational environments which also exhibit evidence of resistance.     

Stability and Change at FPTL: An Institutional Perspective

Once institutionalised, routines are a force for stability and resistance to change. This creates a problem for institutional theorists in explaining changes in accounting practice. This paper attempts to illustrate that institutional theory can encompass a processual explanation of change, through a case study of Fiji Posts and Telecommunications Limited (FPTL). We illustrate how institutional contradictions or inconsistencies were an impetus to institutional change in the organisation. Institutional entrepreneurs were instrumental in abandoning the existing routines and introducing new commercial ones. The commercial business norms were stabilised by the management team through the process of enactment, reproduction and routinisation.     

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.     

Understanding management accounting practices: A personal journey

This paper reviews the changes which have taken place in management accounting research over the last 35 years. It traces the author's personal journey as a management accounting researcher and emphasises the shift which has taken place in what it means to understand management accounting practices. It argues that to make sense of diversity in management accounting practices we need to understand the complex mish-mash of inter-related influences which shape practices in individual organisations. It outlines the contribution which institutional theories can make to understanding this mish-mash of complexity. In particular, it reviews the achievements of the Burns and Scapens framework (2000) for studying management accounting change and describes some of its limitations and extensions; viz., the interplay of internal and external institutions; the importance of trust in accountants; the impact of circuits of power; and the need to study the role of agency in institutional change. It concludes that research in recent years has provided a much clearer understanding of the processes which shape management accounting practices; but the challenge for the future is to use this theoretically informed understanding to provide relevant and useful insights for management accounting practitioners.     

Stability and change in management accounting over time—A century or so of evidence from Guinness

In recent years, much has been written on the nature of management accounting change, and indeed stability. Many researchers have used concepts such as rules and routines to interpret this change and/or stability. Recent research has provided an increasingly clear picture of what rules and routines are, as well as contributing to our understanding of the processes of change and stability in management accounting.Management accounting research has mainly presented rules and routines as related phenomena, but some conceptual work has suggested they are separable and can (and possibly should) be considered independently when studying processes of change/stability within management accounting. However, empirical support for such work has been scarce to date. This paper uses data from the archival records of the Guinness company in an effort to establish whether rules and routines, at least in management accounting research, are best considered separable concepts or not. The archival records are artefacts of rules and routines and thus can be used to trace the interactions of rules and routines over time. Support for the notion that rules and routines should be considered separately is presented. The findings also portray the stable, but changing, nature of management accounting routines over time; a point worthy of further research.     

Accounting,management and organizational change: A comparative study of local government

This is a study of management accounting in local government in the context of significant change (managerial, organizational and environmental). The study is based on four case studies: two in Scotland and two in New Zealand. The paper explores two competing theories of organizational life—the instrumental view as espoused by New Public Management proponents, and the socially constructed, as advocated by new institutional theorists. This study locates management accounting at the centre of these changes in New Zealand with a more limited role in the U.K. where there is evidence of institutional isomorphism.     

Organizational identity change: managerial regulation and member identification in an accounting firm acquisition

This study creates a framework for analysing organizational identity change and examines the process in the context of a global accounting firm's acquisition of a UK mid-market accounting practice. It identifies the parallel processes which facilitate organizational identity change: identity regulation on the part of senior management and de- and re-identification on the part of organizational members. The study explores how changes in organizational identity are inextricably connected to organizational members' changing conceptualisations of professional identity.     

Committed to professionalism: Organizational responses of mid-tier accounting firms to conflicting institutional logics

We study how mid-tier accounting firms deal with changes in their institutional environment that resulted in a shift in emphasis from the trustee logic to the commercial logic. We find that these mid-tier firms selectively adopt practices related to the commercial logic, while retaining a principal commitment to the trustee logic. Interviews with high level informants in these firms show how specific strategic choice opportunities serve as independent critical events framing practice-adoption decisions. Main strategic issues for the mid-tier firms relate to the changing role of the accountant and changes in organizational structure and practices. As these issues fundamentally challenge characteristics of their professional identity, there is internal resistance against this transformation. Non-partnered accountants mainly challenge new roles that upset their extant work routines, whereas partners resist changes affecting their autonomy. These types of resistance directly impact the strategic organizational responses of the accounting firms to institutional pressures.     

Budgetary change at a university: A narrative inquiry

This paper reports the results of a qualitative case study of an Australian University's implementation of a new budget model. To inform our research, we developed a theoretical framework by drawing from neo-institutional sociology, old institutional economics and technical-rational choice. A narrative inquiry was employed to elicit the stories of participants' experiences of the budgetary change in its socio-political and institutional contexts. Through this narrative inquiry, we depart from prior institutional management accounting change studies which have presented change steered by external pressures for conformity and/or legitimacy. Our study shows how budgeting, as a management accounting tool, can be viewed as a rational myth conferring social legitimacy upon organisational participants and their actions. Further, we demonstrate that the emergence of a new management accounting practice is attributed to the demands of technical-rational imperatives, and the existence of internal rationalised dynamics and norms. We highlight and analyse the role and ability of organisational actors to create budgetary change in an institutionalised higher education environment.     

Analysing the Institutional Logic of Late DRG Adopters

Abstract: This study investigates how institutional logics that are prevalent in an organizational field influence change in management accounting. More precisely, we examine the institutional logics of late DRG adopters through which organizations attempt to address the pressures imposed by the institutional field of health care. Specific attention is also paid to the way in which organizations operate at different institutional levels and what kinds of interrelationships exist between these levels. Such developments may at least partially explain why the implementation and adoption of DRG–based accounting systems in Finnish health care took almost twenty years.     

Why is research on management accounting change not explicitly evolutionary? Taking the next step in the conceptualisation of management accounting change

In this article we discuss the evolutionary foundation of the OIE-guided management accounting change research building on the framework of [Scapens R.W. 1994. Never mind the gap: towards an institutional perspective on management accounting practice. Management Accounting Research, 5, 301–321.] and [Burns, J. and Scapens, R.W., 2000. Conceptualizing management accounting change: an institutional framework. Management Accounting Research, 11, 3–25.]. We argue that research on management accounting change should be based on evolutionary theory, but that the full potential of evolutionary theory has not yet been described or used in management accounting research. The conceptualisation and understanding of management accounting change can be improved and expanded if the evolutionary approach is developed beyond the general belief that it describes only small and gradual, often slow, changes. In this article we show that an evolutionary perspective on management accounting change implies that management accounting’s development is explained as the interaction between the evolutionary sub processes of retention (inheritance), variation and selection. Thus, both continuity and change are seen as evolutionary outcomes. These processes follow the cumulative causality that Charles Darwin proposed and Thorstein Veblen applied to the social sciences. Such a comprehensive theory, here labelled Universal Darwinism, must, however, be given substance with supporting details.     

What does organizational change mean? Speculations on a taken for granted category

Despite widespread research on why and how organizations change, what constitutes change is often taken for granted. Its definition is avoided. Studies based on individuals’ rational choice imply that change flows from purposive actions in accordance with an objective, external reality whereas contextualism argues that change results from institutional pressures, isomorphisms and routines. But both depict change as the passage of an entity, whether an organization or accounting practices, from one identifiable and unique status to another. Despite their differences over whether reality is independent, concrete and external, or socially constructed, both assume that actors (or researchers) can identify a reality to trace the scale and direction of changes. This reflects modernist beliefs that organizational space and time are unique and linear. The paper takes issue with this and argues that ‘a-centred organizations’ and ‘drift’ should replace conventional definitions of organizations and change. The arguments are inspired by the arguments of the sociology of translation and constructivism, and insights from two case studies of Enterprise Resource Planning system implementations in large multinational organizations. The latter illustrate how defining change is problematic—as new systems gave rise to multiple spaces and times within the organizations. The paper traces the implications of this for control and accounting studies tout court.     

Accounting and Competitive Tendering in UK Local Government: An Institutionalist Interpretation of the New Public Management

The paper applies institutional theory to analyse the changing role of accounting and contracting in UK local government as the compulsory competitive tendering (CCT) regime was extended to white-collar activities such as housing management, finance, legal services and information technology. Employing an organizational fields model, accounting changes were seen to be influenced by a combination of legal coercion, normative and competitive forces, the resistance and manipulation of the large local authorities together with the facticity of the new accounting and contracting regimes. The theoretical framework is applied to field-work carried out in a large metropolitan authority in the north of England where CCT methodologies directly affected housing management but not other services such as finance. Although resisting CCT for finance, the authority subsequently introduced a radical scheme of voluntary competitive tendering for selected finance processes. The paper examines how accounting and contracting may be adapted to emerging trends in the New Public Management associated with Best Value policies.     

China's Healthcare Costing in Times of Crisis: Conflicts,Interactions, and Hidden Agendas

This paper presents a longitudinal interpretive case study on the development of healthcare costing in China over the period 2002 to 2015. Adopting a middle-range theory lens, the study explores dynamic interactions in the use of cost information among societal institutions and organizations. It reports the successful internalization of costing systems in public hospitals in Beijing, which supports the effectiveness of a hybrid steering mechanism combining both transactional and relational features; however, such successful internalization does not indicate the success of steering the lifeworld of institutions and organizations towards change. Notably, hospitals' responses to steering alter over time, from passive absorption to active manipulation, revealing how cost information may underpin hospital beliefs in marketization. At an institutional level, the paper provides empirical evidence for relational steering among societal institutions, where a reaction of ‘rebuttal’ is observed. It offers insights on how accounting can be a powerful tool in legitimizing such rebuttal, while keeping political considerations as hidden agendas. The findings suggest the importance of understanding lifeworld complexity at both societal and organizational levels, and cross-institutional collaboration in using accounting as a steering mechanism. The findings have important policy implications for public sector reform, both in China and worldwide.     

Capital Allowances and the Incentive to Invest

In recent years many organisations have moved towards a total quality management (TQM) path in their quest for quality. Accounting researchers have become interested in understanding how accounting systems are implicated within a TQM environment. This paper reports on a case study of TQM adoption and changes in management accounting systems (MAS) within a New Zealand construction company. It evaluates organizational approaches to implement TQM as a strategic option and the subsequent change in MAS. The paper suggests that an organisation may initiate TQM practices to promote ‘institutional’ and ‘quality’ culture rather than for purely technical reasons. It also suggests that when an organisation adopts new management practices such as TQM, it may lead to changes in the organisation's internal control mechanisms, such as management accounting and reporting processes.     

FACTORS IMPACTING ON ACCOUNTING LAG: AN EXPLORATORY STUDY OF RESPONDING TO TQM

The academic literature is critical of management accountants for their failure to initiate change and their inability to promote changed accounting information systems and performance measurement. The motivation for this study is provided by Kaplan (1986) who suggests that ‘when manufacturing operations change, the last and most difficult component to change is the accounting system’, and by Dunk (1989) who finds that accounting innovations lag operational innovations and that there are benefits arising from minimizing the time taken to adopt new accounting measures.The introduction of new management accounting systems to support management initiatives, provides the opportunity to investigate those factors contributing to accounting lag, and to determine those strategies which might usefully be employed to reduce accounting lag. This study examines the responses of accounting systems to TQM implementations at six diverse manufacturing sites in Adelaide, South Australia.Wolfe (1994), Rogers (1995), Gosselin (1997) and Bjornenak (1997) provide a theoretical framework for the investigation of the diffusion of accounting innovation and suggestions of the contextual factors which will influence its impact. This study suggests that industry sector, management commitment, organizational structure, participation and financial performance are all influential in the diffusion process, but in an inconsistent manner.     

Management accounting systems change and departmental performance: the influence of managerial information and task uncertainty

Despite the proliferation of new management accounting techniques amidst pressures of organizational and global change, the issue of changes in firm-wide management accounting and control systems (MACSs) has largely been ignored in the research literature. This study explores the indirect effect of MACSs change on departmental performance for a cross-sectional sample of 232 medium-sized Singaporean firms. It is hypothesized that MACSs change affects performance but not directly. Instead, this relationship is mediated by managerial-relevant information (MRI) that is impacted by MACSs change, which, in turn, enhances performance. Task uncertainty is expected to moderate the intervening linkages; specifically, the latter are anticipated to strengthen under conditions of more task variability and task difficulty and, thus, augment the indirect effect of MACSs change on performance. The results offer support for the positive indirect effect of improving departmental performance from more MRI, triggered by MACSs change. Although not large, the indirect effect is strengthened when task variability and task difficulty are high. Overall, the findings are consistent with the stated purposes of management accounting that are embedded in normative definitions, and which are relied upon to motivate the framework for analysis.