Investigating the drivers of innovation diffusion in a low income country context. The case of adoption of improved maize seed in Malawi

To match the rapidly changing demand for food to its supply, agricultural productivity needs to be increased. The adoption of improved agricultural technologies is therefore crucial for sustainable agricultural development. In this paper we investigate the adoption dynamics of improved seed by farmers in Sub-Saharan Africa. Farmers’ expectation is found to be a particularly important element in defining the adoption decision process. The aim of this study is to assess ways to stimulate future expectation. Using survey data from Malawi, we examine the role of expectation in the decision-making process of farmers adopting improved seed. We use these data in a dynamic simulation model to assess historical seed adoption patterns in Malawi and examine how counterfeit seed and branding affect farmers expectations and adoption. The simulation model shows that the presence of counterfeit seed on the market can affect adoption considerably. Our analysis demonstrates, that branding has contributed to seed adoption in Malawi, confirming that it can further stimulate demand of improved seed.     

An environmentally enlightened accounting

Environmental stewardship must become a primary concern if management is to adequately fulfil its societal responsibilities. Management and accounting information systems must aggressively respond to these emerging requirements in order to support adequately the associated information needs as well as to design organizational systems that motivate and facilitate desired behavior. Our purpose here is to consider a framework useful for developing environmentally enlightening management and accounting information systems that take into account alternative environmental perspectives. The framework can be used to develop prototypes representing different levels of environmental enlightenment, and as such, can provide general guidance for moving collectives and organizations toward a more environmentally responsible posture. The framework is illustrated using an example from the salmon farming industry provided in [Geogakopoulous, G., & Thomson, I., 2004. Organic salmon farming: Risk perceptions, decision heuristics and the absence of environmental accounting. In Proceedings of the Asia Pacific Interdisciplinary Research in Accounting. Singapore, July 4–7, 2004, this paper has since been published in this edition of Accounting Forum].     

Activity-based costing diffusion across organizations: an exploratory empirical analysis of Finnish firms

This study aims to explain what drives innovation diffusion in management accounting during its various phases. Based on Abrahamson [Abrahamson, E. (1991). Managerial fads and fashions: the diffusion and rejection of innovations. Academy of Management Review, 16, 586–612], four perspectives with potential to explain the diffusion of accounting innovations are identified: the efficient-choice, forced selection, fad and fashion perspectives. The diffusion of activity-based costing (ABC) in Finland provides an empirical context to study how these four perspectives apply to management accounting innovation. Data comes from a set of four surveys (total n=490, response rate 39.5%, 114 ABC cases), from interviews of consultants, academics and software industry employees, and from archival sources. The study proposes that the driving forces behind innovation diffusion in management accounting change over the course of diffusion. Efficient choice may explain the earliest adoptions, whereas fashion-setting organizations exert considerable influence in the take-off stage. Later on, the influence of fashion setting organizations diminishes. Further diffusion is explained both by mimetic behaviour and efficient-choice.     

Enhancing the government accounting information systems using social media information: An application of text mining and machine learning

This study demonstrates a way of bringing an innovative data source, social media information, to the government accounting information systems to support accountability to stakeholders and managerial decision-making. Future accounting and auditing processes will heavily rely on multiple forms of exogenous data. As an example of the techniques that could be used to generate this needed information, the study applies text mining techniques and machine learning algorithms to Twitter data. The information is developed as an alternative performance measure for NYC street cleanliness. It utilizes Naïve Bayes, Random Forest, and XGBoost to classify the tweets, illustrates how to use the sampling method to solve the imbalanced class distribution issue, and uses VADER sentiment to derive the public opinion about street cleanliness. This study also extends the research to another social media platform, Facebook, and finds that the incremental value is different between the two social media platforms. This data can then be linked to government accounting information systems to evaluate costs and provide a better understanding of the efficiency and effectiveness of operations.     

Customer value exchange

This paper discusses the state of the US banking industry — its challenges and some of the common shortcomings of their current strategies — and presents compelling reasons why banks must re-formulate new strategies for growth and profitability focused on the customer. It proposes a framework, called the customer value exchange (CVE), as a potential solution that would enable banks to develop effective strategies tailored to their customers’ specific needs and perceptions of value, which are the drivers for profitability. This framework is organised into capabilities, which are explained in this paper. A sample process for how these capabilities are applied is provided with an emphasis on an iterative, dynamic refinement process. The iterative approach includes strategy, people, process, analyses and information that companies can integrate to yield higher value and exchange with the banks’ customers. The paper also presents a real company case study. This framework can be utilised by academics and industry practitioners of customer relationship programmes alike.     

Using information systems as a basis for teaching accounting

This paper describes how Brigham Young University reorganized the way it teaches financial, managerial, auditing, tax, law, and information systems (the accounting core). It discusses why information systems (IS) is the first topic taught, why it is a central focus throughout the core, and how teaching the functional areas of accounting is integrated.The paper discusses the results of a survey of core students. The survey shows that studying systems first helped these students integrate IS and accounting concepts, understand the underlying accounting framework, and understand other areas of accounting. Integrating systems with other subjects helped the students understand the role of systems in accounting and how systems relates to other accounting areas. Survey results show systems concepts can be taught in an intensive manner without reducing the level of coverage or affecting student comprehension. Finally, the results show professors can receive high teacher evaluations in systems courses and students can have both a quality and an enjoyable learning experience.     

Towards an understanding of profitability analysis within the residual income valuation framework

This paper argues that there is a mis-match between formal theoretical accounting valuation models, and practical approaches to profitability analysis and valuation. In particular, none of the linear information models published to date exhibit an obvious role for profitability analysis. For example, in the standard Ohlson model, earnings and book value apparently summarise all the value relevant information available from the firm's financial statements and there is no apparent need for any further investigation of the accounting numbers beyond these specific line items. The purpose of this paper is to attempt to investigate potential analytical links between formal valuation models and practical profitability analysis. Specifically, we attempt to show how key features of practical profitability analysis might be incorporated into formal valuation models. In this respect there are two particular aspects of valuation practice to which the formal models published to date have paid no attention. First, in practice we often see explicit reference made to the demand side (sales), and supply side (costs) of the business. Second, we often see attempts to benchmark the financial ratios of one firm against the corresponding ratios of firms in the same industry. The purpose of this paper is to attempt to explain why such practices make sense in the context of an attempt to model the principal determinants of firm value within a residual income valuation framework.     

Responsibility cost control system in China: a case of management accounting application

This paper introduces the responsibility cost control system installed at Han Dan Iron and Steel Company in the People’s Republic of China. The Company has adopted a series of management accounting techniques or procedures in its cost control system, including target costing, responsibility accounting, standard costing, flexible budgeting, internal transfer pricing, behavior motivation, performance evaluation, variance analysis, and so on. In particular, the system has integrated responsibility accounting and cost control by introducing market mechanisms to substantially reduce production costs and raise profitability. The successful experiment reveals that the responsibility cost control system is an effective tool for cost control under the changing Chinese business environment. The Han Dan experience demonstrates that management accounting can play a positive role in improving business management and profitability in China or other developing countries. In addition, this study casts light on effective diffusion of management accounting practices under different social and economic systems.     

Covid-19, corporate survival and public policy: The role of accounting information and regulation in the wake of a systemic crisis

The economic crisis triggered by the Covid-19 pandemic prompted governments to issue several relief mechanisms to hold up companies and workers. This study analyzes how accounting information and regulation can support policymakers in the wake of a systemic crisis. Based on an accounting-based framework and readily available data from financial statements, it forecasts the impact of the crisis in terms of losses, equity depletion, and corporate defaults, absent government intervention. Next, it quantifies the costs and effects of five relief mechanisms in alleviating the risk of generalized corporate bankruptcies. The effects of the health pandemic and relief mechanisms on profitability and equity shortfalls are estimated for a sample of 586,076 privately held Italian firms. The findings indicate that the number of companies facing bankruptcy risk would increase from 65,463 (11% of the population) in 2019 to 153,681 (26%) in 2020, absent any government intervention. Altogether, these firms employ 1.4 million employees and have a total exposure to the financial industry equal to €68 billion in loans. Next, we assess the effects of relief mechanisms introduced by the Italian government to support corporations, whose aggregate costs reach €49.33 billion in 2020, and find that the interventions ‘rescue’ about 43,000 firms otherwise in default. Finally, the study adds to the debate on the role of accounting regulation in the wake of a systemic crisis by (a) discussing the effects of temporary changes to accounting rules on the informativeness and transparency of financial statements, and (b) suggesting alternative ways to modify accounting rules to safeguard corporate survival without compromising the informativeness of financial statements once the crisis reaches a halt.     

Scenario-based approach in dealing with climate change impacts in Central Tanzania

Climate variability and change continue to be a threat to Africa’s agro-ecosystems. This is anticipated to have a multitude of immediate and long-term impacts on sub-Saharan Africa’s natural resources of the present study attempts to establish the potential benefit of integrating local stakeholders’ knowledge into climate scenarios. Specifically, the study sought to tap into the expertise and perspectives of locally important stakeholders in the potentially sensitive Wami/Ruvu River catchment of Tanzania. Participatory scenario planning was used to explore sectors sensitive to climate variability and change. This included 84 selected smallholder farmers and their leaders spread across six villages within the catchment. Quantitative household surveys were conducted across 199 households and Supplementary information sourced from regional statistics. The survey indicates that farmers project that land and agricultural productivity and water resources will be affected by climate change. From the participatory approach adopted for the study, thematic scenario categories featuring land and water resource-use and management and farm productivity were developed. The research found scenario analysis as a useful tool in development planning, as it incorporates interacting risks and uncertainties. If adopted by local farmers, leaders, regional institutional frameworks and policy makers, the tool has the potential to improve responsiveness to changes and risks through its collaborative management approach. This study demonstrates the need for sustainable water use and management systems and land use and farming practices that will increase crop productivity and resilience to climate variability and change.     

The Cambridge Container Company: managing customer-centric information integration

This case illustrates the efforts of the Cambridge Container Company, a fictitious manufacturer of plastic containers, as they consider methods for moving organizational decision-making toward a more customer-centric focus. Cambridge has four independent manufacturing units, each of which currently bases all operational decisions on internally generated cost and profitability information.¹ In 2000, Cambridge established a special enterprise level division to consider best practices for collecting qualitative product and service feedback from customers and to subsequently consider how to best integrate such nontraditional, nonfinancial information into their own operational decision models.This realistic scenario gives students an opportunity to consider the financial and managerial implications of moving to customer-centric operational decision-making. Business articles on the advantages of customer centricity abound, but few sources consider the financial and managerial consequences beyond increased customer loyalty and satisfaction. In actuality, this current business trend requires significant reengineering of information systems and management practices. Consequently, accounting methods must be re-evaluated for accuracy and fit with new systems and management practices.At the heart of this case is an opportunity for students to consider the appropriate balance of traditional financial and customer-driven nonfinancial information in management decision models for optimal profitability of the company and its individual units. In addition, the instructor can delve into a number of internal control and political issues related to information sharing. There is also opportunity for students to consider at a high level the complexities of balancing open information sharing and information security. Several alternative questions and suggested solutions are provided for the instructor at the end of the case. We suggest that instructors select only three or four of the questions so students can spend more time on each selected issue. This case is adaptable for use in managerial accounting, accounting systems or management systems courses at the undergraduate or graduate levels.     

The influence of power strategies in AIS implementation processes

This study is based on a longitudinal in-depth case study, conducted in a Portuguese public-sector organization, where the accountants adopted a strategic business partner role and promoted the implementation of two new accounting information systems (AIS), under the context of increasing business competition. Given their role, we examined how the implementation processes of such AIS were influenced by the accountants’ power strategies, adopting an organizational power narrative inquiry grounded on the four power dimensions proposed in Hardy’s (1996) framework: power over resources, power over decision-making processes, power over meanings and power of the system. As a result, this study contributes to the literature available on AIS by discussing the strategic business partner role of (management) accountants in a specific case; and by offering new insights into AIS research under the topic of accounting change through the exercise of power. Our research also contributes to the literature on organizational power by providing theoretical developments to Hardy’s (1996) power framework.     

Using a systems framework to develop higher level thinking skills in cost/management accounting: Experimental evidence

The teaching of learning and thinking skills has become a primary objective of accounting education. Recent cognitive research has emphasized the importance of a framework for the organization of knowledge in attaining these skills. This paper examines whether a systems framework leads to improved long-term learning and higher level thinking skills. The systems framework involves the identification of objectives, users, inputs, and outputs, in addition to the calculation process. A learning experiment was conducted in which the systems framework was used for organizing material presented to students and for practice exercises. This study suggests that the systems framework enhances long term learning and higher level thinking skills. These results support the recent emphasis on information systems in accounting education.     

Dialogic framing of accounting information systems in social and environmental accounting domains: Lessons from,and for,microfinance

The successful design, application and evaluation of accounting information systems (AIS) in social and environmental accounting (SEA) domains increasingly requires that stakeholder interests be addressed. Because various stakeholders have competing interests, new thinking about how these can be accommodated is needed. Brown (2009) proposes a dialogic framework following from agonistic democracy, which takes the position that when consensus is not possible, progress can be facilitated through ongoing commitment to accounting processes that represent and accommodate competing perspectives. Previous work in AIS (Blackburn et al., 2014; Dillard and Yuthas, 2013) builds on Brown's work to develop a theoretical perspective useful in the AIS-SEA context that takes pluralism seriously. We extend this line of research by exploring developments in the microfinance industry and illustrate how the agonistic accounting principles can be useful in considering AIS-SEA design, implementation and evaluation as well as the initiation of innovation and change in the industry. Microfinance provides an example of an antagonistic context where the social mission/values come into unambiguous conflict with the economic objectives of microfinance institutions. Agonistics suggests that such conflict, if acknowledged and facilitated, has the potential for fostering innovative responses and reducing the likelihood of one perspective dominating the others. Relating accomplishments in this field to the principles of dialogic accounting demonstrates how this perspective can be incorporated into the design and use of systems that address social and environmental objectives as well as economic ones. We explore both accomplishments and shortcomings in achievement of pluralistic systems in the microfinance domain.     

The perils of the imitation age

Imitation exerts enormous influence over society, and business and finance in particular. And its influence has grown as the avenues by which people imitate--and are imitated--have multiplied and the process has gotten faster. Thousands of communications channels make it possible for virtually anyone in the developed world to know, almost instantaneously, what others do, think, believe, claim, or predict. More significantly, we can and do act upon such knowledge. The resulting fads and fashions, bubbles and crashes are ever more frequent, severe, and complex. The information age has cast up more than its share of paradoxes, including this one: When information is plentiful, we often use it not to make better decisions but to imitate others--and their mistakes. In consumer purchases, financial markets, and corporate strategy, what others do matters more to us than the facts. When there's too much information, imitation becomes a convenient heuristic. This is the basis for a self-referential society. Imitation has its virtues, but it also promotes instability and unpredictability. That's because, by definition a multiplier, it can swell a single opinion into a mass movement or catapult the smallest player to the forefront of a market. Mastering the dynamics of self-reference won't ensure mastery of its consequences. But businesses that understand how imitation works can at least attempt to gird themselves against its worst effects--by accounting for it in their forecasts and risk-management plans, by becoming more sensitive to unexpectedly changing circumstances, and by avoiding mindless imitation of other companies' moves. In some instances, they may even be able to build strategies around self-reference and use the tools of imitation to capture new business. That won't make the world any less confusing. But it may make it more profitable.     

A dialogical framing of AIS–SEA design

Previous literature has proposed dialogical accounting as a means wherein accounting information systems can support competing, and potentially incompatible, information needs of various interested constituencies (Dillard and Yuthas, 2013). Here we extend that work by focusing on the design of social and environmental accounting (SEA) information systems that take pluralism seriously. We theorize the challenges of designing such systems wherein they are expected to address the needs of multiple users with different interests that may emerge from different economic, social, political and/or cultural perspectives, as they relate, for example, to sustainability reporting, ethical investment, participatory development studies and indigenous resource management. Using dialogic engagement, we attempt to move beyond traditional, and often highly constrained, conceptualizations of “stakeholder engagement” and propose a framework for undertaking systems design that can facilitate high quality and relevant SEA information systems that meet the needs of a wide range of actual and/or potential users. We provide an example of how the framework might be enacted using a framing methodology.     

A LONGITUDINAL CASE STUDY OF PROFITABILITY REPORTING IN A BANK

This project involved a seven-year longitudinal case study of a Bank monitoring over time the changes in profit measurement and overhead allocation, product group profitability, benchmarking, customer profitability, budgeting and profitability/performance measures such as return on risk adjusted capital. The overall finding is that the Bank’s profitability reporting (particularly its product group and customer profitability) changed considerably during this seven-year period. The main factors that accountants and managers identified as influencing such changes were four external factors and two internal factors. The four external factors were changes in technology (computers and telecommunications), regulatory change, increasingly competitive global markets and a greater difficulty in attracting customers. The two internal factors were the development of new products leading to a wider product range and a changing management accounting culture. The historical and organizational context of the Bank was also critical in this process of change, and a dynamic contingency model is proposed. This longitudinal case study indicates that more changes are occurring in management accounting practices (such as profitability reporting) than the current evidence from questionnaire surveys and ‘snapshot’ case studies reveals. An area for future research that this study highlights is that although accountants and managers talk in terms of long-term planning and control, the norm is short-term management accounting solutions and managerial reaction to new external developments.     

Teaching note: Traditional and activity based costing systems

A significant portion of the current managerial accounting literature contrasts the benefits and importance of activity based costing (ABC) systems with the more traditional cost accounting systems. This paper questions this tendency of making such a stark contrast, by placing ABC systems within a wider cost accounting framework. Initially, the framework is developed by providing an overview of the product costing, control and decision making process. Also outlined are the various costing systems in terms of their objectives, advantages and deficiencies. A schema for integrating the costing process with decision making and performance evaluation criteria is then conceptualized. The role of ABC is recognized and integrated within this framework. The link between ‘traditional’ and ABC systems is also studied via an analysis of the conventional wisdom in some of the leading texts in managerial accounting. The analysis demonstrates that there is still much ambiguity in both the contrasting and the linking of ABC with the more traditional costing systems.     

Accounting and auditing with blockchain technology and artificial Intelligence: A literature review

This paper surveys the published work on how blockchain technology will impact accounting in general, but AI-enabled auditing specifically. The purpose is to investigate how blockchain technology can improve transparency and trust in accounting practice and how professionals can use blockchain data to improve decision-making, based on the qualities of immutability, append-only, shared, verified, and agreed-upon (i.e., consensus-driven) blockchain data. The multi-party validation of blockchain protocols adds real-time trusted data for the AI systems used by auditors to improve assurance and efficiency. This review summarizes four themes emerging from the literature focusing on how blockchain technology has changed record-keeping in accounting: event approach to accounting; real-time accounting; triple entry-accounting and continuous auditing. The research interprets the findings using agency theory and stakeholder theory to advance how using blockchain to mitigate information asymmetry and improve stakeholder collaborations is understood. The investigation also summarizes the challenges and clarifies organizations’ reasons to be cautious about adopting blockchain. Lastly, the study suggests that future researchers use this study in two ways that enrich blockchain literature: first, to apply the themes and answer the questions identified within this review to improve the business methods of practitioners and policymakers; and second, to encourage stakeholders such as practitioners, system designers/developers, and policymakers to collaborate in designing blockchain ecosystems that suit accounting and auditing as they transform digitally.     

Structural properties of the price-to-earnings and price-to-book ratios

We examine the structural properties of a firm’s price-to-earnings (P/E) and price-to-book (P/B) ratios and the relation between these two ratios. A benchmark result is obtained under the hypothesis that firms use replacement cost accounting to value their operating assets, so that the P/B ratio coincides with Tobin’s q. The firm’s P/E ratio can then be expressed as a convex combination of the P/E ratios suggested respectively by the permanent earnings model and the Gordon growth model, with the relative weight to be placed on these two endpoints determined entirely by Tobin’s q. Under current financial reporting rules, the accounting for operating assets is likely to be more conservative than replacement cost accounting. Our findings characterize how the magnitude and behavior of the P/E and P/B ratios are jointly shaped by several key variables, including both past and anticipated future growth, economic profitability, and accounting conservatism