Search results

The paper extends the organizational learning framework: Structural-Functional (SF)-single-loop or Conflictual-Radical (CR)-double-loop learning to the management accounting literature. The sociological approach of organizational learning is utilized to understand those contingent factors that can explain why management accounting innovations succeed or fail in organizations.

We view learning as enhancing an organization’s strategic competitive advantage by making it better able to adopt and diffuse innovation in respond to changes in its environment in order to manage improved performance. The success of management accounting innovations is contingent upon whether its learning process involves SF-single-loop or CR-double-loop learning to adopt and diffuse process innovation.

The paper suggests that the learning strategy that the organization chooses is the reason why some management accounting innovations are more successfully adopted than others and why some innovations are easily diffused in some organizations but not in others. We propose that the sociological approaches to learning provide an alternative framework with which to better understand the adoption and diffusion of process innovations in management accounting systems.

It has become evident that management accounting researchers need to pay particular attention to an organization’s approach to adoption and diffusion of innovation strategies, particularly when they are designing and implementing process innovation programs for an organization. According to Schulz (2001), there are two interrelated stages of the learning that can shape the outcome of the innovation process in an organization. The first stage is related to the acquisition/production (adoption) of knowledge that results in gathering information, codification, and exploration. This is followed by the second stage which is the distribution or dissemination (diffusion) processes. When these two stages – adoption and diffusion – are applied within an accounting context, they address issues that are commonly associated with the successes and/or failures of management accounting innovations.

Although innovation involves learning, the nature of the learning process does not completely describe the manner in which an innovation affects the organization. Accordingly, we suggest that the two interrelated organizational sociological dimensions of innovations processes, namely, (1) the adoption and diffusion theories of Rogers (1971 and 1995), to approach organizational learning, and (2) the SF (single loop) and CR (double loop) approaches to learning be used simultaneously to describe management accounting innovations.

When an innovation is implemented, it initially can be introduced as an incremental change, one that can be limited in both in its scope and its breadth of administrative changes. This means that situations which are most likely to benefit from its initiation can serve as the prototype for its adoption by the organization. If successful, this can be followed by systemic accounting innovations to instituting broader administrative changes within the existing accounting reporting and control systems.

The primary objective of this research is to chronicle how the Environmental Protection Agency (EPA) and other United States Federal Government Agencies (USFGA) agencies have played a role in shaping the trajectory of financial reporting for sustainability, with a particular emphasis on triple bottom line (TBL). This exploration extends to other indexes reporting sustainability data encompassed within financial, social and environmental reporting.

This study adopts an illustrative methodology, utilizing data sourced from governmental, business and international organizational documents.

Sustainability accounting predominantly finds its place within the framework of TBL. However, it is crucial to note that sustainability reporting remains voluntary rather than mandatory. Nevertheless, accounting firms and professional accounting societies have embraced it as a supplementary facet of financial accounting reporting.

The research highlights the historical evolution of sustainability within the USFGA and corporate entities. Corporations’ interest in accounting for sustainability performances has significantly contributed to the emergence of voluntary sustainability accounting rules, as embodied by the TBL.

This volume of Advances in Management Accounting (AIMA) begins with a paper by Jacob G. Birnberg. This thought-provoking article is based on the author’s keynote address delivered at the First AIMA Conference on Management Accounting Research: New Paradigms and Methodologies which was held in Monterey, California, May 15–16, 2003. As the title of the paper indicates, it is about expanding management accounting research frontiers in the next decade. According to Birnberg, the management accounting research cycle has been one of importing new ideas from other disciplines followed by a period of introspection when the new ideas are integrated into the fabric of management accounting research and practice. This prominent scholar claims there are good reasons to believe that management accounting is again at the point where it should look outside its own research domain for new ideas. His paper proposes several areas where management accounting researchers may find new, interesting and productive research. Within these areas a variety of specific research topics are suggested and potential research questions are raised.

Sisaye and Birnberg (2010a, 2010b) have described the extent and scope of the innovations dimensions as the degree to which learning has affected the organizational structures and processes of the organization. Within this framework, extent has been defined as the degree to which the innovation affects the organization's management accounting administrative structures, systems, and behaviors of members or units within the organization. Extent is synonymous with the two types of learning identified by Argyris and Schon (1978) discussed earlier. Thus, the learning in the extent dimension varies from a technical change within an existing system (single loop) to the adoption of an entirely new administrative system (double loop). While this continuum extends from technical changes that affect a single process or task to administrative changes that affect organization-wide systems and structures, we will treat them as though they are dichotomous. As indicated earlier (Chapter 2), extent is associated with two types of learning: single loop (technical change within an existing system, i.e., gradual-incremental) and double loop (the adoption of an entirely new system, i.e., radical-transformational) (Argyris & Schon, 1978, 1996).

The purpose of this paper is to relate the balanced scorecard (BSC) to strategy and teams.

This paper proposes deriving performance targets and weights using a multiparty collaborative decision model that can be integrated into team-based bonus formulas.

Cross-functional division managers face a more complex problem in setting goals for individual managers. The proposed approach is intended to develop such goals and link them for team-based incentives. An example illustrates the application of the proposed BSC model and the team-based pay formula.

The model can be used to determine group bonus.

The paper has two objectives: to relate the BSC to the team setting with a participative flavor rather than with imposed targets and weights, and to develop a better way of relating behaviors and outcomes to the team’s and/or the organization’s goals. Integrating the strategies of various units adds a new dimension that differs from rationalizing the superior’s and the subordinate’s goals. The proposed model considers input from all value chain functional managers involved in implementing an organizational strategy. A methodology is provided to operationalize (Hope and Fraser, 2003) beyond the budgeting model principles.

The cycle in research in management accounting has been one of importing new ideas from other disciplines followed by a period of introspection when the new ideas are integrated into the fabric of management accounting research and practice. There are good reasons to believe that management accounting is again at the point where it should look outside its own research domain for new ideas.

This paper proposes several areas where management accounting researchers may find new, interesting and productive research. Within these areas a variety of specific research topics are suggested and potential research questions are raised.

The mechanistic-organic assumptions of SF address those organizational factors related to structural arrangements, contextual factors, job-task work activities, and human resources management policies. Organizations adopt structures and procedures in search of legitimacy and institutionalization (Riebero & Scapens, 2006, p. 96). Structures manifest themselves in centralized (mechanistic) and/or decentralized (organic) forms. These structures can be loose or tightly controlled; they can involve independent or interdependent tasks. These conditions have a direct impact on the operation of management information and control systems that will, in turn, impact organizational learning and process innovations, which, ultimately, affects organizational performance.

Seleshi Sisaye is Professor of Accounting at the Palumbo-Donahue School of Business, Duquesne University. His research interests are in organizational sociology, management control systems, process innovations, sustainable development, and reporting. His publications have appeared in accounting, management, sociology, and international development journals. He has assumed leadership positions within the Accounting, Behaviour and Organization Sections of the American Accounting Association. He holds two PhDs in Development Sociology from Cornell University and Accounting from the University of Pittsburgh.

Strange and Soule (1998) outlined the processes of innovations as follows. “Innovations are novel (at least to the adopting community), making communication a necessary condition for adoption. Innovations are also culturally understood as progressive, strengthening the hand of change agents. And since innovations are risky and uncertain, adopters carefully weigh the experience of others before acting” (p. 267).