Determinants of accounting innovation implementation

Abstract

Accounting innovations are often not successfully implemented or diffused throughout the organization. This study seeks to explain this phenomenon. One of the major impediments to the successful implementation of accounting innovation is that management accounting systems are generally used to serve the decision control needs of top management while at the same time purportedly supporting the decision management needs of lower level managers. To the extent that the accounting system is used for decision control, innovation creates the potential for wealth effects to occur. This prompts managers, whose wealth will be negatively affected, to resist accounting innovation. We present conditions where it is likely for negative wealth effects to occur. Under these conditions the system will fail to achieve its intended objectives. Our theoretical model examines how decentralization choices influence resistance to accounting innovation. We argue that delegation of decision rights can limit the potential for resistance in two ways-(a) by creating the environment which allows managers to ensure that their subunits are able to adapt to the new signals provided by accounting innovations and (b) by enabling subunit managers to become involved in the design of these systems. Our model also enables us to assess the consequences on organizational outcomes when subunit managers resist accounting innovations. Based on data collected from production managers, our results demonstrate the importance of decentralization choices on the effective implementation of accounting innovations.Top managements implement new management accounting systems (MAS) as they believe these systems will improve the performance of the firm. They are often wrong. There is increasing evidence that management accounting innovations do not improve either decision making or firm performance (Kaplan, 1986;Bruns, 1987;Innes and Mitchell, 1991;Cooper et al. , 1992; Scapens and Roberts, M argaret A. A

Impact of uncertainty and decentralization on activity-based costing use

“…However, the examination of the operational definitions used by each study for this construct can guide us in determining the nature of decentralization studied (horizontal or vertical). Abernethy and Bouwens (2005), by the fact that decentralization choices avoid resistance to accounting innovations. These results prove the importance of employees' involvement in the use of ABC, even though Moroccan employees' skills are perceived to be low, and highlight the different motives of actors for getting involved in an ABC project.…”

Performance implication of market orientation and use of management accounting systems

“…SMA systems require full cooperation between accountants and other functional managers in term of sharing information via MAS (Bromwich and Bhimani, 2005). Therefore, more accountants' participation in the design and implementation of MAS can promote a higher use of MAS (Abernethy and Bouwens, 2005). In addition, more accountants' participation in MAS development can result in more use of MAS from functional managers with more regular system update (Pierce and O'Dea, 2003).…”

Customer accounting and marketing performance measures in the hotel industry: Evidence from Australia

“…It has also been suggested that information systems support management decision-making (Abernethy and Bouwens, 2005) that can result in improved decision-making in regard to resource allocation (Baines and Langfield-Smith, 2003). In conjunction with the overall proposition of a necessary fit between CA usage, the study's contextual variables and hotel performance, it is put forth that CA practices provide important customer focused information that results in better management decision-making.…”