Management accounting change in a subsidiary organisation

Abstract

Parent-subsidiary relationships are commonplace nowadays, yet surprisingly there is a paucity of research analysing their dynamics over time. This paper presents a (longitudinal) case study, illuminating the dynamics implicated when a UK chemicals company imposed its systems and rules on a new subsidiary. Drawing on observations from a longitudinal case study (from 1993 to 2001), the study considers: (1) the extent to which a parent imposes its (management accounting) systems, rules and procedures on a subsidiary; (2) the role which (local) political, cultural and institutional factors in a subsidiary play in shaping the dynamics of such change implementation; (3) how new systems and practices become accepted and take root as values and beliefs and how they supplement earlier norms? The study provides insight for the questions above, and draws on institutional theories and a power mobilisation framework to assist in the interpretation of observations. We find that the operations of the subsidiary company are influenced by inter-related forces, both inside and outside the organisation encompassing issues of power, politics and culture. As such, existing institutions in a subsidiary organisation are influenced, sustained, and changed by the socio-economic context in which the subsidiary is located. Organisational practices designed to secure external legitimacy are not however always symbolic and decoupled from internal operations.

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

“…What may seem as management accounting change may in fact be an example of stability, and what may seem as an example of stability may in practice contain several elements of change (Siti-Nabiha and Scapens, 2005). Another observation is that the implementation of new accounting rules is facilitated if the change agent controls resources, decision-making and meanings, but this may be insufficient to handle 'the power of the system' (Burns, 2000;Ribeiro and Scapens, 2006;Yazdifar et al, 2008). A third observation is that trust has implications for how new management accounting models are received in an organisation where certain persons, known as carriers of trust, are important if the new rules are to influence behaviour (Johansson and Baldvinsdottir, 2003).…”

“…They emphasised that their framework was a starting point and urged researchers to continue with its development. Responding to their request, several researchers extended and refined the framework in a number of articles (e.g., Burns, 2000;Soin et al, 2002;Johansson and Baldvinsdottir, 2003;Burns and Baldvinsdottir, 2005; Siti-Nabiha and Scapens, 2005;Scapens, 2006;Ribeiro and Scapens, 2006;Coad and Cullen, 2006;Busco et al, 2006;Yazdifar et al, 2008). Guided by Burns and Scapens' framework, many important observations have resulted that increase our understanding of what happens when new management accounting techniques are introduced in organisations.…”

The impact of cultural factors on the implementation of global accounting standards (IFRS) in a developing country

“…Theorizing in the area is also presented with parallel but divergent literatures (Covaleski et al, 1993;Meyer & Rowan, 1977;Scott, 1995;Yazdifar et al, 2008) that could help to resolve this complex puzzle. New institutionalists hold some promise; for example, DiMaggio and Powell (1983) extrapolate from micro-level to macrolevel theorization to offer a model that accounts for variations in implementing IFRS (as illustrated in Fig.…”

Management accounting and enterprise risk management. A potential integration as a new change in managerial systems

“…For this reason, in previous literature, there have also been some efforts to integrate themes suggested both by old and new institutionalism (Collier, 2001;Ma and Tayles, 2009;Modell, 2001;Yazdifar et al, 2008) and the consequential adoption of hybrid frameworks (Di Maggio and Powell, 1991), which represent a fusion between old and new institutionalism and use a double lens in order to explain organisational change:…”