The development of quality management accounting practices in China

Abstract

PurposeThe concept of the market economy is gaining ground in China. So also, with the growth of international business partnerships and collaboration with the West, is the significance of management accounting. The purpose of this paper is to provide some background for the development of management accounting practices in China.Design/methodology/approachAs enterprises gain more autonomy, management accounting techniques such as capital budgeting, cost of capital concept, just‐in‐time inventory, inventory model concept, cost‐volume‐profit analysis, total quality management and others will become more important. This paper examines the development of management accounting practices in China from the perspective of transitional economies.FindingsEvidence suggests that the national culture and values practiced for centuries by Chinese business influence the concerted efforts for information dissemination and developing management accounting practices. Because of the lack of understanding of western management accounting practices, the pace of development of Chinese management accounting practices might be slow for now.Research limitations/implicationsThe paper attempts to analyze the development of management accounting practices in Chinese business by looking at the background and contemporary thoughts; however, the value of the paper could be raised if the results were tested empirically, though discussion was aligned to empirics from other research and existing literature.Practical implicationsThis paper argues the necessity of recognizing the significance of culture‐based management accounting systems and practices, but also of realizing that, since the Chinese government opened its doors to foreign investment, international standards and practices have a major role to play.Originality/valueThis paper attempts to analyze the challenges that China, a transitional economy, faces and what factors it seriously needs to consider for developing much needed management accounting practices. It also examines the evolution of management accounting systems in China, with their distinctive features, in order to provide a better understanding of their development.

The Role of a Management Accounting System in the Decision-Making Process: Evidence from a Post-Transition Economy

“…Yet, there is no extensive research in any of these countries (including Europe), apart from China. (Islam & Kantor, 2005) investigated the development of quality management accounting practices in China (a review of the literature based on MA practices in selected Asian countries was made also by (Sulaiman et al, 2004). According to the authors, changes in the way enterprises are run in China have required more management information, and have consequently forced the development of MAS.…”

The Adoption of Management Accounting Practices in Malaysian Small and Medium-Sized Enterprises

“…For example research by Scarbrough, Nanni, & Sakurai, 1991;Bright, Davies, Downes, & Sweeting, 1992;Drury, Braund, Osborne, & Tayles, 1993;Anderson & Rohde, 1994;Innes & Mitchell, 1995Chenhall & Langfield-Smith, 1998Abdel-Kader & Luther, 2006 focused on the use of management accounting among large firms in the developed countries. Whereby a substantial body of research investigating current management accounting practices in large organizations from developing countries was conducted by Ghosh & Kai Chan, 1997;Joshi, 2001;Szychta, 2002;Islam & Kantor, 2005;Wu, Boateng, & Drury, 2007;El-Ebaishi, Karbhari, & Naser, 2003;Van Triest & Elshahat, 2007;Frezatti, 2007;Leftesi, 2008;and Nimtrakoon, 2009. Therefore the paucity of research into the use of management accounting practices among SMEs motivates this research.…”

Research on Chinese Accounting Issues: A Review and Synthesis

“…Chinese nationals are less open in knowledge sharing, which is consistent with culture-based expectations (Chow, Deng, and Ho 2000). It has been suggested that national culture and traditional Chinese business practices have a negative influence on efforts for information dissemination and development of management accounting practices (Islam and Kantor 2005). Tsui (2001) examined the impact of culture on the behavior and attitudes of managers in budgetary participation.…”