The Multiple Roles of the Finance Organization: Determinants, Effectiveness, and the Moderating Influence of Information System Integration

Abstract

This study focuses on three broad Finance organization roles: reporting, compliance, and internal control/risk management (RCCR); performance management; and strategic partner. Using data from a global survey of 832 firms, we examine the determinants of the various roles' importance and their relation with Finance effectiveness. While the effects of organizational change, market growth, international operations, firm size, decentralization, and industry on Finance responsibilities vary depending upon the role, we find little evidence of tradeoffs between the various roles. Instead, we find evidence of complementarities between roles, whereby greater emphasis on one role is associated with greater Finance effectiveness in the other roles. Additionally, we find that information system integration (ISI) not only has a positive direct impact on effectiveness in all three roles, but also interacts with the importance placed on RCCR and performance management roles to improve the Finance organization's effectiveness at carrying out these responsibilities.

Strategy and innovation: the mediating role of management accountants and management accounting systems’ use

“…Second, this study extends literature that analyses what management accountants do (e.g. Chang et al 2014) by examining the relationship between the BPMA role and different uses of MAS. Third, this study examines the impact of management accountants on exploratory innovation through the different uses of MAS.…”

“…Management accountants who take on the business partner role are considered to support firm managers in analyzing broader business management issues (Byrne and Pierce 2007, 472;Cadez and Guilding 2008, 839;Lambert and Sponem 2012, 566;Wolf et al 2015, 25). The business partner contribution can range from providing strategic accounting analyses (such as customer lifetime analysis ;Shank 2006) to supporting strategy implementation (Chang et al 2014;Hartmann and Maas 2011) further to support of innovation projects (Hughes and Pierce 2006;Rabino 2001).…”

“…First, firm size could have an effect on both of these variables. For example, large firms with slack resources might be more easily engaged in innovation (Damanpour 1991), while management accountants could be more often concerned with strategy issues in larger firms compared to smaller firms (Chang et al 2014). SIZE is calculated as a formative index by averaging of logarithmized firms' revenue and number of employees.…”

“…The concentration of decision making authority prevents innovative solutions; the dispersion of power is necessary for innovation (Damanpour 1991, 558). Similarly, centralized firms are more likely to use formal procedures and closely monitor financial targets, which would have an impact on the role of management accountants (Chang et al 2014). Four reflective items from previous literature were borrowed to measure centralization CENTR (Deshpande and Zaltman 1982;Hage and Aiken 1967).…”

“…In contrast, the "business partner" role is defined as supporting top management team members in analyzing broader business management issues (Byrne and Pierce 2007, 472;Cadez and Guilding 2008, 839;Goretzki and Messner 2018;Lambert and Sponem 2012, 566;Wolf et al 2015, 25). Literature suggests that business partnering means working closely with operational managers and developing local strategies (Byrne and Pierce 2007;Hartmann and Maas 2011), being the primary suppliers of quantifiable information for decision-support (Chang et al 2014), and acting as a liaison device across functions and between levels of management (Cadez and Guilding 2008). As summarized by Chotiyanon and de Lautour (2018), the business partner management accountants are becoming active outside their traditional domain with topics such as helping to structure a sales promotional campaign (Ahrens 1997), designing the restaurant menu in order to meet profit targets (Ahrens and Chapman 2007), defining and evaluating profitability thresholds for the approval of new products (Jørgensen and Messner 2010), helping middle managers with budgeting (Windeck et al 2015), or by helping in improving internal processes and working procedures (Windeck et al 2015).…”