Guest editorial

Guest editorial

Article Type: Guest editorial From: Journal of Accounting & Organizational Change, Volume 9, Issue 4

1 Introduction to management accounting change in Japan

From its peak in the mid-1990s the number of articles written about Japanese management accounting has steadily declined in recent years (Okano and Suzuki, 2007). The initial interest in Japanese management accounting has been attributed to the competitiveness of Japanese manufacturing firms – with the aim of understanding what management accounting techniques helped make these firms successful (Wijewardena and De Zoysa, 1999). With the decline of the Japanese economy the number of articles about Japanese management accounting has steadily declined.

This special issue of the Journal of Accounting & Organizational Change seeks to contribute to the Japanese management accounting literature and to encourage more research which examines the changing conditions in which Japanese firms operate and the effect these conditions have on management accounting practice in Japan. The papers contained in this issue show how Japanese firms have/are changing their management accounting systems – not always successfully it should be noted – to meet the demands of economic and social conditions both within Japan and in relation to globalization. We believe that this focus will further our understanding of the context in which management accounting is practiced in Japan.

To examine this theme the authors in this special issue have adopted various methodological approaches – two papers are based on in-depth longitudinal case studies (Ushio and Kazusa; and Yasukata, Yoshida, Yamada and Oura), two are based on surveys (Kawai, Sakagushi and Shimizu; and Arai, Kitada and Oura) and one is based on archival text mining (Sawanobori). The issues these papers explore range from traditional Japanese management accounting themes such as “target cost management” and “buyer-supplier relationships” to a more recent area of interest knows as “amoeba management[1]” (Adler and Hiromoto, 2012; Miya, 1998).

The remainder of this paper is set out as follows. The next section outlines the methods used to attract potential papers for this special issue. This is followed by a brief outline of the key features of Japanese management accounting. Finally, we summarize the papers and present concluding remarks.

2. Method

The papers appearing in this special issue originated from special sessions held at two leading conferences in Japan in 2009. The Japan Cost Accounting Association Annual Meeting hosted by Hitostubashi University and the Japanese Association of Management Accounting Annual Meeting hosted by Asia University. The editors would like to thank the organizing committees of both these conferences for their assistance in setting up these special sessions as well as all the authors who presented papers. Also special thanks to Professor Rob Chenhall who was the Guest Speaker for the special session at the 2009 Japan Cost Accounting Association Annual Meeting[2].

The aim of this process was to get Japanese academics writing papers in English about management accounting change in Japan from a Japanese perspective. For this reason all of the authors in this special issue are Japanese academics. Four of the papers are about the changes taking place in Japan while the final paper is a Japanese academics view of changes that took place in the UK railway system in the 1800s. What is important about all these papers is that they offer new insights into the changing practice of Japanese management accounting from a Japanese perspective.

3. Japanese management accounting

The term “Japanese management accounting” has been popular in both business magazines and academic research (Okano and Suzuki, 2007). Many reasons have been put forward as to why Japanese manufacturing firms performed better than their international counterparts. A number of writers have argued that Japanese management accounting practices have been one of the reasons for the success of Japanese firms’ ability to gain dominance in many manufacturing sectors (Hiromoto, 1988; Howell, 1989). In their comparative analysis of management accounting practices in Japan and Australia Wijewardena and De Zoysa (1999, p. 66) show that Australian firms “place an emphasis on cost control tools such as budgeting, standard costing and variance analysis at the manufacturing stage” while Japanese firms “devote a much greater attention to cost planning and cost reduction tools based on target costing at the product planning and design stage”. It has also been argued that Japanese firms:

[…] seem to use accounting systems more to motivate employees to act in accordance with long-term manufacturing strategies than to prove senior management with precise data on costs, variances, and profits (Hiromoto, 1988, p. 22).

Culture and management philosophy have been given as a possible reason for the differences between Japanese and Western management accounting. Okano and Suzuki (2007), through their analysis of the history of Japanese management accounting, note that a concern for the wider community has been a common feature of Japanese management. Thus, the development of management accounting “was pursued not for the sake of individual managements or companies, but for wider groups of companies, industries and even Japanese society as a whole” (Okano and Suzuki, 2007, p. 1132).

4. The contributions to the special issue

In this special issue we present five papers which are summarized below. We also link these papers to current management accounting themes and reflect on the findings revealed.

The paper by Ushio and Kazusa is a case study of a Japanese manufacturing firm informed by actor-network theory. It examines the development of accounting calculations in amoeba management. According to Mouritsen et al. (2009) management accounting calculations are not used to describe the properties of a particular area (in their case innovation) but to mediate between the local area and firm-wide issues. In their paper Ushio and Kazusa examine the processes through which accounting calculations were developed in the production department of a manufacturing firm. They show that accounting calculations were developed to represent different interests within the firm and helped them manage the changing social and economic contexts faced by the firm.

Arai, Kitada and Oura’s paper examines the use of cost, profit and non-financial measures of performance through a survey of factory managers to explore the effects of interdependence and multi-tasking. This is an important issue given the increase in the use of micro-profit centers (MPC) – as part of amoeba management – in Japan (Yoshida et al., 2009). The authors show that there is a positive association between interdependence and the use of profit measures of performance while is negatively associated with the use of profit information in performance evaluation.

The paper by Kawai, Sakaguchi and Shimizu reports on a survey of Japanese manufacturing firms in the early 2000s. According to Okano and Suzuki (2007) the idea of collectivism and close ties between buyers and suppliers may be changing. In this paper, the authors examine the changing buyer-supplier relationships as many Japanese manufacturing firms struggle to remain profitable. This paper shows that firms that do not perceive a benefit from buyer-supplier relationships are changing the way in which they do business – leading to more short-term Western style relationships.

The paper by Yasukata, Yoshida, Yamada and Oura, presents a case study of a target cost management implementation at a shipbuilding firm. Target cost management has been one of the most studied areas by Japanese academics. Most papers, though, have been written post implementation with the aim of showing why target cost management was successful. This study differs in that the researchers were able to follow the implementation of target cost management from its introduction in the firm. They use diffusion theory to show that a lack of control over the implementation was a major cause of failure – shedding new light on the importance of the implementation phase of a new technique.

The final paper in this special issue by Sawanobori uses archival text mining to better understand the changes taking place in nineteenth century British railway accounting. This paper examines a single firm – the London and Birmingham Railway Company – and shows that the difficulties they had in raising adequate funds may have influenced changes in the way they accounted for depreciation. The author argues that this lead to the firm self-financing and broke its dependence on the need to raise funds from the issue of new shares.

5. Concluding remarks

The papers in this special issue have explored various types of management accounting change much of which has not been examined in previous management accounting studies. The papers have shed new light on traditional areas of research such as the implementation of a target cost management system and the changing relationship between buyers and suppliers as well as highlighting new issues around the use of MPC, amoeba management and their influence on performance measures and accounting calculations. We believe that the findings from the papers in this special issue provide new insights into management accounting change in Japan and have raised new issues that warrant future research.

In closing, we would like to thank the Editor of JAOC, Professor Zahirul Hoque for providing us the opportunity to act as joint editors for this special issue. In addition, we would like to thank Paul Andon, David Brown, Suresh Cuganesan, Aldonio Ferreira, Bianca Groen, Julie Harrison, Ralph Kober, Kim Langfield-Smith, Beverley Lord, Habib Mahama, Steve New, Sandy Qu, Paul Shantapriyan, Umesh Sharma, V.G. Sridharan and Ted Watts, for their reviews of the papers submitted.

Chris Akroyd, Yutaka Kato
Guest Editors

Notes

1. Amoeba management is based on a micro-divisional accounting system which distributes management responsibility into small, self-supporting units called amoebas which can help organizations achieve a high degree of flexibility to accommodate ever-changing markets (Inamori, 2012).

2. Rob Chenhall’s visit was generously sponsored by the Melco Foundation who supports the internationalization of Japanese Management Accounting Research (http://melco-foundation.jp/global/#prospectus).

References

Adler, R.W. and Hiromoto, T. (2012), “Amoeba management: lessons from Japan’s Kyocera”, MIT Sloan Management Review, Fall, pp. 83–89
Hiromoto, T. (1988), “Another hidden edge – Japanese management accounting”, Harvard Business Review, Vol. 66 No. 4, pp. 22–26
Howell, R.A. (1989), “Forward” to Japanese Management Accounting, Edited by Monden, Y. and Sakurai, M., Productivity Press, Cambridge, MA, p. xix
Inamori, K. (2012), Amoeba Management: The Dynamic Management System for Rapid Market Response, Productivity Press, Cambridge, MA
Miya, H. (1998), “Micro-profit center system for empowerment: a case study of the Amoeba system at the Kyocera Corporation”, Gakushuin Economic Papers, Vol. 35 No. 2, pp. 105–115
Mouritsen, J., Hansen, A. and Hansen, C.O. (2009), “Short and long translations: management accounting calculations and innovation management”, Accounting, Organizations and Society, Vol. 34 No. 6, pp. 738–754
Okano, H. and Suzuki, T. (2007), “A history of Japanese management accounting”, in Chapman, C.S., Hopwood, A.G. and Shields, M.D. (Eds), Handbook of Management Accounting Research, Vol. 2, Elsevier, Amsterdam, pp. 1119–1137
Wijewardena, H. and De Zoysa, A. (1999), “A comparative analysis of management accounting practices in Australia and Japan: an empirical investigation”, The International Journal of Accounting, Vol. 34 No. 1, pp. 49–70
Yoshida, E., Fukushima, K. and Senoo, T. (2009), “Management accounting in Japanese firms: a descriptive study”, Corporate Accounting, Vol. 61 No. 10, pp. 134–140 (in Japanese)