Handbook of Management Accounting Research, Volume. 2

Citation

Bates, K. (2009), "Handbook of Management Accounting Research, Volume. 2", Journal of Accounting & Organizational Change, Vol. 5 No. 3, pp. 430-433. https://doi.org/10.1108/18325910910987034

The stated aim of the two volumes of Handbook of Management Accounting Research is to satisfy an interest in “the state of systematic knowledge in the field of management accounting (MA) and in the research processes that develops this knowledge.” (Preface). Vol. 1 of the handbook provides a substantive review of MA literature and then reviewed research on MA practices, highlighting how researchers have utilised a wide variety of different theoretical perspectives and drawn on many alternative disciplines to broaden our understanding of MA practices. Volume 1 also reviews the many different research methods used in MA research as detailed in the other review in this issue.

The subject of this review, Vol. 2 of the handbook, concentrates on MA practices and first provides expert insights into research on different costing practices and on practices relating to organisational planning and control. Its second section delves into the design and functioning of MA in the specific contexts of manufacturing and health care organisations, and considers research issues relating to MA in interorganizational contexts. The final section reviews how MA research varies around the world.

The first four chapters review research into costing practices. In Chapter 1, Anderson provides a thorough review of research into strategic cost management and develops a schematic model that relates strategic cost management to strategy development and performance evaluation. He reviews research in a variety of management fields and concludes that MA researchers are uniquely qualified to create a body of strategic cost management knowledge that unifies structural and executional cost management. Chapter 2 (Ansari, Bell, and Okano) provides a review and analysis of the last ten years of target costing literature produced in both English and Japanese, using the lifecycle of management practice as a framework. The authors conclude by highlighting gaps in existing knowledge and potential new research topics, and areas that may benefit from replication, corroboration and further testing. Chapters 3 and 4 are closely related. In Chapter 3, Banker and Johnson consider research on the relationships between costs, customer value, revenues and profitability, and highlight the problems involved in reconciling the oversimplified cost and profit driver models normally taught with the models that should be used in practice to aid long‐term strategic decision making. Chapter 4 (Christensen and Hemmer) considers the analytical modelling of costs, in particular the challenges of constructing models incorporating uncertainty and strategic behaviour.

Moving into the area of management control systems (MCS), in Chapter 5, Cools and Emmanuel offer a refreshingly alternative view on the problem of international transfer pricing. They shift the focus from the conflict between economic optimisation and appropriate performance measurement of sub‐units and optimisation of global after‐tax profit to a focus on the implications of adopting a tax‐compliant strategy on the design of MCS. In Chapter 6, Covaleski Evans, Luft and Shields consider the extensive research literature on budgeting and highlight the similarities and differences of research from the three different theoretical perspectives of economics, psychology and sociology. They also identify four interrelated criteria for selective integrated research and provide an example of using these criteria for research on participative budgeting. Chapter 7 (Dechow, Granlund and Mauritsen) considers the relationship between information technology, information systems and management control and highlights that information technology is not only a resource for MA to draw on but is also a challenge to be grappled with as expected control benefits often only materialise after long implementation barriers have been overcome. Chapter 8 (Gosselin) reviews, the evolution of activity‐based costing (ABC) from its inception right up to the recent development of “time driven ABC.” The author suggests research opportunities on ABC, including the need to identify why, given the claims that ABC is one of the most important MA innovations in the twentieth century, many firms have not implemented ABC and why some that have adopted ABC have subsequently abandoned it. In Chapter 9, Göx and Schiller review recent literature on transfer pricing and provide a number of different explanations for the wide variety of transfer pricing models used in practice. Not surprisingly, the authors confirm that it is impossible to identify “the” best transfer pricing method and call for more research to identify the economic reasons for decentralisation and to develop a sufficient theory of decentralisation.

Moving on to long‐term decision making, Chapter 10 (Haka) provides a comprehensive review of the past and present of capital budgeting and investment appraisal. After providing a very detailed history of developments in the area and the results of a variety of different types of research studies, she highlight the “issues” identified by academic research and poses a set of questions that are yet to be answered.

The next three chapters return to issues relating to MCS. Chapter 11 (Hansen and Mauritsen) looks at how MA design and practices have been influenced by the various recent developments in operations management, such as just‐in‐time, total quality management and automation. Despite some claims in the operations management literature that MA differentiates rather than integrates, and hence integrated manufacture is better off without MA, the authors do observe significant change and conclude that MA still plays a significant role in terms of managing integrated manufacturing systems. They do however call for more research on the interface between operations management and MA in order to clarify MA's role. In Chapter 12, Langfield‐Smithis provides a detailed review and critique of quantitative research on the relationship between MCS and strategy. In many areas, the research evidence is fragmented and contradictory, partly due to differences in research design, but in some areas consistent patterns emerge, for example in the areas of performance evaluation and reward systems. The author concludes that further research is required to develop consistent definitions of control and strategy and that many research opportunities and unresolved questions remain. In Chapter 13, Merchant and Otley provide a literature review of control and accountability, highlighting the research methods used to advance knowledge in the MCS field. They review literature that takes a holistic view of the overall process of accountability in contrast to other chapters in the volume that have focussed on a particular control technique.

Chapters 14‐17 provide a section on the design and functioning of MA in specific contexts. There is no attempt to cover all sectors but Chapter 14 (Abernethy, Chua, Grafton and Mahama) highlights how the design and implementation of MCS in health care organisations faces as many challenges, if not more, than other industries. The chapter reviews insights into MCS in health care organisations from both behavioural/organisational and sociological/critical perspectives and then integrates these literatures to demonstrate how a cross‐paradigmatic stance may enhance our understanding of accounting in health care organisations. In contrast, Chapter 15 (Davila and Wouters) analyzes the empirical research literature on MA in the manufacturing sector, focussing on both the development and the manufacturing stages of the product lifecycle. The authors find that the move towards modern manufacturing methods and related forms of new product development have put new demands on MA information requiring, inter alia, new cost allocation methods, more non‐financial measures, valuation of intangible benefits, cost of quality measurement and lifecycle costing. Hence, many new research opportunities are emerging. Chapter 16 (Eldenburg and Krishnan) returns to MA in a health care setting, but in contrast to Chapter 14 concentrates on research based on economic theory in three main perspectives: production cost economics, agency theory, and industrial economics. Additional areas of research are identified, including the role of technology in altering production functions and information, outsourcing and its implications for accounting and public policy changes and their implications for accounting. Chapter 17 (Håkansson and Lind) reviews the interorganizational accounting literature and investigates how the emphasis on intensive and long‐term relationships are associated with interorganizational accounting practices, such as open book accounting, target costing, interorganizational cost management, value‐chain accounting, integrated information systems, total cost of ownership and qualitative, non‐financial, and information control mechanisms. The authors conclude that this area will grow in importance and that there is considerable potential to develop a more efficient and effective industrial structure if companies learn to take better advantage of each other.

The final section of the book looks at MA around the world. In Chapter 18, Carmona supplies a history of MA in France, Italy, Portugal, and Spain that highlights how social and political contexts overwhelmingly influenced cost and management practices in these countries. Chapter 19 (Chow, Duh and Xiao) surveys MA and control practices in China and the factors that affect their adoption. Chapter 20 (Boyns and Edwards) surveys the history of cost and management accounting (C/MA) in Britain from medieval times up to 1970 and starts with a discussion of the “right way” to study accounting history. The authors also discuss the changing relationship over time between C/MA theory and practice. Chapter 21 (Ewert and Wagenhofer) covers the state of MA theory in German‐speaking countries, concentrates on innovations that are specifically “German” and not widely recognised elsewhere and discusses their potential contribution to theory and practice. In Chapter 22, Fleischman and Tyson chart the history of MA in the US from 1800 to 1970 and conclude with their analysis of certain components of MA's conventional wisdom as of 1970 and their view of future directions. Chapter 23 (Näsi and Rohde) traces the historical development of the dominant theories and practices of C/MA in Nordic countries during the twentieth century. In Chapter 24, Okano and Suzuki examine the evolution of Japanese MA from the mid‐nineteenth century to the year 2000 and, from a historical perspective, address questions such as: what is Japanese MA? Where does it come from? Are there any defining characteristics that make it “Japanese,” which enhance Japanese companies' international competitiveness? Is Japanese MA particularly socially and culturally determined?

The Handbook of Management Accounting Research, Vol. 2 is an excellent collection of detailed papers, each one covering specific aspects of the practice of MA in considerable depth. The volume contains extensive literature reviews by recognised experts in many key areas of MA and each paper provides a stimulating agenda for possible further research. This text complements Volume 1 as the various papers utilise a variety of different theoretical perspectives and themselves draw on alternative disciplines to broaden our understanding of MA practices. The volume is an excellent resource and will be of benefit to all MA researchers regardless of their stage of development.