Organizational lifecycle and strategic management accounting

Abstract

Purpose

This study aims to examine the relationship between organizational lifecycle stages, the adoption of strategic management accounting (SMA) practices and the performance consequences of SMA adoption.

Design/methodology/approach

The analysis is based on survey data from 377 firms operating in German speaking countries.

Findings

The author finds that the firms’ adoption rates of SMA increase from the birth to the revival lifecycle stages and drop at the decline stage. Firms that deviate from the optimal SMA profile have lower performance compared to the firms that do not deviate. The negative performance effect, however, is only significant for firms that have too little SMA practices and is not significant for firms that adopt too much SMA practices.

Research limitations/implications

These results suggest that firms that fail to implement a sufficient level of SMA suitable for their development stage will not develop as fast as their competitors. This study is subject to general limitations of survey research, particularly with respect to the operationalization of the variables, the number of contextual variables in the empirical model and sample coverage.

Practical implications

The implication for managerial practice is that greater efforts should be directed toward eliminating underfit than overfit regarding the implementation of management control systems.

Originality/value

This is the first analysis of the adoption of SMA at different life cycle stages and the consequences of misfitted adoption.

Citation

Pasch, T. (2019), "Organizational lifecycle and strategic management accounting", Journal of Accounting & Organizational Change, Vol. 15 No. 4, pp. 580-604. https://doi.org/10.1108/JAOC-10-2018-0108