FACTORS THAT INFLUENCED THE CHANGE IN MANAGEMENT ACCOUNTING  part 3 1000w

Burns (1999) suggest that many organisations have routines in place and new changes introduced will lead to the change of the nature of the organisation. In the early 1980s a project, called the Production Cost Control Project was set up to improve the flow of acc info in Omega Plc. The project had failed because the operating managers saw the business in terms of producing-based meanings and routines. The divisional accountants viewed the business as financial term and regarded PCCP as a means of introducing accounting-based routines.

Sulaiman and Mitchell (2005) carried out study on management accounting change in Malaysian manufacturing companies. After gathering all information a four types of change had occurred. The two types occurred due to new technique introduction and two concerned existing management accounting modification. The research found that management accountant classified the level of management accounting change into five generalised components.

3.3 Institutional theory

3.3.1 Institution

Institutional theory is a theoretical framework that became more relevant in research of management accounting change. In accepting this theory there is no universally agreed definition of an institution. Scott (1995) describes “instutions are social structures that have attained a high degree of resilience” Burns and Scapens (19990 defined institution as a way of action of commonness which is surrounded in the habits of a group of people.

3.3.2 Institutional framework as a rules and routines concept

Development of the framework began by looking at the way in which order is achieved through rules and routines. The framework perceive management accounting to be a rules and routines constituted by established habits. (Kim Soin, 2002). Hodgson (1993) defined habits as ‘self-actualizing dispositions or tendencies to engage in previously adopted form of action’. Habit is a personal action where routines involve group of people as components of institution. Routines play an important role in an organisation in which management accounting was viewed as a rule concept where management accountant performed routine tasks. Rules may be became implemented through the establishment of routines and vice versa. Therefore the reproduction of roles and routine will persist over time and the routines of management accountants may be changed. The process of change may develop new routines which over time could be institutionalised.

In the organisation routines can be adapted very quickly over the time. Human behaviour in the organisation is based on repeating actions to comply with rules and routines as they provide an organisational memory and represent the basis for the development of the behaviour (Kim Soin, 2002). Guerreiro, R at al (2006) used habit, routines and institutions to illustrate how accounting practices can turn from habit to institutions through routines. They concluded that ‘all institutions are structured on the basis of take-for-granted habits and routines’, succeed during a certain period and are realised in a form of normative rules.

3.3.3 ‘Taken for granted’

According to Scapens (2006) organisations react more slowly to changes than individuals as they removed form every day activities in some way. He observed that over time, management accounting can contain a structure that shows the way organisations thinking and acting – which is widely taken for granted. Management accountants were viewed as routine features in the organisation and they simply taken for granted as the way things are.

Some researches of institutionalism criticised the framework as it overplays its emphasis on constancy at the expense of focusing on institutional change. Quattrone and Hopper (2001) explained how management accounting can be influenced by an organisation or by individuals. Individualism argues that an organisation changes when individual actions modify the organisation. They introduced the concept of ‘drift’ for constructions of accounting change. The authors replaced the word ‘change’ with world ‘drift’. Quattrone and Hopper (2001) choose drift as to represent accounting change as “incomplete attempts at organising” and emphasise that human elements that situate accounting change is not a harbour to the change. They argued that accounting change was also promoted by technical and inscribed elements.

In a recent study of change in management accounting Busco at all (2007) organised the notion of change within key dimensions. The key dimensions were evaluated in terms of the ratio and forms of change as well as evaluation over space and time of change. They carried out a case study to investigate those key dimensions in the Middle-East Gas and Oil Company (MEGOC) as a large corporation operating in the oil and gas industry. They found that change can only happen due to incompleteness that exists within an organisation. Busco at all (2007) concluded that ‘management accounting change is a theoretical space which, possibly more than many others in management and organizational studies, intersects and interacts with the broader knowledge area of the social sciences, sociology and philosophy of knowledge and science and technology studies’

Chapter 4

4.1 Management accountant as hybrid accountant

The term hybrid accountant emerged in the literature from around 1995 as its role was focused on product stream. Burns and Baldvinsdottir (2005) studied a concept of new role of management accountant as ‘hybrid accountant’ by examining a multinational pharmaceutical company in the manufacturing division. Their study found that the number of hybrid accountants increase with development of team relationship building while routine accounting role disappearing. Two types of hybrid accountant were found from their study: finance manager and finance analyst were the finance manager was involved in strategic issues and the finance analyst was involved with day to day activities. According to Miller et al (2007) hybrid is defined as “new phenomena produced out of two or more elements normally found separately”. The discussion in the literature around ‘hybrid accountant’ has developed in ‘business partner’ direction.

4.2 Business partner role

It has been noted in the literature that management accountant have become more and more involved in business processes (Sathe, 1982, Keating and Joblonsky) and have demonstrated a strong business understanding (Feeney, 2007, Burns at all, 1999). Hopper (1980) found that principal task of accountants was to act in a service role rather than a bookkeeper. He found that majority described their lore as the