Management Accounting Innovation Research Paper Sample

Innovation Accounting

The concept of innovation should be engaged in all managerial spheres, including accounting. In this respect, Esmley (2005) has introduced the research study in which the scholar mentions the evident benefit of introducing innovativeness into management accounting. Due to the fact that management accountants are being criticized for their inability to promote innovation, there should be tangible advances in the sphere of innovation including balanced scorecard and ABC. Specifically, the researcher explains,
“to more closely meet the changing information needs of business unit managers, there have been calls for management accountants to spend less time working within the accounting functions and the more time working in business unit with the users of management accounting information.” (Emsley, 2005, p. 158)

Therefore, the introduction of the literature review can raise the possibility for changing roles and functions of management accountants through the introduction of new innovative approaches. The development of the theoretical framework is aimed at explaining why management accountants, who are more business-unit oriented, do not introduce innovations, or are more radical, as compared with managers with functional orientation.

The literature review on accounting innovation has been presented with regard to the role of management accountants in shaping innovations. The overview of articles could also serve as an explanation why new management accounting innovation is relatively low implemented. They also argued that high profile individuals have fostered the supply of management accounting. Therefore, the demand-orientation shows that innovation develops in a rational manner. In order to understand the innovative trends in management accounting, the author has resorted to the analysis of different levels, which touch on departmental, individual, and organizational activities of management accounting. The explanatory variables could be revealed through the elaboration of a theory development framework, which defines innovation research. This framework also determines the role of management accountant engagement into explanatory variable by introducing the development of management and organizational accounting literature, and defining it as the extent to which accounting has either a functional or business unit orientation. The third part of the section focuses on the relationship between accountant’s functions and innovativeness. At this point, the development of the theory section focuses on the dependent variable, such as innovation and role involvement, as an independent or explanatory variable. Further deliberations refer to the role of involvement and knowledge in innovation, as well as how the latter is promoted by business units. The importance of introducing a theoretical framework can provide a systematic analysis of the proposed goals. Some of the research studies may be explored to understand how the role involvement can contribute to business management, as well as how innovation can be promoted with the help of motivation and incentive creation.

Business unit managers should be working on creating an organizational culture. Therefore, they should also create a powerful vision and mission statement that would stimulate and motivate workers to accomplish their duties and functions in a more effective way. The task of business unit managers is to provide a new ideological framework in which workers perceive innovativeness not only as a technologically-mediated phenomenon, but also as a new conception of management. Thus, it is highly important to argue that acceptance by business unit management, along with the incentives to innovation, should be considered to be the major features of role involvement innovation.

The concerns about innovation should be explored to persuade the employees that business models can introduce helpful and competitive strategies. The concept of innovation should relate to the development of new strategic framework and business model through the example of other workers, including management accountants. It should also adjust their experience and skills in order for them to become more open-minded and innovative. In this respect, Chesbrough (2007) has focused on the new conception of innovation, which is based not on technology, but on open innovation and advancement. There are practical implications and potential for developing new managerial plans in decision making.

There is a growing tendency in promoting innovation in business models and strategies to provide a competitive advantage over other companies. Therefore, companies should work on new ideas and technological innovation by introducing advanced business models. Such organizations can make significant investments for exploring progressive ideas and creating new technologies. At this point, Chesbrough (2010) discusses the importance of integrating new business models that can alleviate the possible barriers. According to the author, the experimentation and successful leadership should be introduced to reduce the risk of barriers. Some of the examples of business models are aimed at underlining the importance of motivating managers and their subordinates to overcome those challenges.

When it comes to management innovation, management accountants should pay attention to modern techniques in calculation. Specifically, accounting calculations seem to be more persuasive in innovation promotion rather than other advances in technologies initiated by the company. In this respect, Mouritsen, Hansen, and Hansen (2009) have focused on the importance of calculation, which either extends or reduces the innovativeness level through a single calculation. For instance, long translation innovative activities should be performed via multiple calculations. Finally, when calculations contradict each other, they should focus on the nature of innovation in terms of time and space. The examples show that calculations trigger alternative propositions on the appropriateness of technological innovation and its relation to sourcing and innovation strategies. Mouritsen (2009) assumes that the tension between different types of calculations underscores the importance of innovation for strategic framework of an organization. In this respect, innovation should touch on every sphere of strategic management, including management accounting, because calculations in this field are partial, but not general.

In order to understand the power of innovativeness in management accounting, the emphasis should be placed on the knowledge that accountants generate. Specifically, Lambert and Pezet (2011) focus on the new roles of management accountants as the producers of knowledge in a company. The analysis of accounting practices should be associated with knowledge that becomes the generator of truthful knowledge. The case presented in the research study relates to the automobile equipment procedure where management accountants have the leading functions and roles. The major roles they perform are revealed through the participation in online auctions, in which they are committed to the company’s long-term projects. The commitment is an integral part of knowledge expansion and organizational truth. Simultaneously, the validity of the knowledge can be assessed in the course of time. According to Lambert and Pezet (2011), the performance review meeting focuses on the truthfulness of knowledge produced by the accountants and examines the way they sustain successful organizational activities. These preparations are based on the subjective attitudes, which are practiced by management accountants, although they still have to render truthful knowledge. Management accountants, in general, are important contributors to the company’s reputation enhancement. Therefore, their aspiration for innovation should be constantly encouraged for them to continue producing truthful knowledge.

The fact that business unit manager has a potent impact on the productivity of management accountants is undeniable. Currently, the role of accountant as a profession should be underscored because their managerial functions have become prominent in various spheres. Such a shift is explained by a growing tendency of decentralization in various companies, leading to the greater responsibilities and roles imposed on different departments. As such, Armstrong (2014) explains, “in the management accounting context, ‘conformist innovation’ implies the adaptation of personnel practice to the requirements of control and reporting systems, whereas ‘deviant innovation’ involves some form of challenge to the accounting frame of reference itself.” (p. 158). The provision of hard information for management accounting systems consumption is a sort of conformist innovation. This activity is justified in terms of costs, as well as possible development of human asset accounting.

In the studies, Emsley (2005) explains, “innovations initiated by management accountants with a business unit orientation are more likely to be accepted because they can reduce business unit managers’ perceived uncertainty about the benefits of innovation” (p. 163). The perceived uncertainty tends to be high because these innovations are of administrative origin, whose benefits are difficult to observe in order to relate them to technical innovation. Such an assumption is justified because company’s reputation and performance will largely depend on the extent to which managers recognize innovation and how they encourage their subordinates to practice it. At the same time, in case a business unit manager ignores the financial dimension of his organizational performance, there is a threat that the company will not facilitate other essential processes. Hence, it is rather favorable to recognize the benefits promoted by the acceptance of a business unit manager.

While deliberating on the purposefulness of creating the incentives for innovation, one should not provide additional evidence because rewards system consists of well-checked approaches to increasing job satisfaction and performance. As soon as accountants become more motivated and rewarded, there are high chances that they will gain more stimuli for further improvement of the accounting techniques and introduction of innovation related to them. Therefore, the achievement of functional goals, such as control of cash flows and other financial operations, could be more motivating than business unit goals. As a result, there are few incentives for promoting innovation because management accounts are engaged in pure adherence to the accounting goals. For this reason, integrating accounting perspectives into business administration could be more motivating.

The methodological approaches chosen by Emsley (2005) are sophisticated since they involve both theoretical and practical approach. Most of the approaches are concentrated on the quantitative data analysis based on surveys, interviews, and questionnaires. In order to conduct surveys and questionnaires, the sampling procedures have been carried out to choose the respondents from various spheres. The managerial practices could be assessed by the presence of specific measures, including traditional accounting practices, such as budgeting, versus contemporary practices, such as balanced score-cared. The working practices have also been analyzed. The presence of a blank space is a good option because it can provide more information on other novelties in accounting sphere. The use of interviews is also a good option because it allows the managers to interpret the information and provide personal outlook on respondent’s statements and perceptions. The course of conducting interviews should be associated with the problem of management accounting practices, which means that all the respondents should be primarily acquainted with the list of accounting activities before they are introduced to the interview question. In such a way, it will be possible to understand what further questions and stages could be admitted. Listening to the respondents’ reactions and perceptions is also a good idea because it introduces new innovation schemes, which should be used for further analysis of radical and non-radical innovations. The role involvement of the management has to be properly mastered as well. However, it could have also been based on the analysis of questionnaire. The role involvement is focused on several questions that have been reduced from the existing eight questions. The choice of a Likert scale is also relevant for the quantitative part of the research.

If the assessment of the role involvement of accountants is logical, the analysis of the perceived environmental uncertainty is not understandable; neither is the randomizing sample approach, which has been chosen for the research study. Therefore, this point seems to be redundant in the methodological part because the author does not provide sufficient rational for its introduction.

The second part, which involves data analysis and results, introduces quantitative data predominantly to test the hypothesis. However, there is no logical explanation how literature review has been used to contribute to the reliability of the study. The data analysis principally refers to such types of innovation as total, radical, and non-radical. There is also a complication concerning perceived environment uncertainty, which does not contribute to the validity of the research. The proposed hypotheses introduce a solid base for further methodological analysis, as well as for the development of new schemes.

It should be stressed that the methodological structure of the section is not clear. The author fails to introduce the systematic activities, as well as provide explanations regarding the choice of methodology. Specifically, it is not comprehensible whether the methodology is quantitative or qualitative. As a result, the explanation for the proposed variables is not congruent with the theoretical framework presented in the literature review section. Nonetheless, the choice of the variables in the methodological part is almost relevant. The hypotheses have been tested by means of the regression equation (Partington, 2002). It would be better if the scholar had introduced the qualitative part because the interviews could be analyzed with regard to the respondents’ perceptions and attitudes toward innovation. However, these perceptions are not properly synthesized into the data analysis. There are also other opportunities for improving the accuracy and consistency of research. In particular, the use of theoretical section should have been more congruent with the methodological part to increase the logics of the paper and remove the limitations.

The use of quantitative research is sometimes problematic because of the excess of information to be synthesized. According to Major and Savin-Baden (2012), “research should be brought closer to those who are in decision-making roles and further that research should come before an intervention or change in practice or policy” (p. 7). Therefore, the author could provide a less informative method. The variety of polls, surveys and questionnaires makes it difficult for the audience to grasp the major idea and understand how the hypothesis is tested. Certainly, the use of traditional literature review is not as effective as the use of empirical and statistical data. Such reviews are also criticized for lack of subjectivity, precision, and findings. At the same time, the use of objective assumption is also essential because it serves a solid ground for managing different factors. Specifically, the fact that Emsley (2005) has included the theory framework is beneficial because it provides an extensive background of how innovativeness could be measured and how it relates to management accounting. Therefore, the synthesis of both theoretical and practical parts is a good position of the author.

The use of mixed-method approach is supported in multiple research studies. In particular, Modell (2009) has resorted to the mixed method research in management accounting to define that the methodological choice contributes to the synthesis of qualitative and quantitative data. The notion of triangulation was introduced in an effort to analyze variations in empirical observations, as well as in grounded theories, which, in combination, provide a foundation for increasing the researchers’ sensitivity to contextual variation that helps the scholars to develop theory-based explanation. The opportunities of employing a modified notion of triangulation in accounting research are described through the review of several empirical studies between interpretive and functionalist paradigms.

The research in accounting is predominantly based on a mixed method review, but the attention is still paid to the analysis of other approaches related to the methodological part. As such, Graham, Ready, and Shackelford (2012) have provided a comprehensive review of the accounting trends in taxations. The identification of accounting for income taxes could be introduced in detail to emphasize the research questions and promote new areas in warrant future analysis. Although the paper is premised on qualitative approaches, which makes it less reliable due to the absence of subjectivity, it could still be used in quantitative analysis. The analysts’ forecasts have been used, but they relate to other scientific resources, not involving the empirical research. Nonetheless, the study could be a potential contribution to the accounting research because it provides a theoretical foundation and scientific implication for future investigations in this sphere. The analysis of the approach could be used to elucidate how it can be explored in the sphere of management accounting and innovation. More importantly, the concept of innovation could be better analyzed and synthesized in case it is based on the additional research from the reviewed literature.

In general, the article provides a unique vision on the management accounting from the perspective of innovation. What is more important, it also introduces a new understanding of innovation, which does not only relate to technological progress. Specifically, it can also be associated with efficient techniques and contemporary financial operations, such as balanced score-card. Therefore, such an analysis could be helpful to deliver new methodological and scientific discoveries.