The Role of Management Accounting as an Influential Force in Modern Organizations - Essay Example

Management Accounting Innovation Name Professor Institution Course Date Management accounting innovation Management accounting has been changing over time, and continues to evolve as an organizational innovation. As depicted in practice and literature, organization’s abilities to be innovative has become the main stay of maintaining competitive advantage. Innovativeness is related to the globalization of business operations both as a result and as a driving force. Equally, management accounting (MA) has continued to receive attention in literature, especially with regard to its role in change management and strategic management and decision making (Crosson & Needles, 2011). This paper attempts to delineate the role of MA and accountants as an influential force in modern organizations. Why Management Accounting Innovation is one of the core themes driving modern organizations Modern organizations are now banking on innovation as the main stay of staying competitive in highly changing business environments. As such, it is required that all business activities and factors be innovative. This innovativeness has to do with the access to and use of information for strategic decisions. Global competition inspires continuous competition. Management accounting is a central theme with an ability to drive innovations in any organization. Firstly, management actions generally flow by a four-stage process: planning, performance, evaluation, and communication, in a cycle of events (Crosson & Needles, 2011). Management account has an active role in each level given the need for managers to make strategic business decisions. As such, the contemporary management accountant performs more than the traditional accounting works and assists managers in each of the planning process (Lal & Srivastava, 2009). MA is not just a managerial function; it is central to management give its involvement in setting and pursuing strategic, tactical and operating objectives (Crosson & Needles, 2011). In the collaborative role, some modern organizations refer to the role of MA as being a controller so that the chief management accountant sits in highest organizational meets and reports directly to executive officers (Albrecht et al., 2011). As such, MA has a hand in the type of management information created and in how the information is used. Globalization influences a shift towards an international platform and standards for competition. The replacement of the International Financial Reporting Standards (IFRS) by the International Accounting Standards Board (IASB) represents a shift to enhance the former. With respect to MA, this shift strengthens internationalization of business processes by creating performance measures and standards that are consistent. This consistency is party to improved international partnering and growth that characterizes modern organizations. In addition, the ability of an organization to establish unique MA systems and processes has become a competitive platform (Albrecht et al., 2011). Has the role of management accountants been adequate in driving innovation? The modern organization management accountant plays two roles: bean counter and business partner (Vaivio & Kokko, 2006). These roles can be conflicting or complementary depending on the organization’s ability in establishing unique systems. In each of the aforementioned, a management accountant’s role in organizational innovation is in providing managers with relevant informational resources (Milova, 2011). This goes beyond changes to accounting techniques where beans are counted differently. It involves overall work practices changes. In evaluating the success of MA in driving innovation it is vital to make reference to the nature of change, its rationale, and the orientation of change flow in which change can be driven either by local change agents or the overall management. In view of the question, this paper is affirmative that management accountants have been instrumental as change agents. However, in the onset, it is vital to note that they have not optimally done it citing the need for more action. Their influence in organizational change is based on the capacity of the management function to subject business activities to economic calculability and visibility. This is a constructivist perspective based on the tenets of the ability of management accountants to interfere with existing organizational economic domain, simultaneously introducing economic importance to business activities (Messner & Becker, 2006; Vaivio & Kokko, 2006). The change agency has been based on excellence in subjecting organizational activities to calculative logic from which the accountant have enshrined into them the economic sphere thereby drawing influence margins into the organization. The accountants’ transfer of calculability logic into visible elements has contributed to organizational perspectives over what is good or bad and thereby act as a key informer for sanctions and permits. According to Baxter & Chua (2003), such an authority and ability to drive change requires a shift on management’s perspective of MA from just the basic economic one to its role in organizational politics and processes. Crosson & Needles (2011) presents this reality by a focus on well known international business leader such as Wal-Mart Stores, Inc. and McDonalds in which management accounting is central to all strategic decision making process. The manager of these organizations use MA information to decide on market entry, supply chains, pricing strategies and marketing. This is a more participative role of the change agent, which is a described as being a paradigmatic shift. This is demonstrated in (Malagueno & Bisbe, 2010) who have cited the success of management accountants in the use of interactive systems in medium and large-sized organizations. Role involvement is expected to affect innovativeness in terms of knowledge about the appropriateness of innovations Role involvement for the MA is a crucial aspect in diverse concepts of the of organizations. Many researches reflects on this truth. According to Emsley (2005), role involvement and innavativeness are intrinsically connected, with regards to management accountants. Consequently, role involvemnet is expected to to affect innovativeness in terms of knowledge about the appropriateness of innovationsin different ways. To begin with, the management accountant are faced by the need of awareness of an innovation as well as comprehending its being desired by the business unit manger’s needs. In respect to this, as the management accountants work hand in hand with the business unit managers in role involvemnets, they become more familiar with the desion making trends of the unit managers and understand the crucial underlying information associated with the said decisions and eventually, they are better positioned in deciding on the appropriate innovations for producing the information entailed. Role involvement is expected to affect innovativeness in terms of acceptance of the innovations by business unit managers In role involvemnet, the management accountants have a chance of reducing the uncertaints exisiting between him and the unit manager, which in return favor the acceptance of their initiated innovations. Since the unit role involvement enables the unit manager to trust the management accounting, he shortcuts the process involved in innovations decision making and intiation. On pursuing this possibility further, Emsley (2005) posits that the underlying attitude for which te relationship between the unit manager and the management accounting have in role involvemnet is that of “one of us but different to us” as opposed to that of “one of them ” in the cases where the two parties are not involvelved in carrying out the roles of the organization. the impact of this kind of relationship is greater faith development which eventually work in favor of innovation. Therefore, role involvement enhances the acceptance of innovation between the different parties in mamnagement, thereby favoring it.  Role involvement is expected to affect innovativeness in terms of incentives to innovate More often than not, incentives are associated with enhancement of job satisfacion and subsequent greater job enrichmnet. Since most of the incentive comes from the management accountant’s superior, when such a mangement accountant is in line witht the business orientation as it is with role involvement, the incentives he initiates are more likely to be geaared towards achievement of business unit goals. The management accountant will therefore aim to produce informatio geared towards attainment of the required goals, which will reduce the conventions of functional accounting constraints. At the same time, incentives work in favor of innovations as opposed to the existing practices, and this can be of significant advantage to the business. How the Management Accountants can accelerate the innovation within an organization A close analysis of the article by Emsely (2005), shows that the management accounts have the duty and ability to ensure relatively speedy innovations within their organizations. This is brought about by the foregoing examination of the various ways in which they affect innovatiness within their organizations. Inorder for management accountatnts to accelerate the organization based innovation, they need to be knowledged about the apppropriateness of the innovations. This they can do by being more radicleand exhibit their knowledge about the information of the organization necessary for innovation to the unit managers, who in return will favor their motive of innovations. Similarly, the management accountants can accelerate innovations in their organization involving themselves and their subjects in the pursuit of the acceptance of the innovations by the unit mangers. In this effort, the management accountantshave to ork towards attaining the trust of the unit managers, so that there can be less resistance to the innovation. The management accountants will can also accelerate the innovations through instilling a competitve sytem of incentives to innovations for the organization employees. In conclusion, it is important for the management accountants to be involved in the roles within the organization. this will haelp the to gain the trust of the unit management, and also being at-per with the information of innovation within the organization. by being ivolved in the roles of the organizations,the management accountants can identify the various needs of the organization and can accelerate those innovations for the benefit of the organization. References Albrecht, W. (2011). Accounting, concepts & applications : what, why, how of accounting. Mason: Cengage. Baxter, J., & Chua, W. (2003). Alternative management accounting research - whence and whither. Accounting, Organizations and Society, 28 (2-3), 97-126. Crosson, S., & Needles, B. (2011). Managerial accounting. Mason: Cengage . Emsley, D. (2005). Restructuring the management accounting function: A note on the effect of role involvement on innovativeness. Management Accounting Research, 16(2005), 157- 177. Retrieved from http://linkinghub.elsevier.com/retrieve/pii/S1044500505000181 Lal, J., & Srivastava, S. (2009). Cost accounting . New Delhi: Tata McGraw-Hill. Malagueno, R., & Bisbe, J. (2010). The Role of Management Accounting and Control Systems as Antecedent of Organizational Creativity and Innovation Competencies. Madrid : University of Ramon Llull. Messner, M., & Becker, A. (2006). Management accountants as 'change agents': Revisiting agency in management accounting research. EEA's Doctoral Colloquium (pp. 1-155). Dublin: HEC School of management. Milova, Y. (2011). Organizations’ receptiveness to management accounting innovations: the Beyond Budgeting Case- A study on the characteristics of the Beyond Budgeting Roundtable organizations . Bergen : Institute for research in economics and business administration. Vaivio, J., & Kokko, T. (2006). Counting Big: Re-examining the Concept of the Bean Counter Controller. The Finish Journal of Business Economics, 1, 49-74. Read More