Issues in Management Accounting - Assignment Example

Running Head: ISSUES IN MANAGEMENT ACCOUNTING Issues in Management Accounting Word count: 1768 (excluding references) 1. Why Emsley (2005) states that “innovation is generally regarded as an important research topic”. (2 marks) Emsley (2005) states that “innovation is generally regarded as an important research topic” because, based on a source that the same author cited, innovations are thought to make it possible for organisations to effectively adjust to unpredictable business environments and thus survive. Indeed, it has been suggested that the volatile business environment that exists today requires businesses to continually adapt in order to survive and compete effectively (Bixler, 2011). Hence, Bixler (2011) notes that the new business environment that exists requires forethought, conversion and innovation. This is because the business environment is one in which business theories have to be continuously reassessed for their ability to match the needs of the organisation as well as their validity. As well, the Information Resources Management Association (2015) points out that the importance of innovations has well been recognised and different industries, including finance, accounting and banking, are growing by adopting innovative and technological requirements. For instance, through innovation, various organisations in the aforementioned industries can come up with new products, methods of doing things, rules and so forth to attract customers and deliver different types of services. Therefore, it can be argued based on the various accounts given by different authors, that innovation is an area that is significant when it comes to research. This is because as implied by Emsley (2005), doing research on the various areas in which to innovate can help organisations to come up with new products, services or processes that can help them to withstand the challenging business conditions that they (the organisations) face. Carrying out research on the areas in which to innovate can also help organisations to change or adjust the way they operate and thus become more competitive. It is because of the various reasons that innovation can generally regarded as a significant research area as noted by Emsley (2005). 2. Explain why the author is emphasising on the role for Theory development (section 3: page 160). (3 marks) Emsley (2005) is emphasising on the role for theory development because of the role that theory development plays in research. According to Fawcett and Downs (1986), one of the reasons why research is conducted is to search for theory. At the same time, theory development depends on research, and research depends on theory. Therefore, the relationship between research and theory is a dialectic or a transaction in which case theory determines what information is to be collected and the findings of the research offer challenges to known theories (Fawcett & Downs, 1986). It is for this reason that Emsley (2005) developed the theory for the research based on three components. In the first part, Emsley (2005) differentiated innovation research, which he describes as a field that concerns single innovations, from innovativeness studies, which as noted by the author, deal with all forms of innovations. The second part of theory development as outlined by Emsley (2005) treats the role involvement of management accountants as an explanatory factor by tracing the development of the concept through literature on organisational management. In doing this, Emsley (2005) also defines role involvement of management accountants as the degree to which management accountants have a business unit orientation or a functional (accounting) orientation. In the third part of theory development, Emsley (2005) assesses the theoretical linkage that exists between the role involvement of management accountants and the innovativeness of the same accountants. It is based on the analysis of the various aspects of theory development as noted above that Emsley (2005) came up with the hypotheses that were used in the research. A hypothesis is a provisional statement regarding the correlation between two or more variables while a theory is a system of interrelated concepts that are used to give details about a set of observations (Weiten, 2011). By analysing various concepts and theories pertaining to the topic of the research, Emsley (2005) is therefore able to come up with a set of hypotheses that can be tested in the research. Therefore, the role for theory development is important in the context of the research because it is used to develop the hypotheses that are tested in the research. 3. The author in his research is addressing the importance to study innovativeness (page 161). Why is he adopting that approach. (5 marks) Emsley (2005) argues that many studies on innovation in the field of management accounting focus on one innovation as the aspect of study. However, the author decides to take a different approach by focusing on innovativeness as the unit of study. As opposed to innovation studies, which use a single unit as the object of study, the focus on innovativeness looks at the entire scope of innovations that management accountants may come up with (Emsley, 2005). By focusing on innovativeness as the subject of research, Emsley (2005) is able to explore a wide array of issues relating to different kinds of innovations. This is supported by the reasons the author gives as to why it is worthwhile to study innovativeness rather than one innovation. The first reason is that innovativeness provides a better manifestation of the extent to which management accountants are innovating than could be determined by carrying out a study one any one innovation. As Emsley (2005) notes, this approach is suitable in cases where the theory being applied assesses what makes management accountants to innovate in a more general way. The second reason given for studying innovativeness is that although there may be a lot of information available about one innovation such as ABC, this does not mean that ABC represents all other innovations. This implies that each and every innovation may be having its own unique characteristics that need to be studied. More importantly, Emsley (2005) notes that factors that are significant to one innovation may not be significant in regard other innovations. However, as the number of innovations that are researched rises, the effect of explanatory factors that are pertinent to any one innovation reduces, thus making it possible for generalisations to be made more easily. As well, the decision to focus on innovativeness is informed by the notion that innovativeness considers a wide array of innovations that then makes it possible to categorise such innovations (Emsley, 2005). Further, the same author notes that grouping innovations is important due to the reason that it opens up the likelihood that explanatory factors like role involvement influence various innovations in different ways. Therefore, it can be seen that Emsley (2005) is addressing the importance of studying innovativeness because doing so enables the researcher to focus on more than one innovation instead of just a single innovation. As well, this approach enables the researcher to measure more variables and relationships between them than would be the case when studying a single innovation. Therefore, focusing on innovativeness as the subject of research can be said to be increasing the scope of the research as well as the findings of the research. 4. The author in his research suggests that “incentives” have a role to play (section 3.3.3: page 164). Do you agree (Yes/No). What other incentives you believe will be useful. (5 marks) Emsley (2005) suggests that incentives have an effect on management accountant’s role involvement and thus affect the growth of innovations. I agree with this statement. This is because incentives can be defined as a mechanism to inspire employees to innovate or as a strategy to share in the value that is created in an organisation (de Bes & Kotler, 2011), meaning that incentives can motivate management accountants to innovate or to share in the value that is created through their innovations. In other words, incentives have a role to play in terms of their ability to increase the motivation for employees in an organisation to innovate or create an innovation. Davila, Epstein, Shelton, Cagan and Vogel (2014) have reviewed the issue of how incentives inspire motivation and how motivation increases people’s engagement in an activity. The five authors suggest that people engage in an activity because of a number of elements. The first one is the expected incentives that are related to the activity. The second element is the passion that people have about the activity. The third element is the belief that people have that they will be appropriately recognised. The fourth element is having a vision that offers a clear sense of purpose. This means that people are more likely to be inspired to innovate when there are incentives to inspire them, when they have the passion to innovate, when they know that they will be recognised for the innovation, and when there is a clear sense of organisational direction regarding innovations. According to Emsley (2005), incentives include the rewards that are given to management accountants as well as the future prospects that such accountants have. As well, incentives include improved job satisfaction that is associated with greater job enrichment. This means that when management accountants are rewarded for coming up with innovations or are promised better future prospects for their performance, they are likely to innovate even more. Similarly, when the incentives that are given to management accountants are things that enrich their job, this is likely to lead to the accountants having an improved job satisfaction and bigger desire to innovate. As illustrated by Emsley (2005), the incentives that management accountants are likely to get are things that are geared towards the achievement of the goals of the organisation. Other incentives that can be useful in motivating management accountants to come up with innovations include bonuses, reward packages such as paid leaves and holidays, salary increases, performance-based pay (Pritchard & Ashwood, 2008). As well non-monetary rewards such as promotions, recognition and motivation for effective performance can be used to stimulate innovation (Pritchard & Ashwood, 2008). According to Barros and Lazzarini (2012), there are two ways in which incentives can be configured to have an impact on innovation. The first way is to directly reward individuals on the basis of short-term performance. For instance, management accountants can be motivated through the use of profit-sharing schemes whereby the desired results can possibly be provided through efforts to come up with a new way of doing things. Firms can also develop longer-term incentive strategies such as promotion schemes that are done based on individual merit. For example, management accountants can be assured that they will be promoted if they unfailingly come up with new, worthwhile ideas. With such an assurance, individuals are likely to be more willing to undertake innovation efforts (Barros & Lazzarini, 2012). References Barros, H.M., & Lazzarini, S.G. (2012). Do organizational incentives spur innovation? Brazilian Administration Review, 9(3). Retrieved from http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1807-76922012000300005 Bixler, C.H. (2011). Developing a foundation for a successful knowledge manager system. In M. Stankosky (Ed.), Creating the discipline of knowledge management (pp. 51-65). New York: Butterworth-Heinemann. Davila, T., Epstein, M., Shelton, R., Cagan, J., & Vogel, C.M. (2014). How to become innovative. Upper Saddle River, NJ: Pearson Education, Inc. de Bes, F.T., & Kotler, P. (2011). Winning at innovation: The A-to-F model. Basingstoke, Hampshire: Palgrave Macmillan. Emsley, D. (2005). Restructuring the management accounting function: A note on the effect of role involvement on innovativeness. Management Accounting Research, 16(2), 157–177. Retrieved from http://www.sciencedirect.com Fawcett, J., & Downs, F. (1986). The relationship of theory and research. Norwalk, CT: Appleton Century Profits. Information Resources Management Association. (2015). Banking, finance, and accounting: concepts, methodologies, tools, and applications. Hershey, PA: Business Science Reference. Pritchard, R.D., & Ashwood, E.L. (2008). Managing motivation: A manager's guide to diagnosing and improving motivation. New York: Taylor & Francis Group, LLC. Weiten, W. (2011). Psychology: Themes and variations (9th ed.). Belmont, CA: Wadsworth. Read More