Role of Strategic Management Accounting in an Organizational Setting - Assignment Example

Issues in Management Accounting Student’s Name Instructor Institution Course Date Issues in Management Accounting 1.0. Quesition 1: Why the authors investigate the role of strategic management accounting in an organizational setting The thesis statement of the Tillmann and Goddard (2008) is to critically understand current management environment under which organizations operate. The decision to investigate the role strategic management accounting within such setting is therefore manifold. Firstly, Tillmann and Goddard (2008) have been influenced by the need to recognize that survival of organizations in today’s highly competitive global markets depend hugely on the functionalities of the organisational’s management accounting. Therefore if issues of management accounting are elaborated then organizations will be able to allow for assessment of strategic situations. This view has also been supported by Goddard and Assad (2009) who opined that Tillmann and Goddard (2008) took the investigation to understand what strategic management accounting means to organizational actors. Secondly, the authors took the investigative approach within an organization setting to ‘make-sense’ of previous studies that had attempted to review issues of strategic management accounting (Lye et al., 2005). That is, Tillmann and Goddard (2008) sought to clarify complexities inherent in management accounting in practice that had transcended the simple economic decisions making strategies earlier portrayed in most literature materials including books. Thirdly, the reason to investigate strategic management accounting in an organization setting was to make organisations comprehend, from the perspective of participants, ways in which accounting can be used when making sense of complex strategic decisions in such organizations. Unlike previous studies, Tillmann and Goddard (2008) attempt to make-sense---the sensibility is their introduction of the notion that there is need for diverse set of accounting information for any organization to make meaningful decisions affecting their strategic management. 2.0. Question 2: What are the important discussions studied by the authors in the prior literature These authors have been interested in strategic management accounting. Their discussion has been characterized by emphasis on normative research. For instance, McLarney and Chung (2010) noted their contributions on the issues related to competitor accounting and competitive position monitoring. Their decisions and discussions on modern accounting developments with regard to strategic components like activity-based costing are some of the aspects Tillmann and Goddard (2008) have studied in the prior literature. For instance, in their study of ‘Accounting and navigating legitimacy in Tanzanian NGOs ‘,Goddard and Assad (2006) noted that in as much as normative work have been making contributions to strategic management accounting, it has not suffered from any serious drawback to be disconnected from basically what should be taking place in organissations. The authors have also attempted to study the connectedness of strategic management accounting with contingency theory. Their discussions have contributed to the general understanding of strategic management accounting. However, studies such as McLarney and Chung (2010) noted a concern in their studies arguing that their approaches suffered from the common drawbacks of contingency theory in that their variable selections as well as specification were not exclusive as far as different organisations are concerned. More significantly, the prior discussions on the theory helped in streamlining accounting management in organization-based practices but showed little light regarding ways in which strategic management accounting practices can be implemented and used in practices. This view is related to their prior studies on accounting functions. According to their discussions Tillmann and Goddard (2008) previously noted that the accounting is able to collect, both specifically and routinely, information or data regarding the external environment of organisaton’s operations, including information concerning performance and plans of competitors. In most cases, their studies have been centralized on gathering ethnographic materials from different organisations so that they can explore ways in which management accounting in different organization settings can conceive their relationship with processes of strategic formulation as well as ways in which these organisations formulate strategic arguments. In particular, their case studies have been aimed at assessing ways in which companies use strategic management accounting in the formulation of strategies. They found, from these studies that in case the issues are more strategic then less involvement the management accounting functions are realized. In as much as some studies have criticized early studies by Tillmann and Goddard (2008), it has contributed significantly in the development of strategic accounting management, specifically establishing a number of strategic accounting management techniques needed by contemporary organizations. 3.0. Question 3: Adequateness of the Methodology Adopted by the Authors The methodology adopted by Tillmann and Goddard (2008) is two-fold. From the one hand, it critically evaluates the aspect of ‘sense-making’ and strategic accounting management and on the other, it lacks adequacy with regard to previous methodologies such as interpretive methodological or empirical researchers that have attempted to review the issue of strategic management accounting. To begin with, the methodology, as adopted by Tillmann and Goddard (2008) should present an a priori theoretical discussion regarding issues surrounding strategic management accounting. However, the methodological approach by Tillmann and Goddard (2008) lacks this facet. That is, the extent to which the authors use preconceived concepts and prior theories especially grounded theory remains contentious and in their methodological approach, this was kept at minimum making it difficult to find the connectedness between the aspect of ‘sense-making’ and theoretical underpinnings regarding strategic management accounting. The manner in which they have justified their methodology, it is palpable that the most common but important questions concerning strategic management accounting in practice can be ask. First, how their methodology was going to resolve issues in an organisation, particularly assisting in strategic decision making and more importantly, ways in which accounting can be used in organization to help strategic decision making, sensible one for that matter. On the other hand, the methodology is adequate when looked at in terms of ‘sense-making.’ Tillmann and Goddard (2008) attempted, in their methodology to emerge sense-making during the research as the issue at the core of the grounded theory. The methodology shows that indeed the aspect of sense making has only been discussed explicitly in diverse organizational fields but little has been done in accounting literatures. It therefore helps in the conceptualization of the fact that within the context of strategic change, sense making should be concerned with construction as well as reconstruction of meaning by manages or parties involved. Through their methodology, Tillmann and Goddard (2008) help in the interpretation as the process where an organization can translate events, suggest models for understanding, or one which helps in bringing different meaning or assembling conceptual schemes essential for strategic management accounting. The methodology’s adequacy can also be seen in terms of authors’ stress on the significance of sense making by showing that interpretation can be one of the most essential functions organisations perform and that sense making activities should be at the centre of other organisations activities. In summary the methodology critically conceptualizes the authors’ thesis statement, “Strategic management accounting and sense-making in a multinational company” but ought to have provided an extensive overview regarding sense-making as well as suggest that the process of interpretation is a key component of sense making, the latter acting as a higher level of abstraction because as Steinthorsson and Söderholm (2002) earlier noted, there can be cases when organisations can be good when it comes to decision making but still falter because they lack ‘sense making’ in the process. 4.0. Question 4: Grounded Theory and its influence on the direction findings of their research The authors have chosen grounded theory amongst other interpretative approaches for different reasons. It is for this choice that the theory has influenced the direction and findings of their research in three major ways. Firstly, through the theory, the research is able to show how best accountants can interpret the data rather than just reporting it. This is arguably and important aspect of the theory to the direction and findings of the research since it will provide an understanding in strategic management accounting that involves complex human interactions organization setting the research chose. Furthermore, through the theory the research is able to take focus on a given research design and methodology owing to the fact that the study was attempting to take a case study on an organization whose realities were multifaceted and there seemed to be lack of prior theory to explain what had existed in that particular set of circumstance. Thirdly, looking at the research questions of the study, it is worth noting that the theory has particularly helped in ensuring that any theoretical constructs that may arise out of their research can only be based on the values and understanding that different economic actors underlie accounting, economic and financial theory. In summary, it is for this reason that the research, through the theory, concluded that management accounting systems can help in achieving alignment between strategy and strategic investment decisions. References Goddard A. and Assad M.J., (2006), ‘Accounting and navigating legitimacy in Tanzanian NGOs ‘, Accounting, Auditing & Accountability Journal, Vol 19, Issue: 3, pp 377 – 404. Lye, J., Perera, H., Rahman A.,(2005), ‘ The evolution of accruals-based Crown (government) financial statements in New Zealand ‘, Accounting, Auditing & Accountability Journal, Vol. 18, No. 6, pp. 784-815. McLarney, C. and Chung, E. (2010), What happened is prologue: creative divergence and corporate culture fabrication, Management Decision, Vol. 38, No. 6, pp. 410-419. Steinthorsson, R.S. and Söderholm, A. (2002), Strategic management as multi-contextual sensemaking in intermediate organisations, Scandinavian Journal of Management, Vol. 18, No. 2, pp. 233-248. Tillmann, K., & Goddard, A. (2008). Strategic management accounting and sense-making in a multinational company. Management Accounting Research, 19(1), 80-102. Retrieved from http://www.sciencedirect.com Read More