The Role of Management Accountants - Assignment Example

Management accounting Name of the student Name of the tutor Name of institution 1. Describe the important elements discussed by Emsley (2005) in the Introduction section of his article. (4 marks) In his writing, the author suggests that management accountants have a huge role to play in the process of ensuring innovativeness for them to survive the hostile and competitive business environment. The role of management accountants according to him is to provide organizational managers with information that they will use to make their businesses dynamic and relevant (Emsley, 2005). However, according to Emsley, management accountants have been highly criticized for their reluctance to change their attitude towards innovation. Incidentally, this perception has persisted at a point when the success rate in the implementation of the new innovations. The reluctance to embrace innovation according to him is called accounting lag, a term that was coined by Kaplan (1986) (Emsley, 2005). He asserts that this situation has called for the minimization of the accounting lag in order to make sure that information is given to the managers. Emsley discusses in his introduction the research works in this work is only of recent origin and is now developing into a discipline that has immense significance (Emsley, 2005). The work of Emsley has also focused on the changing roles of the management accountants from a scenario where they had multiple roles to the contemporary form of management accounting. This is where the profession is concerned with providing information to the managers to aid them in decision making. He suggests that the management accountants need to spend less of their working hours on the accounting function and spend more time with the consumers of the accounting information (Emsley, 2005). The suggestions looks at the relation between management accounting role involvement, the functions and business unit orientation, and how so many case studies have tried to trace the evolution of the role involvement. This is from the literature on organizations to the literature on management accounting (Jones & Dugdale, 2001). In the last paragraph of his introduction to this paper, Emsley explains how he plans to establish a relationship between role involvement and innovation literatures. He asserts that a theoretical framework needs to be developed to explain the reasons why the management accountants with a business unit orientation will come up with innovations as well as their radical orientation (Emsley, 2005). He also goes ahead to explain the formation of the hypothesis using a set of data from data collection tools such as the use of interviews and the use of questionnaires. 2. Explain the three main parts for Theory development that the author has adopted (section 3: page 160). (4 marks) The author has adopted three main parts for the development of the theory. The first part according to the author looks at innovativeness as a dependent variable. The author attempts to bring out the difference between the innovative research which deals with innovations done by individuals and innovativeness research that deals with any and all types of innovations. Many studies according to Emsley done on innovativeness have focused on individual innovativeness. He goes ahead to indicate that ABC is the single most studied of all the innovations (Emsley, 2005). In contrast, according to him, the research looks at innovativeness as the unit of study which studies the whole range of innovations spearheaded by the management accountants. He therefore suggests that we should look at the in-depth meaning of the word innovation. The author defines innovation as a practice, idea or object perceived by individuals or a group of persons as being new (Lukka & Granlund, 2002). The definition in an organizational setting means that it brings into account all the new products, services, ways of production, innovation and new programs (Emsley, 2005). When it comes to management accounting however, the author has asserted that the practice do not only consider the application of techniques but also change to work practices. The second most important reason as to why we need to define the term technology according to the author is precisely that innovation goes through stages right from the inception of the idea. The difficulty however is that not all the innovations go through the same stages. He therefore suggests that we should revert to the origin of the innovation which is actually the idea itself. He additionally goes ahead to discuss the various reasons as to why studying innovativeness is very important. The third item in his discussion of this part is the categorization of innovativeness because it opens up the different variables affects the different types of innovations in different ways (Emsley, 2005). The second part of theory development according to the author is the role involvement as an explanatory variable. According to the author, the term role involvement was first used in management accounting by Anderson (1995) where he tried to define the central responsibilities of management accountants (Emsley, 2005). In his case study of ABC at General Motors he came to a conclusion that stronger foundations for innovation develop where there is a great interaction with the users of management accounting information takes place. More case studies by Friedman and Lyne (1995) have suggested that management accountants who are more focused on role involvement in the business unit will usually take most of their time in the business unit and will have a better understanding of the information needs of business unit managers (Emsley, 2005). The third part of Emsley’s theory development is the role involvement’s effect on innovativeness. The main focus of the author in this part of theory development is on the different ways in which role involvement affects innovativeness. First, he discusses about having the knowledge on the importance of innovation, secondly is on whether the innovativeness will be accepted by the business unit mangers and thirdly the incentives that motivate people to do innovate (Otley, 2003). 3. Do you believe the Method (section 4: page 164) adopted by the author is adequate/not adequate for his research. What improvements you believe can be made. (6 marks) The method used by the author in section is not adequate for this research in my opinion. The reason for this is that a good research outcome must have an analysis of the input of both the provider and the users of the services. In this case however, the author has only considered the responses of the management accountants. The research has gone ahead to collect information from the management accountants on their perception of the role involvement orientation on innovativeness (Emsley, 2005). The improvements I believe would improve the research are to include the responses of the business unit managers in an organisation. The managers are a very important function within the organisation in that they are the people that plan, set targets and do the monitoring and evaluation of activities within the organization. They are therefore the parties that are best suited to give their take on the research matter. The other more important issue in this case is that it would be very important to seek their responses in that we will be able to find out where they think that management accountants will be best suited (Emsley, 2005). This is critical in order to ascertain the suggestions and recommendations that the author has dealt with in the literature review such as the precise change of the functions of the management accountants from multiple tasks within a business unit to a more specific function of working with the consumers of the management accounting information such as the managers of a business unit. The author should also try to use a larger sample that is more representative for there to be more accurate responses. 4. What are the limitations of his research and future research needs to address that the author has discussed. (6 marks) The author has reviewed a number of limitations of this study that one has to have in mind when analysing the data obtained in this study. The first limitation of this study is that of identifying the causality that exists between variables. This is because the study is cross-sectional, meaning it can only bring out the relationship between the variables. It was difficult to determine for example whether the role involvement affects innovativeness and vice-versa. The interviews however went a long way in showing that the causality went both ways (Emsley, 2005). The other limitation that was identified in this research was that of the sample size. It is prudent to note that the time and the nature of the data collection tools made it very difficult to obtain a desirable response rate. A good and representative data in most cases would be that which is closer to the whole population. Studying a whole population would be the most desirable way of collecting information because that way, the researcher would capture the information from all the respondents. This is however impossible or very difficult to execute because one would need so much resources and time in order to carry out a satisfactory data collection procedure (Perera, McKinnon & Harrison, 2002). The third limitation of this study is that the conclusions drawn in this study are based on the effects of innovations that were initiated by the management accountants themselves. It therefore assumes that it is only the management accountants that have the ideas that bring about innovation. There are however some other innovation ideas that are prevailed upon by other parties on the management accountants to execute. Such include those from the finance directors and the parent companies (Emsley, 2005). The fourth shortcoming of the research is that the study did not give us the effect that innovation has on the organisational performance. The author only assumes that innovativeness is directly related to better performance. It is very difficult to link management accounting innovativeness to all the indicators of good performance in an organisation such as profitability. The effect of innovation can however be measured in terms of the effect that it has in terms of its contribution to organisational performance (Emsley, 2005). The final limitation is on the perceived functions of the management accountants. This is considered as a practical limitation because management accountants working with business units might be credited with bringing about innovation that can aid in the transformation of the business units. However, it is important to note that the management accountants with a business orientation are thought to have less freedom owing to the roles they play as compared to their counterparts who have a functional orientation and exercise some more freedom that can give them the freedom to carry out innovation (Emsley, 2005). The areas that are recommended for further research in this paper include the level of innovativeness and how each of those levels plays out in the organisation. The second area is that of how radical the innovation being put in place is. This are the critical areas not captured in this research but are important in reviewing innovativeness and is therefore recommended for further research (Williams & Seaman, 2001). References 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. Jones, T. & Dugdale, D. (2001). The ABC bandwagon and the juggernaut of modernity. Acc. Organ. Soc., 27: 121–163. Lukka, K., Granlund, M. (2002). The fragmented communication structure within accounting academia: the case of activity-based costing research genres. Acc. Organ. Soc., 27: 165– 190. Otley, D. (2003). Management control and performance management: whence and whither? Br. Acc. Rev., 35: 309–326. Perera, S., McKinnon, J.L. & Harrison, G.L. (2002). Diffusion of transfer pricing innovation in a public sector organization: a longitudinal case study. Manage. Acc. Res., 14: 140–164. Williams, J.J. & Seaman, A.E. (2001). Predicting change in management accounting systems: national culture and industry effects. Acc. Organ. Soc., 26: 443–460. Read More