Reasons for Investigating the Role of Strategic Management Accounting in Organizations - Coursework Example

Aims of Strategic Management Accounting Student’s Name University Affiliation Aims of SMA Reasons for Investigating the Role of SMA in Organizations Previous research studying the SMA role has laid focus on the accounting techniques applied and their underlying circumstances. Tillman and Goddard’s research pays attention to the perception and use of SMA. The authors investigate the role of SMA in organizational setting to obtain a deep comprehension of the matter, which is lived and observed by players in organisations. The topic of the role of SMA seeks to add to the new comprehension by giving comprehensions from a Germany-based transnational firm. In investigating the role of SMA, the authors begin by defining SMA broadly as the application of management accounts models in reinforcing tactical resoultions. The authors investigate SMA as an important function that determines companies’ survival in the current highly competitive international global markets. Thus, the authors consider SMA as important as it allows organizations to assess strategic situations successfully. The researchers endeavour to comprehend the meaning of SMA to organisational players. Past research by Scapans and Bromuwich (2001) document that the studies written about ten years ago on the subject of ‘Management Accounts’ show the complexities of the works in practice, which stem from the simple approaches of economic decision-making. These authors further note that many studies seek to find out the organisational background of management accounting, thus opening the debate of the objective of the organization in accounting management. In this light, Tillman and Goddard (2008) tries to address the objective of management accounting in organizations by examining different complexities facing the subject within organizations. Whereas past studies in SMA has focused on the used accounting techniques and the prevalent circumstances, Tillman and Goddard (2008) pay more attention to the perception and practice of SMA. As a result, the authors seek to understand from the perspective of contributors the manner that accounting is applied is making sense during complex strategic decisions alongside the particular techniques used. The attainment of sensemaking, a varied information set in accounting is applied depending on the decision’s setting. In their study of the role of SMA, Tillman and Goddard (2008) hope that by attaining a better comprehension of the use of accounting information within a strategic context, more valuable systems of accounting may be developed. Consequently, the authors provide the comprehension by investigating sense-making and the way management accounting aids the process. Important Discussions Studied by Tillman and Goddard in the Preceding Literature The important discussions by the authors in the previous research span SMA and organizational logic making. Strategic Accounting Management: The latest years have interested many researchers in the issue of SMA. The interest has been inspired by originally emphasising on normative studies, which has trailed research that is additionally empirical. Main normative additions to SMA usually recommend templates for SMA practices comprising competitive position monitoring and competitor accounting, strategic cost management (Porter, 1985), strategic investment appraisal and developments on modern accounting with a tactical constituents including activity-grounded costing and the balanced scorecard. Even though the normative work has contributed to SMA, it has some drawbacks because it is usually disconnected from what often occurs in organisations. Several SMA practice surveys have been conducted (Guilding & Cravens, 2001; Guilding et al., 2000). The surveys have documented that strategic pricing and competitor accounting are the commonly used techniques. However, some surveys consider the SMA term is not extensively applied in firms, and the implication is not usually open to leaders. Different scholars have used a contingency framework methodology in examining SMA (Abernethy, 1999). Moreover, this study has led to the comprehension of the subject but has been affected by the common contingency theory shortcomings in the choice of variables and requirement, incomprehensive sample selection and the production of conflicting results (Chenhall & Langfield, 1998). These studies, however, failed to shed light about the implementation of SMA practices and offer no theoretical description of such practices. Several SMA case examples have been conducted to offer some valuable insights into practices of SMA. According to Rickwood (1990) investigations imply that the accounting’s role obtains, both information about the external setting of the operations of a firm comprising the plans and performance of competitors. Lord (1996) refers to a case example done to demonstrate that the practices of SMA systems could be found in firms. However, the facts might not be quantifiable in accounting numbers. Moreover, they might not be gathered and applied by accounts managers. However, the case study is widely expressive and gives minimum theoretic information. Dent calls for explanatory studies of the strategy and accounting interface (1990). Likewise, Dermer looks at the matter of strategy and accounting from an environmental viewpoint that considers tactic as the result of administrative strive (1990). According to Ahrens (1997) in Tillmann and Goddard (2008) lends an interpretive research that examines the strategic management accountants’ intervention. He does this by analysing ethnographic material from Germany and British brewers, in a bid to assess the way accounts managers in the states perceive of their relations with strategic formulation processes and the way they seek to move strategic claims. Jarvenpaa’s management strategy and accounting in a Finland based technical company and explores the way the firm applied SMA in formulating strategy and established that every time the matters were considered, the function of management accounting became least involved (1998). Moreover, he states that the techniques of SMA mentioned in the normative text were used insignificantly. Ultimately, although normative studies have been critiqued for their extreme detachment from reality, little has been done little to advance SMA methods. Empirical studies have examined whether and how the methods have been used in firms. Interpretive empirical studies have further showed that SMA and linked methods are not supposed to be considered as impartial tools applied in the reasonable manner suggested in the normative texts. Nevertheless, little is known about the issue. Ultimately, interpretive studies into the topic can enhance the present studies, by giving a profounder comprehension of management accounting as used in companies and supposed by players in the organizations. Very limited evidence is given about the way players in organisations identify SMA. The grounded theory gives an approach for undertaking an interpretive research to address the matter Organisational sense-making The logic-making idea has been mentioned widely in different organisational settings but comparatively a little in accounting. The discussion is linked with management, strategic change, organisational disasters, culture and different other management-associated matters (Hasan and Gould, 2001). Logic-making has been described as the discursive procedure of creating and understanding the common universe. Hasan’s and Gould’s case study considers sense-making as “comprehending the scenario,” “informing oneself,” “getting the picture,” and “discerning the direction of the organization” (Hasan & Gould, 2001). In the strategic change context, sense-making concerns the establishment of establishment and reestablishment of the parties engaged with the change. ‘Sense giving’ is considered as an act, which concerns the mechanisms of trying to control sense-making and other people’s creation of meaning in a way that favours the reconstruction of an organization’s reality. Weick and Daft emphasize the importance of making sense by arguing that analysis may constitute a major function taken by organisations and that sense-making acts form the core of organizational acts. Tillmann and Goddard (2008) refer to Weick (1995) who lends an overview of sense-making and recommends the analysis as an attribute of logic-creation. He further argues that businesses can be great at arriving at decisions and still weaken sue to weak sense-making. Gould and Hassan (2001) argue that activities of managerial sense-making have an important objective in association processes of knowledge management and tactical resolutions. Accountants create explanatory inferences of the organizational situations as a basis for report writing (Boland, 1993). Managers on the other hand read accounting reports while they attempt to establish sense of scenarios of an organisation. Readers apply accounting reports to create meaning to the business including its background as well as to themselves and their world. Appropriateness of the Methodology Adopted The methodology used by the authors is adequate and appropriate for the study. Firstly, the literature review gave a background to the prior issues that concern SMA. The case study methodology is appropriate for understanding SMA in practice and the way management accountants use it in accounting information and in sense-making during strategic situations in relation to other organizational actor. In this case, the research used a large German-based multinational firm, which generates a widely differentiated product assortment of industrial and human compounds and with a revenue of about thirteen (billion) Euros and many employees distributed across five major divisions. Through the case study, information on SMA practices was obtained by interviews, supplemented by the gathering of papers and observation to guarantee a ‘triangulation’ characteristic. The interview method is suitable for collecting the opinions and views of the workers and collect different perspectives. Using unstructured interviews at first was appropriate because it enabled the researchers to collect useful information from the respondents in a way that allowed them to pay attention to the matters, which were of particular concern. Furthermore, with the interviews, the case study research process allowed for advanced data assessment and progression of categories and concepts, which assisted interview queries to be condensed, thus allowing focus to be paid on particular attributes of the ensuing theory. The interview schedule comprised individuals from different functions and locations. The interview comprised different people and thus it enabled various perspectives to come up. Furthermore, this contributed to authenticating the statements of various participants, and to obtaining a bigger outlook of occurrences (Corbin, 1990). Collectively the research comprised 46 official interviews with thirty different people each taking approximately an hour. A good aspect about the selection of the participants in the interview is the incorporation of managers and management accountants from diverse corporate unit levels (Company Development, Company Control, R&D Controlling, and Financial Accounting). Moreover, there were casual debates held on many instances. Observational proof was also obtained. A non-respondent part was adopted. Moreover, observation (informally) was conducted when the scientist was present in the firm and the company gave a workplace for the study. Thus, the study was carried out in a comprehensive and systematic way. Formal observation was a critical issue. Documents gave a great information source and publicly and internally present documents gathered, examined and assessed. Consequently, the methodology is inadequate because the researchers took deliberate efforts and strategies to address matters of reliability and validity during the data analysis process. However, this research used a small sample of study. A possible improvement to the study would entail using a bigger sample in the interview to ensure generalizability of findings. Influence of the Theory of Grounding In the grounded theory approach, the collection of information, coding and analysis is often interlinked systematically beginning from the inquiry stage to the finishing. The method influences the approach and findings of the study. As a result, the coded data and analyses and the resultant theoretical explanations and categories were continually authenticated in succeeding interviews, document analysis and observation. The continuous comparison approach, a key attribute of the theory of grounding further gave a thorough study process. Through the grounded theory approach, the researchers compared many incidents, events and types of behaviours in the data to come up with the classes and resultant theoretical descriptions. The influence of the grounded theory led to the comparison, contrasting, refining and development of the concepts and theoretical explanations resulting from the data. According to Parker and Roffey (1997), the grounded theory is preferable because as opposed to paying attention exclusively on describing sense-making interactions and activities of field members, the approach seeks to integrate the understandings of the researchers and seeks to develop descriptive theoretical frameworks that represent processes and structures observed. Thus, the grounded theory assisted to interpreting the data rather than just reporting it. The method enabled to produce theory and to ground the theory in data thus influencing the direction and findings of the research (Strauss & Corbin, 1998). The methodology allowed the participants’ own meanings and perceptions to emerge. According to grounded theory theorists, studies that start with pre-described operative variables generated from positivist theories leave out the likelihood of recognizing both categories of data nor new ‘variables’ or an additionally significant assessment of those patterns and relationships among variables (Roffey & Parker, 1997). The consideration is critical when carrying out a study in an area such as SMA comprising compound unknown humanity connections in business set ups. The grounded theory influenced the research process by capturing complex social phenomena by its emphasis on the need for developing numerous concepts and their connections. The grounded theory is especially suited in this study in which little is reasonably known about an occurrence, certainty is compound, and wherein there lacks previous theory to describe the occurrences or existing theories fail to describe certain situations. Thus, grounded theory influenced the research outcome by ensuring that theoretical concepts, which came up are founded on comprehending and standards attached by economic players to major themes and concepts, which form financial, accounting, and economic theories. References Abernethy, M. A., & Brownell, P. (1999). The role of budgets in organizations facing strategic change: an exploratory study. Accounting, organizations and society, 24(3), 189-204. Boland Jr, R. J. (1993). Sense-making of accounting data as a technique of organizational diagnosis. Management science, 30(7), 868-882. Chenhall, R. H., & Langfield-Smith, K. (1998). The relationship between strategic priorities, management techniques and management accounting: an empirical investigation using a systems approach. Accounting, Organizations and Society, 23(3), 243-264. Guilding, C., 1999. Competitor-focused accounting: an explanatory note. Account. Organ. Soc. 24 (7), 583–595. 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