Lapsley and Rekers Are Theorizing Strategy in Management Accounting - Assignment Example

Issuеs in Маnаgеmеnt Ассоunting 1. Why are the authors theorizing strategy in management accounting. (5 marks) Lapsley and Rekers (2017) are theorizing strategy in management accounting because there is an unresolved debate on the meaning of the concepts of “strategy” and “strategic management accounting” (SMA) as applied in management accounting. The authors argue for instance that although SMA continues to be a tool that is accepted within exciting literature on what comprises the modern portfolio of management accounting techniques, many studies conducted over the past two years have challenged whether SMA really exists. Therefore, by theorizing strategy in management accounting, the authors are reviewing the various ideas that have been put forward by various authors as regards the use of strategy in management accounting, or what is commonly referred to as SMA. The issues addressed by Lapsley and Rekers (2017) as well as other authors point to why the debate on strategy in management accounting is an issue that is still subject to further debate. In particular, the term “strategic management accounting” was coined in 1981 by Simmonds, who envisaged profit emanating not from how effectively a firm functioned internally, but from the firm’s competitive position over a given period (Lord, 2007, p. 138). In other words, Simmonds viewed SMA as a process by which a firm applies a strategy that enables the firm to become competitive over time, in the process being able to make profit. A business strategy can be defined as concept by which a business produces long-term plans, taking into consideration the possible actions of the competition, with an objective of putting the firm in a competitive position (Lord, 2007, p. 135). From the point of view of strategy, SMA is seen as encompassing a set of accounting techniques that are strategically oriented to make a business more competitive. As well, SMA can also be seen as being related to the involvement of accountants is making strategic corporate decisions (Cadez & Guilding, 2008, p. 838). Bell, Ansari, Klammer and Lawrence (n.d.) have also added to the debate on SMA by noting that in order for management accounting to have strategic value, it must help in accomplishing three goals of cost, quality and time by providing details that link the actions of managers to the an organisation’s strategic aims, enables managers to effectively engage an organisation’s stakeholders, and takes a long-term view of an organisation’s actions and strategies. It is therefore interesting when Lapsley and Rekers (2017) cite some authors who have argued that SMA does not even exist. One argument is that SMA is a “figment of academic imagination” while another is that “SMA has not been accepted as an accounting practice and that its language is in use by other professions” (Lapsley & Rekers, 2017). Such statements imply that there is no general consensus on the meaning of “strategy” and strategic management accounting” as used in relation to management accounting. Therefore, by theorizing strategy in management accounting, Lapsley and Rekers (2017) are providing readers with an opportunity to look at the concept of strategy as it relates to management accounting in different ways. For instance, the authors suggest that the concept of “strategy-as-practice” (SAP) can be used to provide a slightly different understanding of what strategy means. And it is SAP that the authors used in analysing the practice of strategy in their research. 2. Critically analyze the research design that is used in the study and if it is adequate. (5 marks) Lapsley and Rekers (2017) have used a research design that involves a case study as well as an “inter-disciplinary perspective”, which they suggest would help them to identify the mechanisms and intermediaries that form the basis of strategy as practice (SAP). The authors have also identified the sites in which the research was collected and given reason for selecting these sites. Lapsley and Rekers (2017) have also identified their sources of information as “publicly available documents, attendance at trade events, and interviews with key informants”. This means that in essence, the research design used by Lapsley and Rekers (2017) involved combining more than one qualitative method to carry out the study. Lapsley and Rekers’ (2017) research design is largely adequate because as noted above, the researchers used more than one qualitative method in the study. According to Ritchie (2003, p. 37), using more than one qualitative method to conduct a research is beneficial because each method brings a certain kind of insight to the issue that is being studied. In particular, using many methods can enable the researcher to obtain the ‘truth’ from the research participants in a better way than would have been obtained using one method (Maylor & Blackmon, 2005, p. 257). This is because the use of different methods is particularly likely to result in different answers, but the answers can be verified based on the information that is obtained from different sources (Maylor & Blackmon, 2005, p. 257). The use of different methods is also important where the research participants are being asked to estimate or recall issues for which recollection may be difficult (Maylor & Blackmon, 2005, p. 257). Lapsley and Rekers’ (2017) research design can also be said to have largely met the requirements of a good design because the authors explained the reason why they settled on the particular design. As noted by Saunders, Lewis and Thornhill (2009, p. 43), a research design section presents an overall view of the methods selected and the reasons for that choice. As well, the section for data collection delves into much more detail as regards how specifically the information is to be collected. This is seen in Lapsley and Rekers’ (2017) research design information where the authors have for instance explained how semi-structured interviews were conducted and how the “key informants” for the interviews were selected. Despite the strong points that are associated with the research design that was used by Lapsley and Rekers (2017), the research design has some weaknesses that make it somewhat inadequate. A few of these weaknesses are as follows. To start with, the use of qualitative methods to collect data and specifically the case study approach exposes the study to lack of objectivity. The selection of the research participants as well as analysis of the data tends to be subjective because it depends on the investigator’s intuition (Mustafa, 2008, p. 22). Secondly, even though verification of the data that was collected was done using “publicly available documents”, the analysis of data could still be unreliable if there were inherent problems in the collection of the data (Mustafa, 2008, p. 22). 3. Explain the important findings that the authors have reported in their study and its implications for the management accounting innovations. (5 marks) One of the important findings made by Lapsley and Rekers (2017) is that strategy plays an important role in regard to how companies in the musical theatre industry come up with new products ideas, develop them into products, and market them. For instance, it is indicated that strategy plays a crucial role in the selection of a production team as well as a test-site and in the subsequent process of developing the market through interactions with other organisations. The strategic decisions that are made during the process of developing new shows include selecting the creative team, investors, actors, owners of theatres, as well as the sites for testing new products. It is also noted that the making of strategic decisions is done by many stakeholders including investors, producers, presenters and theatre owners. Lapsley and Rekers (2017) also note that the key strategic decision that theatre firms have to make is the selection of a new product or show. Such decisions are made in a context whereby theatres have little influence over the prices of tickets in a competitive market given that this function lies under the purview of the management. But the authors also note that the making of strategic decisions as noted above does not relate to traditional or conventional conceptions of what strategic management accounting entails. Another key finding made by Lapsley and Rekers (2017) is that based on the concept of strategy as practice, the success of a cultural product is shaped to a great extent by the structures of the communities that develop and consume cultural content. The authors also note that in a these processes, accounting is not a primary factor, thus supporting the notion that conventional accounting practices hinder product innovation and are impediments to creativity. There is some literature that supports this point of view. For instance, Harmon (1992, p. 255) argues that some aspects of conventional accounting systems actually do curtail factory improvements, in other words innovations that could lead to product improvement. This is because in some cases, uninformed top managers of an organisation have compelled operations managers to stop implementing improvements due to erroneous indicators from conventional accounting systems. Lapsley and Rekers (2017) also suggest that many players are involved in strategising for organisations (such as coming up with innovations and new products), and not just managers. As such, their findings offer a challenging insight on strategy as practice for people who would like to become strategic management accountants. References Bell, J., Ansari, S., Klammer, T. & Lawrence, C. (n.d.). Strategy and management accounting. Retrieved from http://college.cengage.com/accounting/ansari/management/1e/students/modules/mod11.pdf Cadez, S., & Guilding, C. (2008). An exploratory investigation of an integrated contingency model of strategic management accounting. Accounting, Organizations and Society, 33, 836–863. Harmon, R. L. (1992). Reinventing the factory II: Managing the world class factory. New York: The Free Press. Lapsley, I., & Rekers, J. V. (2017). The relevance of strategic management accounting to popular culture: The world of West End Musicals. Management Accounting Research. Retrieved from http://dx.doi.org/10.1016/j.mar.2017.01.001 Lord, B. R. (2007). Strategic management accounting. In T. Hopper, D. Northcott & R. Scapens (Eds.), Issues in management accounting (3rd ed.) (pp. 135-154). Essex: Pearson Education Limited. Maylor, H., & Blackmon, K. (2005). Researching business and management. Basingstoke/New York: Palgrave Macmillan. Mustafa, A. (2008). Case study method: Theory and practice. New Delhi: Atlantic Publishers & Distributors (P) Ltd. Ritchie, J. (2003). The applications of qualitative methods to social research. In J. Ritchie & J. Lewis (Eds.), Qualitative research practice: A guide for social science students and researchers (pp. 24-46). London: Thousand Oaks. Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business students (5th ed.). Essex: Pearson Education Limited. Read More