Essays on the design of the management accounting system: Determinants, components and effects

Abstract

Management accounting systems play a key role in translating an organization’s strategy into desired behaviors and results. An appropriate design of a management accounting system is essential in achieving that aim. The purpose of this dissertation is to better understand the determinants and the consequences of management accounting systems’ design choices. Four empirical studies were conducted. In study one we analyze how CFO characteristics explain the use of strategic management accounting practices over and above commonly known contingency factors. The main finding is that the impact of a CFO on the firm’s use of strategic management accounting practices depends on both, his or her organizational power and personal background. In study two I continue the investigation of human factors in regard to management accounting systems’ design and analyze how the relationship between differentiation strategy and innovativeness is sequentially mediated by the business partner role of management accountants and their use of management accounting systems. I find that business partner management accountants use management accounting systems in a more interactive way compared to bean counter management accountants and the interactive way of use is positively related to innovativeness. In study three we examine how firms build dynamic capabilities in marketing and accounting; and how the decision to build a portfolio of both capabilities changes with competition. The analysis reveals that the marketing and management accounting dynamic capabilities are complements in high competition environments but are not related in low competition environments. Finally, in study four I investigate how firms implement strategic management accounting practices across their life cycle and what the performance consequences of this implementation are. Two findings are central. First, the strategic management accounting practices’ adoption rates increase between the birth and revival stages and decrease at the decline stage. Second, firms that adopt strategic management accounting practices to a less intensive degree compared to the benchmark experience performance losses, while firms that adopt these practices to a higher degree do not.