ORGANIZATIONAL CHANGE, ENVIRONMENTAL CHANGE AND CHANGE IN MANAGEMENT ACCOUNTING PRACTICES: A CONTINGENCY APPROACH
DOI:
https://doi.org/10.24034/j25485024.y2024.v8.i1.5817Keywords:
environmental, organizational, management accounting practicesAbstract
In this study, the impact of mediated organizational changes and environmental changes on management accounting procedures is investigated. The management of the organization will need to make administrative and management accounting practice adjustments due to the high level of environmental unpredictability. This study employs a survey approach with 149 company managers in mid-to-high level positions in East Javan manufacturing companies as respondents. Data analysis techniques using Smart PLS are used to examine the relationship between changes in the environment and changes in management accounting practices, both directly and indirectly. The findings demonstrated that modifications in management accounting procedures are positively and strongly impacted by ecological changes. Changes in management accounting procedures benefit from organizational changes. On the other hand, modifications to the practice of management accounting cannot be mediated by changes to the organization. This study is unique in that it examines how environmental changes impact management accounting practices. Specifically, it shows that changes in technology and a highly competitive market will impact management accounting methods related to evaluation, costing, and decision-making. Changes in the organization's structure and technology utilization support this shift in management accounting.
References
Abrahamsson, G., H. Englund, and J. Gerdin. 2011. Organizational Identity and Management Accounting Change Identity. Accounting, Auditing & Accountability Journal 24(3): 345–376. https://doi.org/10.1108/09513571111124045.
Alsharari, N. M. 2019. Management Accounting and Organizational Change: Alternative Perspectives. International Journal of Organizational Analysis 27(4): 1124–1147. https://doi.org/10.1108/IJOA-03-2018-1394.
Alsharari, N. M. and M. A. El-Aziz Youssef. 2017. Management Accounting Change and the Implementation of Games: A Jordanian Case Study. Asian Review of Accounting 25(2): 242–261. https://doi.org/10.1108/ARA-06-2016-0062.
Bassani, G., J. A. Pfister, and C. Cattaneo. 2021. Management Accounting Change as an Amplifier of a Leadership Dispute: an Ethnography of Convergent and Divergent Ader–Follower Relations. Accounting, Auditing and Accountability Journal 34(9): 104–134. https://doi.org/10.1108/AAAJ-01-2020-4379.
Bitmiş, M. G. and A. Ergeneli. 2011. The Contingency Approach to Strategic Management: a Test of the Mediating Effect of Leader-Member Exchange on the Relationship between Psychological Empowerment and Job Satisfaction in the 21st-Century Workplace. Procedia - Social and Behavioral Sciences 24: 1143–1153. https://doi.org/10.1016/j.sbspro.2011.09.081.
Bouten, L. and S. Hoozée. 2013. On the Interplay between Environmental Reporting and Management Accounting Change. Management Accounting Research 24(4): 333–348. https://doi.org/10.1016/j.mar.2013.06.005.
Bui, B. and C. de Villiers. 2017. Business Strategies and Management Accounting in Response to Climate Change Risk Exposure and Regulatory Uncertainty. British Accounting Review 49(1): 4–24. https://doi.org/10.1016/j.bar.2016.10.006.
Busco, C. and R. W. Scapens. 2011. Management Accounting Systems and Organizational Culture Interpreting Their Linkages and Processes of Change. Qualitative Research in Accounting & Management 8(4): 320–357. https://doi.org/10.1108/11766091111189873.
Cadeaux, J. and A. Ng. 2012. Environmental Uncertainty and Forward Integration in Marketing: Theory and Meta‐Analysis. European Journal of Marketing 46(1/2): 5-30. https://doi.org/10.1108/03090561211189202.
Cadez, S. and C. Guilding. 2012. Strategy, Strategic Management Accounting and Performance: a Configurational Analysis. Industrial Management and Data Systems 112(3): 484–501. https://doi.org/10.1108/02635571211210086.
Carlstro, E. D. 2012. Strategies for Change: Adaptation to New Accounting Conditions. Journal of Accounting & Organizational Change 8(1): 41–61. https://doi.org/10.1108/18325911211205739.
Cheng, Y. and A. Fisk. 2022. Contingency Theory Informs Relationship Management: Exploring the Contingent Organization-Public Relationships (COPR) in a Crisis of Mainland China. Public Relations Review 48(2): 102178. https://doi.org/10.1016/j.pubrev.2022.102178.
Colwell, S. R. and A. W. Joshi. 2013. Corporate Ecological Responsiveness: Antecedent Effects of Institutional Pressure and Top Management Commitment and Their Impact on Organizational Performance. Business Strategy and the Environment 22(2): 73–91. https://doi.org/10.1002/bse.732.
Contrafatto, M. and J. Burns. 2013a. Social and Environmental Accounting, Organizational Change and Management Accounting: a Processual View. Management Accounting Research 24(4): 349–365. https://doi.org/10.1016/j.mar.2013.10.004.
Contrafatto, M. and J. Burns. 2013b. Social and Environmental Accounting, Organizational Change and Management Accounting: a Processual View. Management Accounting Research 24(4): 349–365. https://doi.org/10.1016/j.mar.2013.10.004.
Coombs, W. T. and E. R. Tachkova. 2022. Elaborating the Concept of Threat in Contingency Theory: an Integration with Moral Outrage and Situational Crisis Communication Theory. Public Relations Review 48(4): 102234. https://doi.org/10.1016/j.pubrev.2022.102234.
Cooper, D. R., P. S. Schindler, and J. Sun. 2014. Business Research Methods. In Mc Graww-Hill (Issue 2000). http://130.209.236.149/headocs/31businessresearch.pdf.
Coyte, R. 2019. Enabling Management Control Systems, Situated Learning and Intellectual Capital Development. Accounting, Auditing and Accountability Journal 32(4): 1073–1097. https://doi.org/10.1108/AAAJ-02-2013-1237.
Diana, G. C., C. J. C. Jabbour, A. de Sousa Jabbour, and D. Kannan. 2017. Putting Environmental Technologies into the Mainstream: Adoption of Environmental Technologies by Medium-Sized Manufacturing Firms in Brazil. Journal of Cleaner Production 142: 4011–4018. https://doi.org/10.1016/j.jclepro.2016.10.054.
Dhar, B. 2014. The Future of the World Trade Organization. A World Trade Organization for the 21st Century: The Asian Perspective 30(1): 316–360. https://doi.org/10.4337/9781783479283.00018.
Djaharuddin, D., A. R. Kadir, I. Sudirman, and I. Pabo. 2018. Review on: Company Strategic Competitive Power. Scientific Research Journal VI(VI): 39–47. https://doi.org/10.31364/scirj/v6.i6.2018.p0618537.
Erserim, A. 2012a. The Impacts of Organizational Culture, Firm's Characteristics and External Environment of Firms on Management Accounting Practices: an Empirical Research on Industrial Firms in Turkey. Procedia-Social and Behavioral Sciences 62(2012): 372-376. https://doi.org/10.1016/j.sbspro.2012.09.059.
Erserim, A. 2012b. The Impacts of Organizational Culture, Firm's Characteristics and External Environment of Firms on Management Accounting Practices: An Empirical Research on Industrial Firms in Turkey. Procedia - Social and Behavioral Sciences 62(2011): 372–376. https://doi.org/10.1016/j.sbspro.2012.09.059.
Fiondella, C., R. Macchioni, M. Maffei, and R. Spanò. 2016. Successful Changes in Management Accounting Systems: a Healthcare Case Study. Accounting Forum 40(3): 186–204. https://doi.org/10.1016/j.accfor.2016.05.004.
Gani, L. and J. Jermias. 2011. The Effects of Strategy-Management Control System Misfits on Firm Performance. Accounting Perspectives 11(3): 165-196. https://doi.org/10.2139/ssrn.1531266.
Ghasemi, R., N. A. Mohamad, M. Karami, and N. H. Bajuri. 2016. The Mediating Effect of Management Accounting System on the Relationship between Competition and Managerial Performance. International Journal of Accounting & Information Management 24(3): 272-295. https://doi.org/10.1108/IJAIM-05-2015-0030.
Ghozali, I. 2018. Aplikasi Analisis Multivariate dengan Program IBM SPSS 25. Semarang. Badan Penerbit Universitas Diponegoro.
Giannetti, R., L. Cinquini, P. Miolo Vitali, and F. Mitchell. 2021. Management Accounting Change as a Learning Process: a Longitudinal Analysis. Qualitative Research in Accounting and Management 18(4–5): 484–515. https://doi.org/10.1108/QRAM-01-2017-0003.
Gogan, L. M., D. C. Duran, and A. Draghici. 2015. Structural Capital - A Proposed Measurement Model. Procedia Economics and Finance 23: 1139–1146. https://doi.org/10.1016/S2212-5671(15)00503-1.
Granlund, M. and K. Lukka. 2017. Investigating Highly Established Research Paradigms: Reviving Contextuality in Contingency Theory Based Management Accounting Research. Critical Perspectives on Accounting 45: 63–80. https://doi.org/10.1016/j.cpa.2016.11.003.
Granlund, M., J. Mouritsen, and E. Vaassen. 2013. On the Relationship between Modern Information Technology, Decision Making and Management Control. International Journal of Accounting Information Systems 14(4): 275–277. https://doi.org/10.1016/j.accinf.2013.10.001.
Gunarathne, N. and K. H. Lee. 2021. Corporate Cleaner Production Strategy Development and Environmental Management Accounting: a Contingency Theory Perspective. Journal of Cleaner Production 308(March): 127402. https://doi.org/10.1016/j.jclepro.2021.127402.
Hammad, S. 2012. Decentralization, Perceived Environmental Uncertainty, Managerial Performance and Management Accounting System Information in Egyptian Hospitals. International Journal of Accounting and Information Management 21(4): 314–330. https://doi.org/10.1108/IJAIM-02-2012-0005.
Hopper, T. and B. Bui. 2016. Has Management Accounting Research been critical? Management Accounting Research 31: 10–30. https://doi.org/10.1016/j.mar.2015.08.001.
Hoque, Z. 2011. The Relations among Competition, Delegation, Management Accounting Systems Change and Performance: a Path Model. Advances in Accounting 27(2): 266–277. https://doi.org/10.1016/j.adiac.2011.05.006.
Hutaibat, K., L. von Alberti‐Alhtaybat, and K. Al‐Htaybat. 2011. Strategic Management Accounting and the Strategising Mindset in an English Higher Education Institutional Context. Journal of Accounting & Organizational Change 7(4): 358-390. https://doi.org/10.1108/18325911111182312.
Jacobs, G. 2013. A Theoretical Framework of Organizational Change. Journal of Organizational Change Management 26(5): 772–792. https://doi.org/10.1108/JOCM-09-2012-0137.
Kumarasiri, J. and A. Gunasekarage. 2017. Risk Regulation, Community Pressure and the Use of Management Accounting in Managing Climate Change Risk: Australian Evidence. British Accounting Review 49(1): 25–38. https://doi.org/10.1016/j.bar.2016.10.009.
Laitinen, E. K. 2011. Effect of Reorganization Actions on the Financial Performance of Small Entrepreneurial Distressed Firms. Journal of Accounting and Organizational Change 7(1): 57-95. https://doi.org/10.1108/18325911111125540.
Lasyoud, A. A., J. Haslam, and R. Roslender. 2018. Management Accounting Change in Developing Countries: Evidence from Libya. Asian Review of Accounting 26(3): 278–313. https://doi.org/10.1108/ARA-03-2017-0057.
Lin, M., X. Wu, and Q. Ling. 2017. Assessing the Effectiveness of Empowerment on Service Quality: a Multi-Level Study of Chinese Tourism Firms. Tourism Management 61: 411–425. https://doi.org/10.1016/j.tourman.2017.03.001.
Majima, S. 2018. Target: the Japanese Defense Industry - Ethical Issues Surrounding Military Hardware Manufacturers | Cible: L'industrie de la défense japonaise -Enjeux éthiques entourant les fabricants de matériel militaire. Revue Roumaine de Philosophie 62(1): 33–43.
Makrygiannakis, G. and L. Jack. 2016. Understanding Management Accounting Change using Strong Structuration Frameworks. Accounting, Auditing and Accountability Journal 29(7): 1234–1258. https://doi.org/10.1108/AAAJ-08-2015-2201.
Markey, R., P. J. Gollan, A. Hodkinson, A. Chouraqui, and U. Veersma. 2018. Models of Employee Participation in a Changing Global Environment: Diversity and Interaction. In Models of Employee Participation in a Changing Global Environment: Diversity and Interaction. https://doi.org/10.4324/9781315189284.
Micheli, P. and L. Mari. 2014. The Theory and Practice of Performance Measurement. Management Accounting Research 25(2): 147–156. https://doi.org/10.1016/j.mar.2013.07.005.
Mikalef, P. and A. Pateli. 2017. Information Technology-Enabled Dynamic Capabilities and Their Indirect Effect on Competitive Performance: Findings from PLS-SEM and fsQCA. Journal of Business Research 70: 1–16. https://doi.org/10.1016/j.jbusres.2016.09.004.
Mnif, Y. and Y. Gafsi. 2020. A Contingency Theory Perspective on Analyzing Central Government Accounting Disclosure under International Public Sector Accounting Standards (IPSAS). Meditari Accountancy Research 28(6): 1089–1117. https://doi.org/10.1108/MEDAR-04-2019-0480.
Nixon, B. and J. Burns. 2012. Strategic Management Accounting. Management Accounting Research 23(4): 225–228. https://doi.org/10.1016/j.mar.2012.09.005.
Oboh, C. S. and S. O. Ajibolade. 2017. Strategic Management Accounting and Decision Making: a Survey of the Nigerian Banks. Future Business Journal 3(2): 119–137. https://doi.org/10.1016/j.fbj.2017.05.004.
Ojra, J., A. P. Opute, and M. M. Alsolmi. 2021. Strategic Management Accounting and Performance Implications: a Literature Review and Research Agenda. Future Business Journal 7(1): 1–17. https://doi.org/10.1186/s43093-021-00109-1.
Omylska, B. 2019. The Yin-Yang Model of Organizational Project Management Capabilities Illustrates Micro and Macro Perspectives—The Society of Petroleum Engineers. Abu Dhabi International Petroleum Exhibition and Conference 2018, ADIPEC 2018.
Otley, D. 2016. The Contingency Theory of Management Accounting and Control: 1980–2014. Management Accounting Research 31: 45–62. https://doi.org/10.1016/j.mar.2016.02.001.
Pärl, Ü. 2019. Models for: The Relational Constructivist Approach to Management Accounting and Control (MAC) Research. Acta Baltica Historiae et Philosophiae Scientiarum 7(1): 121–134. https://doi.org/10.11590/abhps.2019.1.09.
Pérez, D., P. Lefèvre, M. Castro, M. E. Toledo, G. Zamora, M. Bonet, and P. Van der Stuyft. 2013. Diffusion of Community Empowerment Strategies for Aedes Aegypti Control in Cuba: a Muddling through Experience. Social Science & Medicine (1982) 84: 44–52. https://doi.org/10.1016/j.socscimed.2013.02.003.
Quinn, M. 2014. Stability and Change in Management Accounting over Time: a Century or so of Evidence from Guinness. Management Accounting Research 25(1): 76–92. https://doi.org/10.1016/j.mar.2013.06.001.
Robalo, R. 2014. Explanations for the Gap between Management Accounting Rules and Routines: an Institutional Approach. Revista de Contabilidad-Spanish Accounting Review 17(1): 88–97. https://doi.org/10.1016/j.rcsar.2014.03.002.
Romano, L. 2019. Explaining Growth Differences across Firms: the Interplay between Innovation and Management Practices. Structural Change and Economic Dynamics 49: 130–145. https://doi.org/10.1016/j.strueco.2019.01.004.
Struckell, E., D. Ojha, P. C. Patel, and A. Dhir. 2022. Strategic Choice in Stagnant Growth and Uncertainty: an Institutional Theory and Organizational Change Perspective. Technological Forecasting and Social Change 182(June): 121839. https://doi.org/10.1016/j.techfore.2022.121839.
Tuanmat, T. Z. and M. Smith. 2011. The Effects of Changes in Competition, Technology and Strategy on Organizational Performance in Small and Medium Manufacturing Companies. Asian Review of Accounting 19(3): 208–220. https://doi.org/10.1108/13217341111185137.
Van der Voet, J. 2014. The Effectiveness and Specificity of Change Management in a Public Organization: Transformational Leadership and a Bureaucratic Organizational Structure. European Management Journal 32(3): 373–382. https://doi.org/10.1016/j.emj.2013.10.001.
Vu, T. K. A., B. H. Dam, and T. T. van Ha. 2022. Factors Affecting the Application of Strategy Management Accounting in Vietnamese Logistics Enterprises. Journal of Distribution Science 20(1): 27–39. https://doi.org/10.15722/jds.20.01.202201.27.
Wahyuni, N. and B. Triatmanto. 2020. Changes in Management Accounting Practices Mediate the Effect of the Organismal Change on Company Performance. Accounting 6(4): 581–588. https://doi.org/10.5267/j.ac.2020.4.002.
Waweru, N. and E. Uliana. 2008. Predicting Change in Management Accounting Systems: a Contingent Approach. Problems and Perspectives in Management 6(2): 72-84.
Wilden, R., S. P. Gudergan, B. B. Nielsen, and I. Lings. 2013. Dynamic Capabilities and Performance: Strategy, Structure and Environment. Long Range Planning 46(1–2): 72–96. https://doi.org/10.1016/j.lrp.2012.12.001.
Wu, T., Y. C. Jim Wu, Y. J. Chen, and M. Goh. 2014. Aligning Supply Chain Strategy with Corporate Environmental Strategy: a Contingency Approach. International Journal of Production Economics 147(PART B): 220–229. https://doi.org/10.1016/j.ijpe.2013.02.027.
