Management accounting summary Reading the artical at first, write 2 pages summary about this article, use your words to write it and don’t need to use outs

Management accounting summary Reading the artical at first, write 2 pages summary about this article, use your words to write it and don’t need to use outside sources. JOURNAL OF MANAGEMENT ACCOUNTING RESEARCH
Volume Twenty
pp. 3-13
Management Accounting Research
in a Changing World
Anthony G. Hopwood
University of Oxford
am indeed honored by being selected to be the recipient of the 2008 Lifetime Achieve-
ment Award of the Management Accounting Section of the American Accounting As-
sociation. It is particularly rewarding to be honored in this way by such a worthy group
of one’s peers and fellow researchers. Over the years I have developed a very high regard
for the Management Accounting Section. It has always striven to be interdisciplinary in
approach, providing an almost unique meeting place in the United States for accounting
scholars with backgrounds in economics, organizational theory, operational research, psy-
chology, social psychology, and sociology. It has even been open to the redefinition of the
field, being willing to incorporate into it new topics and themes for investigation. The study
of executive compensation is an example of this. Many would have thought that this was
an area more suited to the probings of scholars of human resource management. But man-
agement accounting researchers got there first, possibly reflecting their much greater ease
with the individualistic philosophy that has become so deeply ingrained in the area in recent
times in the United States. Such intellectual diversity and the willingness to innovate are
unusual in and of themselves in the North American accounting academic world, but the
Section has also adopted a very international posture as well as developing its own links
with the community of practice. Of all the sections of the American Accounting Associa-
tion, the Management Accounting Section is most likely the most open-minded. It is there-
fore a particular pleasure to be associated with it in this way. I truly appreciate the honor
and the recognition.
Valuing both the achievements of the Section and my association with it, I would like
to take this opportunity to reflect on a number of issues that I see as important for under-
standing the current state of management accounting research and practice. First, I wish to
consider the increasing extent to which what has come to be called “mainstream” tenden-
cies are making themselves visible in management accounting research, a field that has so
far been characterized by a more diverse and open-minded approach. Following on from
that, I make some observations on the increasing autonomy of the accounting academic
sphere, the need for an understanding of management accounting that integrates both design
and social science perspectives, and finally, the challenges of responding to the changes
that are occurring in the world of management accounting practice.
I am grateful for the comments and suggestions of Jake Birnberg, Chris Chapman, Mahmoud Ezzamel, Kari Lukka,
Anette Mikes, Paolo Quattrone, and Mike Shields.
Increasingly I have come to be more and more concerned about the state of accounting
research (Hopwood 2007, 2008). Of course, some may see this as being merely a desire
to return to what might be seen as a more glorious past. But I do not think that is the case.
What worries me is not the preservation of what we have achieved but rather our ability
and willingness to address the multitude of issues and problems that still characterize the
realms of accounting ideas and practice. My concern is therefore future-oriented. It is in
this context that I am troubled by what I see as an increasing narrowness of outlook, the
careerist rather than the curiosity-orientated nature of an increasing amount of the research,
the growing domination of what are characterized as “mainstream” tendencies that prior-
itize particular conceptual and methodological approaches to the research task, and an
associated growth in intolerance toward different but equally valid and equally rigorous
approaches. As I see it, we are living in changing times and some of the changes that I
see underway are not conducive to advancing our understandings of the functioning and
continued development of the management accounting craft.
Such tendencies were even evident in the program of the 2008 Midyear Meeting of the
Management Accounting Section in Long Beach. The program looked less diverse than it
used to be. There were fewer occasions during which different perspectives confronted one
another. More emphasis seemed to have been placed on mainstream conceptual and meth-
odological approaches at the expense of other equally meritorious ones. Analytical and
economic perspectives appeared to be more prevalent with fewer occasions when econom-
ics, organization theory, and sociology were intermingled and interrelated within a session.
Perhaps this was just a reflection of the particular circumstances prevailing on this occasion.
However, the fact that the changes were in conformity with wider patterns of development
in accounting research must inevitably make one more cautious. It really does feel as if
the mainstream is encroaching ever closer and the diversity of approaches is being lost.
The Section does indeed need to be alert to the tendency-and to resist it.
Such worries reflect my view that the understanding and continued development of
accounting itself calls for a diverse set of understandings of both accounting and its context.
Let me illustrate this with reference to the area of accounting for intangibles—a relatively
new area of both accounting practice and research, albeit one only partially related to
management accounting. I use this topic as an example because a conference on this theme
was held in London in late 2007 and brought together a number of surveys of research in
the area (Ittner 2007; Skinner 2007; Wyatt 2007). The presentations were both interesting
and insightful, but also partial in their scope. Nearly all coming from a capital markets
perspective, they provided some understandings of the complexities of definition and mea-
surement in the area, the role of market pressures in the disclosure of such information in
a variety of different ways, the capital market reactions to any such disclosures, and whether
the internal availability of information on intangibles influenced performance (Ittner 2007).
The sum total of the presentations was a real degree of enlightenment, but only in relation
to a number of quite specific aspects of the overall problem. The question that was not
asked or answered was “Why are we concerned with this issue at this time?” Without
insights into this question and the contemporary history of financial reporting it is difficult
to come to an understanding of the reasons why organizations initiated disclosures in this
Very different probings would be necessary to appreciate why interests emerged in
making the intangible tangible at specific moments in time and in particular circumstances.
An active consideration of the politics of accounting disclosure and its regulation would
be needed if many of the factors implicated in these particular processes of change are to
Journal of Management Accounting Research, 2008
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Management Accounting Research in a Changing World
be fully understood. With no appeal to sociological and political insights, the processes at
work in the construction of the new financial categories and their magnitudes could not be
analyzed. Nor could the resultant debates between representatives of the corporate sector
and the regulatory authorities, the state, trade associations, and the audit and consultancy
industries be fully understood. Even the appeals to a historical appreciation of the emer-
gence of the category of intangibles and the subsequent debates about it were minimal,
despite the potential that a serious theorising of the history of accounting practices has to
offer. So a well-organized and fascinating conference was nevertheless a very partial one,
failing as it did to provide insights into some of the key dynamics underlying these partic-
ular processes of accounting elaboration and change.
The point of this example, particular in focus as it is, is not to criticize the ability of
mainstream research to cast light on important aspects of the intangibles debate. The rel-
evant papers certainly did that. Rather, the point is to illustrate that a diversity of research
approaches is needed if the aim is to provide a more complete understanding of the issues
related to the reporting of intangibles. If the interest is in appreciating the issues at stake
in processes of emergence and change as well as current functioning, then perspectives that
call on a wider array of the human and social sciences than just economics are needed. If
the aim is to understand the struggles over significances, definitions, and modes of mea-
surement, then political and social insights must seek to complement the economic ones.
If there is an interest in appreciating how new markets in information can both emerge and
decline, then a wider array of conceptual insights are also required. For all these reasons,
and others as well, it is vital that the accounting academic community preserves a range
of intellectual perspectives. They are needed for real-world pragmatic reasons as well as
interesting academic ones.
In contrast with such a need for a wider understanding, the world of accounting re-
search, both managerial and financial, has been getting increasingly narrow. Ideological
issues undoubtedly play some role in this narrowing of accounting research, pushing re-
search away from the social and political underpinnings of accounting and focusing more
on its market and decision facilitative roles and the theoretical insights that are presumed
to provide insights into these roles. However, I am increasingly convinced that a complex
of other factors also play important roles in sustaining what has come to be seen as the
“mainstream approach.” The hierarchical organization of the academic community provides
incentives for the contagious spread of the intellectual approaches of the elite from above
and the discouragement of innovation being generated from below. So much could be done
by non-elite institutions, but there seemingly is a fear of the consequences of stepping out
of line. I have said for a long time that only a very limited number of people have a license
to innovate in the North American academic accounting community.
The sheer expansion of that academic community has also resulted in the recruitment
of people with a more diverse range of intellectual abilities. Moreover, the increase in the
number of business schools seeking accreditation has further intensified the pressures on
faculty to engage in research, often in institutions in which there previously had been no
research culture. Many of the more senior faculty in such schools had a more technical
rather than an intellectual training in accounting and, as a result, the junior faculty often
lack the type of mentoring that is desirable. Thus, many of the faculty faced with the need
to publish look for simplicity and certainty rather than complexity and challenge in their
research. Standardized methods and pre-existing data sources are very attractive in such
circumstances. In addition, to the extent that many new members of the academic com-
munity are not very familiar with the history and institutions of the countries about which
Journal of Management Accounting Research, 2008
they research, it becomes increasingly difficult to pursue research that requires an under-
standing of organizational, societal, and cultural contexts. Yet conducting research on the
institutional and wider contexts of U.S. accounting requires such a knowledge base. Hardly
surprisingly, the result is that more and more emphasis is being placed on abstract theories
and forms of inquiry that are detached from the contexts in which accounting actually
operates (Hopwood 1987). Alongside all these factors are those of a more careerist nature,
which put increasing pressures on individual research to conform to established research
agendas and to publish in those journals that have a greater commitment to the publication
of mainstream research.
But all of these tendencies are neither uniform nor determining. There are a multitude
of exceptions, as the Management Accounting Section has itself illustrated over the years.
So it is vital that the pressures for conformity be recognized and resisted, that the possi-
bilities for innovation and diversity be encouraged, and that as much emphasis be placed
on the intellectual and methodological problems with the mainstream as on those of alter-
native perspectives. Archival and experimental studies, for instance, have their own prob-
lems that are different from but no less significant than those facing case, field, and his-
torical research. Moreover, although economic theorisations tend to reflect a monocentric
intellectual culture, that is itself a fairly recent product of some of the very pressures that
are impinging on accounting today. We need to remember that economics was also once a
polycentric discipline with a history of struggles between different schools of thought and
a long-standing investment in a wide range of perspectives, approaches, and modes of
inquiry. Neoclassical and Keynesian approaches debated with one another, as did theorists
emanating from Cambridge and Chicago. The classical school operated alongside political
economy perspectives and at times even those of institutional economics. The history of
economic thought once constituted an important part of the discipline as did what now
functions as the separate subject of economic history. Once diverse and multifaceted, the
pressures for a greater degree of uniformity have not only been those related to a search
for truth and understanding. While the resultant discipline can perhaps provide a more
detailed insight into particular issues and themes, economics has, in the process, also be-
come a narrower, more focused field of inquiry, certainly one less able to grapple with the
issues at stake in economic dynamics, processes of change, the interrelationships with
the political and social spheres, and appreciating what is at stake in economic praxis in
organizations and society at large. Although we currently are observing the development
of behavioral economics which might have some potential to cast at least some light on a
number of these topics, it is still too early to comment on the permanence of such a change.
Much of accounting research appears to be following what has happened to economics.
The management accounting research community needs to be conscious of this, to recognize
the non-inevitability of the tendencies at work and to invest now in the preservation of an
intellectual and methodological diversity that is so important for both appreciating and
acting on all aspects of the functioning of the craft in practice.
In management accounting there increasingly is a need for the integration of a number
of different theoretical and methodological approaches to the creation of new knowledge.
By this I mean not only a greater investment in interdisciplinary understandings, although
that is important as the above discussion has sought to illustrate. I also think that there is
a need to go beyond the drawing together of a number of different social science disciplines
in order to try to relate design and social science perspectives. We cannot lose sight of the
Journal of Management Accounting Research, 2008
Management Accounting Research in a Changing World
fact that the effective design of management accounting and control systems requires in-
sights into the factors driving systems to change as well as the consequences of system
elaboration. It needs to move beyond the design of particular new systems in isolation from
the wider organizational context.
It is possible to illustrate this with reference to the debates that I have had with Bob
Kaplan over the years. Bob comes from an engineering design and operations research
perspective. He is interested in the design of new approaches to aspects of management
accounting that have the potential to improve organizational functioning. His work on both
activity-based costing and the balanced scorecard is illustrative of this (Cooper and Kaplan
1992; Kaplan and Norton 1996). In contrast, I come from a social science background,
having a long-standing interest in the factors that are implicated in the emergence of man-
agement systems, both historically and contemporaneously, the wider patterns of human
and organizational consequences that the systems can have, and how both of these factors
interact to shape the organizational impact that the systems have. Different though these
perspectives might be, I think that there is now a fair measure of mutual respect between
us that stems from the recognition that the approaches have a degree of interdependency
and neither approach should operate in isolation. I am increasingly convinced that both
design and social science approaches are needed for investigating and implementing effec-
tive organizational change and improvement.
Indeed if a wider interpretation is given to the concept of design, the notion has some
very real potential to serve as a common ground where rationalist and interpretive ap-
proaches to management accounting could meet. For this to happen, our understanding of
design would need to go beyond the merely technical to include issues of organizational
and cultural fit.
The need for both design and more scientific understandings is certainly evident in the
world of construction. Consider the case of the new Millennium Bridge linking the two
sides of the River Thames in London, providing pedestrian access to Tate Modern. Initially
designed by the famous architect Norman Foster, the bridge shook when even quite modest
numbers of pedestrians walked on it. Elegant in form and beautiful to look at, it nevertheless
did not have the required functionality. That only came after the bridge was temporarily
closed during which time the renowned engineering consultants Arup re-examined the un-
derlying engineering assumptions, using both engineering science and simulations to modify
the design to increase its functionality. The resultant bridge brings together the art of design
and the science of engineering-and it works.
Similar issues constantly arise—and certainly should arise-in the sphere of manage-
ment accounting system design. Attractive as activity-based costing might appear, it also
may require the help of more organizationally grounded knowledges for its successful
implementation. In many cases it has been incorporated into massive and relatively inflex-
ible system designs that not only require costly investments in their adaptation to particular
organizational circumstances, but also undermine the more basic understanding of the need
for different costs in different circumstances. Seemingly particular forms of implementing
costing systems can have implications for the flexibility and responsiveness of organiza-
tional flows of information, thereby suggesting the need for an integration of the under-
standings of system design with those social science disciplines that can provide insights
into the likely modes of organizational functioning.
Not dissimilar issues can be raised with respect to the balanced scorecard. There cer-
tainly is an elegance about bringing together a variety of sources of information. But this
also has implications for the possible power of the newly more concentrated information
Journal of Management Accounting Research, 2008

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