Making Business Partners: A Case Study on how Management Accounting Culture was Changed

Abstract

There has been a lot of debate on the new business-oriented role of management accountants during recent years. This paper examines how a case company is trying to change its management accounting culture in practice. Furthermore, it illustrates how accounting practices are woven into the cultural fabric of an organization and the great diversity of practices constituting its business orientation. This longitudinal case study explores and theorizes the multiple cultural change interventions related to management accounting, including how the case company reorganized the management accounting organization, implemented new accounting systems and innovations, pursued a new kind of human resource management (recruitment, training and career planning policies) and set the official corporate values in order to support this change. The deepened decentralization of the business controller function, combined with the effective and increasingly centralized basic accounting systems (such as ERP and consolidation packages) and HRM management, were of high importance in establishing the new business orientation. Moreover, informal interventions such as the role modelling and directing of personal attention – carried out by the top management and top financial executives – and storytelling, contributed to the constitution of cultural practices. Thus, the potential power of these informal change interventions and mechanisms should not be underestimated, with further research being, in fact, in great need. As its major theoretical development, at the end of the report, this study introduces a systematic framework of the cultural change interventions related to management accounting.

Acknowledgements

This longitudinal research project has indeed been like a long distance running competition. I would like to gratefully acknowledge the helpful and constructive comments offered along the way by Michael Bromwich, Michael Dutton, Markus Granlund, Lars Hassel, Anthony G. Hopwood, Cory Isaacs, Pertti Kettunen, Erkki K. Laitinen, Kari Lukka, Teemu Malmi, Ari Manninen, Jan Mouritsen, Kari Neilimo, William Nixon, Vesa Partanen, Jukka Pellinen, Pekka Pihlanto, Timo Salmi, Robert Scapens, Mike Shields, Jani Taipaleenmäki and Tero-Seppo Tuomela. I would also like to thank warmly the insightful audiences in the EAA annual congresses in Graz 1997, Bordeaux 1999 and Athens 2001.

Notes

¹Actually, the wider research project included three case sites selected from large Finnish companies. In total, 35 interviews were conducted in these three companies. Two other companies were excluded from this paper in order to shorten and sharpen the study for the chosen purposes. They are, however, used in the original theorizing of the wider project as comparative data material. This additional material and analysis is intended for use in the subsequent phases of this research project.

²The dimensions of the management accountant's roles, according to the earlier literature (e.g. Mouritsen, 1996), could be simplified into three parts: for example, ‘Scorekeeping’ (gathering, registering data, preparation and the dissemination of routine reports), ‘Controlling’ (producing and using ‘surveillance’ and ‘supporting’ control information, and looking after managers), and finally, ‘Business Orientation’ (or support) (managerially active duties, such as being an advisor and participating in the management activities). This classification might be seen as the modern version of the categories defined by Simon et al. (1954). In a broader way, attention directing and problem solving are respectively defined as ‘control’ and as a ‘business orientation’ or ‘business support’. Another label could be ‘involved’ vs. ‘independent’ (Mouritsen, 1996 or Coad, 1999) or ‘participation-oriented’ vs. ‘instrumental’ (Pihlanto, 1995; Järvenpää, 1998).

³The nature of controllership has been studied by Mattson (1987), and multinational CFOs roles and requirements by KPMG (1990), both of which indicated the changing and expanding responsibilities and roles because of companies restructuring, global competition and CEOs' changing information needs. Furthermore, the studies of Fern and Tipgos (1988), Kendall and Sheridan (1991) and the IMA (1996) indicated an already active and growing role for management accountants in strategic planning, too. The findings of the IMA (1996) survey emphasized the increasing importance of business and communicative skills in the management accountant's work. The interpretation and communication of information and the financial consequences of different activities, in addition to preparing reports, were seen as essential and increasingly common duties. Very similar trends can also be found in the IFA research programme (1994), considering the future of management accountancy.

⁴This hierarchy of cultural elements is not highlighted in this study, but it might provide a basis for further theory development in future research.

⁵See Alvesson and Berg (1992, pp. 80–85) for an in-depth analysis of the related studies that this study relies upon.