Strategic management accounting: how far have we come in 25 years? Kim Langﬁeld-Smith
Monash University, Melbourne, Australia
Purpose – The purpose of this paper is to provide a review of the origins of strategic management accounting and to assess the extent of adoption and “success” of strategic management accounting (SMA). Design/methodology/approach – Empirical papers which have directly researched SMA and prior review papers of the adoption and implementation of SMA or SMA techniques are reviewed. As well as assessing the extent of adoption of SMA and the reasons underlying an apparent low adoption rate, the role of accountants in adopting and implementing SMA is considered. Finally, the success or otherwise of SMA is discussed. Findings – SMA or SMA techniques have not been adopted widely, nor is the term SMA widely understood or used. However, aspects of SMA have had an impact, inﬂuencing the thinking and language of business, and the way in which we undertake various business processes. These issues cut across the wider domain of management, and are not just the province of management accountants. Research limitations/implications – There is limited value in conducting future surveys of the adoption and implementation of SMA or SMA techniques. Rather, the focus should be on how SMA-inspired techniques and processes diffuse into general practice within organizations. Originality/value – Twenty-ﬁve years after the term strategic management accounting was ﬁrst introduced in the literature, this paper brings together disparate literature and provides a broad assessment of the “state-of-the-art” of strategic management accounting to inform researchers and practitioners. Keywords Strategic management, Accounting, Activity based costs, Budgetary control, Target costs Paper type Literature review
Received July 2007 Revised September 2007 Accepted November 2007
Accounting, Auditing & Accountability Journal Vol. 21 No. 2, 2008 pp. 204-228 q Emerald Group Publishing Limited 0951-3574 DOI 10.1108/09513570810854400
Introduction In 1981, Simmonds published a paper in the UK professional magazine, Management Accounting, in which he presented a strong case for the adoption of strategic management accounting (SMA) (Simmonds, 1981, p. 12). Many professional and academic papers continued this theme, culminating in an inﬂuential paper by Bromwich (1990) and the book Pathways to Progress (Bromwich and Bhimani, 1994) At the same time in the USA, inﬂuential academics such as Robert Kaplan, Robin Cooper and John Shank were vocal critics of the state of management accounting and urged us to improve our relevance by adopting strategic cost management (SCM). On both sides of the Atlantic, case studies were published that demonstrated the superiority of SMA or SCM over traditional forms of management accounting, and the The author is grateful for comments received from attendees at the 5th Asia Paciﬁc Interdisciplinary Research on Accounting Conference, Auckland, July 2007. The paper also beneﬁted from constructive comments by the journal referees and David Smith.
need to take a strategic perspective to management accounting became the accepted wisdom. However, various surveys of practice in the 1990s indicated that the uptake of SMA was slow. Some commentators asked whether SMA was “a ﬁgment of academic imagination” (Lord, 1996) and others questioned whether accountants had the capacity or the skills to make SMA a success (Cooper, 1996a, b). Despite the evidence, several commentators continued to believe that it was only a matter of time before SMA was adopted widely across industry and that it would emerge as a major force in shaping modern management accounting (Bromwich and Bhimani, 1994; Dixon and Smith, 1993; Roslender, 1995). As it is now just over 25 years since Simmonds ﬁrst...