Over the past decade, management accounting has seen an extraordinary rise in technology driven innovations, whereby Hyvonen (2008) explains how this has contributed to the emergence of virtual organisations. The power of ICT plays a pivotal role in many organisations, through providing a basis for managing efficient operations and formulating corporate strategy. Moreover, Bhimani et al (2008) explains how ICT provides the opportunity to alleviate the problems associated with information flows in organisations with fragmented information systems. In practice, Hyvonen (2008) notes that the centralised control of large organisations requires ICT systems that make the periphery visible to the centre. The enterprise wide resource planning system (ERP System) is an example of an ICT system which coordinates all the resources, activities and corporate information of an organisation into one central database that collects data and feeds it into multiple applications that support all business activities of an organisation. Furthermore, it has been suggested that such systems facilitate unprecedented levels of organisational integration (Dechow and Mouritsen, 2005) and thus ERP systems have provided a new platform for organisations to thrive and develop a competitive advantage.
Actor-Network Theory is a constructivist and distinctive approach to social theory which was developed in the early 1980’s by scholars Michel Callon and Bruno Latour, together with sociologist John Law. Whilst Actor-Network Theory is often interpreted in many ways, it is commonly agreed that it adopts a ‘material-semiotic’ approach, which assumes that many relations are mapped together in order to form a single network. Thus, Actor-Network Theory describes the progressive constitution of a network in which both human and non-human
Cited: in Latour and Woolgar, 1979). This is illustrated by Alcouffe et al (2008), where they state that once the Sections Homogenes was inscribed in the Plan Comptable in 1947, any reference to the system of values that had supported its development was erased through collective amnesia. As a result, managers strive for their accounting innovations to become accepted by the organisation, so that it becomes black boxed and only the inputs and outputs of the system are deemed important, ultimately achieving improved efficiency. Whilst a black boxed accounting innovation, such as an ERP system, may host an array of benefits to control in an organisation, managers should act with care as reporting dimensions become carved in computer code (Deschow and Mouritsen, 2005), and thus they should be confident in its design. However, the merits of black boxing have also received criticism, as many argue that the pursuit of creating a black box can never be successful, as it is always possible to reopen and re-debate the black box (Deschow and Mouritsen, 2005). Nonetheless, the performance of a black box is thus influenced by the costs of re-opening it, or in the case of an ERP system, the costs of changing the system after implementation which is determined by both the human actors and technology. Additionally, Actor-Network Theory provides an affective platform in which to explore the merits of control in organisations. Quattrone & Hopper (2005) illustrate this by investigating the implications of ERP technologies for management control at two multinational organisations. Sister Act, a Japanese MNO possessed an organisation structure which was characterised by complexity and distance. Sister Act realised that distance was not physical, but rather a social artefact and thus used SAP to reproduce existing boundaries and existing control methods, keeping the organisation structure intact. Although the SAP was not a vehicle for revolutionary change, it defined the centre and peripheries whereby the only space capable of overseeing the MNO was the centre, and thus its configuration created a unitary notion of space and time enabling action at a distance to continue. Consequently, this improved prevailing practices and enhanced the level of control at Sister Act. In contrast, Think Pink, an American MNO used SAP to collapse functional barriers and distances between segments in order to enact integration based on real-time control. However, paradoxically, control suffered as the reorganisation of processes and structures failed to match responsibilities to accountability and thus eliminating distance did not centralise control (Quattrone & Hopper, 2005). Quattrone & Hopper (2005) explain that as a result of this impaired control, information could be accessed and inputted from different locations, for different purposes and so ‘everyone at Think Pink could slice the information as they wished’. As a result, this had significant implications for Think Pink; For example, the plant financial analysts tried to improve their unit’s performance by benchmarking their costs against those factories across the world without the centre or the other factory knowing. Hence, anyone with access to the ERP database could create information to suit his or her purpose and thus they stated that ‘everyone is an accountant now’. This illustrates the importance of forming a heterogeneous network of aligned interests in order to achieve control in an organisation. Therefore, by drawing on Actor-Network Theory, which places a fundamental emphasis on both human and non-human actors, it enhances our understanding of integration and control in organisations. By examining the implementation of ERP technologies in several organisations, Actor-Network Theory has proved successful at rediscovering the connections that have been lost as a result of modernistic thinking. However, Actor-Network Theory has been subject to criticism, and thus this creates the opportunity for further research into social theory, such as an investigation into the extent to which Functionalism better contributes to our understanding of management accounting and control. Nonetheless, as Actor-Network Theory successfully breaks down the barriers of dualism between society and technology, it has provided a practical platform to understand the complex issues associated with information infrastructures. Hence, as Actor-Network Theory increases the level of description and precision, it provides a new opportunity to aid our understanding of management accounting and control in organisations that have adopted ERP technologies. Without this precision, Dechow and Mouritsen (2005) state that one will never get to understand the underlying infrastructure of the meeting point between technology and control. As Quattrone & Hopper (2005) suggest, shared databases which are simultaneously accessible from many locations fulfil the dream of many managers and accountants. However, this dream has not been shared by everyone, as Dechow & Mouritsen (2005) suggest that ERP systems only create ‘moderate impact’ as they are not typically designed with change in mind. Nonetheless, through exploring the merits of Actor-Network Theory, we have come to understand that for an ERP system to be given a fair chance at succeeding and initiating control within an organisation, all relevant actors must construct its meaning through translation and action, and this meaning must be continuously renewed in order to continue its existence socially (Hyvonen et al, 2008).