MANAGEMENT ACCOUNTING AND ORGANISATIONAL CHANGE

Topics: Management accounting, Developing country, Developed country Pages: 5 (1498 words) Published: October 15, 2014
MANAGEMENT ACCOUNTING AND ORGANIZATIONAL CHANGE: IMPACT OF ALIGNMENT OF MANAGEMENT ACCOUNTING SYSTEM, STRUCTURE AND STRATEGY ON PERFORMANCE Introduction
In the search to understand management accounting in competitive environments and advance technologies, change has increasingly become a focus for research. Many firms have experienced significant changes in their organizational design, competitive environments and technologies. Business environments exhibit a variety of structures and processes, including flat and horizontal organizational forms, multidimensional matrix structures, networks of “virtual organizations” and self- directed work teams. When business organizations respond to challenges by embarking on a change management path, they are faced with choices of which one of the management methods, techniques, and systems would be most effective (Waldron, 2005). Every organization is located within a particular configuration of contingencies. It is dependent on the market and technological environment in which it operates its scale and diversity of operations, the technology applied to its work, and the type of personnel it employs. To achieve congruence, an appropriate design is the one which best suits it’s contextual and operational contingencies. According to Moores and Yuen (2001, p.352), “to be internally consistent, organizations must have tightly independent and mutually supportive parts in terms of strategies, structures and process”. The management of organizations faces a challenge to reinforce the management accounting system, strategies and structures together in order to achieve competitive advantage and enhance performance. Thus, research needs to be carried out to help management make appropriate decisions in order to achieve this congruence. This study examines companies in Malaysia’s manufacturing industry in responding to the rapid changes in technological and competitive environment in Malaysia as a result of globalization. Globalization has changed the environment surrounding organizations operating in developing countries with an increase in uncertainty, intensified industry competition and advanced technology. According to Kassim, Md-Mansur and Idris (2003) globalization brings in new technology and makes a developing country open to greater competition. These changes may affect the choice of management accounting practice (MAP) in an organization and may also result in the need for the firm to reconsider its existing organizational design and strategies in order to fit with the changing environment. This argument is supported by Burns and Scapens (2000) and Shields (1997), who suggest that changes in environment cause changes in organizations, which in turn cause changes in MAP.

Background and Significance of the Study
The business environment in a developing country differs from that within a developed country with regards to market size, access to manufactured inputs, human capital, infrastructure, volatility and governance. According to Tybout (2000), although some developing economies are quite large, most are not; the menu of domestically produced intermediate inputs and capital equipment is often limited; a scarcity of technicians and scientists also affects flexibility in the production process and the ability to absorb new technologies; infrastructure is relatively limited; macroeconomic and relative price volatility is typically more extreme; legal systems and crime prevention are also relatively poor; and corruption is often a serious problem. Malaysia is categorised as the developing country, however it has more advanced infrastructure and technology compared to most other developing countries. Malaysian manufacturing industries are also more concentrated than those of most developed countries (Bhattacharya, 2002). With globalization, the application of technology in Malaysia has increased, especially through foreign investment (Kassim et al., 2003). Changes in business...


References: Online articles on management accounting
Previously conducted research papers on different issues of management accounting
magazines, brochure ctc
Web link
http://www. en.wikipedia.org/wiki/about management accounting
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http://en.wikipedia.org/wiki/management accounting system
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