Effects of organizational process change on responsibility accounting and managers’ revelations of private knowledge

We report the results of a nine-year field study that examines how responsibility accounting (RA) is used to manage horizontal relationships among several responsibility center (RC) managers including those who work on committees or cross-functional teams. We find theory-consistent evidence that the...

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Bibliographic Details
Published in:Accounting, organizations and society organizations and society, 2008-02, Vol.33 (2), p.164-198
Main Authors: Rowe, Casey, Birnberg, Jacob G., Shields, Michael D.
Format: Article
Language:English
Subjects:
Accounting research
Business management
Business organization
Business studies
Impact analysis
Intragroup relations
Knowledge management
Managers
Organizational behavior
Organizational change
Responsibility accounting
Senior management
Studies
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Summary:We report the results of a nine-year field study that examines how responsibility accounting (RA) is used to manage horizontal relationships among several responsibility center (RC) managers including those who work on committees or cross-functional teams. We find theory-consistent evidence that the goal-congruent design or redesign of accounting and participation practices in general, and of RA in particular, depends on the magnitude, scope, and speed of organizational process change. When there is a change in the magnitude, scope, and speed of organizational process change, we find that the measurability of RC managers’ financial performance can change, and we also find that using RA to manage RC boundaries is an important mechanism for achieving goal-congruent behavior and avoiding dysfunctional behavior. Moreover, we show that several accounting and participation practices (e.g., activity-based costing, open book accounting, project budgeting, cross-functional teams) support RC boundary management that involves framing or reframing RC boundaries so as to influence competitive or cooperative behavior among RC managers. Finally, this study contributes by introducing a new research method to the accounting literature that is effective in structuring and interpreting longitudinal field data in relation to theoretical expectations.
ISSN:0361-3682
1873-6289
DOI:10.1016/j.aos.2006.12.002