Do innovation attributes really drive the diffusion of management accounting innovations? Examination of factors determining usage intensity of strategic management accounting

Abstract

PurposeThis study investigates the usage of modern management accounting techniques popularly referred to as “strategic management accounting” (SMA), and the extent to which innovation attributes (namely relative advantage, compatibility, complexity, trialability and observability) determine SMA usage intensity.Design/methodology/approachSurvey data was obtained through a structured questionnaire from 45 out of 56 publicly listed manufacturing companies on the Mainboard of the Nigerian Stock Exchange. Descriptive statistics, one-way ANOVA, exploratory factor analysis, confirmatory factor analysis and structural equation modelling were used to analyse data.FindingsWhereas the overall usage rate of SMA as an innovation is generally moderate, there is significant difference in SMA usage intensity across industries in the manufacturing sector due to environmental uncertainty. Compatibility emerged as the strongest determinant of SMA usage intensity, implying that commercial enterprises would intensely apply SMA to remain innovative, to continuously improve and to incorporate strategy in accounting practice in a bid to survive competition. SMA will witness extensive usage if it aligns with the competitive strategies of an organisation.Research limitations/implicationsThe attributes of innovation measured treat all SMA techniques as one, but did not measure relative advantage, compatibility, complexity, trialability and observability for each of the techniques. Future studies may consider investigating how innovation attributes specifically affect each SMA technique. The dimension of compatibility investigated in the study lean towards the alignment of SMA with competitive strategies. Taking into account the multidimensionality of compatibility as an innovation attribute, future studies may examine how past experience of implementing new ideas, as well as compatibility of SMA with corporate culture and value system, affect the dissemination and diffusion of management accounting innovations.Practical implicationsThe paper proposes that although innovation attributes may partly explain SMA usage, coercive factors such as competition and environmental uncertainty may also be responsible for the decision to adopt innovative management accounting practices. The study therefore calls for a critical appraisal of how coercive institutional factors such as competition, regulation and actions of key stakeholders influence the decision of organisations to adopt an innovation.Originality/valueThis paper contributes to knowledge by challenging existing knowledge and presenting evidence that innovation attributes acclaimed to determine the spread of an innovation may be inapplicable in certain settings due to some environmental challenges. The study also contributes to knowledge by developing a composite scale for measuring innovation attributes specifically adapted to management accounting innovation, which can be used in future studies.

Diffusion of a Managerial Innovation: Nothing is ever certain. The Case of Mindfulness at Work

“…More precisely, we find that perceptions of a lack of compatibility can outweigh the relative advantages of the studied MI; beyond compatibility, the origins of MI in other cultural environments seem to be crucial obstacles. Accordingly, our findings enrich Rogers's (1995) long-standing model and are consistent with the results of Oyewo's (2021) recent research on the diffusion of management accounting innovations.…”

“…Unfortunately, as Khosravi et al's (2019) systematic review shows, few studies empirically examine the role of MI attributes in their diffusion. Moreover, with the exception of recent research on a specific management accounting innovation (Oyewo, 2021), studies only find evidence of the relative advantages of MIs (cost, impact of performance) (Damanpour, Schneider, 2008;Schneider, 2007).…”

“…The rational perspective could be one of these explanations, if we consider other empirical results, such as those by Damanpour and Schneider (2008) and Schneider (2007), that show that perceived advantages or awareness of the benefits of MI can provide complementary explanations of MI diffusion. However, from a rational perspective, Oyewo (2021) shows that compatibility with strategy is the strongest determinant of the diffusion of MIs such as strategic management accounting, suggesting that compatibility must be studied in all its multidimensionality, including its institutional dimension, through compatibility with corporate cultures and value systems. Finally, in mindfulness literature, Badham and King (2021) highlight the risks of the rational view that can lead to rigid forms of MBI@W. All these findings and explanations justify our interest in bridging the two MI diffusion perspectives to analyze why some MIs diffuse and some do not, according to the integrative model in Figure 1.…”

Understanding the adoption or rejection of management accounting innovations within an SME using Rogers’ conceptual frameworks

“…At first, Rogers’ innovation diffusion theory is one of the fundamental references in the field of innovation management. Kapoor et al (2014, p. 4) mention the “hundreds of studies on Rogers’ attributes.” Second, Rogers’ framework does not concentrate on individual or organizational adaptations to change, but it primarily considers the change as a result of the evolution that could become better adapted to the needs of the collective of an organization (Oyewo, 2021). Finally, few studies apply Rogers’ concepts at the organizational level as called for the author (Rogers, 2003).…”

“…See, for example, papers dealing with the implementation of activity based costing (ABC) method in France (Alcouffe et al , 2003; Alcouffe and Guedri, 2008) and in Germany (Becker et al , 2015). As for Oyewo (2021), he analyzed the implementation of the usage of strategic management accounting in listed companies in Nigeria. Other papers study MAIs with an historical approach within big companies (Bensadon, 2015; Collier, 2012).…”