Strategic management accounting in the public sector context: the case of the Swedish Transport Administration

Abstract

PurposeThe objective of this paper is to generate further knowledge about strategic management accounting (SMA) in the public sector context. The authors attempt to do this through a study of SMA work in a public sector agency (PSA), the Swedish Transport Administration (STA). The paper elaborates on the formation of the agency's strategies and the challenges the agency's SMA work had to deal with, and focuses its analysis on the interplay between SMA and the characteristics of the public sector as well as how it is constitutive of strategy.Design/methodology/approachThe empirical material was gathered between 2013 and 2015 and consists of documents that include the STA's appropriation, mandate, strategic and operational plans, and balanced scorecard, as well as interviews with 35 civil servants at various levels of the STA.FindingsThe study finds that, depending on the performances of PSAs in their specific environment and the influences from the environment's constituents, SMA may function as an instrument that makes or breaks strategies. The characteristics of the public sector context may therefore affect SMA, and by extension, strategy, in several ways. First, the present case shows that the inherent reduction that the focus of SMA techniques entails, and their inability to deal with the complexity of a PSA's context, places them at constant risk of becoming strategically irrelevant in the eyes of knowledgeable local managers in a PSA. Second, interventions from the government may override a PSA's SMA and in effect make a PSA's strategic focus ambiguous. Third, outside monitoring performed by such actors as the National Audit Office and the mass media may influence a PSA's SMA work both directly and indirectly when the agency and the government are responsive to the agenda set by such scrutiny.Originality/valueThe paper broadens the scope of earlier SMA research in the public sector by including the specific characteristics of the public sector in the analysis and how accounting techniques may come to compete for strategic placement as they are propelled from within and from without the organization.

Strategic Management Accounting on Competitive Advantage

“…All dimensions of SMA also indicate that a company's resource procurement is sufficient, appropriate, and timely, saving time and related costs and being able to set prices for products or services that are attractive to customers at different prices from others in the same market. This study is consistent with a study by Höglund et al (2021) to generate further knowledge about strategic management accounting (SMA) in the public sector context. The authors attempted to achieve this by studying SMA work in a public sector agency (PSA): the Swedish Transport Administration (STA).…”

The impact of the control function on the effectiveness of policy implementation

“…In this broad view, the control function focuses on both monitoring and facilitating implementation. However, less research has been conducted on how this broader control function specifically influences policy implementation (Höglund et al, 2021; Nilsen et al, 2013).…”

“…The control function both as controller and facilitator has been studied a lot as well, particularly in the context of New Public Management and in the field of management accounting (Anderson, 2006; Paulsson, 2012; van Helden & Uddin, 2016). However, the specific impact of this broader control function on policy implementation has not previously been the subject of research (Höglund et al, 2021; Nilsen et al, 2013; ter Bogt et al, 2016). Following the results of this study, it can be concluded, that precisely this broader control function can be a very decisive factor for the effectiveness of policy implementation.…”

Challenges of implementing management accounting innovations: Evidence from the field

“…TMA systems do not provide enough relevant information to management in the new business environment which is adopting advanced technologies. These inherent limitations of early management accounting systems paved the way for the emergence of innovative management accounting techniques (Höglund et al, 2021). Strategic management accounting (SMA) is an umbrella name for contemporary management accounting techniques that provide and analyse information about an organization's products in the market, cost structure, the firm's strategies, competitors' strategies and competitors' costs over a considerable period beyond one year (Pasch, 2019).…”