Strategy, strategic management accounting and performance: a configurational analysis

Abstract

The purpose of this study is to investigate the effectiveness of different configurational archetypes of strategy and strategic management accounting and to appraise how management accounting's horizontal and vertical alignment with strategy can facilitate performance. Design/methodology/approach The study deploys a holistic configurational approach to examine the relationship between strategy, strategic management accounting, and performance. Configurations are derived empirically using an inductive approach from a sample of 109 manufacturing companies. Findings The observed configurations (i.e. 'analytics', 'blue-chips', 'first movers', 'domestic protectors', 'laggards and socialism relics') constitute varying levels of performance and varying degrees of fit. Support is provided for the equifinality proposition that different strategic and structural alternatives are associated with similar performance levels. Equivocal support is provided for the configurational proposition that internally consistent configurations are associated with higher performance. Research limitations/implications The variables examined do not fully capture the complexity of pertinent configurations. Limitations revolve around application of the cluster analytical technique and its reliance on researcher judgement. Practical implications The study's most important message concerns the manner in which it highlights the fallibility of assuming a singular relationship between strategic choices and management accounting system design. While prior research has tended to offer fragmented and unidirectional management accounting prescriptions, we raise the notion of how key variables can interact to create an effective organization. Originality/value The study breaks new ground by showing that multiple designs of strategy and strategic management accounting may be equally effective in a particular context. This finding challenges much traditional contingency based modelling in management accounting.

Climate change mitigation strategies in carbon-intensive firms

“…Quantitative studies usually deploy a configurational approach (Jeswani et al, 2008;Lee, 2012;Sprengel and Busch, 2011;Weinhofer and Hoffmann, 2010). This approach identifies configurations of firms deploying similar strategies but does not reveal relationships between alternative strategies (Cadez and Guilding, 2012). While acknowledging mixed arguments and evidence, the proposition in this study builds on the economic argument that corporate resources are limited which supports the expectation that carbon intensive firms are likely to engage in a single climate change mitigation strategy.…”

“…A strategy in a business context is typically concerned with setting long-term corporate goals, developing activities and allocating resources that will enable the firm to achieve those goals (Cadez and Guilding, 2012;Snow and Hambrick, 1980). Historically, business was reluctant to reduce pollution due to the prevailing philosophy that the costs of prevention and clean-up lead to lower competitiveness (Porter and van der Linde, 1995).…”

Performance implication of market orientation and use of management accounting systems

“…This construct has eight items, covering three dimensions: customer orientation (three items), competitor orientation (two items), and interfunctional coordination (three items). The scale for accountants' participation in strategic decision making is adapted from Wooldridge and Floyd (1990) and Cadez and Guilding (2012). Respondents have been asked to rate the accountants' participation in five aspects of the strategic 38 JABES 25,1 process, including identifying problems and proposing objectives, generating and evaluating options, developing details about options, and taking the necessary actions to put changes into place.…”

Management Control Systems and Firm Sustainability: Evidence From Textile and Apparel Businesses in Thailand

“…To succeed in competitive markets and environments, strategic management accounting is a significant determinant of firms' competitiveness and business outcomes. Strategic management accounting can produce information and data through the management accounting approach and method implementation to aid decision making to support firms' business success (Cadez & Guilding, 2012). In the existing literature, management control systems are one of the strategic management accounting techniques.…”