Innovation and research impacts widely in the field of management accounting which encompasses the measuring and reporting financial and non financial information for decision making towards the achievement of organizational objectives. The traditional accounting measurements for a long time are characterized by the use of a monthly financial cycle that raises issues of relevance of data and timeliness. Lack of monitoring, the existence of many variances in the accounting information and low performance are some of the notable factors in the traditional methods of accounting. However, this has long since changed with the introduction of new technology and advancement in the management accounting techniques.
The field witnesses a radical change in the processing, analysis and presentation of information. Even the aspect of management in itself has changed. With reference to the introduction of computerized accounting to replace labor records, management accounting has improved based on the production of error free, timely and relevant data. The positive impact of innovation in this sector is witnessed in the essence of fast and easy storage of data, speed in processing data into information, communication and interactions, fast distribution channels, data reliability among others.
Innovation has led to competitive advantage in the firms and promoted the integration of data. The use of technological advancement in the accounting field has also had its bad effects. It is an example of the case of predators and preys where the innovation leads to mass retrenchment in the workforce. The use of technology integrates many systems together. It is continuously viewed that the use of innovation leads to the eventual dismissal of some of the sectors and mass competition where the dominant sectors absolve the small sectors.
The technology in use promotes competitive advantage over smaller firms and eventually most of them pull out of the market for lack of selling power. However in the case of accounting, this is different. As much as this is witnessed, the innovations promote integration and even mergers in the market sectors of the technology. For instance, computers may have replaced the use of typewriters but not the use of cabinets and labor records. People are still employed as secretaries and in some cases, typing is required.
Cabinets used for storage purposes are still manufactured even to date despite the existence of computers since not all things need be stored in the software. The computer industry may be dominant but has not completely wiped the rest of efficient industries necessary for survival. The organizational behavior and policy of the government also pose as key factors towards the adoption of technology in the organization thus reducing the competition level of certain innovations. The effects of adopting innovations in management accounting are positively and negatively felt and this gives opportunities for mergers and even market advantage by other firms.
It is thus not all cases where small firms are preyed on by large firms who are the predators. In some instances the predators may also turn into prey and face the difficulties or rather result into mergers. It is not in all instances where firms that have adopted the innovation dominates the market, rather they gain only a share where the rest of the firm hold. Reference Kaplan, R. Et al.
(2001). Issues In Management Accounting. Financial Times Prentice Hall.