Issues in Management Accounting - Assignment Example

Issues in Management Accounting Student’s Name Institutional Affiliation Date Task 1 Emsley (2005) reiterates that innovation is an important topic for research because it enables firms to adapt and survive successfully in the volatile business environment. Management accountants also play a crucial role in the innovation process. They are responsible for ascertaining that the managers have the relevant information that will enable the smooth adjustment to the changing business environment (Emsley, 2005). Urbancova (2013) also states that innovation and knowledge are key prerequisites for gaining competitive advantage in an organization. Towards enabling the organization to respond successfully to the changing business environment, there are particular characteristics of innovation that should come into play. For instance, innovation ensures that the existing relationship between the new products developed by the firm and the market performance is strong (Urbancova, 2013). Moreover, the development of new products from innovation enables the firm to maintain its market share thereby enhancing productivity. Innovation also stands out as an essential necessity for the growth of an organisation. The growth of the company manifests through non-price factors such as individualisation, quality and design. Innovation also enables a firm to substitute out-of-the-market products thereby retaining its market share. In essence, innovation creates a pivotal role in shortening the lifecycles of the products for the best interest of the company. The inability of an organisation to develop innovative products places it at a risk of lagging behind in the development of new products (Urbancova, 2013). Consequently, the competing firms will outperform it thereby leading to reduced market share and profitability that may result in the ultimate collapse of the company. Therefore, firms that intend to grow and survive in the current turbulent environment should embrace creativity and innovativeness in the development of products. Innovation enables the organisation to develop products that meet customer needs thereby giving rise to customer satisfaction. The ability of the organisation to satisfy customer needs increases the chances of the customers to become loyal to the organisation. Management accountants that have a business unit orientation can determine whether an innovation is proper or not since they report to the business unit managers or work alongside them (Emsley, 2005). Task 2 Emsley also emphasises on the innovation role of a management accountant for theory development. In the first section, Emsley explains how innovativeness is a dependent variable. To begin with, the author provides a definition of innovativeness by equating it to the act of an individual within the organisation to develop an idea, object or practice that is new to the department, organisation or individual. Being an employee that is responsible for evaluating the successful performance of innovative strategies, it is the role of the management accountant to devise innovative strategies that will enable the organisation to attain competitive advantage. Emsley also states that the management accountant should be innovative since innovation manifests anywhere in the product or service development cycle from the inception of the idea through the entire implementation process. The incremental stages associated with the product development cycle are not independent. As a result, the input of the management accountant in the identification of alternative approaches to the innovative strategy is pertinent to the overall success of the underlying innovation. According to Nassar et al. (2011), some of the innovative concepts implemented by the management accountant may include Activity Based Costing (ABC), Economic Value-Added (EVA), Target Costing, Balanced Scorecards (BS), Strategic Cost Management and Activity Based Management (ABM) (Nassar et al., 2011). Having the idea in mind, it is appropriate to emphasise the role played by a management accountant towards ensuring the success of an innovative business strategy. The role of the management accountant in the innovation process also emanates from the fact that innovativeness reflects the extent to which the management accountant takes part in the innovation process. The essence of the innovation theory that concerns the management accountant also arises from the mere fact that studying innovativeness enables the understanding of the different explanatory variables that impact differently on the innovativeness of the employees of an organisation. Role involvement suffices to be one of the variables. The roles of the management accountant include score keeping, problem solving and directing attention. The significance of the theory also emanates from the relationship that exists between the management accountants and role involvement. From the theory, Emsley explains the three distinct ways through which role involvement influences the innovation process: innovation acceptance by the unit managers, knowledge about the significance of the innovations and the motive behind the innovation (Emsley, 2005). Task 3 Emsley also explains the significance of studying innovativeness. For instance, studying innovation has enabled the realisation that there are different incremental stages associated with the innovation process. The fact that that the steps are dependent implies that an innovative input by a management accountant at one point of the chain will contribute to the overall success of the entire innovation process. Emsley states that it is important to define the moment when an idea changes into an innovation since an idea is the basis of an innovation. The importance of studying innovativeness is also evident when studying all the innovations in an organisation rather than concentrating on a single innovation (Emsley, 2005). The argument arises from the fact that it is easy to understand a single innovation such as Target Costing since it contains similar stages. However, in the case of different innovations, understanding their stages is different since different innovations have different implementation stages. The use of innovation in management accounting has also become a trend in modern organisations. As a result, innovativeness is an important topic of study since most organisations use innovativeness as a tool of surviving during turbulent economic times (Lopez-Valeiras, 2015). Sustainable innovations in management accounting enable the organisation to concentrate on activities that will realise positive performance only rather than engaging in other activities that may yield losses. Target Costing ensures that the innovativeness ideas of the organisation are in tandem with the expected costs thereby playing a pivotal role in the budgeting process. Studying innovativeness enables the determination of the extent to which the management accountant takes part in the innovation process. However, it is difficult to achieve the objective when studying a single innovation. Studying innovativeness also enables the understanding of the different stages of different innovations. However, the study of a single innovation cannot provide a generalised understanding of the other innovations. Finally, studying innovativeness merges various innovations thereby enabling the categorisation of the innovations based on the underlying explanatory variables that influence them (Emsley, 2005). Task 4 I also agree with Emsley’s argument that incentives have a role to play in the innovativeness witnessed in management accounting. From the argument, it is evident that the incentive of the management accountant to innovate influences the development of innovations. The future prospects and rewards of the management accountant are some of the incentives that motivate the professional to take part in innovation development. This yields greater job enrichment that result in enhanced job satisfaction. In many organisations, the business unit manager is the superior of the management accountant. As a result, the individual influences the incentives that are available to the management accountant. In most cases, the guarantee of incentives on the part of the management accountant emanates from the ability of the professional to develop innovations that lead to the achievement of the goals of the organisation. As a result, the innovations developed by the management accountants are radical. However, less motivation and incentives arise in cases where the superiors are senior accountants that are responsible for aligning the innovations developed by the management accountant with the overall functional goals of the business unit such as compliance reporting and cash flow management (Emsley, 2005). Just like in the case of other executives and employees of the organisation, firms have utilised incentives to enhance the performance of employees for a long period. In essence, there is a positive correlation between the incentives offered to employees and their productivity (Lerner & Wulf, 2007). As a result, management accountants are not an exception. Offering incentives to the professionals will motivate them to take part in the development of innovations geared towards the goals of the organisation. There are other monetary and intrinsic incentives such as straight commission and variable pay that employers use to motivate employees to yield high performance (DelVecchio & Wagner, 2011). Offering on-the-job training that guarantees promotion to the successful trainees is the other incentive that motivates employees to exhibit high performance. There are other incentives such as hefty allowances that motivate the employee since there is a guarantee of the financial security of the professional. From the argument, management accountants also consider incentives (monetary and intrinsic) to be critical determinants of their engagement in developing innovations in the accounting business unit. References DelVecchio, S., & Wagner, J. (2011). Motivation and monetary incentives: A closer look. Journal of Management and Marketing Research, 7, 1. Emsley, D. (2005). Restructuring the management accounting function: A note on the effect of role involvement on innovativeness. Management Accounting Research, 16(2), 157-177. Lerner, J., & Wulf, J. (2007). Innovation and incentives: Evidence from corporate R&D. The Review of Economics and Statistics, 89(4), 634-644. Lopez-Valeiras, E., Gomez-Conde, J., & Naranjo-Gil, D. (2015). Sustainable innovation, management accounting and control systems, and international performance. Sustainability, 7(3), 3479-3492. Nassar, M., Al-Khadash, H., Al-Okdah, S., & Sangster, A. (2011). The implementation of management accounting innovations within the Jordanian industrial sector: the role of supply-side factors. European Journal of Economics, Finance and Administrative Sciences, 35. Urbancová, H. (2013). Competitive advantage achievement through innovation and knowledge. Journal of Competitiveness, 5(1). Read More