The Role of Strategic Management Accounting in an Organisational Setting - Assignment Example

Issues in Management Accounting A2 1. Why are the authors (Tillman and Goddard 2008) investigating the role of strategic management accounting in an organisational setting?  (2 marks)  There are two main reasons as to why the authors (Tillman & Goddard, 2008) investigate the role of strategic management accounting in an organisational setting. The first reason is related to the growing interest in academia about the role of strategic management accounting within the context of organisations. The authors note that so far, research in the field of strategic management accounting has been carried out using normative approaches of research (Tillman & Goddard, 2008, p. 84). The use of this approach has yielded specific results about the role that strategic management accounting plays within the context of organisations. Tillman and Goddard (2008, p. 84) also note that the use of normative approaches in research about strategic management accounting has been replaced by the use of empirical research methods. Thus, the authors seek to contribute to literature about sense-making in strategic management accounting by providing an empirical examination of the subject. Secondly, the authors seek to investigate the role of strategic management accounting within organisations by establishing new theories and explanations about how sense-making is carried out within organisations and how this contributes to the manner in which strategic management decisions are made within organisations. It is argued that a lot of research about the use of sense-making in strategic management accounting within organisations has been focused on examining the context of the process and not how the process actually occurs (Tillman & Goddard, 2008, p. 83). Thus, the authors seek to fill this gap. 2. What are the important discussions studied by the authors in the prior literature ( 3marks) There are three issues that form the important discussions studied by the authors in the prior literature. The first issue is related to what sense-making is within organisations. It is noted that in the research that has been carried out, sense-making is defined as the process by which individuals seek to interpret current events within the context of events that have occurred previously (Tillman & Goddard, 2008, p. 83). It is further noted that by use of sense-making, individuals within organisations are able to predict what scenarios they may encounter in the future using their past experiences and observations. Thus, sense-making is seen as a process that is used to help managers to have a clear understanding of events within an organisation in the context of the past and the future (Tillman & Goddard, 2008, p. 83). The second issue that the authors note in regard to sense-making is related to the actual role of the sense-making process in the managerial function of organisations. The authors note that research indicates that the main function of sense-making is better understood when one considers the role of accounting in the overall process of setting the strategic direction of any given organisation. Thus, it is noted that research indicates that sense-making is essentially used to link the aspect of knowledge management within an organisation with the manner in which strategic decisions are made (Tillman & Goddard, 2008, p. 84). Thirdly, the authors note that in general, there is little literature that addresses the subject of sense-making within the context of accounting. However, they note that sense-making is an important process that accountants use when they are communicating their technical findings in the form of reports. It is argued that the subject of how exactly sense-making is used within the context of accounting and how this links up with the overall process in which strategic decisions are made within the context of organisations is not adequately addressed. Thus, it is based on this finding that the research is carried out (Tillman & Goddard, 2008, p. 83). 3. Do you believe the methodology adopted by the authors is adequate/not adequate for the study? What improvements you believe can be made? (5 marks) The methodology adopted by authors for this study is adequate. This is because of several reasons. To begin with, the authors adopted a case study methodology. The study was based on a large multinational company in Germany that is involved in the business of producing a wide range of consumer and industrial chemicals (Tillman & Goddard, 2008, p. 85). The different departments of the organisation were studied using two main methods: interviews and observation. Interviews were carried out with different employees of the organisation. The employees who were interviewed were selected in such a manner that the different divisions of the organisation were represented. As well, formal and informal observations of the processes that take place within the organisation were used. Therefore, it can be seen that the adoption of the case study method for this research was appropriate. In theory, it can be seen that the use of the case study method in research is appropriate when an issue has not been adequately addressed in research (Vissak, 2010, p. 371). In such a case, this methodology is used to expand on the existing theoretical knowledge by using what has been documented to study a new phenomenon (Vissak, 2010, p. 371). Since the authors noted that the issue of the use of sense-making within the context of accounting and how this is related to strategic decision making has not been adequately addressed in academia, it means that the use of the case study methodology is the most appropriate way of addressing the issue. The second reason as to why the methodology adopted for the study is adequate is related to the nature of the sample that was used in the study and how this was appropriate in helping the researchers answer the research questions. The researchers carried out the study as a way of answering two key questions. The first question was to determine how sense-making is used within the context of organisations (Tillman & Goddard, 2008, p. 84). The second question was to determine the manner in which organisational actors, mainly managers, perceive sense-making within the context of accounting processes in organisations (Tillman & Goddard, 2008, p. 84). The researchers used a sample that was composed of 30 individuals who work in different divisions of the company (Tillman & Goddard, 2008, p. 84). What is important to note is that the sample as well as the method of collecting information that was used in this research was appropriate. Marques, Camacho and de Alcantara (2014, p. 30) note that single case studies are usually carried out using small sample sizes. The small sample sizes usually allow the researchers to examine the issues under consideration in great depth. In this case, it can be seen that using the small sample size allowed the researchers to examine the issue under consideration in great depth and answer the research questions adequately. The last reason is related to the manner in which reliability and validity are established in the research. It should be noted that although reliability and validity are regarded as important aspects of quantitative research, they are still important in qualitative research (Golafshani, 2003, p. 601; Hoque, 2006, p. 462). It is because of the importance of the two concepts in qualitative research that the authors seek to establish them in the research. Notably, the researchers sought to use multiple views about the phenomenon that they were investigating (Tillman & Goddard, 2008, p. 85). This approach, in addition to approaching the data collection process in an interlinked manner, contributes to addressing the issues of reliability and validity in the research. 4. The authors have adopted the role of grounded theory for their study. Do you believe that has influenced the direction and findings of their research? (5 marks) The adoption of grounded theory for the study by the researchers has influenced the direction and findings of the research. This is because of several reasons. First of all, the choice of grounded theory was based on three key reasons, as noted by Tillman and Goddard (2008, p. 84). The first one is that this theory is suitable for helping researchers develop new and explanatory frameworks as opposed to simply reporting the nature of phenomena. In this research, the researchers sought to explain how a phenomenon is practiced in its natural setting. They sought to understand how managers of organisations used sense-making to make strategic decisions. Hence, the use of this theory suited the needs of the researchers, the main one being to provide a detailed explanation of the use of sense-making within the context of strategic management accounting. In addition to this, the use of grounded theory is usually favoured in circumstances in which the researchers need to generate theory that is grounded in data (Tillman & Goddard, 2008, p. 85). What this means is that researchers who are working on a phenomenon using this theory seek to refer to the existing data and frameworks to develop additional information about the phenomenon. In this case, it can be seen that the researchers sought to expand the existing knowledge about the use of sense-making for strategic management accounting in organisations. Hence, this theory was the most suitable one for this purpose. Additionally, the use of grounded theory is said to be useful because it allows the new perceptions and understanding of the researchers to emerge in the course of a research. This is because the theory allows researchers to observe a phenomenon in its natural setting and use existing theoretical frameworks to develop new variants and compare their findings with what has already been documented about the issue. In this case, the researchers were examining an issue that has received little but significant academic attention. As such, they sought to develop new frameworks based on what had already been developed but in a manner that could be used to explain the actual manner in which the phenomenon occurs. Thus, it can be concluded that the use of grounded theory for this research was appropriate in that it was the most suitable one that could be used to examine the phenomenon that the researchers were interested in. Furthermore, the theory matched the methodology that was used by the researchers to conduct the study. Most importantly, the use of grounded theory influenced the findings of the study in that the interpretation of the findings of the study was carried out using the frameworks provided in the theory. The researchers sought to determine how sense-making is used in strategic management accounting and how managers view the process. They found that sense-making is used to interpret current events within the context of the past and future (Tillman & Goddard, 2008, p. 88). They also found that managers use the process of sense-making consciously and subconsciously and that this influences the strategic decision-making process that is carried out within organisations. References Golafshani, N. (2003). Understanding reliability and validity in qualitative research. The Qualitative Report, 8(4), 597-607. Retrieved from http://www.nova.edu/ssss/QR/QR8-4/golafshani.pdf Hoque, Z. (2006). Methodological issues in accounting research: Theories, methods and issues. London: Spiramus. Marques, K. C. M., Camacho, R. R., & de Alcantara, C. C. V. (2014). Assessment of the methodological rigour of case studies in the field of management accounting published in journals in Brazil. Research in Contemporary Finance, 26(67), 27-42. Retrieved from http://www.scielo.br/pdf/rcf/v26n67/1519-7077-rcf-26-67-00027.pdf Tillman, K., & Goddard, A. (2008). Strategic management accounting and sense-making in a multinational company. Management Accounting Research, 19, 80–102. Vissak, T. (2010). Recommendations for using the case study method in international business research. The Qualitative Report, 15(2), 370-388. Retrieved from http://www.nova.edu/ssss/QR/QR15-2/vissak.pdf Read More