A study of the emergence of management accounting system ethos and its influence on perceived system success

AOS 387 Disk used ARTICLE IN PRESS No. pages 26, DTD=4.3.1 Version 7.51e Accounting, Organizations and Society www.elsevier.com/locate/aos A study of the emergence of management accounting system ethos and its influence on perceived system success Alnoor Bhimani Department of Accounting and Finance, London School of Economics and Political Science, Houghton Street, London WC2A 2AE, UK Abstract This study considers how certain notional organisational culture elements became embedded in the design of an innovative management accounting system (MAS) and how the alignment between the cultural premise of the MAS and that espoused by MAS users influenced the perceived success of the new system. The research data for the study were obtained over a three and half year period and derive from interviews, questionnaire responses and public as well as internal corporate documents. The site chosen for the study is a division of Siemens—a global firm in the electronics and electrical components industry. Two employee groups with functional expertise in engineering and business economics respectively comprise the MAS user groups. During the development and implementation phases of the new MAS, Siemens was actively engaged in a corporate-wide culture change programme that was supportive of the new MAS initiative. The study results are in two parts. First they report on the manner in which the organisational programme of culture change affected the cultural premise of the new system. Second, they indicate that the degree of alignment between the organisational culture elements which were embedded within the MAS and the organisational outlook of the two user groups significantly influenced the system’s perceived success. # 2003 Elsevier Science Ltd. All rights reserved. 1. Introduction Past research suggests that different groups of MAS users within organisations exhibit different rationales, priorities and cultural orientations (Ahrens, 1996, 1997, 1999; Appleyard & Pallett, 2000; Bamber, 1993; Birnberg & Shields, 1989; Bruns & McKinnon, 1993; Ko & Mock, 1988; Lon¨ ing, 1994; Markus & Pfeffer, 1983; Young & Selto, 1991) and that these may influence their perceptions of the success of MAS changeovers (Brewer, 1998; Broadbent, 1992; Dent, 1991; Ezzamel, 1987; Goddard, 1997a; Hopwood, 1989; Mouritsen, 1996; O’Connor, 1995; Roberts, 1990). Some researchers suggest that changes in organisational control systems tend to be deemed successful when accompanied by organisation cultural values which support the new systems (Das, 1986; Dent, 1987; Robey & Farrow, 1982; Rowlinson, 1995; Zmud, 1979). Moreover, user involvement in the design of information systems has been reported to enhance the perceived success of a systems change because user value assumptions become embedded into the new systems’ architecture (Argyris & Kaplan, 1994; Birnberg, 1998; Caplan, 1988; Fisher, 1998; Franz & Robey, 1986; Markus & Pfeffer, 1983; Shields & Young, 1989). Whilst evidence exists that the introduction of a novel management accounting system can bring about desired consequences when the system users 0361-3682/03/$ - see front matter # 2003 Elsevier Science Ltd. All rights reserved. PII: S0361-3682(02)00025-9 AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 2 consider the organisational values of their working environment to be consistent with those embedded within the new system, there has been little research on how such consistencies emerge. The present study aims to address this concern by exploring how certain notional organisational culture elements became embedded features of a newly implemented MAS within a specific organisation. It also aims to investigate how the alignment between the organisational culture elements which were embedded within the MAS and the organisational outlook of two MAS user groups influenced their perception of the success of the new system. The site chosen for this study is the Fibre Optics business unit (HLFO) of the Semiconductors Group of Siemens AG—a global electronics and electrical components firm. Operational officers within HLFO have specific expertise either in engineering (Technisch) or in business economics (Kaufmannisch). Engineering and business officers’ educational training differs in that the former tend to possess engineering based qualifications whereas the latter have a business economics academic background. These two distinct functional expertises provide a basis for categorising operational officers at HLFO into two different employee groups. The new management accounting system adopted by HLFO is called processbased target costing (PBTC) which was designed by HLFO engineering officers between September 1995 and May 1996. PBTC became operational in August 1996. The information collected to achieve the two aims of the investigation is derived from different sources. Interviews were carried out between early 1995 and mid-1998 with company officers. Internal documents, accounting reports, statistical data, graphical charts and official company histories were consulted. Two questionnaires were also used for collecting data on the MAS users’ organisational culture orientation. One questionnaire was administered to engineering and business officers prior to the introduction of the new accounting system and the other was administered following its implementation. Whilst HLFO was in the process of designing and implementing the new MAS, a corporate-wide culture change pro- gramme was in progress at Siemens. The two questionnaire administrations enabled changes in the users’ organisational outlooks over this time period to be assessed. The second questionnaire also included a question on the users’ perception of the success of the new MAS. The paper is structured as follows: following a review of the literature dealing with organisational culture and MAS ethos alignment, the paper discusses the emergence of the new MAS’s ethos in the light the corporate culture change programme being put into effect throughout Siemens. The questionnaire and interview-based approach and hypotheses for investigating how the alignment between the organisational culture elements characterising the MAS and the system users’ orientation towards a developmental culture relate to the new MAS’s perceived success are subsequently considered. Following a discussion of the results of the investigation, the paper’s concluding section addresses some of the implications of the study and future research possibilities in the area. 2. Literature review 2.1. Management accounting systems and organisational culture The management accounting literature has only recently started to show empirical concern with the concept of ‘organisational culture’ (Dent, 1991; Goddard, 1997a, 1997b; O’Connor, 1995) though the potential of studying links between organisational culture and systems of control has long been posited (Flamholtz, 1983; Hopwood, 1987; Markus & Pfeffer, 1983; Ouchi & Johnson, 1978). More recently, Shields (1995) and Birnberg (1998, 2000) have reiterated the desirability of investigating how cost management systems adoptions and effects are conditioned by variables such as organisational culture. Whilst there is evidence to suggest that the perceived implementation success of a new MAS is influenced by whether its information output is considered easy to use, accurate and timely, investigations of organisational culture and control practices indicate that successful information AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 3 systems changes tend to result when supporting and compatible organisational values are in place (DeLone & McLean, 1992; Doll & Torkzadeh, 1988; Earley & Kanfer, 1985; Hogarth, 1993; Shields, 1995). Research studies suggest that the introduction of novel information systems may not bring about the desired effects if users do not perceive the organisational characteristics and climate of their working environment to be consistent with the values embedded within the new system (Cushing,1990; Das, 1986; Robey & Farrow, 1982; Rowlinson, 1995; Zmud, 1979). How closely the cultural orientation of management accounting information users aligns with the value assumptions factored into the design of a MAS has likewise been reported to have an influence on the perceived implementation success of a new system (Argyris & Kaplan, 1994; Birnberg, 1998; Caplan, 1988; Shields & Young, 1989). Some scholars posit the existence of direct linkages between accounting systems characteristics and corporate culture (Goddard, 1997a; O’Connor, 1995; Soeters & Shreuder, 1988) and between organisational culture and accounting systems design (Bourn & Ezzamel, 1986; Broadbent, 1992; Dent, 1991). In the context of cost management innovations, Shields and Young (1989) and Young (1997) suggest that often, novel systems are administrative rather than technical in nature and as such, their implementation fate is not independent of the preferences, goals and strategies of top managers. Foster and Swenson (1997), McGowan and Klammer (1997) and Friedman and Lyne (1995, 1999) provide empirical support in this light. Cooper, Kaplan, Maisel, Morrisey, and Oehm (1992) offer some evidence that a variety of behavioural and organisational factors are intertwined with the implementation of activity based costing (ABC) systems and Anderson (1997) and Anderson and Young (1999) explore the existence of relationships between contextual variables such as organisational commitment and shared organisational values and ABC implementation success. Following an investigation of Canadian firms, Gosselin (1997, p. 8) has reported that: ‘‘. . .administrative innovations such as ABC are easier to adopt and implement in mechanistic organizations’’. Based on a study of Finnish organisations, Malmi (1997, p. 21) concludes that user resistance can lead to ABC systems failure and that organizational culture is ‘‘important’’ in explaining such resistance. Argyris and Kaplan (1994) identify organisational culture change strategies that can be effected to overcome employee resistance to the introduction of ABC and Henning and Lindahl (1995, p. 58) stress the importance of having an ABC system implementation ‘‘. . .fit the current culture of the organization’’. Different levels of success in management information systems implementations have also been argued to depend on organisational groupings (Cooper & Zmud, 1990; Cushing, 1990; Lucas, 1975; Newman & Rosenberg, 1985). Research on group polarisation suggests that group interaction enhances the salience of value conformity (Barki & Hartwick, 1989; Brown, 1965) and that it increases familiarity with different information elements (Bates, Amundson, Schroder, & Morris, 1995; Rutledge & Harrell, 1994). Moreover, intergroup interaction causes ‘‘bonding to a choice or system as well as leads to a convergence of utilities’’ (Whyte, 1989, p. 49). Studies of the implementation of management accounting innovations suggest that their information output ‘‘. . .is used for various purposes by various organizational sub-groups’’ (Malmi, 1996, p. 243) with effects that are ‘‘far from unambiguous’’ (Ibid.). Shields and Young (1989, 1994) believe that cost management systems implementation success depends on specific group based behavioural variables. Attention must be given to how well an innovation such as the implementation of a new MAS matches the preferences, goals, strategies, agendas, skills and the resources of dominant employee groups (Shields, 1995). In this light, Scapens and Roberts (1993) have investigated the emergence of resistance to the implementation of a new information system within an organisation with different subcultures. They report that although different organisational participants can be agreed on the desirability of altered information systems for controlling internal operations, there may be ‘‘. . .very different perceptions of the precise nature of these infor- AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 4 mation needs’’ (Scapens & Roberts, 1993, p. 31). They document the disparity between divisional managers’ predilection for information defined primarily in economic terms and unit company managers’ preference for accounting information focusing on production factors, scheduling resources and delivery issues. These findings lend appeal to Argyris’s (1990, p. 503) contention that an accounting system’s technical features will be premised on accounting information system designers’ ‘‘technical theory of control’’ which may not accord with the views of users. Markus and Pfeffer (1983) have similarly documented instances of information system implementation failures whereby the ethos of newly implemented information systems are at odds with the underlying departmental culture of information user groups. Whilst this literature has sought to explore ways in which systems changeovers are affected by their designers and users’ organisational culture orientations, it has not addressed the question of how the technical configuration of management accounting systems can evolve such as to embed particular organisational culture elements. This is one intent of the present study which also investigates how far the alignment between the organisational culture elements espoused by two functional employee groups within a business unit of Siemens and those embedded within a new MAS are associated with the users’ perceptions of MAS success. To this end, a methodological model to assess organisational culture orientation is considered below. 2.2. The competing values model of organisational culture Organisation research concerned with the role of organisational culture has had to contend with a wide variety of definitions of organisational culture (see Martin, 1992; Reichers & Schneider, 1990; Weick, 1985 for reviews). For the purposes of this paper, organisational culture is taken to refer to the patterns of values and ideas in organisations that shape human behaviour and its artefacts (Zammuto & Krakower, 1991). This definition is sufficiently broad as to be, in the main, identifiable with most quantitative and/or qualitative organisational culture studies (Pettigrew, 1979). Although some researchers contend that organisational culture cannot be effectively examined using quantitative methods (Frost, Moore, Louis, Lundberg, & Martin, 1991; Louis, 1983; Schein, 1985; Smircich, 1983) and that ‘‘culture needs to be observed, more than measured’’ (Schein, 1996, p. 229), others see statistical analyses as being able to contribute significantly to investigations of organisational culture (Hofstede, Neuigen, Okayre, & Sanders, 1990; Rousseau, 1990; Saffold, 1988; Siehl & Martin, 1988; Wilkins & Ouchi, 1983; Zammuto & Krakower, 1991). The present study makes use of qualitative information regarding cultural changes within Siemens obtained from internal corporate documents, external publications as well as from interviews with HLFO and other Siemens executives. The study also derives information from the administration of two questionnaires based on a model concerned with organisational culture elements. Within the organisation study literature, a number of different models exist for quantitatively analysing organisational culture (see Xenikou & Furnham, 1996). The present study focuses on aspects of organisation culture which are explored using the competing values model (Cameron & Quinn, 1998; Quinn, 1988; Quinn & Kimberly, 1984; Quinn & Rohrbaugh, 1981, 1983). The competing values model differentiates between underlying values which create meaning in organisational settings and the cultural artefacts that reflect them. This model relies on the premise that although cultural artefacts such as myths, language, rituals and symbols are specific to organisations, values are not. The model assumes that it is not different sets of values which give rise to different organisational cultures but varying emphases on the limited set of values prevalent within the larger society. This perspective is one that is gaining favour among researchers interested in the relationships between national culture and management accounting and control systems (see Harrison & McKinnon, 1999). Quinn and Kimberly (1984, p. 298) argue that the competing values model can enable ‘‘. . .such things as the means of compliance, motives, lea- AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 5 dership, decision-making effectiveness, values and organizational forms’’ to be explored. This is made possible by identifying different axes of organisational effectiveness. Quinn and Kimberly (1984) propose that one of these relates to an organisational focus ranging from, at one end, an internal and micro-emphasis on the well-being and development of people within the organisation to stressing the well-being and development of the organisation itself at the other extreme. Another value dimension which they advance relates to organisational structure ranging from emphasizing stability and control to stressing flexibility and change. The competing values model thus enables four resulting cultural types of organisational orientations to be posited: group, developmental, hierarchical and rational (see Fig. 1). Quinn and Kimberly (1984) consider that the ‘‘group’’ culture is based on norms and values associated with affiliation. It emphasises flexibility and internal focus and stresses cohesion, morale and member participation in decision making as means and human resource development as ends. The group culture’s strategic orientation is one of implementation through consensus building. The ‘‘developmental’’ culture which stresses flexibility Fig. 1. The competing values model [adapted from Quinn and Kimberly (1984)]. AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 6 and an external focus is permeated by assumptions of dynamic change. Growth and resource acquisition as ends are enabled by readiness and flexibility as means. It is the ideological appeal of the task undertaken which motivates individuals. The ‘‘hierarchical’’ culture underscores the relevance of control and internal focus. Information management and communication as means enable the achievement of stability and control as ends. Effectively, this cultural type reflects the values and norms associated with bureaucracy. Significance is given to orderly work situations with sufficient co-ordination and distribution to provide organisational participants with a sense of security, continuity and stability. Individuals’ actions are directed by formally delineated roles and enforcement is ordered by rules and regulations. Finally, the ‘‘rational’’ cultural type stresses control and external focus. Productivity and efficiency as ends are brought about by planning and goal setting as means. Achievement is emphasised and individual motivation comes from the meritocracy-based belief that competent performance and achievement of designated organisational objectives are to be rewarded. Quinn and Kimberly (1984, p. 300) affirm that although no organisation is likely to identify purely with only one culture, ‘‘. . .a distinctive culture reflective of one characteristic grouping as opposed to another’’ in terms of the competing values model will prevail. Table 1 identifies characteristic elements of each cultural type based on the competing values model. The following section discusses the organisational programme of culture change at Siemens and the emergence of the new management accounting system—process based target costing at HLFO. Its purpose is to delineate the manner in which the culture change programme shaped the cultural premise upon which the new MAS features were founded in terms of the competing values model dimensions. Whilst the study makes use of several sources of information, for the following part, general information on Siemens was obtained from official external and internal publications as well as from published interviews with company executives. Interviews were also undertaken with Siemens managers both from within and from outside the Fibre Optics unit (see Table 2). 3. Culture change at Siemens 3.1. In pursuit of flexibility and external outlook In early 1993, Siemens launched a companywide culture change programme referred to as Table 1 Organisational culture type characteristics under the competing values modela Culture types Characteristics Flexibility vs control External vs internal Means Ends Compliance Motivation Leadership a Group Flexibility Internal Member participation, cohesion, morale Development of human resources Affiliation Attachment Concerned supportive Developmental Flexibility External Adaptability, readiness Growth, resource acquisition Ideology Growth Inventive risk taking Hierarchical Control Internal Communication information management Stability, bureaucracy, control Rules Security Conservative cautious Rational Control External Planning, goal setting Productivity efficiency Contract Competence Directive goal oriented Based on Quinn and Kimberly (1984). AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 7 Table 2 Interviews undertaken with managers at Siemens Interviewee Information Manager TOP Programme Executive Innovation Management Director Innovation Management Officer Management Development Consultant General Manager—Business Improvement Human Resources Manager Engineering Manager TOP Programme Officer Manager—Human Resources Strategy Information Systems Manager Finance Director Deputy Director Engineering Consultant Management Training Regional Manager (Europe) Information Systems Manager PBTC Software Developer Phoenix Technical Project Leader Head of Production Planning Strategy and Marketing Manager Assistant to General Manager Product Developer A Product Developer B PBTC Project Leader Financial Manager General Manager Head of Accounting Siemens unit Defence Electronics Siemens Plessey Sytems Siemens Nixdorf Siemens Nixdorf Siemens Corporate Communications Siemens PLC (UK) Private Communication Systems Siemens-Matsushita Components Drives and Standard Products Semiconductors Semiconductors Private Communication Systems Public Communications Networks Electronic Components Corporate Human Resources Development Infrastructure Services HLFO HLFO HLFO HLFO HLFO HLFO HLFO HLFO HLFO HLFO HLFO Duration (min) 30 30 45 30 30 15 30 20 30 45 60 30 20 45 30 30 45 45 90 45 30 30 20 45 90 90 120 90 time optimized processes (TOP). At the heart of this organisational drive, was an attempt to engender greater flexibility of operational practices and an enhanced outward management orientation. Many managers across the organisation perceived a need to alter their business units’ accounting information systems once the implementation of the TOP initiative had started to take effect. The TOP programme aimed to achieve greater ‘‘customer and process orientation, faster decision making, team-oriented management, enhanced self-initiative and selfresponsibility’’ (Siemens, 1994, p. 3). Alongside these goals, managers sought ‘‘more powerful cost consciousness and more effective cost management’’ (Innovation Management Director commenting on the TOP initiative, 3/6/1996). To understand how the Siemens-wide programme of culture change affected the design of the new MAS at HLFO, it is essential to consider the emergence of TOP at Siemens. The idea that ‘‘it is essential to simplify and to reduce decision processes and to place ourselves closer to the market and to our customers’’ (Karl Heinz Kaske, President of Siemens, cited in Michel & Longin, 1990, p. 161) was a concern which had been expressed by Siemens’ top management since the mid-1980’s. Kaske had articulated a need for the organisation to become more flexible, dynamic and competitive. He had sought: . . .an internal structure to enable us to discover, develop and encourage our managers’ entrepreneurial talents in order to allow them total managerial control over projects rather than simply partial authority (Ibid.) AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 8 In 1985, Kaske restructured Siemens’ activities into three distinct elements (divisions, regional units and central services) to ‘‘. . .enhance efficiency, reduce costs and avoid duplication of activities’’ (Ibid.). In 1989, the company put into place further decentralization measures which culminated into the present company structure consisting of divisions, groups and business units. During the 1990’s, senior company executives continued to voice concerns similar to Kaske’s. For instance, Siemens’ General Works Manager indicated that: . . .we harbour some doubts about whether thinking in terms of competitive, market and cost advantages truly permeates our corporation (Siemens, 1990, p. 2). A major problem according to him was that ‘‘personal goals and business goals often take separate or even divergent paths’’ (Ibid., p.3). One difficulty faced by the organisation was perceived to relate to information exchange and communication channels. A Senior Innovations Manager had noted that Within the organisation, there are obvious inter-company communication barriers. There is talk of a wall of silence between the upper levels and the rest of the staff, who are left in ignorance regarding the background to many decisions (Siemens, 1991a, p. 2). Likewise, an Engineering Works Manager had remarked that ‘‘stumbling blocks’’ stood in the way of commitment and entrepreneurial action: Many regard change primarily as a risk. Innovative, entrepreneurial action becomes shipwrecked on the jagged rocks of rigid demarcation (Siemens, 1991b). A year after his appointment as President and Chief Executive Officer in 1992, Heinrich von Pierer launched the ‘‘time optimized processes’’ (TOP) culture change programme to ‘‘tear down barriers within the company’’ (interview excerpts form The Economist, 13/11/1996, p. 12). Heinrich von Pierer’s basic strategy was to give equal weight to both cost-cutting and reaping the rewards of the ‘‘cultural revolution’’ (Ibid) through increased flexibility in the way organizational processes were carried out and greater awareness of external market factors. Under TOP, two hundred and sixty independent business units were created each with responsibility for bringing about a change in culture. Employees were to be remunerated on the basis of results rather than rank as had been the case traditionally. Staff were expected to assess their superiors as well as be assessed by them. An internal employee magazine noted TOP’s aim to ‘‘achieve accelerated optimisation of all processes in the value chains’’ (Siemens, 1994, p. 2) and to ‘‘. . .design more efficient structures, decision patterns and processes’’ (Siemens, 1994, p. 2). The TOP initiative singled out productivity measures as having three dimensions: quality, time and cost. One Financial Manager noted that: If we shorten and simplify our development and marketing processes, then costs will go down . . . quality will go up. Our aim is to be faster, better and cheaper than our competitors (4/6/1996). During the early 1990’s, senior managers within the Semiconductors division at Siemens identified a variety of problems including long decision processes, excessive bureaucratic hurdles, repair and quality problems arising from high levels of labour demarcation, uncontrollable document complexity, illogical process flows, inadequate interdepartmental communication and ineffective information systems structures. The TOP programme attempted to fuel the implementation of innovations such as ‘‘time based management’’, ‘‘total quality management’’, ‘‘total cycle time analysis’’ and ‘‘kaizen’’ among others so as to foster ‘‘. . .customer and process orientation, faster decision making, team-oriented management, enhanced self-initiative and self-responsibility’’ (Siemens, 1994, p. 3). Once the implementation of TOP was under way, it had an impact on work attitudes according to a number of managers at Siemens. An Engineering Manager indicated that a TOP motivated re-engi- AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 9 neering project had led to ‘‘. . .teamwork, jobrotation, group meetings, speaking your mind which were practically inconceivable before, are now all part of a day’s work’’ (3/6/1996). An Innovation Management Director noted that: ‘‘Today there is a powerful cost consciousness in the company together with a broad palette of cost controls’’ (3/6/1996). He nevertheless believed that: In comparison to our competitors, we cannot claim to be front-runners in cost cutting... We are profit-minded but the follow-through is weak and inconsistent (Ibid) and stressed that: In the future, we will commit ourselves to effective cost management at all levels and in all functions . . . since consistent profit is an important indicator of whether we are doing the right thing and doing it right. TOP provides a framework for moving in this direction (Ibid.). The TOP culture change programme continued to receive wide publicity across all groups and divisions and was made visible through a multitude of platforms: logos, office stationary, internal newsletter articles and corporate confectionery among others. Certain dimensions of the TOP initiative were to become extensively reflected in the target cost management system (process based target costing) which was to be implemented at HLFO. In particular, cost, quality and time concerns of the programme of cultural change, were to be central elements of the new MAS. Concurrently, factors which underscored the relevance of flexible work practices and high sensitivity to the enterprise’s external environment were to be important characterising features of the new system. One TOP initiative publication stated that: Time and quality are key to improved performance and lowered costs. Significant cost disadvantages with competitors are attributable to inadequate product design and wasteful processes. It is here that out greatest potential lies (Siemens, 1996). It further stressed that: . . .improved results. . . are dependent not only on costs but also on the relationship between productivity and costs which can be improved . . . if infrastructure and processes are improved as well as time and quality parameters (Siemens, 1996). These elements of the TOP initiative were to become embedded in the design of the new MAS. 3.2. Process based target costing At HLFO, the belief that costing information of a different type to that being provided was necessary had began to be voiced from early 1995. Until late 1994, HLFO had controlled a large portion of the fibre optics market for IBM mainframe computers. But at this time, a foreign competitor entered the market with the objective of taking over a major part of Siemens’ market share in this sector primarily by offering the same products at a lower price. This led HLFO managers to consider ways of reducing product costs initially through more flexible production practices and efficiency drives and subsequently by redesigning production specifications and processes so as to reduce overall resource consumption over the longer term. In order to remain competitive, HLFO managers believed it was necessary to bring down the total manufacturing costs of its subcomponent parts to around one third of their original level in the face of the emerging competitive threat. HLFO started to focus on the emerging market and financial information needs of design engineers. In September 1995, HLFO initiated the development of a target cost based accounting system which aimed to provide accounting information on market imposed cost ceilings for different product functions. The system was developed by a team of HLFO designers with engineering functional expertise who interfaced with other engineers in operational departments about their information requirements. The design engineers also liaised with HLFO accountants trained in business economics about implementation issues concerning PBTC. AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 10 Whilst the newly perceived information needs of design engineers were being addressed, HLFO also launched what it termed the ‘Phoenix’ project in September 1995 which was a re-engineering exercise to alter the manufacturing process. Phoenix entailed the reconfiguration of manufacturing such that all basic products would run on one automated line prior to mass-customising the product. All products were to use modularised production steps according to individualised product specifications. Design engineers at HLFO had not traditionally desired or been provided with extensive accounting information relating to either manufacturing processes or to the selling prices of fibre optics products. Their primary role had been to develop leading edge technological innovations and to seek ways of further improving product specifications, performance and efficiency. The accounting system in place at HLFO had been designed with the object of allocating rather than tracing costs in line with Siemens-wide accounting procedures. This costing system divided material and production elements into cost blocks and used volumebased allocation methods. Direct material and direct labour costs served as a basis for the application of different overhead costs using predefined overhead rates. This practice did not seek to relate resource changes in components to changes in production or to enable costings for different generations of re-engineered products to be compared. Thus, if for instance, a process change resulted in the production time being reduced by 50%, the accounting system allocated the same overhead cost amount to a smaller base by doubling the allocation ratio without providing design engineers with information on the origins and flows of costs. The Phoenix project team’s focus of attention was mainly on analysing the production process. But the production process was itself in large part reflective of product design which determined the basis of production workflow, timing and ultimately costs. It was difficult for the design engineers to address questions about the impact of a component change on the cost of the production process. What was deemed desirable was to have linkages between the decisions made at the design stage and the resultant effects on the production costs. If such information could be made available, it would enable design decisions to take account of production implications which themselves had to be considered in the context of customer requirements. A key element of the project was the application of target costing concepts to set market-defined parameters affecting production cost, timing and quality factors. To enable this, the engineering officers working on the Phoenix initiative integrated engineering and cost management information relating to costs, time and quality factors into single reports. PBTC’s information output was thus intended to assist the design and production engineering officers to relate product function areas to the production process. PBTC became operational in August 1996 and by April 1997, an HLFO officer who had set up the software requirements for producing PBTC information reports indicated that: ‘‘All new design projects are now using the tool and it is also used for all existing products’’ (24.4.97). The implementation of PBTC necessitated interaction among different operational departments and extensive communication between engineering and business officers. TOP’s basic concerns included the transparency of organisational processes, quality accountability, team orientated co-operation, market competition awareness and cost consciousness which were also central to PBTC. PBTC reports were intended to enable the costs of functions to be compared to the perceived customer value for those functions. Moreover, functional cost drivers could be backtracked from functions to the production processes so as to depict the trade-offs between materials and processes, or automation and labour costs. PBTC was to delineate production flows visually at the design stage by producing graphic images of time, cost and quality resource consumption across processes. The design engineers who had traditionally only dealt with product specifications could now obtain direct visual information on the effects of different design decisions on specific production processes through the availability of PBTC reports. PBTC was also intended to enable responsibility for achieving quality requirements to be tied to AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 11 Table 3 Users of PBTC information at HLFO Department Production Purchasing Marketing and Strategy R&D Accounting Quality Control Top Management Total Number of users (ex-ante) 6T 1K 2 T, 1 K 16 T 4K 3T 1K 34 Usable questionnaires 4T 1K 2 T, 1 K 15 T 4K 2T 1K 30 Number of users (ex-post) 6T 1K 2 T, 2 K 13 T 5K 3T 1K 33 Usable questionnaries 5T 1K 2 T, 2 K 12 T 5K 3T 1K 31 T=‘‘Technisch’’ (Engineering officer); K=‘‘Kaufmannisch’’ (Business officer) specific operational personnel. Consequently, a product defect at one stage of the overall production sequence could be associated with a particular prior production step which gave rise to the problem. This would lead to further cost allocation possibilities and the potential to refine existing responsibility accounting relationships. The conventional accounting information prepared by HLFO accountants was based on extensive calculative rules and detailed allocation procedures. It was primarily a management information collection and resource control tool. By contrast, the PBTC system was flexibly designed to provide engineers with information they could visualise and act upon in operational terms. PBTC reports were not prepared on the basis of pregiven standards, formats or rules, but were reflective of design engineers proclivities regarding information representation and communication. Whereas traditional accounting systems were focussed on internal economic allocations, PBTC was externally orientated in that it tied market imposed time, quality and price specifications to internal operational constraints. Under the competing values model, the PBTC system might be seen as most closely embedding external and flexibility orientated values and thereby, of stressing developmental culture characteristics. The above discussion has focused on the manner in which certain organisational culture change elements became embedded within the new MAS. This was the first objective of this investigation. The paper now considers the methodology for investigating how the alignment between the organisational culture ethos of PBTC design features and the system users’ orientation towards a developmental culture related to the new MAS’s perceived success. 4. Measuring perceived MAS success 4.1. Questionnaires and interviews A questionnaire was administered in May 1996 prior to the implementation of the novel management accounting system (PBTC) to its two groups of users categorised as engineering officers (Technisch) and business officers (Kaufmannisch). The questionnaire contained a series of questions about their perceptions of the degree to which organisational culture types as delineated by the competing values model are representative of their functional department (see Appendix).1 This exante questionnaire was completed by 34 HLFO officers (see Table 3 for information on the questionnaire respondent group). Another questionnaire 1 The competing values model questionnaire as used by Zammuto and Krakower (1991) in their surveys enables scores (from 0 to 100) to be aggregated by cultural types. Within the questionnaire instrument, the four cultural types based on the Quinn and Kimberly (1984) typology are as follows: Department A accords with the ‘‘group’’ type, B accords with the ‘‘developmental’’ type, C accords with the ‘‘hierarchical’’ type and D accords with the ‘‘rational’’ type. Zammuto and Krakower (1991, p. 109) discuss the validity of the approach based on large scale surveys. They note that ‘‘the data met the criteria of internal consistency, predictable relationships with other organisational phenomena and discrimination among groups’’. AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 12 was administered to the same group of PBTC information users in April 1997 (see Table 3). This ex-post questionnaire, asked respondents once again about their perception of the organisational cultural types represented within their functional departments and sought their judgement as to the overall success of the newly implemented management accounting system. Interviews were undertaken prior to and following the administration of the ex-post questionnaire to explore respondents’ views on PBTC ’s implementation process and the system’s consequences as a further source of information for the study. The ex-ante and ex-post questionnaires were administered in German. The German versions of the questionnaires were translated from English to German by a German academic and back translated to English by another German academic.2 Some stylistic revisions were made to the German questionnaire as a result of the double translation. The first questionnaire was administered in May 1996. The ex-post questionnaire was administered in April 1997 after the new accounting system was fully operational. This questionnaire was structured in the same way as the first but included an additional question asking respondents to assess the overall success of PBTC using a scale from one to five (1=totally successful, 2=mainly successful, 3=neither successful nor unsuccessful, 4=mainly unsuccessful, 5=totally unsuccessful). 4.2. Hypotheses development Business officers who staffed the Accounting Department at HLFO had traditionally prepared internal accounting information for operational departments. This information was extensively calculative and in accord with predetermined company accounting reporting procedures. Business officers within Siemens’ accounting departments receive training in the preparation of detailed accounts of the flow of economic resources within the organisation and are taught to apply an extensive set of company specific rules and standards for structuring accounting information. Prior to being hired by Siemens, business officers will have obtained university qualifications in business economics. It is necessary to briefly consider business economics education in Germany to provide some insight on the intellectual background of Siemens’ business officers. Ordinarily, the university level degree (Diplom-Kaufmann) follows the study of business economics [Betriebswirtschaftsleher (BWL)] which emphasises the understanding of sophisticated economic concepts underpinning management principles including costing approaches. Traditionally, German business economics universities do not have close relationships with industry (Lane, 1990; Lawrence, 1989, 1994). BWL’s science-based tradition (Wissenschaft) stresses systematic and disciplined conceptual research sometimes at the expense of closeness to industrial issues or practical concerns according to some writers (Randlesome, Brierley, Bruton, Gordon, & King, 1990; Sheridan, 1995). In this light, Locke (1989, p. 249) observes that ‘‘. . .the Wissenschaft tradition isolates the German professors of business economics from praxis’’ and notes that German BWL today. . .is primarily undergraduate pre-experience and specialist research graduate education (Locke, 1989, p. 176). Locke (1989) provides various examples of companies working with academic engineers but seldom with business scholars. He cites one Siemens manager who states that the firm tends not to bring in German professors of business economics to provide advice because they are too ‘‘inexperienced’’ (Hermann Baumann cited in Locke, 1989, p. 171). HLFO accountants’ predilection for a structured numerical and procedural approach to the preparation of accounting information was not independent of their prior educational training. The professional conception of the legitimate role of Siemens’ accountants with BWL training was not conducive to the integration of accounting information with other types of operational data. The characteristic Wissenschaft-based approach to economic representations of organisational 2 This was the case as the questions draw on the competing values model instrument used in prior Anglophone studies. AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 13 activities which demarcate costs, functions and departments via numerical data was at odds with the precepts embodied within Siemens’ TOP programme (Siemens, 1995) of cultural change. It was also at variance with the cross-functional and diagrammatic form of information representation which characterised PBTC information reports. The TOP programme confronted the basis of historically derived precepts concerning the correct role, format and presentation of financial information. It emphasised flexible internal structures and receptivity to external and market derived influences which accord with the competing values model’s ‘‘developmental’’ culture. By contrast, business officers employed within the Accounting Department could not be described as sharing the same high level of ‘‘developmental’’ culture orientation. Contrary to business officers’ training, the educational background of engineering officers is more closely aligned with a flexible orientation to structuring data which makes little appeal to regimented procedures and standardised information formats or structures of communication. This is in line with a developmental cultural orientation under the competing values model. Educationally, engineering officers at HLFO possess a ‘‘DiplomIngenieur’’ qualification following university level engineering studies spread over 4–6 years. By tradition, engineering education in Germany combines the search for knowledge with practical purposefulness. Consequently, German engineering degrees are characterised by a unique combination of scientific knowledge and craftsmanship (Technik) (Head, 1992; Randlesome, 1988, 1993; Randlesome et al., 1990; Sorge & Warner, 1986). University engineering faculties maintain close cooperation with industry: ‘‘Where engineering training is concerned, there is little formal detachment of academic from practical aspects of training’’ (Warner & Campbell, 1993, p. 93). In a similar light, Lawrence (1989, p. 98) states that: participants in Technik . . . Technik is something which transcends hierarchy. Locke (1989, p. 264) likewise notes that for engineers: ‘‘Technik is the combination of knowledge and know-how necessary to make a product’’. Moreover, ‘‘. . . technical expertise is as close to the shop-floor, and as close to the production/line hierarchy, as possible’’ (Warner & Campbell, 1993, p. 98). Unlike BWL which is generally more remote from practice, Technikbased engineering education blends Wissenschaft and functional purposefulness (Lawrence, 1994; Maurice, Sorge, & Warner, 1980). Past research suggests that ‘‘the past learning of an individual can be expected to influence the person’s perceptions of the organisational and task variables’’ (Das, 1986, p. 217). Information channels and modes of exchange can be shaped by users’ prior professional training (Joyce & Sloam, 1990; Kim, 1989). Within HLFO, the extent of integration of conceptual and applied engineering concerns was evident in the structuring of technical information reports. Engineering analyses were indicative of the systematic fusion of diagrammatic and quantitative data and the blending of theoretical concepts and practical issues. The engineering officers’ operational concerns and proclivities influenced the structuring of PBTC information which contrasted markedly with accountants’ prior notions of legitimate information form and content. There is also research evidence which indicates that differences in cognitive styles and organisational culture dimensions lead to consistent relationships with decision making preferences and information systems design (Dermer, 1971; Driver & Mock, 1975; Hulin & Blood, 1968; Huysman, 1970; Ives & Olson, 1984; Macintosh, 1985; Ouchi & Johnson, 1978; Seddon & Yip, 1992; Senn, 1978). Whilst individuals with an ‘‘internal locus of control’’ (Reitz & Sewell, 1979, p. 73) react favourably to certain organisational settings, others with an ‘‘external locus of control’’ do not (Reitz & Sewell, 1979, p. 73). In the light of what the prior literature suggests about the role of past learning, it is argued here that engineering officers will uphold a developmental culture by virtue of their training and functional expertise Technik is a force for integration. The German company is Technik in organisational form. The skilled worker, the foreman, the superintendent, the technical director are all AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 14 more so than business officers. The following hypothesis is advanced: Hypothesis 1. Engineering officers will indicate higher developmental culture scores under the competing values model than business officers prior to PBTC implementation. Although one might expect that engineering officers will tend to generally remain culturally more developmental than business officers, it is important to ascertain that the contrast between engineering and business officers’ cultural orientations did not significantly alter during the implementation of Siemens’ corporate-wide culture change programme. Whilst transformations in organisational values may take place over protracted lengths of time, it is unlikely that the cultural change which Siemens sought to mobilise through the TOP programme could have significantly altered the organisational culture orientation of business officers such that it would have become more developmental than that of engineering officers over the eleven months time period between the two questionnaire administrations. To establish that no such transformation took place, the hypothesis that HLFO engineering officers are culturally more developmental than business officers after the implementation of PBTC is tested via the following hypothesis: Hypothesis 2. Engineering officers will indicate higher developmental culture scores under the competing values model than business officers following PBTC implementation. Hypothesis 1 is essential for establishing the more extensive developmental cultural orientation among engineering as opposed to business officers prior to PBTC implementation given the influence of their highly specific educational and training background. Hypothesis 2 is necessary to establish that neither the ongoing cultural change programme nor the process of PBTC implementation materially altered this relationship. Taken together, they provide the basis for assessing how the alignment between the developmental orientation of MAS users and that embedded within the MAS influenced the perceived success of the new system. Zammuto and Krakower (1991) suggest that a departmental culture which stresses flexibility as opposed to control is more conducive to favouring an accounting innovation that can potentially redirect managerial attention and alter organisational processes. An internally oriented outlook may be expected to coincide with a low inclination to adopt management innovations which alter the stability and continuity of control procedures as opposed to an external orientation (Zammuto & O’Connor, 1992). Thus a developmental culture orientation under the competing values model can be expected to be more receptive to any accounting innovation which alters the status quo especially where the accounting innovation enhances information on the impact of external market and customer influences on organisational activities. Since PBTC attempts to provide enhanced information on ways in which resources can be reallocated, a flexible orientation on the part of users can be expected to heighten the relevance and potential success perceived of PBTC more so than a control orientation. In this respect, a developmental culture orientation can be expected to be more receptive to PBTC since it does not favour structured information and extensive calculative procedures and rules which characterise a control orientation. A developmental orientation does not favourably view the running of internal operations via formalisation, structure and extensive administrative rules. Such characteristics are antithetical to the design and objectives of PBTC. PBTC provides information by integrating financial, operational, internal and market-based data. Its reports are structured as a dynamic mix of visual, graphical, quantitative and qualitative information. Financial content is blended with operational data in PBTC reports. Thus a user group with a high developmental culture orientation will tend to consider PBTC as more successful relative to a user group which is less developmentally oriented. A low developmental orientation would suggest lesser receptivity to viewing PBTC as successful as this new MAS stresses an external and flexible orientation rather than an internal and control oriented outlook. AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 15 Table 4 t-Tests of developmental culture orientation of engineering and business officersa Engineering Mean (standard deviation) Ex-ante developmental orientation (H1) Ex-post developmental orientation (H2) 39.04 (20.99) 41.00 (24.87) Business Mean (standard deviation) 19.05 (11.15) 18.89 (14.16) 3.291 (0.004) 3.115 0.005 t (P-value) a A two-sided t test was used to test the hypotheses, H1 and H2, that the true means of the developmental scores under the competing values model of the engineering officers group is significantly higher than the business officer group before and after PBTC implementation. The following hypothesis is posited: Hypothesis 3. officers with higher developmental culture scores under the competing values model will consider PBTC to be more successful than will those with lower developmental scores. To provide a deeper organisational perspective to the questionnaire results, interviews were held with users of the PBTC system following the administration of the ex-post questionnaire. These interviews were semi-structured in that questions generally attempted to retain some focus on the users’ outlook toward PBTC’s usefulness and consequences. The interviewees included employees with Research & Development, Production and Marketing & Strategy responsibilities. In addition, interviews were held with individuals who had played a role in the design and implementation of the PBTC system. The next section discusses the questionnaire results and their implications for the hypotheses being tested in the light of the qualitative information derived from these interviews. 5. Questionnaire results and interview analyses The ex-ante questionnaire was distributed to the 34 relevant PBTC accounting information users at HLFO identified in Table 3. Four questionnaires were returned partially filled and were excluded from the analysis. The ex-post questionnaire was distributed to the corresponding group of 33 relevant PBTC information users. Of the 33 questionnaire returns, two were partly filled and unusable. Hypotheses 1 and 2 are tested by reference to two sided t-test scores and hypothesis 3 is tested using regression analysis. Table 4 indicates that engineering officers have a more developmental orientation than business officers both prior to and following PBTC implementation thereby confirming hypotheses 1 and 2. The results confirm that engineering officers exhibit a higher developmental value orientation than business officers both before and after PBTC implementation. The interviews undertaken with various officers at HLFO also provided qualitative evidence underpinning the differing organisational value orientations between engineering and business officers both prior to and following PBTC implementation. These interviews suggest that beliefs about the usefulness and effects of PBTC were infused with judgements about how departmental attitudes differed. Individuals in some departments differentiated themselves from others in terms of cultural outlook and as to how their conception of the role of cost information differed from that of business officers staffing the Accounting Department. For instance, the Phoenix Technical Project Leader viewed the R & D Department as being the . . .driver of PBTC since the accountants did not realise that such a tool was required in such a form (24.4.97). The PBTC Software Developer likewise noted that accountants are ‘‘. . .conservative. They fulfil their function and manage by the numbers but do not accept new ideas easily’’ (23.4.97). He indicated that traditionally: ‘‘. . .the accountants’ tasks AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 16 are defined by formal constraints’’ (23.4.97) and observed that: . . .before, we used to use overhead allocations and when there were questions, the accountants simply analysed the problem in more cost detail (23.4.97). The Head of Production Planning offered a similar view of the accountants: PBTC had to come from one of us in R and D or Production or from somebody in Sales or Marketing but not from the Accounting Department. We cannot expect this approach from a classical Accounting department. They only expect the right numbers and then have a ‘‘help yourself’’ mentality in relation to other departments. ‘‘Just pick from our numbers what you need’’ they seem to say (3.7.97). The Strategy and Marketing Manager was particularly critical of the accountants in that, according to him ‘‘PBTC calculations always better match the reality than the results from the accountants’’ (25.4.97). He remarked that: Accountants live in their own world, closed to the outside, living within numbers and staying remote from the rest of development. They believe more in their numbers than in what is actually happening. To them, PBTC is not thinkable. They just hide behind their overhead costings (25.4.97). He further noted that PBTC information users ‘‘intuitively’’ recognise the advantages of the system: Tools allowing function analysis, forward pricing, design to cost and customer discussions are more and more in demand. But the accountants who should be promoting these tools react negatively (25.4.97). An assistant to the top management team also remarked that: Accountants only want to use standard Siemens accounting tools. They focus on existing products and they fulfil standard Siemens functions—and there are a lot of standard functions at Siemens (24.4.97). In commenting on the type of information provided by the Accounting Department, a product developer from the R & D Department (here referred to as Product Developer A) stated that: Accountants are more conservative because of their structure and their approach. But nothing is more deadly than columns and columns of numbers—these are the so-called ‘‘number cemeteries’’ (Zahlenfriedhof). Conversely, PBTC shows us the results more clearly—this helps (27.6.97). In echoing this view, the Head of Production Planning indicated that: Accountants have their rules and financial report regulations. You cannot expect flexibility in their representation of data (3.7.97). He pointed in humour that: ‘‘. . .only if they have time and they are bored, will they help us’’ (3.7.97) and noted that a specific type of . . .accounting information is needed by R and D, but accountants do not really care where the costs come from (3.7.97). The Head of Production Planning commenting on the accountants’ cultural outlook noted that: ‘‘The accountant is cool. He is not emotionally involved and hence, not as committed’’ (3.7.97). He indicated that: I hope I did not give a too bad blow to any accountant from the Accounting Department but we could expect that they could help us a little more in cost controlling. They are too involved in their financial regulations. Their transparency is only financial and that’s the big problem (3.7.97). AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 17 He further added that: I am always amazed at how little transparency we have at HLFO. There is only an apparent transparency. It seems that the only important thing is that the numbers add up together finely. But the meaningfulness of the information is missing. So it happens that we bet on the wrong horse when we make a decision (3.7.97). The PBTC Project Leader also commented on the differing outlooks between engineers and accountants regarding PBTC based information: With the Production people, communication has been easy because they already were thinking about manufacturing processes in the same way. For the accountants it has been more difficult because with PBTC, they have had to procure data in a form and depth they have not been used to (25.4.97). The tenor of these interviews are indicative of perceived differences between engineering officers and accountants and between traditional accounting information produced by the accountants and the form and nature of PBTC information. Engineering officers in R and D, Production and Sales and Marketing considered themselves as being more open than accountants to departing from traditional precepts governing accounting information content and form. Under the competing values model, this view of accountants accords with a lower developmental orientation in comparison with engineering officers. The questionnaire based results of hypotheses 1 and 2 therefore find some corroboration by way of the interview results. The results suggest that the enterprise-wide culture change programme was not significantly associated with changes in the organisational outlooks of engineering and business officers over the eleven month time period between the two questionnaire administrations. As might be expected, the organisational value orientations of the functional officers are not subject to change over short periods of time. It is plausible also that any association between organisational value orientation and perceived MAS success which is tested in hypothesis 3 will remain equally stable over short time periods. Hypothesis 3 is tested by reference to the following regression model: PBTC Success ¼ bo þ b1 DEVELOP þ e where DEVELOP=Developmental culture score under the competing values model. The results of this regression are shown in Table 5 and provide support for Hypothesis 3. PBTC users with higher developmental scores perceived PBTC to be more successful than those with lower developmental culture scores. The R-square for the model is 0.683 and the coefficient for DEVELOP is in the expected direction and is significant. The coefficient for DEVELOP is negative because lower scores for PBTC Success signified higher perceived success. The results of Hypothesis 3 are also corroborated by the interview results. A number of engineers who were users of PBTC information commented on the usefulness of the information provided by the new MAS. The PBTC Project Leader for instance, stated that: PBTC gives a structured way of talking about cost elements with our partners. It is a progress in the way that Accounting, Production, Table 5 Developmental culture orientation and perceived PBTC success: regression resultsa Expected sign Intercept Develop – Coefficient (S.E.) 5.058 (0.340) À0.041*** (0.006) Adjusted R-square=0.638; ***P <0.01. a The model is Perceived PBTC success=bo+b1 DEVELOP+e. Perceived PBTC success is measured on a scale from one to five (1=totally successful, 2=mainly successful, 3=neither successful nor unsuccessful, 4=mainly unsuccessful, 5=totally unsuccessful). DEVELOP is measured by the aggregate score from 0 to 100 allotted to Department B which corresponds to ‘‘developmental’’ culture in the questionnaire instrument. The significance level of the coefficient of DEVELOP was determined using two-tailed t-test. AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 18 Marketing and Purchasing talk to each other . . . This is a tool which creates an ‘‘aha’’ effect—what a sheet of paper with only rows and columns would never be able to do (25.4.97). Product Developer A likewise thought that with the PBTC system, ‘‘you do not consider single pieces but complete work processes and product functions’’ (27.6.97). He noted that: ‘‘All existing processes should be broken down using the methodology of PBTC’’ (27.6.97). He considered that this would ‘‘make accessible to everybody, the knowledge of the functionality and processes of existing products’’ (27.6.97). He believed that ‘‘PBTC is a progress compared to the old system because the cost transparency is much clearer’’ (27.6.97). Product Developer A explained that: In R and D, we always have the same problem: we know vaguely the cost but it is very difficult to know the real cost of diodes which for example is an important cost driver. . . PBTC helps a lot in relation to new developments to get the cost of components (27.6.97). The Head of Production Planning was also receptive to the new MAS. He remarked that: ‘‘PBTC is the only report that I can really use’’ (3.7.97). He added that: Our cost structure is more like mud in a swamp even if you could call mud clean. We need cost details. . . Previously, we could not really tell how much a function of the product costed (3.7.97). He observed that PBTC’s information output is useful in terms of ‘‘. . .knowledge of cost drivers, the flow of material and the visual stimulation of problem areas and plans versus real comparisons’’ (3.7.97). A similar opinion was expressed by the Phoenix Technical Project Leader from the R and D Department who viewed PBTC as enabling to ‘‘look for the reason for a deviance within a process and to look at how to reach our target’’ (25.4.97). The Phoenix Technical Project Leader added that it is a tool to show the Strategy and Marketing people ‘‘what we are good at’’ (25.4.97). Another Product Developer (here referred to as Product Developer B) believed that: PBTC as a product calculation tool, has to be accepted and hence integrated into Siemens’ standard procedures (13.1.98). Product Developer B stressed that control responsibility was an important issue: PBTC should be used not only for the planning of new products but also for cost controlling. From this controlling, the optimisation of processes can be achieved (13.1.98). He thought that PBTC helped match processes and product functions to different individuals and departments and that with the new MAS: . . .problems such as the question of who is the cost responsible person will be resolved (13.1.98). Such a view did not depart from one of the TOP initiative’s aims to replace ‘‘division of labour with division of responsibility’’ (Siemens, 1995, p. 5). Evidence of the perceived alignment between functional users’ organisational outlooks and their views as to the potential of PBTC further stemmed from interviews. Product Developer B for instance, noted that PBTC had quite significant influences on product design decisions. He thought that this was the result not so much of a heightened cost focus on the part of engineers: PBTC has not changed much in the heads of the Project team because Phoenix was from the beginning, a very cost conscious redesign project and all employees were very sensitised to this (13.1.98). Rather, Product Developer B believed that product design decisions were affected because PBTC represented and highlighted costs in a particular way. He cited various examples where particular AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 19 decisions were made because ’’. . .PBTC helped make certain interconnections obvious’’ (13.1.98). Product Developer B explained that with PBTC: . . .the possibility to visualise the numbers had emphasised the importance of the processes. The employees of the Technical Production Support division who are in charge of planning the production were directly, by the information gathering and with the questions associated with this, made attentive to possible cost drivers and have got through this, a higher awareness of cost origins (13.1.98). The PBTC Project Leader had commented that ‘‘. . .the way in which data is communicated, that is, visually as opposed to just numbers, is very important to some departments’’ (25.4.97). A similar view had been expressed by the Head of Production Planning who thought that ‘‘PBTC’s visual approach is very user friendly’’ (3.7.97). In line with the structuring of information conventionally adhered to by engineers, PBTC’s structuring of information output was graphic and visually diverse. The imagery of process flows, the visual depictions of the magnitude of resource allocations at different process steps and the diagrammatic displays of cost incursions at various operational stages are characteristic features of PBTC reports. Engineering officers’ predilection for integrating numerical and diagrammatic representations is a hallmark of PBTC that is not independent of their involvement in its design and development. It is likely that prior conceptions of the nature and role of the Accounting Department and engineering officers’ contrasting perceptions of the potential role of cost management information influenced their judgements concerning the new MAS. Engineering officers were predisposed to consider the viability of an accounting system which not only departed from the structural representation of data favoured by accountants but which was also intended to convey information that was broader in scope, encompassing operational, rather than just procedural financial concerns. The expectation on the part of engineering officers that accounting information produced by accountants was unlikely to be useful, affected their predisposition to accounting information stemming from the PBTC system. Beliefs about the propriety and success of the new MAS were conditioned by its origins as much as its form and substance. The business versus engineering subcultures within HLFO in this light could be differentiated in terms of their perception of the new MAS’s success. 6. Discussion The study has considered how certain notional organisational culture elements became embedded within the PBTC system’s design features at HLFO. It has also suggested that the degree to which the notional organisational culture elements embedded within the new MAS aligned with the organisational outlook of the user groups was significantly associated with the perceived success of the new system. The study results support those of other investigations which suggest that different employee groups can subscribe to different organisation cultural values and that a MAS which is more reflective of the organisation culture values of one group is likely to be seen as being more successful by that group. The study however goes beyond the scope of prior investigations in that it considers quantitative and qualitative information collected prior to and following the implementation of the MAS under study. Within the organisation investigated, there were context specific factors underpinning the results of the study. The TOP programme of culture change at Siemens for instance, played a role in shaping the MAS’s design features and by upholding certain notional culture elements, influenced what came to be deemed as successful accounting change within the organisation. During the time period between the first and second questionnaire administration, Siemens was actively engaged in a programme of enterprise-wide culture change. A principal objective of this programme was to alter the form and extent of communication between different parts of the organisation. Siemens’ TOP initiative sought to ‘‘. . .design more efficient structures, decision patterns and processes’’ (Siemens, 1994, p. 2) and ‘‘new forms of co-operation’’ AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 20 (Siemens, 1995, p. 5). It encouraged organisational participants across the enterprise to develop greater sensitivity to external market changes, increased flexibility in carrying out work activities and interacting with individuals across functions. Whilst TOP was being implemented across Siemens, HLFO initiated the Phoenix project in September 1995 which entailed the reconfiguration of manufacturing by modularising production steps. Phoenix was viewed as necessitating altered forms of information exchange between departments in relation to different operational processes. Just as TOP was intended to reduce ‘‘. . .the unending series of co-ordination meetings’’ (Siemens, 1995, p. 5) and to ‘‘tear down the barriers between different departments’’ (Siemens, 1995, p. 5), so Phoenix aimed to reduce production complexity by manufacturing basic products within single automated lines before mass-customising through subsequent individualised production processes. The Phoenix exercise adhered to the ethos of the TOP culture change programme. Whilst Phoenix was focused on production simplification, supporting information provision was seen as an essential corollary. The idea of providing HLFO design engineers with detailed information concerning production costs coincided with the implementation of the Phoenix initiative. PBTC stressed three dimensions: market-led quality, process time tracking and cost resource flow data. This premise underlying PBTC information output was also broadly embodied within TOP which sought to make Siemens ‘‘faster, better and cheaper than our competitors’’ (Financial Manager, 4/6/96) and to attain ‘‘effective cost management at all levels and in all functions’’ (Innovation Management Director, 3/6/96). Like the Phoenix project, PBTC’s aims were also characterised by objectives subsumed within the TOP programme of cultural change. The ability of the PBTC system to achieve its aims was, in this light, not independent of Siemens’ pursuit of TOP objectives. Aside from altered information monitoring and reporting, Siemens’ progression towards a meritocratic and individualistic rewards-based culture whereby traditional functional boundaries are transcended in the pursuit of effectiveness and transparency also affected the form and effects of PBTC. Accountants had traditionally internalised a professional conception of the need to economically map the organisation in terms of functional boundaries and to allocate costs based on generic procedural rationales. PBTC by contrast, represented an attempt at connecting and linking resource flows by focusing on processes rather than functional demarcations. The object was on integrating time, resource, quality and cost concepts rather than on merely reporting on overhead allocations across individualised cost objects. PBTC’s embodiment of engineering officers’ information structuring and reporting idiosyncrasies contrasted with the procedural formality which had permeated the Accounting Department’s approach to information development and representation. The internal ethos of the organisation which had in the past emphasised centralised modes of control but which now stressed devolved responsibilities, more dispersed information distribution and receptivity to alternative forms of information flows, was at odds with the traditional precepts still embedded in the functional priorities of the Accounting Department. The study brings to light the complex ways in which a wide diversity of organisational factors can influence the form and consequences of a new accounting system. The qualitative information derived from interviews and internal documents suggests that perceptions of the impact of PBTC were not unrelated to the notion that the new system provided accounting information which in content and form, was not originally conceived by HLFO accountants. It has been argued that engineering officers’ prior training which emphasised the integration of Wissenschaft and applied concerns influenced their preferences in relation to the structuring of PBTC reports. The significance of Technik as the embodiment of both conceptual engineering knowledge and craftsmanship as part of engineering officers’ training was not, within HLFO, independent of the structure and content of the PBTC system’s output which diagrammatically integrated costing data with other forms of operational information. Additionally, the new MAS’s form and content brought into sharp focus the absence of representations of AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 21 purely economic data which had traditionally been provided by the Accounting Department. The analysis suggests that the interview comments of PBTC system users are broadly in line with the questionnaire results which indicate that different users’ organisational outlooks affected their perception of the success of the newly implemented MAS. The interviews provided a backdrop of organisational detail to the statistical analyses of respondent replies. The qualitative comments are indicative of the perceived success of PBTC as having been possibly tied to the pre-existing proclivities of the engineering officers toward information representation and how they sought to understand the cost implications of design changes. The study is, in this regard, indicative of the potential of methodological triangulation whereby quantitative and qualitative analyses can be coupled to shed greater light on the subject under investigation (Ashton, 1982; Bamber, 1993; Birnberg, Shield, & Young, 1990; Brownell & Trotman, 1988). A void continues to exist in our knowledge of the diversity of factors which can affect user receptivity to novel accounting systems. The present investigation posits the existence of contingencies between different cultural orientations espoused within the organisation under study, those factored into its new accounting system and perceptions of the propriety of a user based accounting system design as opposed to one procured by the Accounting Department based on traditional accounting information precepts. In this light, the study points to the usefulness of examining some of the conditioning forces affecting the ultimate perceived impact of a novel accounting system within an organisation and of exploring ways in which an accounting system can a priori embody organisational value elements of primary significance and utility to its designers. A possible avenue for further research might thus be to contrast the present study with a similar analysis of the implementation of a MAS designed outside the organisation and to assess whether under such circumstances, different groups of users perceive the impact of the system differently. There exists little analysis within the accounting literature of the interrelationships between factors influencing accounting transformations which arise from outside and from within the organisation. Whereas a number of past studies have focused on the external origins of internal accounting changes and on the influencing forces at the margins of accounting (see Hopwood & Miller, 1994; Luft, 1997; Miller, 1998), the present study leans more toward an examination of forces conditioning an emerging MAS from within the organisation. The predisposition of engineering officers to structuring information in ways that contrast with accountants’ notions of appropriate accounting data representation has here been argued to find possible origins outside the organisation. This investigation suggests that a variety of intra-organisational forces shaped the new MAS’s form, content and effects. Siemens’ historical shift from being highly centralised to adopting a decentralised form with more autonomous business units, its ongoing programme of culture change and its traditionally focussed and detailed standard accounting procedures were instrumental in influencing the structure and consequences of process based target costing. The emergence and receptivity of the new MAS can in this light, be argued to have been conditioned by intra-organisational forces which themselves are partially shaped by more protracted extra-organisational factors. This study is thereby suggestive of accounting change being tied to transformations that are multifaceted in origin and which inhere it with a specificity that is intra- as well as extra-organisationally rooted. Acknowledgements The comments made on an earlier draft of this paper by Thomas Ahrens, Robert Chenhall, Maurice Gosselin, Graeme Harrison, Anthony Hopwood, Peter Miller, Cedrik Neike, Neale O’Connor, Michael Shields and Holger Vieten are gratefully acknowledged. The paper has also greatly benefited from the comments of participants at the Manufacturing Accounting Seminar held at the University of Edinburgh in June 1997 and at the Manufacturing Accounting Workshop held at the Copenhagen Business School in March 1999. The review suggestions of two anonymous reviewers have greatly contributed to the paper. AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 22 Appendix. Competing values model questions3 The questions below will provide information on whether process based target costing is associated with the type of department that your department is most like. Each of these items contains four descriptions. Please distribute 100 points among the four descriptions depending on how similar the description is to your department. None of the descriptions is any better than the others; they are just different. For each question, please use all 100 points. For example, in question 1, if department A seems very similar to mine, B seems somewhat similar, and C and D do not seem similar at all. I might give 70 points to A and the remaining 30 points to B. (a) Department Character (Please distribute 100 points) ______ Department A is a very personal place. It is a lot like an extended family. People seem to share a lot of themselves. ______ Department B is a very dynamic and entrepreneurial place. People are willing to stick their necks out and take risks. ______ Department C is a very formalized and structured place. Bureaucratic procedures generally govern what people do. ______ Department D is very production-oriented. A major concern is with getting the job done. People are not very personally involved. (b) Department Leader (Please distribute 100 points) ______ The head of Department A is generally considered to be a mentor, a sage, or a father or mother figure. ______ The head of Department B is generally considered to be an entrepreneur, an innovator, or a risk taker. ______ The head of Department C is generally considered to be a coordinator, an organiser, or an administrator. ______ The head of Department D is generally considered to be a producer, a technician, or a hard driver. (c) Department ‘‘Glue’’ (Please distribute 100 points) ______ The glue that holds Department A together is loyalty and tradition. Commitment to this institution runs high. ______ The glue that holds Department B together is commitment to innovation and development. There is an emphasis on being first. ______ The glue that holds Department C together is formal rules and policies. Maintaining a smooth running operation is important here. ______ The glue that holds Department D together is the emphasis on tasks and goal accomplishment. A production orientation is commonly shared. (d) Department Emphases (Please distribute 100 points) ______ Department A emphasises human resources. High cohesion and morale in the institution are important. ______ Department B emphasises growth and acquiring new resources. Readiness to meet new challenges is important. ______ Department C emphasises performance and stability. Efficient, smooth operations are important. ______ Department D emphasises competitive action and achievement. Measurable goals are important. 3 Used with permission from Zammuto and Krakower (1991). AOS 387 Disk used ARTICLE IN PRESS A. Bhimani / Accounting, Organizations and Society No. pages 26, DTD=4.3.1 Version 7.51e 23 References Ahrens, T. (1996). Styles of accountability: an ethnography of management knowledge in British and German brewers. 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