In the new competitive business environment nowadays, the management accounting techniques used by the companies plays a vital role in assisting them to remain profitable and at the same time to gain the competitive advantage. The variety of choices among management accounting techniques can be the great opportunity for the companies to choose the best techniques that fit accordingly to the company's capacity and their objective. Given by the evolving of the management accounting practices around the world, there are major shifting in the used of techniques and concept to serve the management needs from uses of traditional approaches towards the contemporary approaches. The traditional approaches which also known as traditional management accounting techniques including budgeting tools, cost absorption technique, cost-volume-profit analysis and many other traditional techniques has been used from the past 100 years ago. Nowadays, the management of the companies started to look into contemporary approaches given by the strategic management accounting techniques for instance Activity-based costing (ABC), Total Quality Management (TQM), The Balance Scorecard (BSC), Target Costing, Just-in-Time (JIT), and many others in order to increase the companies value towards offering better products and serving high quality services to the customers.
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The choice of management accounting techniques is basically depends on the management decision. However, it can be driven by many factors including the company objectives and strategies, resources and capacity, business environment and competitiveness, organizational structure and also the factors of cultural influences. Seems the choices are depending on many direct and indirect factors to the management decisions, the cultural influences have shown a slightly different view in it linkages towards the management decision. This is due to the fact that cultural factors are invisibles and hard to explains through the direct observations. Indeed, there might be a general effects in its influences on the management decisions, however, there are need to further clarify whether the effect of culture on the choice of management accounting techniques are real and can be seen visibly or otherwise. Therefore, this paper tries to provide basic explanations and critically evaluate on the effect of culture towards the management choices among the available management accounting techniques.
CULTURE INFLUENCES AND MANAGEMENT ACCOUNTING PRACTICES
Cultural influence proved by many studies has played significant roles in the development of accounting system around the world. Study done by Gray (1988) has initiated the development of theory of cultural influence in shaping the accounting system across countries. Followed by Gray's study, many other studies has come to the pictures in order to integrate the cultural factor towards the accounting in different point of views including Eddie (1990), Gray and Vint (1995), Salter and Niswander (1995), Chancani and Willet (2004) which all this studies are done in testing the theory of culture influence in accounting practices. In the management accounting perspective, Harrison and MacKinnon (1999) did a cross-cultural study in testing the culture impact on the management control system design. Basically, the theory of cultural influence has dominantly contributed through Hofstede's study which involves the development of cross-cultural values dimension. Hofstede's cross-cultural values dimension then has been used widely in many other studies as a fundamental framework in testing the cultural influence factors in accounting.
The term of 'culture' as defined by Hofstede (1980) as "the collective programming of the mind which distinguishes the members of one human group from another" can be further divided into two levels as discuss by Gray (1988). The commonly word of 'culture' is usually referred to culture at the societal system at large given by the country origin that carried different tendency, belief system, attitude and preference. For example people from Japan country have the set of mind and preference towards something which are different from those in America country. Therefore, Hofstede study further classified the set of culture different based on the country origin in the specific culture area such as Anglo, Nordic, More developed Asian, Less develop Asian, etc. On the other hand, there is another term as sub-culture (Gray, 1988) or business unit culture (Baird et al., 2004) which represents the culture within the organization. However, the discussion on the effect of culture on the choice of management accounting techniques will be refer to the culture at the national level or society system at large represent by the country origin.
IS THERE ANY EFFECT OF CULTURE ON THE CHOICE OF MANAGEMENT ACCOUNTING TECHNIQUES?
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There are many studies try to relate the management accounting techniques used in different countries given by the different preference and tendency in one's country. For example, study done by Sulaiman et al (2004) investigates the management accounting practices in the selected Asian countries and found that India country is still using the traditional management accounting techniques and reluctant to adopt the contemporary techniques because among Indian managers, they have the attitude and tendency of risk avoidance, more conservative and thus have very little innovation. Therefore, they are likely prefer to maintain on what currently they practices and try to avoid the adoption of new management accounting techniques. The tendency of having the risk avoidance and conservative preference also derive from the Hofstede's culture dimension to represent the attitude of the management towards risk in adoption the new management accounting techniques which belief to be uncertain and could be cause a failure to the company. As according to the Hofstede culture dimension, Asian countries are likely more risk avoidance and conservative and thus shapes their management attitudes (Hofstede, 1980). Thus, in support to the studied done by Sulaiman et al (2004), India as one of the Asian countries may have the tendency to stay on the traditional management accounting tools in order to avoid the risk.
As accordance to Wijewardena and Zoysa (1999) in their study of management accounting practices in Australia and Japan, Japanese which have the preference on collective decision making style emphasize on cost planning and cost reduction tools. Therefore, Japanese management likely to adopt the management accounting techniques that more towards strategies the structure to reduce the cost at the beginning of the process such as use of target costing technique. On the other hand, Australian which have more individualism oriented in the decision making style emphasize on cost control techniques. Thus, Australian companies likely to use management accounting technique that will provide ongoing control including budgeting and variance analysis. In addition, the result from the Wijewardena and Zoysa (1999) study also shows that the more collective oriented in Japanese culture has contribute on the highly use of Just-in-Time (JIT) inventory management system which JIT technique requires more integrated and high cooperation between the manufacturer and the suppliers. Thus, JIT is suitable to implement by the Japanese companies which they shared the common values of being collective. On the other hand, JIT techniques are very limited to use in Australian companies given by the individualistic values carried by the Australian people in the workplace.
In addition, MacArthur (2006) did a study to examine the cultural influences on German and U.S management accounting practices and he found such significant differences in the management practices for both countries. Given by the flexibility to change in U.S culture has giving impact on the highly adoption of Activity-based Costing (ABC) while in Germany, their culture in workplace are not flexible in the adoption the new method. Other than that, research done by Zadry and Yusof (2006) also found that the barriers in the implementation of Total Quality Management (TQM) technique in Malaysian automotive companies is due to the cultural factors embedded in the organization where the people in the Malaysian organization are likely resistance to change. Up to that extent, it can be concluded that Malaysian society are usually comfortable with the routine and thus difficult to accept the adoption of new method in the management practices.
Therefore, there are effects of culture influences on the use of different management accounting techniques as proved by various studies. Especially in the contradict pattern of culture areas as portrayed in Hofstede's culture studies, the tendency to adopt certain management accounting tools can be seen relatively from the comparison of U.S and Japanese culture (Chow, et al, 1994). However, major studies that investigate the impact of cultural differences and the management accounting practices are based on single comparison. Thus, it can be argued that the result cannot be generalized and further studies are needed to support those studies from different countries and probably testing the different management accounting techniques specifically.
IMPACT OF GLOBALISATION AND INTERNATIONAL HUMAN RESOURCE MANAGEMENT
Though many studies has proved that national cultural factors played significant role in the choice of management accounting tools, the fact that cannot be denied is that culture is a dynamic in nature and emergence throughout the times. Particularly in the impact of globalization, the cultural differences between countries are likely being reduces due to the effect of mobilization of human resources across countries and establishment of many multinational companies. The emergence of cultural across countries has become vital in current business environment which involves many expatriates working in different countries for the purpose of knowledge and skills sharing.
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Shields (1998) found that the emergence of European nations as result from the effect of the globalization has brought the convergence of management accounting techniques across nations. However, the author believe that the convergence is particularly in the use of management accounting techniques but the purposes of style in using such techniques still in different manners between the European countries. In addition, the growth of multinational companies across countries has brings an impact of the emergence cultural between the host and the origin country. The free flow of technologies and human resource between countries has reduces the cultural gap and therefore reduce it consequences on the particular tendency on the choice of management accounting tools that applied to the multinational company.
However, based on the simple observation, though the multinational companies are likely to emerge with the local culture, but their tendency to bring their own culture in managing the company still gives an effect. For example, many among the multinational companies in Malaysia applied the strategic management accounting tools such as Target Costing, Kaizen Costing which originally invented by the Japanese people because of influence from spirit to look into Japanese culture which has shown a successful result. Therefore, obviously the effect of culture still took place in the choice of management accounting techniques but the national cultural also could emergence with other culture through the effect of globalizations.
In conclusion, the culture effect has shown significantly influence towards the choice of management accounting techniques. The management decisions towards the management style and practices proved by many studies have given influence from the national belief system and cultural tendency. Therefore, management from different country origin has different preference and thus tends to adopt the management accounting tools that fit to their organization environment. However, the impact from globalization business environment has open up the emergence of management accounting practices across countries to share the common preferences and thus reduces the cultural gap. Nevertheless, the effect of cultural differences still taken into place in the management accounting practices given by the cultural factor involve with the societal belief system which difficult to change and totally removes even in the long period of times.