Examining the relationship between Management Accounting (MA) and Operation Management

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In order to come up with the correct relationship between Management Accounting (MA) and Operation Management (OM) in terms of enhancing the organizational performance which are steps in a chain leading to increased firm value, it should give some practical definitions to the both of the terms.

Atkinson, Banker, Kaplan and Young ( 2001) defined management accounting as the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Kaplan and Cooper (1986, 1989) defined it as "the ability of management accounting practices (MAP) in providing relevant, timely & accurate information to management for planning, control & decision making purposes is questioned"

While the operation management focuses on carefully managing overall activities associated with Product and services management such as: product creation, development, production and distribution as well as the activities managing purchases, inventory control, quality control, storage, logistics and evaluations. Moreover, it involves the responsibility of ensuring that business operations and efficient in terms of using as little resources as needed, and effective in terms of meeting customer requirements. Thamboo (2008) described operation management "involves all the activities that converts inputs such as raw materials, semi-finished goods, capital, workforce, facilities and machinery into finished products and services".

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In the same way that MA, OM is a discipline with its own propositions for how to manage organisations. Where MA is based on accounting numbers in hierarchical flows of information enabling planning and control, OM is more concerned with technological, architectural and organisational principles established to facilitate the lateral flow of goods and services. Great number of new OM techniques such as Computer Aided Design (CAD); Computer Aided Manufacturing (CAM), kanban, cross-functional teams and process mapping ingrained in total quality management (TQM), just in time (JIT) or automated practices focus on the integration of functional departments, activities and organisational goals, and change the very nature of the planning and control tasks in operations, which, in turn affect the role of MA.

Therefore, this study aims to understand the responses that have been made within the MA discipline in regard to new operational practices. The study intend to describe the literature that directly addresses the challenge/barriers from integrated manufacturing /innovations and the changing characteristics of MA design and practices that have been appointed. Subsequently, the paper will reflect upon possible research questions for the future, in order to gain new insight into the relationship between MA and OM (Hansen & Mouritsen, 2007).

The paper is organised as follows. The next section outlines central issues in relation and new operations management practices. Then, it describes how operations management research depicts the problem of accounting and follows this with an outline of operations management accounting - a natural tension than describes the MA innovations that ought to overcome the misfit between MA techniques and changing environment of operation practices. Hereafter the paper describes how the challenges / barriers from innovations in OM have been debated in MA research. The subsequent step is the findings and recommendations. Finally, the paper ends with a brief conclusion.

2.0 Central Issues in Relation and New OM Practices

Management accounting calculates organisational performance for decision-making, coordination and motivation using techniques such as cost allocation, responsibility centres, transfer prices, product costing, performance measurement and budgeting. All are expect­ed to contribute to increased firm value. Operations management has a parallel agenda, but has other techniques. These specify flows of materials, resources and products, outline layout in manufacturing and service settings and are concerned with non-financial aspects of performance such as time, quality, flexibility and innovation, which are steps, in a chain leading to increased firm value (Hansen & Mouritsen, 2007).

2.1 Operations management accounting - a natural tension

In order to understand the nature of involvement of operations managers and management accountants in decisions about operational processes this section briefly outlines their respective key tasks. As a result it is suggested that their differing roles and perspectives may lead to a natural tension between these two groups of people (Johnston, Brignall, & Fitzgerald, 2002).

2.1.1 The role of the operations manager

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The key tasks for operations managers include (Slack et al., 2001):

developing and implementing operations strategies linking the operation to corporate strategy in order to gain competitive advantage;

designing products and services and the processes by which they are created and delivered;

planning and controlling the materials, customers and information used in the process to create the goods and services, on time, every time;

Continually improving the operation to make it cost effective and competitive.

2.1.2 The role of the management accountant

There are three main activities undertaken by the accounting and finance function in most organisations, which in small businesses may be performed by the same person:

day-to-day recording of financial transactions and their periodic reporting to external parties, principally shareholders;

financial management, including decisions on the mix of finance and dividend policy;

Management accounting

Management accounting systems generate financial information to meet three main requirements (Drury, 2000):

a periodic allocation of costs between cost of goods sold and inventory;

the provision of information on both an ad hoc and regular periodic basis to aid managerial decision making;

the provision of information for planning, control and performance measurement.

A large part of the activities of management accountants concerns the operation of systems of budgetary control, sometimes referred to as "managing by the numbers" (Ezzamel et al., 1990). The operation of budgetary control requires that managers be made accountable for those costs and revenues for which they are responsible and which are controllable by them. Budgetary control involves setting budgets and then making periodic comparisons of actual performance with budget, followed by appropriate action and organisational learning (Fitzgerald et al., 1991)

2.1.3 A natural tension

It is at regular meetings to compare actual performance with budget that operations managers and management accountants meet. The management accountants run the systems whereby operational budgets are set, capital projects are approved or rejected, and operational managers are held to account. This is reason enough to understand that there may well be a natural tension between the management accountants and operations managers.

Essentially, the natural tension between operations managers and management accountants is the result of their differing perspectives on two issues. First, operations managers tend to be focused on decision making today and in the future whereas accountants are traditionally concerned with reporting on past events. Second, when it comes to improving processes, operations managers are looking for ways and means to change, on the assumption that what they do should improve the organisation's financial position. Management accountants, on the other hand, being concerned with financial reporting, and responsible for budgetary control, are less concerned about change per se and more concerned about the need to be convinced, in financial terms, before any change can take place.

2.1.4 Tension and the degree of change

The fundamental assumption of this paper is that this tension is likely to evident itself most strongly where operations managers and accountants are brought closely together, for example when operations managers are trying to bring about improvements to operations processes which may have an impact on budgets and capital expenditure. Process change, such as the implementation of new computer-based processes or equipment, changes in delivery systems such as Internet-based trading, or the restructuring of existing processes, roles and responsibilities, may well involve decisions on capital expenditure, risk assessment, allocation of costs, the drawing up of budgets and implementation of new financial and operational control systems (Lynch & Cross, 1991; Nanni et al, 1990, 1992; Shank & Govindarajan, 1993).

2.2 Issues in New OM Practices

Many complex management con­cepts have been introduced to delineate better ways to manage modern operations. Total quality management (TQM), just in time JIT), lean manufacturing, agile manu­facturing, time-based management, world class manufacturing and flexible manufac­turing are just a few examples. In 1974, Skinner argued that the role of manufacturing or operations is strategic. Several commentators, researchers and others have followed his suggestions for increasing a company's competitive advantage through manufacturing (Hayes & Wheelwright, 1984; Schonberger, 1986; Womack et ah, 1991).

Figure 1 shows how four key dimensions of a manufacturing system differ between two alternative approaches to designing operations to accommodate changes in the environment. One design produces at a low cost and the other, whilst more cost­ly, can produce more differentiated products that sell at relatively higher prices. The system on the right of Figure 1 is a mass-producer with high routine and predictabili­ty, while the system on the left is flexible and complex i.e. the first represents a manufacturing system run for maximum efficiency, whereas the other concentrates on flexibility. Actual designs implement these principles in some form. But, before illustrating this, it is useful to introduce the oppos­ing ideas about factory and operations organisation that are inherent in materials' requirement planning (MRP) system and just in time (JIT) principles, since they illus­trate the control problems encountered in such production systems.

2.3 Critical Reflections on "The Problem of Accounting" Management Accounting Perspective:

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Hansen & Mouritsen (2007) mentioned that it is a functional to change roles and function of management accounting while changing the operations environments regarding to this matter this section highlights the ostensible problems. As well as, there are several critiques against accounting could be summarized as follows:

Accounting operations are entirely promoted on financial performance measures rather than non-financial measures.

Accounting operations are promoted on hierarchical rather than lateral relations.

Accounting operations are promoted on standard (status quo) situation rather than improvement.

Accounting operations are promoted on control rather than empowerment.

Management accounting may well have a roll in the new manufacturing setting. The following four claims would explain why:

First claim: Relevance is lost because accounting promotes financial performance measures rather than non-financial measures. There are two reasons that justify why non-financial measures are more important in manufacturing. The first claim is that strategies focusing on cost efficiency are mostly changed by differentiation other strategies focused on flexibility, speed and quality because manufacturing could combine both types of strategies. Accordingly, these strategies could be obtained at the same time. The second argument is that financial performance measures are too abstract and non operational to guide empowered workers in the new manufacturing systems because those workers need more operational information to make right decisions. Although, financial accounting information is often portrayed as irrelevant and too aggregated for the decision makers as well as financial performance measures has used as a shop floor and financial information is valuable at the shop floor if reorganized it can be stimulus for improvement of the manufacturing system. Activity based costing has been used as a solution for this problem by providing more accurate cost information that are aligned to the operational reality. Finally cost accounting has been related to concerns about production time. Therefore management accounting seem to be crucial in lean manufacturing systems because it provides information for operators for local decision making and learning contributes to understanding the economics of the new manufacturing strategies as well as creates incentives according to the goals of lean manufacturing systems. Moreover, non financial information may not necessarily be more real.

Second claim: Relevance is lost because accounting promotes hierarchical rather than lateral relations. The complexity and dynamics often present in new operational settings are presumed to be better accommodated by lateral rather than hierarchical coordination to ensure quality, flexibility, innovation and productivity. New organizational devices, such as multi-skilled workers, cross-functional terms, self-management principles and liaison roles, are proposed as answers to complex and dynamic environment that require fast and innovative responses. The individual decision makers in the value chain do not necessarily have knowledge of the whole value chain even when there is mutual integration with the decision maker future upstream and downstream. In turn, a hierarchy may create incentives or provide information that enables the lateral orientation. Operation management critique with accounting may be that operation management's attention to nonfinancial measures does not recognize how accounting creates the space within which nonfinancial measures are used.

Third claim: Relevance is lost because accounting promotes standardization rather than learning and continuous improvements. Standards do not stimulate individuals to exceed standards. Furthermore, standards are often considered as mechanisms that lead to sub optimization in organizations. Standard can have different properties and there may be a discrepancy between motivational and planning purposes. For instance, effective motivation often requires standards that are higher that what is normally achievable and frequent adjustment is necessary. In contrast, any problem with standard setting may affect employees' performance due to challenge of asymmetric information. Managers and supervisors do not necessarily know the job or process that they evaluate and employees may exploit that for their own benefits in this case the solution is planting or enrooting the trust between managers and supervisors on the one side and employees on the other. Finally, It could be said that the standard setting and lateral relations do not necessarily to conflict because that relies upon what standards are set for and what is the goal of this standard as well.

Fourth claim: Relevance is lost because accounting promotes top-down control rather than empowerment. The notions of self-management and empowerment, essential in lean manufacturing systems, run counter to accounting numbers that are diagnostic levers of control whereby operations are planed monitored and evaluated by upper level managers. Self management implies that authorities for decision making and control are given to the employees. Here, accounting numbers are interactive levers of control used for individual learning and decision making rather than top-down monitoring and performance evaluation. However, accounting numbers may have disciplinary effect, as workers cannot control how these numbers are used for surveillance by others. Thus local operational data is not only useful locally; it can become part of wider systems of accountability. Paradoxically, self management and lean manufacturing can bring stronger hierarchical systems of accountability. As well as management accounting will still be used for control and monitoring because responsibility centers are still in place in modern manufacturing settings. Also there are other types of responsibility centers which are promoted by management accounting as relevant in changing operation management practices. For instance, some organizations motivate their employees by providing them with profit information because, it is argued that this type of incentives considered more comprehensive financial signal than cost reduction. In turn the previous indicator provides incentives for continuous improvement even when employees work teams are not organized as profit centers. Thus hierarchical systems of accountability still play significant role in modern manufacturing settings.

3.0 Innovations

Innovation is generally regarded as an important research topic because innovations are believed to enable organizations to successfully adapt to, and survive, volatile business environments (Rogers, 1995) Management accountants' contribution to this innovation process is to ensure that managers are provided with information that continues to be relevant as business circumstances change.

However, management accountants have been criticized for their inability to innovate (Kaplan and Johnson, 1987) and these perceptions continue to persist in light of the relatively low success rate in implementing 'new' management accounting innovations such as ABC and the balanced scorecard (Cobb et al., 1992; Reeve, 1996; Chenhall ; Langfield-Smith, 1998a; Lukka & Granlund, 2002). This lack of innovation was described by Kaplan (1986) as 'accounting lag' that needs to be minimized in order to keep management accounting relevant to the changing information needs of managers. However, at the time Kaplan (1986) coined the term 'accounting lag', there was little research about management accounting innovation and researchers have only turned their attention to this issue in recent years. This research into management accounting innovation has now matured into several different streams and this literature is reviewed in order to locate this study within that literature.

Innovations in operations management (OM) have challenged management accounting (MA) for more than two decades (Berliner & Brimson, 1988; Cooper, 1995; Johnson, 1992; Kaplan, 1983, 1990; Maskell, 2003). Automation, just-in-time (JIT) and total quality management (TQM) are examples of practices that have changed manufacturing systems (Hayes & Wheelwright, 1984; Schonberger, 1986, 1996; Womack et al., 1991) and are today considered to be basic elements in the OM discipline, and pivotal in the pursuance of competitiveness.

3.1 Innovations in OM - Pursuing Integrated Manufacturing

Integrated manufacturing surround JIT, TQM and automation, and characterises the new manufacturing paradigm as a matter of integration. Hayes; Wheelwright (1979, 1984); Wheelwright and Hayes (1985) who present the argument for heightened attention to manufacturing in the modern world. They point to the lack of competitiveness in American manufacturing industries compared to Asian and European manufacturers in the 1970s and 1980s (Clark et al., 1985 & Teece, 1987), and the urge to rethink manufacturing and the principle of OM, and by doing so, they set the stage for integrated manufacturing and the roles of automation, JIT and TQM.

3.1.1 Putting OM on the Strategic Agenda

Skinner (1969, 1974) was one of the first to point to the strategic role of manufacturing/operations. Skinner's response to 'the productivity crisis' in the early 1970s in the US was to offer an optimistic view, suggesting that what was needed was not to feel powerless in competing against cheaper foreign labour. From his study of approximately 50 plants in six industries, he pinpointed three concepts in focused manufacturing which he considered dealt with the productivity dilemma: (1) there are many ways to compete besides producing at low costs; (2) a factory cannot perform well on every yardstick; (3) simplicity and repetition breed competence

Hayes and Wheelwright coined the term 'world class manufacturing' (Hayes & Wheelwright, 1979, 1984; Wheelwright & Hayes, 1985). They developed world-class manufacturing based on in-depth analysis of the practices implemented by Japanese, German and US firms that exhibited outstanding performance. Hayes and Wheelwright (1984) offer six design suggestions: (1) build the skills and capabilities of your work force, (2) build technical competence throughout management, (3) compete through quality, (4) develop real worker participation, (5) rebuild manufacturing engineering, (6) tortoise and hare approaches to industrial competition. Furthermore, Hayes and Wheelwright emphasise incremental improvement practices rather than strategic leap changes in corporate development.

3.1.2 Integrated Manufacturing

Dean and Snell's (1991) notion of integrated manufacturing, as it conceptualizes the new manufacturing practice in three practices: advanced manufacturing technology (automation), JIT inventory control and TQM. Advanced manufacturing technology, TQM and JIT inventory control work in concert to transform manufacturing organisations, and they complement one another. For example, JIT enhances total quality, because a reduction in inventory exposes quality problems that were previously hidden, and total quality facilitates JIT, because poor quality is one of the main reasons for maintaining 'just-in-case' levels of inventory. Advanced manufacturing technology may also be closely linked with total quality and JIT. For example, Majchrzak (1988) observed that 'flexible automation creates an increased dependence on quality control'. However, Warner (1987) argued that these techniques can substitute one another, with a company using JIT or TQM in place of advanced manufacturing technology.

Dean and Snell (1991) propose that each of the practices represents a different facet of integrated manufacturing, a paradigm of manufacturing management whose core concept is the elimination of barriers between different aspects of manufacturing operations.

3.1.2.1 Advanced manufacturing technology (automation) includes computer-based technologies such as computer-aided design, engineering, manufacturing and process planning (CAD, CAE, CAM and CAPP). These technologies are sometimes combined into flexible or computer-integrated manufacturing systems (FMS, CIM), where the potential for integration is a key characteristic of advanced manufacturing technology.

3.1.2.2 Just-in-time (JIT) is a system for reducing 'lead time', inventory and thereby cost. With JIT, plants receive purchased parts just in time for use in manufacturing (Schonberger, 1986; Womack et al., 1991). A number of other techniques relate to the JIT concept. For example, the kanban system of minimizing work-in-process inventory by using cards to pull parts through a factory is often associated with JIT control. Other related techniques include minimizing lot sizes by reducing machine setup and changeover times, and establishing close working relationships with a small number of suppliers.

3.1.2.3 Total quality management (TQM) is the most elusive of the three components of integrated manufacturing, because of the many connotations of the term 'quality'. Like JIT, total quality involves a few, relatively simple central concepts, and what Dean and Snell call 'an amorphous array of peripheral associated practices'. The core ideas include doings things right the first time, striving for continuous improvement and understanding and meeting customer needs. Associated practices include statistical process control, quality function deployment and Taguchi methods. Quality was initially limited to factory floors, but total quality is now understood to apply to all areas of enterprises.

Companies eliminate barriers in three ways: (1) integrate the stages of production, (2) integrate functional departments and (3) integrate manufacturing goals. Thus, Dean and Snell talk about three different forms of integration: stage integration, functional integration and goal integration. With regards to stage integration, Dean and Snell (1991, 778) emphasise that 'the practice underlying integrated manufacturing integrates the stages of manufacturing processes in terms of time, space and information. JIT eliminates work-in-process buffers between production stages, and any steps, such as the movement of parts, that do not add value to the product. Consistent with total quality's premise of doing things right the first time, inspections and rework between stages are also eliminated. Companies practicing these techniques often create ''cells'' in which machines performing successive operations on similar products are located adjacent to one another in a plant. Such measures dramatically reduce time and space between stages'. Table 1 summarises these ideas.

This paper also argues that innovation in OM typically deals with the lateral flows within and beyond the firm. Like MA, OM is concerned with the transformation of inputs into outputs, but in contrast to MA, OM develops and explicates how this transformation takes place in detail. In a sense, while MA is concerned with juxtaposing a series of questions about decision making, responsibility and accountability on the process of transformation, automation, TQM and JIT are more focused on the specific steps in the transformation process. As a consequence, the objects of OM are related to throughput mechanisms including the design of manufacturing and service production systems, the design of products and services, the design of relations beyond the firm, the design of (factory) layout and the flow of services and products, the design of production and service technology and also the design of work organisation. This is a very broad spectrum of objects, which testifies that OM attempts to develop propositions about most things in a firm: the only caveat is that these objects have to be subordinated to the flow of the product or service in the supply, manufacturing and consumption processes.

Many innovation studies in management accounting settings focus on a single innovation as the unit of study, and Lukka and Granlund (2002) indicate that ABC is the single most studied innovation. Traditional absorption costing systems have long been subject to criticism. This time the focus of criticism was that these systems do not accurately measure costs for decision making purposes and activity based costing (ABC) has been developed and promoted. Also, target costing and the 'costing of quality' were introduced as tools for confronting increased competition (Abdel-Kader & Luther, 2006).

4.0 Challenges from Innovations in Operations Management from a Management Accounting Point of View

MA research has considered innovations in OM to pose a challenge for more than two decades (Berliner & Brimson, 1988; Bromwich & Bhimani, 1994; Johnson & Kaplan, 1987; Kaplan, 1983, 1984, 1990). This paper analyses the responses to the new manufacturing paradigm given in MA research. As mentioned above, we draw on Dean and Snell's (1991) notion of integrated manufacturing in our understanding of the new manufacturing paradigm. However, in the review it is the individual researcher's own definition of integrated manufacturing-related to automation, TQM or JIT - which forms the basis for characterising the relationship between MA and OM. Figure 2 identifies five challenges related to integrated manufacturing that are addressed in the MA research: (1) decentralisation, (2) non-financial performance measurement, (3) cost calculations, (4) standard setting and (5) reward systems. These five challenges are not a comprehensive list of all aspects addressed in the MA research focussing on innovations in OM. However, we believe that these points give a representative picture of how the MA research has responded to the challenge from integrated manufacturing.

Figure 2 OM challenges from a MA perspective(Adapted from Hansen & Mouritsen, 2007)

4.1 Role involvement's effect on innovativeness

Role involvement is expected to affect innovativeness in terms of: (1) knowledge about the appropriateness of innovations; (2) acceptance of the innovations by business unit managers; and (3) incentives to innovate. The first and second aspects of role involvement affect the ability of management accountants to innovate while the third affects their motivation to innovate (Emsley, 2005).

4.1.1 Knowledge about the appropriateness of innovations

To successfully innovate, the management accountant needs to be aware of an innovation as well as understanding its appropriateness to a business unit manager's needs. However, "awareness" and "appropriateness" are separate issues and role involvement is only argued to be important for understanding the appropriateness of innovations for business unit managers' needs.

Management accountants with a business unit orientation are more likely to know whether an inno­vation is appropriate or not because they work alongside and/or report to business unit managers. This proximity to, and contact with, business unit managers means that these management accountants will be more familiar with the sort of decisions business unit managers make, more likely to understand the information that is of most value to making those decisions, consequently, they are more likely to know which innovations are appropriate for producing that information. As these innovations need to reflect changing business unit needs, management accountants with a business unit orientation are less likely to be constrained by functional (accounting) dictates and consequently the innovations are also more likely to be viewed as radical (Emsley, 2005).

4.1.2 Acceptance of innovations by business unit managers

Emsley (2005) mentioned that knowledge about the appropriateness of a management accounting innovation is likely to be a nec­essary but insufficient step to initiating innovations. The second way role involvement affects the de­velopment of innovations concerns the degree to which management accounting innovations are ac­cepted by business unit managers. Innovations initiated by management accountants with a business unit orientation are more likely to be accepted because they can reduce business unit managers' per­ceived uncertainty about the benefits of the innovations as well as lessen their resistance to innova­tions.

The perceived uncertainty surrounding the benefits of management accounting innovations is likely to be relatively high because they are administrative innovations whose benefits are difficult to demonstrate and observe ex ante, at least relative to technical innovations (Dunk, 1989) For example, the benefit of a technical innovation that makes a machine run faster is probably easier to demonstrate than the improvement to decision making as a result of implementing an administrative innovation such as ABC. Consequently to be confident that the claimed benefits of a management accounting innovation will materialize, the business unit manager needs to spend time becoming familiar with the information generated by the innovation in order to appreciate its usefulness. However, the business unit manager can short-cut this process if s/he can trust the management accountant's opinion about the benefits and costs of an innovation and this trust is more likely where the management accountant has a business unit orientation because trust will have developed as a result of working together in the past. This situation is especially relevant for radical innovations whose benefits are often harder to demonstrate ex ante and greater resources are needed to implement them. In contrast, less trust is likely to exist between a business unit manager and a management accountant with a functional (accounting) orientation, consequently, the business unit manager will be less certain about the benefits of the innovation and will be less likely to accept it as a result (Emsley, 2005).

With regards to minimising the level of resistance to the innovation, social identify theory (Janis, 1982; Tajfels, 1978) indicates that management accountants with a business unit orientation will become a member of the "in" group (i.e. the business unit) and, consequently, will find it less difficult to get their views accepted within the business unit than management accountants with a functional orientation who will be viewed as members of an "out" group. In the former case the management accountant tends to be viewed as "one of us but different to us" compared to the latter case where the management accountant is viewed as "one of them". This situation is especially relevant for radical innovations where the departure from existing methods is larger and a greater faith in the management accountant is necessary (both in terms of the innovation's benefits to the business unit and any potential downside that might accrue to the business unit as a result of implementing the innovation).

4.1.3 Incentives to innovate

The third way a management accountant's role involvement affects the development of innovations is through their incentives to innovate. Incentives include a management accountant's rewards and future prospects but also includes the enhanced job satisfaction that comes from greater job enrichment (Argyris & Kaplan, 1994) These incentives are likely to be largely determined by the management accountant's superior who, for management accountants with a business unit orientation, is likely to be the business unit manager. In such situations, incentives are more likely to be geared to the achievement of business unit goals where the management accountant will aim to produce information that is geared towards achieving these goals and, as such, will be less likely to be constrained by conventions of functional accounting; moreover, in order to meet the various needs of the business unit, innovations are likely to be radical compared to existing practice (Emsley, 2005).

For management accountants who are functionally orientated, their superiors will be accountants who are more likely to align management accountants' incentives with the achievement of functional goals (such as managing cash flows and compliance reporting) than business unit goals. In such situations, there is less incentive and motivation for them to pursue innovations designed to achieve business unit managers' goals. This situation is especially likely if management accountants with a functional orientation have to invest considerable time and effort to convince the business unit manager of the innovation's benefits or if pursuing those innovations threatens the achievement of functional goals. These arguments all lead to the expectation that the role involvement of management accountants will be associated with their innovativeness (Emsley, 2005).

Some researchers have identified factors such as lack of top management willingness, lack of adequate role models, the emphasis on financial accounting and the dominance of computer based accounting systems. Others have included organisational strategy, structure and the influence of communication channels as factors influencing the diffusion of management accounting innovations (Yazdifar & Askarany, 2008).

4.2 Barriers to adopting new accounting techniques

Everett and Waldron (2000) mentioned that limitations relative to a firm's human resources were the most com­monly cited barriers to the introduction of new accounting techniques and practices. In particular, the cost of change related to people and time, and a lack of relevant skills were the top three barriers reported, as shown in Table (2) 40% or more of the respondents identified each of these three factors. The fourth most cited barrier, selected by 37% of the respondents, was management inertia. This problem, which rep­resents yet another human resource barrier, also featured in a study of barriers to UK manufacturer's adoption of throughput accounting that was conducted by Dugdale and Jones (1998).

It would appear that more effort needs to be expended in educat­ing mangers about the now accounting techniques and the benefits that can be realized from their use.

Askarany and Yazdifar (2007 (indicated that factors related to the characteristics of innovations are seemed to be among the most important influencing factors affecting the diffusion of cost and management accounting changes: 1. Lack of suitable software programs. 2. Cost of system set up and its implementation. 3. Cost of maintaining and collecting cost information. 4. Lack of information on available costing techniques. 5. Management policies and priorities. 6. Lack of appropriate cost accounting skills. 7. Low benefit arising from change compared with higher required expenditure. 8. Lack of confidence in the ability of new accounting techniques. 9. Adequacy of current system. 10. Employee resistance. 11. Inadequacy of the current system not being important enough to require change in the costing system. 12. External financial or cost accounting standards or practices

5.0 Findings and Recommendations

The findings suggest that top management commitment and support is a key factor in adoption and successful implementation of new cost and management accounting techniques. However, the top management commitment and support will be more effective if it is backed up by sufficient top management insight. They need to know about the new techniques being implemented in their company and be able to communicate this to others.

The findings also indicated that management accounting innovations may be able to reduce the misfit between management accounting techniques and the changing environment of operation practices. As Snell & Dean (1991) suggest, automation, TQM and JIT are major innovations in operational practices in companies around the world, and they contribute to the integration of stages, functions and goals in what has been called a new manufacturing paradigm.

The results of the research provide important information to facilitate the diffusion of recently developed management accounting techniques in practice. Such developments are expected to increase the satisfaction of users of current management accounting information. The findings may also be helpful in planning successful implementation of any management accounting change programme.

The research findings suggest that managers and practitioners should seek a better understanding of the nature and characteristics of new management accounting techniques that they are planning to adopt. The findings are also relevant for managers and practitioners working in group organisations, as the research suggests that they need a better understanding of the operations and needs of subsidiary companies.

In 2002, Johnston, Brignall, and Fitzgerald recommended that there appear to be six prerequisites that appear to aid and underpin collaboration:

team-working;

sound and well established accounting systems;

accountants with good business and process knowledge;

accountants with a flexible view of their roles;

accountants with good interpersonal and communications skills;

accountants who were willing to challenge the status quo and facilitate change.

The accountants who worked closely with operations managers in process change appear to be non-traditional accountants, who act as facilitators and lynchpins for business decisions.

There are several issues for operations managers in order to break down the tension between operations managers and management accountants. First, there is a need to encourage accountants to become involved in the operation and to understand, first hand, the issues facing operations managers. Second, this may be achieved by greater use of cross-functional teams not only to share understanding but also to create common ownership of problems. Third, operations managers need to recognise and use the skills of the accountants, in particular encourage their roles in providing non-financial information and use their skills in interpreting and disseminating information. Fourth, operations managers should see accountants as facilitators not as a barrier to change. It would appear that the potential of management accountants is much maligned and misunderstood and their skills undervalued and under-utilised in process change - a key task for operations managers.

Applying the refined instrument, the following fourteen items were identified to measure characteristics of management accounting innovation: 1. Can get the job done quicker. 2. Can do the job easier. 3. Can improve the quality of service. 4. Can do the job more effectively. 5. Can achieve greater control over work processes. 6. Can be learned quickly and easily. 7. Is easy to implement. 8. Is compatible with exist-ing processes. 9. Has minor implications for other processes. 10. Is compatible with corporate culture. 11. Advantages/benefits are clear and demonstrable. 12. Outcomes are easily reported/communicated. 13. Able to trial the technique to ensure it does what it said it would. 14. Enhances the profile and reputation of the company )Askarany & Yazdifar, 2007).

6.0 Conclusion

Management accounting work out organizational performance for decision-making, coor­dination and motivation using techniques such as cost allocation, responsibility centers, transfer prices, product costing, performance measurement and budgeting while operations management concerned with non-financial aspects of performance such as time, quality, flexibility and innovation, which are both techniques steps in a chain leading to increased firm value.

Even if management accounting can be described as financial and hierarchical, and concerned with standards and control, it may well have a role in the new manufac­turing setting.

In addition, management accounting and operations management have much to say to each other because, as Bromwich and Bhimani (1994) note, many challenges facing mod­ern management accounting come from an operations environment. The authors' analysis justify this view: new ways to conceive of management accounting emerge from studying its interaction with operations management. Both have similar concerns and conclusions about the importance of non-financial information in modern manufacturing environ­ments.  In whatever way, the paper analysis confront the caricature of accounting often made in debates about operations management and more generally.

Hansen and Mouritsen (2007) recommend that the language of operations is not a purely non-financial. Employees do understand financial language to a certain extent. Standard cost systems are used as a cat­alyst for improvement processes and 'pseudo profit centers' provide incentives for contin­uous improvement. In addition, management accounting is important as it describes the economics of flexibility, speed and innovation.

As well they argue that standard cost systems and variance analysis do not necessarily conflict with aspirations for 'zero defect' strategies and lateral relations as is suggested by many oper­ations management commentators.

Operations management has confronted management accounting for quite a while. on the other hand, management accounting could similarly be a confront for operations management, at the same time as the limitations around and within operations depend upon calculations that join flows of products and services, individuals with organizational goals, and ideas of competitiveness to profitability and control. Management accounting and operations management can learn and develop one from the other.

There is an unresolved tension between the different roles of nonfinancial performance measures in regard to local and central information systems that build on two different sets of logic, one is oriented towards operational learning and continuous improvement, while the other is oriented towards control. Thus, the vagueness of the role of nonfinancial performance measures in integrated manufacturing still leaves us with a significant question for the future

Another trait of the MA research is the focus on the economics of integration, and in particular, the need for new cost calculations in terms of providing decision makers in integrated manufacturing systems with better information. For instance, the cost reduction potential of the 'integration of functions' such as the production and design interface can be made clear by means of life-cycle costing, which helps design for manufacturability. Moreover, the economics of flexibility and quality reflected in ABC and quality costing provide input to decision makers about the limits of the integration strategy. New cost calculations are also introduced in order to produce incentives to increase throughput by means of back flush or throughput accounting, which have been specifically adapted to JIT settings. One possible role of MA research here is to investigate trade-offs between types of manufacturing systems (Hansen & Mouritsen, 2007).

It can be conclude that operations man­agement and management accounting can learn and develop one from the other. In addition, management accounting innovations may be able to reduce the misfit between management accounting techniques and the changing environment of operation practices.