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Strategic Management Accounting: Theoretical and Field Study Perspectives Robin Roslender , , a and Susan J. Hart , B

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In search of strategic management accounting: theoretical and field study perspectives

Robin Roslender , , a and Susan J. Hart , b

a Department of Accounting, Finance and Law, Faculty of Management, University of Stirling, Stirling FK9 4LA, UK

b Department of Marketing, University of Strathclyde, Strathclyde, UK

Available online 6 August 2003.

Abstract

Despite being introduced into the literature as a potentially exciting development over 20 years ago, there is still little or no agreement about what constitutes strategic management accounting (SMA). The term itself is open to a number of interpretations, something that is reflected in the varied nature of the research associated with it. In our view, however, SMA is best understood as a generic approach to accounting for strategic positioning. It is defined by an attempt to integrate insights from management accounting and marketing management within a strategic management framework. To date, the attribute costing technique has been the most compelling development within SMA. Its focus on costing the benefits associated with products and their attributes necessitates contributions from both disciplines. The findings of an exploratory field study of practices at the interface between management accounting and marketing management affirm SMA's limited impact on practice in the UK. In those cases where interfunctional cooperation is most advanced, there are indications that a new subset of SMA developments may be emerging as accountants and marketers begin to measure the performance of brands.

Author Keywords: Strategic management accounting; Marketing management; Attribute costing; Marketing accountability; Interfunctional cooperation

Article Outline

1. Introduction

2. The evolution of strategic management accounting

3. Refining the strategic management accounting concept

4. Enhancing the marketing content of strategic management accounting

5. The field study

6. Findings

6.1. The traditionalists

6.2. The transitionalists

6.3. The synergists

7. Discussion

Acknowledgements

References

1. Introduction

The objective of this paper is to contribute to the growing literature on the topic of strategic management accounting (SMA). It reports the findings of an exploratory field study of UK companies that was designed primarily to gather insights on the present extent of implementation of SMA practices. Throughout the research project a particular interpretation of SMA was embraced. SMA is identified as a generic approach to accounting for strategic positioning, defined by an attempt to integrate insights from management accounting and marketing management within a strategic management framework. Examples of SMA techniques include target costing, life-cycle costing and some forms of strategic cost analysis, with attribute costing as the most compelling development to date.

As a consequence of the way in which SMA is interpreted in the study, it is assumed to be underpinned by well-established patterns of interfunctional cooperation between management accountants and marketing managers. These patterns of cooperation, and the relationships they embody, are regarded as acting as critical facilitators for practices such as SMA. Although examples of such cooperation were widely evident within the sample of companies, and in some instances in their most advanced or synergistic form, there was little evidence that these companies were currently implementing SMA practices such as target costing, life-cycle costing, attribute costing, etc. At the same time, a strong cross-functional interest in brands and their management evident in some companies was, however, accompanied by a number of developments that might be termed brand management accounting. In our view, such developments may constitute an additional subset of techniques to be included within the generic SMA approach.

The paper is structured as follows. In the next section the evolution of SMA is briefly chronicled, with the attribute costing technique identified as its most compelling development to date. In Section 3, SMA's links with marketing management are identified in order to differentiate SMA both from the earlier tradition of marketing accounting, and from concurrent attempts to integrate elements of strategy theory into management accounting. Section 4 provides an overview of a number of recent developments within the marketing management literature, including calls for the pursuit of a greater extent of interfunctional co-ordination, and for the promotion of increased marketing accountability. Details of the field study of the implementation of SMA practices in the UK are presented in Section 5. In Section 6 we outline some of the principal findings of this study. The concluding discussion section initially summarises the main points of the paper before identifying a number of future lines of research enquiry.

2. The evolution of strategic management accounting

SMA came to prominence in the late 1980s as one of the range of new techniques and approaches designed to restore the lost relevance of management accounting. It did so principally in the UK, with Bromwich as one of its main academic advocates at that time ([Bromwich, 1988, Bromwich, 1990,Bromwich, 1991, Bromwich, 1992, Bromwich and Bhimani, 1989 and Bromwich and Bhimani, 1994]). What differentiated SMA from many parallel developments was its external orientation, hence Bromwich and Bhimani's observation that it provided a means of releasing management accounting from the factory floor ( [Bromwich and Bhimani, 1989]). Using the term strategic to name the approach was also intended to convey that SMA incorporated a longer term outlook, as well as a broader emphasis than the greater part of management accounting. This was consistent with Bromwich's initial identification of SMA as offering a higher order of management accounting ( [Bromwich, 1988]). For these reasons it was not difficult to recognise in SMA a potentially important departure for the practice of accounting to management.

The term SMA has a longer history, however, having

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