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Accounting, Organizations and Society

A study of the emergence of management accounting system
ethos and its in¬‚uence on perceived system success
Alnoor Bhimani
Department of Accounting and Finance, London School of Economics and Political Science, Houghton Street,
London WC2A 2AE, UK

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 in¬‚uenced 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 ¬rm in the electronics
and electrical components industry. Two employee groups with functional expertise in engineering and business eco-
nomics 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 pro-
gramme of culture change a¬ected 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 signi¬cantly in¬‚uenced the system™s perceived success. # 2003 Elsevier Science Ltd. All
rights reserved.

systems tend to be deemed successful when
1. Introduction
accompanied by organisation cultural values which
Past research suggests that di¬erent groups of support the new systems (Das, 1986; Dent, 1987;
MAS users within organisations exhibit di¬erent Robey & Farrow, 1982; Rowlinson, 1995; Zmud,
rationales, priorities and cultural orientations 1979). Moreover, user involvement in the design
(Ahrens, 1996, 1997, 1999; Appleyard & Pallett, of information systems has been reported to
2000; Bamber, 1993; Birnberg & Shields, 1989; enhance the perceived success of a systems change
Bruns & McKinnon, 1993; Ko & Mock, 1988; Lon- because user value assumptions become embedded
ing, 1994; Markus & Pfe¬er, 1983; Young & Selto, into the new systems™ architecture (Argyris &
1991) and that these may in¬‚uence their perceptions Kaplan, 1994; Birnberg, 1998; Caplan, 1988; Fisher,
of the success of MAS changeovers (Brewer, 1998; 1998; Franz & Robey, 1986; Markus & Pfe¬er,
Broadbent, 1992; Dent, 1991; Ezzamel, 1987; God- 1983; Shields & Young, 1989).
dard, 1997a; Hopwood, 1989; Mouritsen, 1996; Whilst evidence exists that the introduction of a
O™Connor, 1995; Roberts, 1990). Some researchers novel management accounting system can bring
suggest that changes in organisational control 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
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consider the organisational values of their work- gramme was in progress at Siemens. The two
ing environment to be consistent with those questionnaire administrations enabled changes in
embedded within the new system, there has been the users™ organisational outlooks over this time
little research on how such consistencies emerge. period to be assessed. The second questionnaire
The present study aims to address this concern by also included a question on the users™ perception
exploring how certain notional organisational of the success of the new MAS.
culture elements became embedded features of a The paper is structured as follows: following a
newly implemented MAS within a speci¬c organi- review of the literature dealing with organisational
sation. It also aims to investigate how the align- culture and MAS ethos alignment, the paper dis-
ment between the organisational culture elements cusses the emergence of the new MAS™s ethos in
which were embedded within the MAS and the the light the corporate culture change programme
organisational outlook of two MAS user groups being put into e¬ect throughout Siemens. The
in¬‚uenced their perception of the success of the questionnaire and interview-based approach and
new system. hypotheses for investigating how the alignment
The site chosen for this study is the Fibre Optics between the organisational culture elements
business unit (HLFO) of the Semiconductors characterising the MAS and the system users™
Group of Siemens AG”a global electronics and orientation towards a developmental culture relate
electrical components ¬rm. Operational o¬cers to the new MAS™s perceived success are subse-
within HLFO have speci¬c expertise either in quently considered. Following a discussion of the
engineering (Technisch) or in business economics results of the investigation, the paper™s concluding
(Kaufmannisch). Engineering and business o¬cers™ section addresses some of the implications of the
educational training di¬ers in that the former tend study and future research possibilities in the area.
to possess engineering based quali¬cations
whereas the latter have a business economics aca-
demic background. These two distinct functional 2. Literature review
expertises provide a basis for categorising opera-
tional o¬cers at HLFO into two di¬erent 2.1. Management accounting systems and
employee groups. The new management account- organisational culture
ing system adopted by HLFO is called process-
based target costing (PBTC) which was designed The management accounting literature has only
by HLFO engineering o¬cers between September recently started to show empirical concern with
1995 and May 1996. PBTC became operational in the concept of ˜organisational culture™ (Dent,
August 1996. 1991; Goddard, 1997a, 1997b; O™Connor, 1995)
The information collected to achieve the two though the potential of studying links between
aims of the investigation is derived from di¬erent organisational culture and systems of control has
sources. Interviews were carried out between early long been posited (Flamholtz, 1983; Hopwood,
1995 and mid-1998 with company o¬cers. Inter- 1987; Markus & Pfe¬er, 1983; Ouchi & Johnson,
nal documents, accounting reports, statistical 1978). More recently, Shields (1995) and Birnberg
data, graphical charts and o¬cial company his- (1998, 2000) have reiterated the desirability of
tories were consulted. Two questionnaires were investigating how cost management systems
also used for collecting data on the MAS users™ adoptions and e¬ects are conditioned by variables
organisational culture orientation. One ques- such as organisational culture.
tionnaire was administered to engineering and busi- Whilst there is evidence to suggest that the per-
ness o¬cers prior to the introduction of the new ceived implementation success of a new MAS is
accounting system and the other was administered in¬‚uenced by whether its information output is
following its implementation. Whilst HLFO was considered easy to use, accurate and timely,
in the process of designing and implementing the investigations of organisational culture and con-
new MAS, a corporate-wide culture change pro- trol practices indicate that successful information
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systems changes tend to result when supporting easier to adopt and implement in mechanistic
and compatible organisational values are in place organizations™™. Based on a study of Finnish
(DeLone & McLean, 1992; Doll & Torkzadeh, organisations, Malmi (1997, p. 21) concludes that
1988; Earley & Kanfer, 1985; Hogarth, 1993; user resistance can lead to ABC systems failure
Shields, 1995). Research studies suggest that the and that organizational culture is ˜˜important™™ in
introduction of novel information systems may explaining such resistance. Argyris and Kaplan
not bring about the desired e¬ects if users do not (1994) identify organisational culture change stra-
perceive the organisational characteristics and cli- tegies that can be e¬ected to overcome employee
mate of their working environment to be con- resistance to the introduction of ABC and Hen-
sistent with the values embedded within the new ning and Lindahl (1995, p. 58) stress the impor-
system (Cushing,1990; Das, 1986; Robey & Far- tance of having an ABC system implementation
row, 1982; Rowlinson, 1995; Zmud, 1979). How ˜˜. . .¬t the current culture of the organization™™.
closely the cultural orientation of management Di¬erent levels of success in management infor-
accounting information users aligns with the value mation systems implementations have also been
assumptions factored into the design of a MAS argued to depend on organisational groupings
has likewise been reported to have an in¬‚uence on (Cooper & Zmud, 1990; Cushing, 1990; Lucas,
the perceived implementation success of a new 1975; Newman & Rosenberg, 1985). Research on
system (Argyris & Kaplan, 1994; Birnberg, 1998; group polarisation suggests that group interaction
Caplan, 1988; Shields & Young, 1989). Some enhances the salience of value conformity (Barki
scholars posit the existence of direct linkages & Hartwick, 1989; Brown, 1965) and that it
between accounting systems characteristics and increases familiarity with di¬erent information
corporate culture (Goddard, 1997a; O™Connor, elements (Bates, Amundson, Schroder, & Morris,
1995; Soeters & Shreuder, 1988) and between 1995; Rutledge & Harrell, 1994). Moreover, inter-
organisational culture and accounting systems group interaction causes ˜˜bonding to a choice or
design (Bourn & Ezzamel, 1986; Broadbent, 1992; system as well as leads to a convergence of utili-
Dent, 1991). ties™™ (Whyte, 1989, p. 49). Studies of the imple-
In the context of cost management innovations, mentation of management accounting innovations
Shields and Young (1989) and Young (1997) sug- suggest that their information output ˜˜. . .is used
gest that often, novel systems are administrative for various purposes by various organizational
rather than technical in nature and as such, their sub-groups™™ (Malmi, 1996, p. 243) with e¬ects
implementation fate is not independent of the that are ˜˜far from unambiguous™™ (Ibid.).
preferences, goals and strategies of top managers. Shields and Young (1989, 1994) believe that cost
Foster and Swenson (1997), McGowan and management systems implementation success
Klammer (1997) and Friedman and Lyne (1995, depends on speci¬c group based behavioural vari-
1999) provide empirical support in this light. ables. Attention must be given to how well an
Cooper, Kaplan, Maisel, Morrisey, and Oehm innovation such as the implementation of a new
(1992) o¬er some evidence that a variety of MAS matches the preferences, goals, strategies,
behavioural and organisational factors are inter- agendas, skills and the resources of dominant
twined with the implementation of activity based employee groups (Shields, 1995). In this light,
costing (ABC) systems and Anderson (1997) and Scapens and Roberts (1993) have investigated the
Anderson and Young (1999) explore the existence emergence of resistance to the implementation of a
of relationships between contextual variables new information system within an organisation
such as organisational commitment and shared with di¬erent subcultures. They report that
organisational values and ABC implementation although di¬erent organisational participants can
success. be agreed on the desirability of altered infor-
Following an investigation of Canadian ¬rms, mation systems for controlling internal oper-
Gosselin (1997, p. 8) has reported that: ations, there may be ˜˜. . .very di¬erent
˜˜. . .administrative innovations such as ABC are perceptions of the precise nature of these infor-
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mation needs™™ (Scapens & Roberts, 1993, p. 31). with most quantitative and/or qualitative organi-
They document the disparity between divisional sational culture studies (Pettigrew, 1979).
managers™ predilection for information de¬ned Although some researchers contend that organi-
primarily in economic terms and unit company sational culture cannot be e¬ectively examined
managers™ preference for accounting information using quantitative methods (Frost, Moore, Louis,
focusing on production factors, scheduling Lundberg, & Martin, 1991; Louis, 1983; Schein,
resources and delivery issues. These ¬ndings lend 1985; Smircich, 1983) and that ˜˜culture needs to
appeal to Argyris™s (1990, p. 503) contention that be observed, more than measured™™ (Schein, 1996,
an accounting system™s technical features will be p. 229), others see statistical analyses as being able
premised on accounting information system to contribute signi¬cantly to investigations of
designers™ ˜˜technical theory of control™™ which organisational culture (Hofstede, Neuigen,
may not accord with the views of users. Markus Okayre, & Sanders, 1990; Rousseau, 1990; Saf-
and Pfe¬er (1983) have similarly documented fold, 1988; Siehl & Martin, 1988; Wilkins &
instances of information system implementation Ouchi, 1983; Zammuto & Krakower, 1991). The
failures whereby the ethos of newly implemented present study makes use of qualitative information
information systems are at odds with the under- regarding cultural changes within Siemens
lying departmental culture of information user obtained from internal corporate documents,
groups. external publications as well as from interviews
Whilst this literature has sought to explore ways with HLFO and other Siemens executives. The
in which systems changeovers are a¬ected by their study also derives information from the admini-
designers and users™ organisational culture orien- stration of two questionnaires based on a model
tations, it has not addressed the question of how concerned with organisational culture elements.
the technical con¬guration of management Within the organisation study literature, a
accounting systems can evolve such as to embed number of di¬erent models exist for quantitatively
particular organisational culture elements. This is analysing organisational culture (see Xenikou &
one intent of the present study which also investi- Furnham, 1996). The present study focuses on
gates how far the alignment between the organi- aspects of organisation culture which are explored
sational culture elements espoused by two using the competing values model (Cameron &
functional employee groups within a business unit Quinn, 1998; Quinn, 1988; Quinn & Kimberly,
of Siemens and those embedded within a new 1984; Quinn & Rohrbaugh, 1981, 1983). The
MAS are associated with the users™ perceptions of competing values model di¬erentiates between
MAS success. To this end, a methodological underlying values which create meaning in orga-
model to assess organisational culture orientation nisational settings and the cultural artefacts that
is considered below. re¬‚ect them. This model relies on the premise that
although cultural artefacts such as myths, lan-
guage, rituals and symbols are speci¬c to organi-
2.2. The competing values model of organisational
sations, values are not. The model assumes that it
is not di¬erent sets of values which give rise to
Organisation research concerned with the role di¬erent organisational cultures but varying
of organisational culture has had to contend with emphases on the limited set of values prevalent
a wide variety of de¬nitions of organisational cul- within the larger society. This perspective is one
ture (see Martin, 1992; Reichers & Schneider, that is gaining favour among researchers inter-
1990; Weick, 1985 for reviews). For the purposes ested in the relationships between national culture
of this paper, organisational culture is taken to refer and management accounting and control systems
to the patterns of values and ideas in organisations (see Harrison & McKinnon, 1999).
that shape human behaviour and its artefacts Quinn and Kimberly (1984, p. 298) argue that
(Zammuto & Krakower, 1991). This de¬nition is the competing values model can enable ˜˜. . .such
su¬ciently broad as to be, in the main, identi¬able things as the means of compliance, motives, lea-
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dership, decision-making e¬ectiveness, values and and change. The competing values model thus
organizational forms™™ to be explored. This is enables four resulting cultural types of organi-
made possible by identifying di¬erent axes of sational orientations to be posited: group, develop-
organisational e¬ectiveness. Quinn and Kimberly mental, hierarchical and rational (see Fig. 1).
(1984) propose that one of these relates to an Quinn and Kimberly (1984) consider that the
organisational focus ranging from, at one end, an ˜˜group™™ culture is based on norms and values
internal and micro-emphasis on the well-being and associated with a¬liation. It emphasises ¬‚exibility
development of people within the organisation to and internal focus and stresses cohesion, morale
stressing the well-being and development of the and member participation in decision making as
organisation itself at the other extreme. Another means and human resource development as ends.
value dimension which they advance relates to The group culture™s strategic orientation is one of
organisational structure ranging from empha- implementation through consensus building. The
sizing stability and control to stressing ¬‚exibility ˜˜developmental™™ culture which stresses ¬‚exibility

Fig. 1. The competing values model [adapted from Quinn and Kimberly (1984)].
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and an external focus is permeated by assumptions opposed to another™™ in terms of the competing
of dynamic change. Growth and resource acqui- values model will prevail. Table 1 identi¬es char-
sition as ends are enabled by readiness and ¬‚exi- acteristic elements of each cultural type based on
bility as means. It is the ideological appeal of the the competing values model.
task undertaken which motivates individuals. The following section discusses the organisa-
The ˜˜hierarchical™™ culture underscores the rele- tional programme of culture change at Siemens
vance of control and internal focus. Information and the emergence of the new management
management and communication as means enable accounting system”process based target costing
the achievement of stability and control as ends. at HLFO. Its purpose is to delineate the manner in
E¬ectively, this cultural type re¬‚ects the values which the culture change programme shaped the
and norms associated with bureaucracy. Sig- cultural premise upon which the new MAS fea-
ni¬cance is given to orderly work situations with tures were founded in terms of the competing
su¬cient co-ordination and distribution to pro- values model dimensions. Whilst the study makes
vide organisational participants with a sense of use of several sources of information, for the fol-
security, continuity and stability. Individuals™ lowing part, general information on Siemens was
actions are directed by formally delineated roles obtained from o¬cial external and internal pub-
and enforcement is ordered by rules and regu- lications as well as from published interviews with
lations. Finally, the ˜˜rational™™ cultural type stres- company executives. Interviews were also under-
ses control and external focus. Productivity and taken with Siemens managers both from within
e¬ciency as ends are brought about by planning and from outside the Fibre Optics unit (see
and goal setting as means. Achievement is Table 2).
emphasised and individual motivation comes from
the meritocracy-based belief that competent per-
formance and achievement of designated organi- 3. Culture change at Siemens
sational objectives are to be rewarded.
Quinn and Kimberly (1984, p. 300) a¬rm that 3.1. In pursuit of ¬‚exibility and external outlook
although no organisation is likely to identify
purely with only one culture, ˜˜. . .a distinctive cul- In early 1993, Siemens launched a company-
ture re¬‚ective of one characteristic grouping as wide culture change programme referred to as

Table 1
Organisational culture type characteristics under the competing values modela

Culture types

Characteristics Group Developmental Hierarchical Rational

Flexibility vs control Flexibility Flexibility Control Control
External vs internal Internal External Internal External
Means Member participation, Adaptability, readiness Communication information Planning, goal setting
cohesion, morale management
Ends Development of Growth, resource Stability, bureaucracy, Productivity e¬ciency
human resources acquisition control
Compliance A¬liation Ideology Rules Contract
Motivation Attachment Growth Security Competence
Leadership Concerned supportive Inventive risk taking Conservative cautious Directive goal oriented
Based on Quinn and Kimberly (1984).
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Table 2
Interviews undertaken with managers at Siemens

Interviewee Siemens unit Duration (min)

Information Manager Defence Electronics 30
TOP Programme Executive Siemens Plessey Sytems 30
Innovation Management Director Siemens Nixdorf 45
Innovation Management O¬cer Siemens Nixdorf 30
Management Development Consultant Siemens Corporate Communications 30
General Manager”Business Improvement Siemens PLC (UK) 15
Human Resources Manager Private Communication Systems 30
Engineering Manager Siemens-Matsushita Components 20
TOP Programme O¬cer Drives and Standard Products 30
Manager”Human Resources Strategy Semiconductors 45
Information Systems Manager Semiconductors 60
Finance Director Private Communication Systems 30
Deputy Director Public Communications Networks 20
Engineering Consultant Electronic Components 45
Management Training Corporate Human Resources 30
Regional Manager (Europe) Development 30
Information Systems Manager Infrastructure Services 45
PBTC Software Developer HLFO 45
Phoenix Technical Project Leader HLFO 90
Head of Production Planning HLFO 45
Strategy and Marketing Manager HLFO 30
Assistant to General Manager HLFO 30
Product Developer A HLFO 20
Product Developer B HLFO 45
PBTC Project Leader HLFO 90
Financial Manager HLFO 90
General Manager HLFO 120
Head of Accounting HLFO 90

time optimized processes (TOP). At the heart of culture change a¬ected the design of the new MAS
this organisational drive, was an attempt to at HLFO, it is essential to consider the emergence
engender greater ¬‚exibility of operational prac- of TOP at Siemens.
tices and an enhanced outward management The idea that ˜˜it is essential to simplify and to
orientation. Many managers across the organi- reduce decision processes and to place ourselves
sation perceived a need to alter their business closer to the market and to our customers™™ (Karl
units™ accounting information systems once the Heinz Kaske, President of Siemens, cited in
implementation of the TOP initiative had started Michel & Longin, 1990, p. 161) was a concern
to take e¬ect. The TOP programme aimed to which had been expressed by Siemens™ top man-
achieve greater ˜˜customer and process orien- agement since the mid-1980™s. Kaske had articu-
tation, faster decision making, team-oriented lated a need for the organisation to become more
management, enhanced self-initiative and self- ¬‚exible, dynamic and competitive. He had sought:
responsibility™™ (Siemens, 1994, p. 3). Alongside
these goals, managers sought ˜˜more powerful cost . . .an internal structure to enable us to dis-
consciousness and more e¬ective cost manage- cover, develop and encourage our managers™
ment™™ (Innovation Management Director com- entrepreneurial talents in order to allow them
menting on the TOP initiative, 3/6/1996). To total managerial control over projects rather
understand how the Siemens-wide programme of than simply partial authority (Ibid.)
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In 1985, Kaske restructured Siemens™ activities von Pierer™s basic strategy was to give equal weight
into three distinct elements (divisions, regional to both cost-cutting and reaping the rewards of the
units and central services) to ˜˜. . .enhance e¬- ˜˜cultural revolution™™ (Ibid) through increased
ciency, reduce costs and avoid duplication of ¬‚exibility in the way organizational processes were
activities™™ (Ibid.). In 1989, the company put into carried out and greater awareness of external
place further decentralization measures which cul- market factors. Under TOP, two hundred and
minated into the present company structure con- sixty independent business units were created each
sisting of divisions, groups and business units. with responsibility for bringing about a change in
During the 1990™s, senior company executives culture. Employees were to be remunerated on the
continued to voice concerns similar to Kaske™s. basis of results rather than rank as had been the
For instance, Siemens™ General Works Manager case traditionally. Sta¬ were expected to assess
indicated that: their superiors as well as be assessed by them. An
internal employee magazine noted TOP™s aim to
. . .we harbour some doubts about whether ˜˜achieve accelerated optimisation of all processes
thinking in terms of competitive, market and in the value chains™™ (Siemens, 1994, p. 2) and to
cost advantages truly permeates our corpora- ˜˜. . .design more e¬cient structures, decision pat-
tion (Siemens, 1990, p. 2). terns and processes™™ (Siemens, 1994, p. 2). The
TOP initiative singled out productivity measures
A major problem according to him was that as having three dimensions: quality, time and cost.
˜˜personal goals and business goals often take One Financial Manager noted that:
separate or even divergent paths™™ (Ibid., p.3). One
di¬culty faced by the organisation was perceived If we shorten and simplify our development
to relate to information exchange and communi- and marketing processes, then costs will go
cation channels. A Senior Innovations Manager down . . . quality will go up. Our aim is to be
had noted that faster, better and cheaper than our competi-
tors (4/6/1996).
Within the organisation, there are obvious
inter-company communication barriers. During the early 1990™s, senior managers within
There is talk of a wall of silence between the the Semiconductors division at Siemens identi¬ed
upper levels and the rest of the sta¬, who are a variety of problems including long decision pro-
left in ignorance regarding the background to cesses, excessive bureaucratic hurdles, repair and
many decisions (Siemens, 1991a, p. 2). quality problems arising from high levels of labour
demarcation, uncontrollable document complex-
Likewise, an Engineering Works Manager had ity, illogical process ¬‚ows, inadequate inter-
remarked that ˜˜stumbling blocks™™ stood in the departmental communication and ine¬ective
way of commitment and entrepreneurial action: information systems structures. The TOP pro-
gramme attempted to fuel the implementation of
Many regard change primarily as a risk. innovations such as ˜˜time based management™™,
Innovative, entrepreneurial action becomes ˜˜total quality management™™, ˜˜total cycle time
shipwrecked on the jagged rocks of rigid analysis™™ and ˜˜kaizen™™ among others so as to
demarcation (Siemens, 1991b). foster ˜˜. . .customer and process orientation, faster
decision making, team-oriented management,
A year after his appointment as President and enhanced self-initiative and self-responsibility™™
Chief Executive O¬cer in 1992, Heinrich von (Siemens, 1994, p. 3).
Pierer launched the ˜˜time optimized processes™™ Once the implementation of TOP was under way,
(TOP) culture change programme to ˜˜tear down it had an impact on work attitudes according to a
barriers within the company™™ (interview excerpts number of managers at Siemens. An Engineering
form The Economist, 13/11/1996, p. 12). Heinrich Manager indicated that a TOP motivated re-engi-
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neering project had led to ˜˜. . .teamwork, job- It further stressed that:
rotation, group meetings, speaking your mind
which were practically inconceivable before, are . . .improved results. . . are dependent not only
now all part of a day™s work™™ (3/6/1996). An Inno- on costs but also on the relationship between
vation Management Director noted that: ˜˜Today productivity and costs which can be improved
there is a powerful cost consciousness in the com- . . . if infrastructure and processes are
pany together with a broad palette of cost controls™™ improved as well as time and quality para-
(3/6/1996). He nevertheless believed that: meters (Siemens, 1996).

In comparison to our competitors, we cannot These elements of the TOP initiative were to
claim to be front-runners in cost cutting... We become embedded in the design of the new MAS.
are pro¬t-minded but the follow-through is
weak and inconsistent (Ibid) 3.2. Process based target costing

and stressed that: At HLFO, the belief that costing information of
a di¬erent type to that being provided was neces-
In the future, we will commit ourselves to sary had began to be voiced from early 1995. Until
e¬ective cost management at all levels and in late 1994, HLFO had controlled a large portion of
all functions . . . since consistent pro¬t is an the ¬bre optics market for IBM mainframe com-
important indicator of whether we are doing puters. But at this time, a foreign competitor
the right thing and doing it right. TOP provides entered the market with the objective of taking
a framework for moving in this direction over a major part of Siemens™ market share in this
(Ibid.). sector primarily by o¬ering the same products at a
lower price. This led HLFO managers to consider
The TOP culture change programme continued to ways of reducing product costs initially through
receive wide publicity across all groups and divisions more ¬‚exible production practices and e¬ciency
and was made visible through a multitude of plat- drives and subsequently by redesigning production
forms: logos, o¬ce stationary, internal newsletter speci¬cations and processes so as to reduce overall
articles and corporate confectionery among others. resource consumption over the longer term.
Certain dimensions of the TOP initiative were to In order to remain competitive, HLFO man-
become extensively re¬‚ected in the target cost agers believed it was necessary to bring down the
management system (process based target costing) total manufacturing costs of its subcomponent
which was to be implemented at HLFO. In parts to around one third of their original level in
particular, cost, quality and time concerns of the the face of the emerging competitive threat.
programme of cultural change, were to be central HLFO started to focus on the emerging market
elements of the new MAS. Concurrently, factors and ¬nancial information needs of design engi-
which underscored the relevance of ¬‚exible work neers. In September 1995, HLFO initiated the
practices and high sensitivity to the enterprise™s development of a target cost based accounting
external environment were to be important system which aimed to provide accounting infor-
characterising features of the new system. One mation on market imposed cost ceilings for di¬er-
TOP initiative publication stated that: ent product functions. The system was developed
by a team of HLFO designers with engineering
Time and quality are key to improved perfor- functional expertise who interfaced with other
mance and lowered costs. Signi¬cant cost dis- engineers in operational departments about their
advantages with competitors are attributable information requirements. The design engineers
to inadequate product design and wasteful also liaised with HLFO accountants trained in
processes. It is here that out greatest potential business economics about implementation issues
lies (Siemens, 1996). concerning PBTC.
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Whilst the newly perceived information needs of stage and the resultant e¬ects on the production
design engineers were being addressed, HLFO also costs. If such information could be made avail-
launched what it termed the ˜Phoenix™ project in able, it would enable design decisions to take
September 1995 which was a re-engineering exer- account of production implications which them-
cise to alter the manufacturing process. Phoenix selves had to be considered in the context of cus-
entailed the recon¬guration of manufacturing tomer requirements. A key element of the project
such that all basic products would run on one was the application of target costing concepts to
automated line prior to mass-customising the set market-de¬ned parameters a¬ecting produc-
product. All products were to use modularised tion cost, timing and quality factors. To enable
production steps according to individualised pro- this, the engineering o¬cers working on the
duct speci¬cations. Phoenix initiative integrated engineering and cost
Design engineers at HLFO had not traditionally management information relating to costs, time
desired or been provided with extensive account- and quality factors into single reports. PBTC™s
ing information relating to either manufacturing information output was thus intended to assist the
processes or to the selling prices of ¬bre optics design and production engineering o¬cers to relate
products. Their primary role had been to develop product function areas to the production process.
leading edge technological innovations and to seek PBTC became operational in August 1996 and
ways of further improving product speci¬cations, by April 1997, an HLFO o¬cer who had set up
performance and e¬ciency. The accounting sys- the software requirements for producing PBTC
tem in place at HLFO had been designed with the information reports indicated that: ˜˜All new
object of allocating rather than tracing costs in design projects are now using the tool and it is also
line with Siemens-wide accounting procedures. used for all existing products™™ (24.4.97).
This costing system divided material and produc- The implementation of PBTC necessitated
tion elements into cost blocks and used volume- interaction among di¬erent operational depart-
based allocation methods. Direct material and ments and extensive communication between
direct labour costs served as a basis for the appli- engineering and business o¬cers. TOP™s basic
cation of di¬erent overhead costs using prede¬ned concerns included the transparency of organi-
overhead rates. This practice did not seek to relate sational processes, quality accountability, team
resource changes in components to changes in orientated co-operation, market competition
production or to enable costings for di¬erent gen- awareness and cost consciousness which were also
erations of re-engineered products to be com- central to PBTC. PBTC reports were intended to
pared. Thus, if for instance, a process change enable the costs of functions to be compared to
resulted in the production time being reduced by the perceived customer value for those functions.
50%, the accounting system allocated the same Moreover, functional cost drivers could be back-
overhead cost amount to a smaller base by doubl- tracked from functions to the production pro-
ing the allocation ratio without providing design cesses so as to depict the trade-o¬s between
engineers with information on the origins and materials and processes, or automation and
¬‚ows of costs. labour costs. PBTC was to delineate production
The Phoenix project team™s focus of attention ¬‚ows visually at the design stage by producing
was mainly on analysing the production process. graphic images of time, cost and quality resource
But the production process was itself in large part consumption across processes. The design engi-
re¬‚ective of product design which determined the neers who had traditionally only dealt with pro-
basis of production work¬‚ow, timing and ultimately duct speci¬cations could now obtain direct visual
costs. It was di¬cult for the design engineers to information on the e¬ects of di¬erent design deci-
address questions about the impact of a com- sions on speci¬c production processes through the
ponent change on the cost of the production pro- availability of PBTC reports.
cess. What was deemed desirable was to have PBTC was also intended to enable responsibility
linkages between the decisions made at the design for achieving quality requirements to be tied to
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Table 3
Users of PBTC information at HLFO

Department Number of users Usable Number of users Usable
(ex-ante) questionnaires (ex-post) questionnaries

Production 6T 4T 6T 5T
Purchasing 1K 1K 1K 1K
Marketing and Strategy 2 T, 1 K 2 T, 1 K 2 T, 2 K 2 T, 2 K
R&D 16 T 15 T 13 T 12 T
Accounting 4K 4K 5K 5K
Quality Control 3T 2T 3T 3T
Top Management 1K 1K 1K 1K
Total 34 30 33 31

T=˜˜Technisch™™ (Engineering o¬cer); K=˜˜Kaufmannisch™™ (Business o¬cer)

speci¬c operational personnel. Consequently, a organisational culture ethos of PBTC design fea-
product defect at one stage of the overall produc- tures and the system users™ orientation towards a
tion sequence could be associated with a particular developmental culture related to the new MAS™s
prior production step which gave rise to the prob- perceived success.
lem. This would lead to further cost allocation
possibilities and the potential to re¬ne existing
responsibility accounting relationships. 4. Measuring perceived MAS success
The conventional accounting information pre-
pared by HLFO accountants was based on exten- 4.1. Questionnaires and interviews
sive calculative rules and detailed allocation
procedures. It was primarily a management infor- A questionnaire was administered in May 1996
mation collection and resource control tool. By prior to the implementation of the novel manage-
contrast, the PBTC system was ¬‚exibly designed ment accounting system (PBTC) to its two groups
to provide engineers with information they could of users categorised as engineering o¬cers (Tech-
visualise and act upon in operational terms. PBTC nisch) and business o¬cers (Kaufmannisch). The
reports were not prepared on the basis of pre- questionnaire contained a series of questions
given standards, formats or rules, but were re¬‚ec- about their perceptions of the degree to which
tive of design engineers proclivities regarding organisational culture types as delineated by the
information representation and communication. competing values model are representative of their
functional department (see Appendix).1 This ex-
Whereas traditional accounting systems were
focussed on internal economic allocations, PBTC ante questionnaire was completed by 34 HLFO
was externally orientated in that it tied market o¬cers (see Table 3 for information on the ques-
imposed time, quality and price speci¬cations to tionnaire respondent group). Another questionnaire
internal operational constraints. Under the com-
The competing values model questionnaire as used by Zam-
peting values model, the PBTC system might be
muto and Krakower (1991) in their surveys enables scores (from 0
seen as most closely embedding external and ¬‚exi-
to 100) to be aggregated by cultural types. Within the ques-
bility orientated values and thereby, of stressing tionnaire instrument, the four cultural types based on the Quinn
developmental culture characteristics. and Kimberly (1984) typology are as follows: Department A
The above discussion has focused on the manner accords with the ˜˜group™™ type, B accords with the ˜˜develop-
mental™™ type, C accords with the ˜˜hierarchical™™ type and D
in which certain organisational culture change
accords with the ˜˜rational™™ type. Zammuto and Krakower (1991,
elements became embedded within the new MAS.
p. 109) discuss the validity of the approach based on large scale
This was the ¬rst objective of this investigation. surveys. They note that ˜˜the data met the criteria of internal
The paper now considers the methodology for consistency, predictable relationships with other organisational
investigating how the alignment between the phenomena and discrimination among groups™™.
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12 A. Bhimani / Accounting, Organizations and Society

was administered to the same group of PBTC standards for structuring accounting information.
information users in April 1997 (see Table 3). This Prior to being hired by Siemens, business o¬cers
ex-post questionnaire, asked respondents once will have obtained university quali¬cations in
again about their perception of the organisational business economics.
cultural types represented within their functional It is necessary to brie¬‚y consider business eco-
departments and sought their judgement as to the nomics education in Germany to provide some
overall success of the newly implemented manage- insight on the intellectual background of Siemens™
ment accounting system. Interviews were under- business o¬cers. Ordinarily, the university level
taken prior to and following the administration of degree (Diplom-Kaufmann) follows the study of
the ex-post questionnaire to explore respondents™ business economics [Betriebswirtschaftsleher
views on PBTC ™s implementation process and the (BWL)] which emphasises the understanding of
system™s consequences as a further source of sophisticated economic concepts underpinning
information for the study. management principles including costing approa-
The ex-ante and ex-post questionnaires were ches. Traditionally, German business economics
administered in German. The German versions of universities do not have close relationships with
the questionnaires were translated from English to industry (Lane, 1990; Lawrence, 1989, 1994).
German by a German academic and back trans- BWL™s science-based tradition (Wissenschaft)
lated to English by another German academic.2 stresses systematic and disciplined conceptual
Some stylistic revisions were made to the German research sometimes at the expense of closeness to
questionnaire as a result of the double translation. industrial issues or practical concerns according to
The ¬rst questionnaire was administered in May some writers (Randlesome, Brierley, Bruton, Gor-
1996. The ex-post questionnaire was administered don, & King, 1990; Sheridan, 1995). In this light,
in April 1997 after the new accounting system was Locke (1989, p. 249) observes that ˜˜. . .the Wis-
fully operational. This questionnaire was struc- senschaft tradition isolates the German professors
tured in the same way as the ¬rst but included an of business economics from praxis™™ and notes that
additional question asking respondents to assess
the overall success of PBTC using a scale from one German BWL today. . .is primarily under-
to ¬ve (1=totally successful, 2=mainly successful, graduate pre-experience and specialist research
3=neither successful nor unsuccessful, 4=mainly graduate education (Locke, 1989, p. 176).
unsuccessful, 5=totally unsuccessful).
Locke (1989) provides various examples of
companies working with academic engineers but
4.2. Hypotheses development
seldom with business scholars. He cites one Sie-
Business o¬cers who sta¬ed the Accounting mens manager who states that the ¬rm tends not
Department at HLFO had traditionally prepared to bring in German professors of business eco-
internal accounting information for operational nomics to provide advice because they are too
departments. This information was extensively ˜˜inexperienced™™ (Hermann Baumann cited in
calculative and in accord with predetermined Locke, 1989, p. 171).
company accounting reporting procedures. Busi- HLFO accountants™ predilection for a struc-
ness o¬cers within Siemens™ accounting depart- tured numerical and procedural approach to the
ments receive training in the preparation of preparation of accounting information was not
detailed accounts of the ¬‚ow of economic resources independent of their prior educational training.
within the organisation and are taught to apply The professional conception of the legitimate role
an extensive set of company speci¬c rules and 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
This was the case as the questions draw on the competing
to economic representations of organisational
values model instrument used in prior Anglophone studies.
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activities which demarcate costs, functions and participants in Technik . . . Technik is some-
departments via numerical data was at odds with thing which transcends hierarchy.
the precepts embodied within Siemens™ TOP pro-
gramme (Siemens, 1995) of cultural change. It was Locke (1989, p. 264) likewise notes that for
also at variance with the cross-functional and dia- engineers: ˜˜Technik is the combination of know-
grammatic form of information representation ledge and know-how necessary to make a pro-
which characterised PBTC information reports. duct™™. Moreover, ˜˜. . . technical expertise is as
The TOP programme confronted the basis of his- close to the shop-¬‚oor, and as close to the pro-
torically derived precepts concerning the correct duction/line hierarchy, as possible™™ (Warner &
role, format and presentation of ¬nancial infor- Campbell, 1993, p. 98). Unlike BWL which is
mation. It emphasised ¬‚exible internal structures generally more remote from practice, Technik-
and receptivity to external and market derived based engineering education blends Wissenschaft
in¬‚uences which accord with the competing values and functional purposefulness (Lawrence, 1994;
model™s ˜˜developmental™™ culture. By contrast, Maurice, Sorge, & Warner, 1980).
business o¬cers employed within the Accounting Past research suggests that ˜˜the past learning of
Department could not be described as sharing the an individual can be expected to in¬‚uence the per-
same high level of ˜˜developmental™™ culture son™s perceptions of the organisational and task
orientation. variables™™ (Das, 1986, p. 217). Information channels
Contrary to business o¬cers™ training, the edu- and modes of exchange can be shaped by users™
cational background of engineering o¬cers is prior professional training (Joyce & Sloam, 1990;
more closely aligned with a ¬‚exible orientation to Kim, 1989). Within HLFO, the extent of integration
structuring data which makes little appeal to regi- of conceptual and applied engineering concerns was
mented procedures and standardised information evident in the structuring of technical information
formats or structures of communication. This is in reports. Engineering analyses were indicative of the
line with a developmental cultural orientation systematic fusion of diagrammatic and quantitative
under the competing values model. Educationally, data and the blending of theoretical concepts and
engineering o¬cers at HLFO possess a ˜˜Diplom- practical issues. The engineering o¬cers™ opera-
Ingenieur™™ quali¬cation following university level tional concerns and proclivities in¬‚uenced the
engineering studies spread over 4“6 years. By tra- structuring of PBTC information which con-
dition, engineering education in Germany com- trasted markedly with accountants™ prior notions
bines the search for knowledge with practical of legitimate information form and content.
purposefulness. Consequently, German engineer- There is also research evidence which indicates
ing degrees are characterised by a unique combi- that di¬erences in cognitive styles and organi-
nation of scienti¬c knowledge and craftsmanship sational culture dimensions lead to consistent
(Technik) (Head, 1992; Randlesome, 1988, 1993; relationships with decision making preferences
Randlesome et al., 1990; Sorge & Warner, 1986). and information systems design (Dermer, 1971;
University engineering faculties maintain close Driver & Mock, 1975; Hulin & Blood, 1968;
cooperation with industry: ˜˜Where engineering Huysman, 1970; Ives & Olson, 1984; Macintosh,
training is concerned, there is little formal detach- 1985; Ouchi & Johnson, 1978; Seddon & Yip,
ment of academic from practical aspects of train- 1992; Senn, 1978). Whilst individuals with an
ing™™ (Warner & Campbell, 1993, p. 93). In a ˜˜internal locus of control™™ (Reitz & Sewell, 1979,
similar light, Lawrence (1989, p. 98) states that: 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
Technik is a force for integration. The Ger- what the prior literature suggests about the role of
man company is Technik in organisational past learning, it is argued here that engineering
form. The skilled worker, the foreman, the o¬cers will uphold a developmental culture by
superintendent, the technical director are all virtue of their training and functional expertise
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14 A. Bhimani / Accounting, Organizations and Society

more so than business o¬cers. The following embedded within the MAS in¬‚uenced the per-
hypothesis is advanced: ceived success of the new system.
Zammuto and Krakower (1991) suggest that a
Hypothesis 1. Engineering o¬cers will indicate departmental culture which stresses ¬‚exibility as
higher developmental culture scores under the opposed to control is more conducive to favouring
competing values model than business o¬cers an accounting innovation that can potentially
prior to PBTC implementation. redirect managerial attention and alter organi-
sational processes. An internally oriented outlook
Although one might expect that engineering may be expected to coincide with a low inclination
o¬cers will tend to generally remain culturally to adopt management innovations which alter the
more developmental than business o¬cers, it is stability and continuity of control procedures as
important to ascertain that the contrast between opposed to an external orientation (Zammuto &
engineering and business o¬cers™ cultural orienta- O™Connor, 1992). Thus a developmental culture
tions did not signi¬cantly alter during the imple- orientation under the competing values model can
mentation of Siemens™ corporate-wide culture be expected to be more receptive to any account-
change programme. Whilst transformations in ing innovation which alters the status quo espe-
organisational values may take place over pro- cially where the accounting innovation enhances
tracted lengths of time, it is unlikely that the cul- information on the impact of external market and
tural change which Siemens sought to mobilise customer in¬‚uences on organisational activities.
through the TOP programme could have sig- Since PBTC attempts to provide enhanced
ni¬cantly altered the organisational culture orien- information on ways in which resources can be re-
tation of business o¬cers such that it would have allocated, a ¬‚exible orientation on the part of
become more developmental than that of engi- users can be expected to heighten the relevance
neering o¬cers over the eleven months time period and potential success perceived of PBTC more so
between the two questionnaire administrations. than a control orientation. In this respect, a
To establish that no such transformation took developmental culture orientation can be expected
place, the hypothesis that HLFO engineering o¬- to be more receptive to PBTC since it does not
cers are culturally more developmental than busi- favour structured information and extensive cal-
ness o¬cers after the implementation of PBTC is culative procedures and rules which characterise a
tested via the following hypothesis: control orientation.
A developmental orientation does not favour-
Hypothesis 2. Engineering o¬cers will indicate ably view the running of internal operations via
higher developmental culture scores under the formalisation, structure and extensive adminis-
competing values model than business o¬cers fol- trative rules. Such characteristics are antithetical
lowing PBTC implementation. to the design and objectives of PBTC. PBTC pro-
vides information by integrating ¬nancial, opera-
Hypothesis 1 is essential for establishing the tional, internal and market-based data. Its reports
more extensive developmental cultural orientation are structured as a dynamic mix of visual, graphical,
among engineering as opposed to business o¬cers quantitative and qualitative information. Financial
prior to PBTC implementation given the in¬‚u- content is blended with operational data in PBTC
ence of their highly speci¬c educational and reports. Thus a user group with a high develop-
training background. Hypothesis 2 is necessary to mental culture orientation will tend to consider
establish that neither the ongoing cultural change PBTC as more successful relative to a user group
programme nor the process of PBTC imple- which is less developmentally oriented. A low devel-
mentation materially altered this relationship. opmental orientation would suggest lesser receptivity
Taken together, they provide the basis for asses- to viewing PBTC as successful as this new MAS
sing how the alignment between the develop- stresses an external and ¬‚exible orientation rather
mental orientation of MAS users and that than an internal and control oriented outlook.
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Table 4
t-Tests of developmental culture orientation of engineering and business o¬cersa

Engineering Business t (P-value)

Mean (standard deviation) Mean (standard deviation)

Ex-ante developmental orientation (H1) 39.04 (20.99) 19.05 (11.15) 3.291 (0.004)
Ex-post developmental orientation (H2) 41.00 (24.87) 18.89 (14.16) 3.115 0.005
A two-sided t test was used to test the hypotheses, H1 and H2, that the true means of the developmental scores under the com-
peting values model of the engineering o¬cers group is signi¬cantly higher than the business o¬cer group before and after PBTC

The following hypothesis is posited: Hypotheses 1 and 2 are tested by reference to
two sided t-test scores and hypothesis 3 is tested
Hypothesis 3. o¬cers with higher developmental using regression analysis. Table 4 indicates that
culture scores under the competing values model engineering o¬cers have a more developmental
will consider PBTC to be more successful than will orientation than business o¬cers both prior to
those with lower developmental scores. and following PBTC implementation thereby
con¬rming hypotheses 1 and 2. The results con-
To provide a deeper organisational perspective ¬rm that engineering o¬cers exhibit a higher
to the questionnaire results, interviews were held developmental value orientation than business o¬-
with users of the PBTC system following the cers both before and after PBTC implementation.
administration of the ex-post questionnaire. These The interviews undertaken with various o¬cers
interviews were semi-structured in that questions at HLFO also provided qualitative evidence
generally attempted to retain some focus on the underpinning the di¬ering organisational value
users™ outlook toward PBTC™s usefulness and orientations between engineering and business
consequences. The interviewees included employ- o¬cers both prior to and following PBTC imple-
ees with Research & Development, Production and mentation. These interviews suggest that beliefs
Marketing & Strategy responsibilities. In addition, about the usefulness and e¬ects of PBTC were
interviews were held with individuals who had infused with judgements about how departmental
played a role in the design and implementation of attitudes di¬ered. Individuals in some depart-
the PBTC system. The next section discusses the ments di¬erentiated themselves from others in
questionnaire results and their implications for the terms of cultural outlook and as to how their
hypotheses being tested in the light of the qualitative conception of the role of cost information di¬ered
information derived from these interviews. from that of business o¬cers sta¬ng the
Accounting Department. For instance, the Phoe-
nix Technical Project Leader viewed the R & D
Department as being the
5. Questionnaire results and interview analyses

The ex-ante questionnaire was distributed to the . . .driver of PBTC since the accountants did
34 relevant PBTC accounting information users at not realise that such a tool was required in
HLFO identi¬ed in Table 3. Four questionnaires such a form (24.4.97).
were returned partially ¬lled and were excluded
from the analysis. The ex-post questionnaire was The PBTC Software Developer likewise noted
distributed to the corresponding group of 33 rele- that accountants are ˜˜. . .conservative. They ful¬l
vant PBTC information users. Of the 33 ques- their function and manage by the numbers but do
tionnaire returns, two were partly ¬lled and not accept new ideas easily™™ (23.4.97). He indi-
unusable. cated that traditionally: ˜˜. . .the accountants™ tasks
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16 A. Bhimani / Accounting, Organizations and Society

are de¬ned by formal constraints™™ (23.4.97) and Accountants only want to use standard Sie-
observed that: mens accounting tools. They focus on existing
products and they ful¬l standard Siemens
. . .before, we used to use overhead allocations functions”and there are a lot of standard
and when there were questions, the accoun- functions at Siemens (24.4.97).
tants simply analysed the problem in more
cost detail (23.4.97). In commenting on the type of information
provided by the Accounting Department, a pro-
The Head of Production Planning o¬ered a duct developer from the R & D Department
similar view of the accountants: (here referred to as Product Developer A) stated
PBTC had to come from one of us in R and
D or Production or from somebody in Sales Accountants are more conservative because
or Marketing but not from the Accounting of their structure and their approach. But
Department. We cannot expect this approach nothing is more deadly than columns and
from a classical Accounting department. columns of numbers”these are the so-called
They only expect the right numbers and then ˜˜number cemeteries™™ (Zahlenfriedhof). Con-
have a ˜˜help yourself™™ mentality in relation versely, PBTC shows us the results more
to other departments. ˜˜Just pick from our clearly”this helps (27.6.97).
numbers what you need™™ they seem to say
(3.7.97). In echoing this view, the Head of Production
Planning indicated that:
The Strategy and Marketing Manager was par-
ticularly critical of the accountants in that, Accountants have their rules and ¬nancial
according to him ˜˜PBTC calculations always bet- report regulations. You cannot expect ¬‚exi-
ter match the reality than the results from the bility in their representation of data (3.7.97).
accountants™™ (25.4.97). He remarked that:
He pointed in humour that: ˜˜. . .only if they
Accountants live in their own world, closed to have time and they are bored, will they help us™™
the outside, living within numbers and stay- (3.7.97) and noted that a speci¬c type of
ing remote from the rest of development.
They believe more in their numbers than in . . .accounting information is needed by R and
what is actually happening. To them, PBTC is D, but accountants do not really care where
not thinkable. They just hide behind their the costs come from (3.7.97).
overhead costings (25.4.97).
The Head of Production Planning commenting
He further noted that PBTC information users on the accountants™ cultural outlook noted that:
˜˜intuitively™™ recognise the advantages of the ˜˜The accountant is cool. He is not emotionally
system: involved and hence, not as committed™™ (3.7.97).
He indicated that:
Tools allowing function analysis, forward
pricing, design to cost and customer discus- I hope I did not give a too bad blow to any
sions are more and more in demand. But the accountant from the Accounting Department
accountants who should be promoting these but we could expect that they could help us a
tools react negatively (25.4.97). little more in cost controlling. They are too
involved in their ¬nancial regulations. Their
An assistant to the top management team also transparency is only ¬nancial and that™s the
remarked that: big problem (3.7.97).
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He further added that: between organisational value orientation and per-
ceived MAS success which is tested in hypothesis 3
I am always amazed at how little transpar- will remain equally stable over short time periods.
ency we have at HLFO. There is only an Hypothesis 3 is tested by reference to the fol-
apparent transparency. It seems that the only lowing regression model:
important thing is that the numbers add up
together ¬nely. But the meaningfulness of the PBTC Success ¼ bo þ b1 DEVELOP þ e
information is missing. So it happens that we
bet on the wrong horse when we make a
decision (3.7.97). where DEVELOP=Developmental culture score
under the competing values model.
The PBTC Project Leader also commented on The results of this regression are shown in
the di¬ering outlooks between engineers and Table 5 and provide support for Hypothesis 3.
accountants regarding PBTC based information: PBTC users with higher developmental scores
perceived PBTC to be more successful than
With the Production people, communication those with lower developmental culture scores.
has been easy because they already were The R-square for the model is 0.683 and the coef-
thinking about manufacturing processes in ¬cient for DEVELOP is in the expected direction
the same way. For the accountants it has been and is signi¬cant. The coe¬cient for DEVELOP is
more di¬cult because with PBTC, they have negative because lower scores for PBTC Success
had to procure data in a form and depth they signi¬ed higher perceived success.
have not been used to (25.4.97). The results of Hypothesis 3 are also corrobo-
rated by the interview results. A number of engi-
The tenor of these interviews are indicative of neers who were users of PBTC information
perceived di¬erences between engineering o¬cers commented on the usefulness of the information
and accountants and between traditional account- provided by the new MAS. The PBTC Project
ing information produced by the accountants and Leader for instance, stated that:
the form and nature of PBTC information. Engi-
neering o¬cers in R and D, Production and Sales PBTC gives a structured way of talking about
and Marketing considered themselves as being cost elements with our partners. It is a pro-
more open than accountants to departing from gress in the way that Accounting, Production,
traditional precepts governing accounting infor-
mation content and form. Under the competing
Table 5
values model, this view of accountants accords
Developmental culture orientation and perceived PBTC suc-
with a lower developmental orientation in com- cess: regression resultsa
parison with engineering o¬cers. The ques-
Expected sign Coe¬cient (S.E.)
tionnaire based results of hypotheses 1 and 2
therefore ¬nd some corroboration by way of the Intercept 5.058 (0.340)
interview results. Develop “ À0.041*** (0.006)
The results suggest that the enterprise-wide cul-
Adjusted R-square=0.638; ***P <0.01.
ture change programme was not signi¬cantly asso- a
The model is Perceived PBTC success=bo+b1 DEVEL-
ciated with changes in the organisational outlooks OP+e. Perceived PBTC success is measured on a scale from
of engineering and business o¬cers over the eleven one to ¬ve (1=totally successful, 2=mainly successful, 3=nei-
ther successful nor unsuccessful, 4=mainly unsuccessful,
month time period between the two questionnaire
5=totally unsuccessful). DEVELOP is measured by the aggre-
administrations. As might be expected, the orga-
gate score from 0 to 100 allotted to Department B which cor-
nisational value orientations of the functional o¬- responds to ˜˜developmental™™ culture in the questionnaire
cers are not subject to change over short periods of instrument. The signi¬cance level of the coe¬cient of
time. It is plausible also that any association DEVELOP was determined using two-tailed t-test.
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18 A. Bhimani / Accounting, Organizations and Society

Marketing and Purchasing talk to each other Marketing people ˜˜what we are good at™™
. . . This is a tool which creates an ˜˜aha™™ (25.4.97).
e¬ect”what a sheet of paper with only rows Another Product Developer (here referred to as
and columns would never be able to do Product Developer B) believed that:
PBTC as a product calculation tool, has to be
Product Developer A likewise thought that with accepted and hence integrated into Siemens™
the PBTC system, ˜˜you do not consider single standard procedures (13.1.98).
pieces but complete work processes and product
functions™™ (27.6.97). He noted that: ˜˜All existing Product Developer B stressed that control
processes should be broken down using the responsibility was an important issue:
methodology of PBTC™™ (27.6.97). He considered
that this would ˜˜make accessible to everybody, the PBTC should be used not only for the plan-
knowledge of the functionality and processes of ning of new products but also for cost con-
existing products™™ (27.6.97). He believed that trolling. From this controlling, the
˜˜PBTC is a progress compared to the old system optimisation of processes can be achieved
because the cost transparency is much clearer™™ (13.1.98).
(27.6.97). Product Developer A explained that:
He thought that PBTC helped match processes
In R and D, we always have the same prob- and product functions to di¬erent individuals and
lem: we know vaguely the cost but it is very departments and that with the new MAS:
di¬cult to know the real cost of diodes which
for example is an important cost driver. . . . . .problems such as the question of who is the
PBTC helps a lot in relation to new develop- cost responsible person will be resolved
ments to get the cost of components (27.6.97). (13.1.98).

The Head of Production Planning was also Such a view did not depart from one of the TOP
receptive to the new MAS. He remarked that: initiative™s aims to replace ˜˜division of labour with
˜˜PBTC is the only report that I can really use™™ division of responsibility™™ (Siemens, 1995, p. 5).
(3.7.97). He added that: Evidence of the perceived alignment between
functional users™ organisational outlooks and their
Our cost structure is more like mud in a views as to the potential of PBTC further stemmed
swamp even if you could call mud clean. We from interviews. Product Developer B for
need cost details. . . Previously, we could not instance, noted that PBTC had quite signi¬cant
really tell how much a function of the product in¬‚uences on product design decisions. He
costed (3.7.97). thought that this was the result not so much of a
heightened cost focus on the part of engineers:
He observed that PBTC™s information output is
useful in terms of ˜˜. . .knowledge of cost drivers, PBTC has not changed much in the heads of
the ¬‚ow of material and the visual stimulation of the Project team because Phoenix was from
problem areas and plans versus real comparisons™™ the beginning, a very cost conscious redesign
(3.7.97). A similar opinion was expressed by the project and all employees were very sensitised
Phoenix Technical Project Leader from the R and to this (13.1.98).
D Department who viewed PBTC as enabling to
˜˜look for the reason for a deviance within a pro- Rather, Product Developer B believed that pro-
cess and to look at how to reach our target™™ duct design decisions were a¬ected because PBTC
(25.4.97). The Phoenix Technical Project Leader represented and highlighted costs in a particular
added that it is a tool to show the Strategy and way. He cited various examples where particular
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decisions were made because ™™. . .PBTC helped a¬ected their predisposition to accounting infor-
make certain interconnections obvious™™ (13.1.98). mation stemming from the PBTC system. Beliefs
Product Developer B explained that with PBTC: about the propriety and success of the new MAS
were conditioned by its origins as much as its form
. . .the possibility to visualise the numbers had and substance. The business versus engineering
emphasised the importance of the processes. subcultures within HLFO in this light could be
The employees of the Technical Production di¬erentiated in terms of their perception of the
Support division who are in charge of plan- new MAS™s success.
ning the production were directly, by the
information gathering and with the questions
associated with this, made attentive to possi- 6. Discussion
ble cost drivers and have got through this, a
higher awareness of cost origins (13.1.98). The study has considered how certain notional
organisational culture elements became embedded
The PBTC Project Leader had commented that within the PBTC system™s design features at
˜˜. . .the way in which data is communicated, that HLFO. It has also suggested that the degree to
is, visually as opposed to just numbers, is very which the notional organisational culture elements
important to some departments™™ (25.4.97). A embedded within the new MAS aligned with the
similar view had been expressed by the Head of organisational outlook of the user groups was
Production Planning who thought that ˜˜PBTC™s signi¬cantly associated with the perceived success
visual approach is very user friendly™™ (3.7.97). of the new system. The study results support those
In line with the structuring of information con- of other investigations which suggest that di¬erent
ventionally adhered to by engineers, PBTC™s employee groups can subscribe to di¬erent orga-
structuring of information output was graphic and nisation cultural values and that a MAS which is
visually diverse. The imagery of process ¬‚ows, the more re¬‚ective of the organisation culture values
visual depictions of the magnitude of resource of one group is likely to be seen as being more
allocations at di¬erent process steps and the dia- successful by that group. The study however goes
grammatic displays of cost incursions at various beyond the scope of prior investigations in that it
operational stages are characteristic features of considers quantitative and qualitative information
PBTC reports. Engineering o¬cers™ predilection collected prior to and following the implementa-
for integrating numerical and diagrammatic tion of the MAS under study.
representations is a hallmark of PBTC that is not Within the organisation investigated, there were
independent of their involvement in its design and context speci¬c factors underpinning the results of
development. It is likely that prior conceptions of the study. The TOP programme of culture change
the nature and role of the Accounting Department at Siemens for instance, played a role in shaping
and engineering o¬cers™ contrasting perceptions the MAS™s design features and by upholding cer-
of the potential role of cost management infor- tain notional culture elements, in¬‚uenced what
mation in¬‚uenced their judgements concerning the came to be deemed as successful accounting
new MAS. Engineering o¬cers were predisposed change within the organisation. During the time
to consider the viability of an accounting system period between the ¬rst and second questionnaire
which not only departed from the structural administration, Siemens was actively engaged in a
representation of data favoured by accountants programme of enterprise-wide culture change. A
but which was also intended to convey informa- principal objective of this programme was to alter
tion that was broader in scope, encompassing the form and extent of communication between
operational, rather than just procedural ¬nancial di¬erent parts of the organisation. Siemens™ TOP
concerns. The expectation on the part of engi- initiative sought to ˜˜. . .design more e¬cient
neering o¬cers that accounting information pro- structures, decision patterns and processes™™ (Sie-
duced by accountants was unlikely to be useful, mens, 1994, p. 2) and ˜˜new forms of co-operation™™
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20 A. Bhimani / Accounting, Organizations and Society

(Siemens, 1995, p. 5). It encouraged organisational transparency also a¬ected the form and e¬ects of
participants across the enterprise to develop PBTC. Accountants had traditionally internalised
greater sensitivity to external market changes, a professional conception of the need to econom-
increased ¬‚exibility in carrying out work activities ically map the organisation in terms of functional
and interacting with individuals across functions. boundaries and to allocate costs based on generic
Whilst TOP was being implemented across Sie- procedural rationales. PBTC by contrast, repre-
mens, HLFO initiated the Phoenix project in Sep- sented an attempt at connecting and linking
tember 1995 which entailed the recon¬guration of resource ¬‚ows by focusing on processes rather
manufacturing by modularising production steps. than functional demarcations. The object was on
Phoenix was viewed as necessitating altered forms integrating time, resource, quality and cost con-
of information exchange between departments in cepts rather than on merely reporting on overhead
relation to di¬erent operational processes. Just as allocations across individualised cost objects.
TOP was intended to reduce ˜˜. . .the unending PBTC™s embodiment of engineering o¬cers™ infor-
series of co-ordination meetings™™ (Siemens, 1995, mation structuring and reporting idiosyncrasies
p. 5) and to ˜˜tear down the barriers between dif- contrasted with the procedural formality which
ferent departments™™ (Siemens, 1995, p. 5), so had permeated the Accounting Department™s
Phoenix aimed to reduce production complexity approach to information development and repre-
by manufacturing basic products within single sentation. The internal ethos of the organisation
automated lines before mass-customising through which had in the past emphasised centralised
subsequent individualised production processes. modes of control but which now stressed devolved
The Phoenix exercise adhered to the ethos of the responsibilities, more dispersed information dis-
TOP culture change programme. tribution and receptivity to alternative forms of
Whilst Phoenix was focused on production sim- information ¬‚ows, was at odds with the traditional
pli¬cation, supporting information provision was precepts still embedded in the functional priorities
seen as an essential corollary. The idea of provid- of the Accounting Department.
ing HLFO design engineers with detailed infor- The study brings to light the complex ways in
mation concerning production costs coincided which a wide diversity of organisational factors
with the implementation of the Phoenix initiative. can in¬‚uence the form and consequences of a new
PBTC stressed three dimensions: market-led qual- accounting system. The qualitative information
ity, process time tracking and cost resource ¬‚ow derived from interviews and internal documents
data. This premise underlying PBTC information suggests that perceptions of the impact of PBTC
output was also broadly embodied within TOP were not unrelated to the notion that the new sys-
which sought to make Siemens ˜˜faster, better and tem provided accounting information which in
cheaper than our competitors™™ (Financial content and form, was not originally conceived by
Manager, 4/6/96) and to attain ˜˜e¬ective cost HLFO accountants. It has been argued that engi-
management at all levels and in all functions™™ neering o¬cers™ prior training which emphasised
(Innovation Management Director, 3/6/96). Like the integration of Wissenschaft and applied con-
the Phoenix project, PBTC™s aims were also char- cerns in¬‚uenced their preferences in relation to the
acterised by objectives subsumed within the TOP structuring of PBTC reports. The signi¬cance of
programme of cultural change. The ability of the Technik as the embodiment of both conceptual
PBTC system to achieve its aims was, in this light, engineering knowledge and craftsmanship as part
not independent of Siemens™ pursuit of TOP of engineering o¬cers™ training was not, within
objectives. HLFO, independent of the structure and content
Aside from altered information monitoring and of the PBTC system™s output which dia-
reporting, Siemens™ progression towards a merito- grammatically integrated costing data with other
cratic and individualistic rewards-based culture forms of operational information. Additionally,
whereby traditional functional boundaries are the new MAS™s form and content brought into
transcended in the pursuit of e¬ectiveness and sharp focus the absence of representations of
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purely economic data which had traditionally been arise from outside and from within the organisa-
provided by the Accounting Department. tion. Whereas a number of past studies have
The analysis suggests that the interview com- focused on the external origins of internal
ments of PBTC system users are broadly in line accounting changes and on the in¬‚uencing forces
with the questionnaire results which indicate that at the margins of accounting (see Hopwood &
di¬erent users™ organisational outlooks a¬ected Miller, 1994; Luft, 1997; Miller, 1998), the present
their perception of the success of the newly imple- study leans more toward an examination of forces
mented MAS. The interviews provided a backdrop conditioning an emerging MAS from within the
of organisational detail to the statistical analyses of organisation. The predisposition of engineering
respondent replies. The qualitative comments are o¬cers to structuring information in ways that
indicative of the perceived success of PBTC as hav- contrast with accountants™ notions of appropriate
ing been possibly tied to the pre-existing proclivities accounting data representation has here been
of the engineering o¬cers toward information argued to ¬nd possible origins outside the organi-
representation and how they sought to understand sation. This investigation suggests that a variety of
the cost implications of design changes. The study intra-organisational forces shaped the new MAS™s
is, in this regard, indicative of the potential of form, content and e¬ects. Siemens™ historical shift
methodological triangulation whereby quantitative from being highly centralised to adopting a
and qualitative analyses can be coupled to shed decentralised form with more autonomous busi-
greater light on the subject under investigation ness units, its ongoing programme of culture change
(Ashton, 1982; Bamber, 1993; Birnberg, Shield, & and its traditionally focussed and detailed standard
Young, 1990; Brownell & Trotman, 1988). accounting procedures were instrumental in in¬‚u-
A void continues to exist in our knowledge of encing the structure and consequences of process
the diversity of factors which can a¬ect user based target costing. The emergence and receptivity
receptivity to novel accounting systems. The pre- of the new MAS can in this light, be argued to have
sent investigation posits the existence of con- been conditioned by intra-organisational forces
tingencies between di¬erent cultural orientations which themselves are partially shaped by more pro-
espoused within the organisation under study, tracted extra-organisational factors. This study is
those factored into its new accounting system and thereby suggestive of accounting change being tied
perceptions of the propriety of a user based to transformations that are multifaceted in origin
accounting system design as opposed to one pro- and which inhere it with a speci¬city that is intra- as
cured by the Accounting Department based on well as extra-organisationally rooted.
traditional accounting information precepts. In
this light, the study points to the usefulness of
examining some of the conditioning forces a¬ect- Acknowledgements
ing the ultimate perceived impact of a novel
accounting system within an organisation and of The comments made on an earlier draft of this
exploring ways in which an accounting system can paper by Thomas Ahrens, Robert Chenhall,
a priori embody organisational value elements of Maurice Gosselin, Graeme Harrison, Anthony
primary signi¬cance and utility to its designers. A Hopwood, Peter Miller, Cedrik Neike, Neale
possible avenue for further research might thus be O™Connor, Michael Shields and Holger Vieten are
to contrast the present study with a similar analy- gratefully acknowledged. The paper has also
sis of the implementation of a MAS designed out- greatly bene¬ted from the comments of partici-
side the organisation and to assess whether under pants at the Manufacturing Accounting Seminar
such circumstances, di¬erent groups of users per- held at the University of Edinburgh in June 1997
ceive the impact of the system di¬erently. and at the Manufacturing Accounting Workshop
There exists little analysis within the accounting held at the Copenhagen Business School in March
literature of the interrelationships between factors 1999. The review suggestions of two anonymous
in¬‚uencing accounting transformations which reviewers have greatly contributed to the paper.
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22 A. Bhimani / Accounting, Organizations and Society

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 di¬erent. 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
______ 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 ¬gure.
______ 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
______ The glue that holds Department B together is commitment to innovation and development. There is an
emphasis on being ¬rst.
______ 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
______ Department C emphasises performance and stability. E¬cient, smooth operations are important.
______ Department D emphasises competitive action and achievement. Measurable goals are important.
Used with permission from Zammuto and Krakower (1991).
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