Management Accounting Research, 1998, 9, 1 19 ~

Adoption and benefits of management

accounting practices: an Australian study
Robert H. Chenhall" and Kim Langfield-Smith"

This article uses a survey to identify the extent to which Australian manufacturing
firms have adopted certain traditional and recently developed management account-
ing practices, the benefits received from those practices and the intentions to empha-
size certain management accounting practices in the future. The findings indicate
that, overall, the rates of adoption of traditional management accounting practices
were higher than recently developed techniques. However, newer techniques, such as
activity-based costing, were more widely adopted than found in prior surveys. Also,
the benefits obtained from traditional management accounting techniques were
higher than those of newer techniques. The evidence suggests that the majority of
large Australian firms have adopted a range of management accounting techniques
that emphasize non-financial information, and take a more strategic focus.
0 1998 Academic Press Limited

Key words: management accounting; benchmarking; activity-based costing; perfor-

mance measurement.

1. Introduction

In recent years, increasing levels of global competition have intensified the challenges
for managers and many experts have warned that if management accounting is to
maintain its relevance it needs to adapt to meet the changing needs of managers. In
response to these concerns, a range of new management accounting techniques has
emerged.
Traditional management accounting practices, such as cost variance analysis and
profit-based performance measures, focus on concerns internal to the organization
and are financially-oriented. In contrast, more contemporary management account-
ing techniques combine both financial and non-financial information and take an
explicit strategic focus. This can be seen, for example, in the design of activity-based
costing, contemporary performance measurement systems and benchmarking tech-
niques.
Several studies have researched the adoption and benefits derived from traditional
and contemporary management accounting practices in the U.S., U.K. and Europe.
However, there is little Australian evidence of the adoption and benefits provided by

*Department of Accounting and Finance, Monash University, Clayton 3 168, Australia

Received 14 June 1997; accepted 24 June 1997.

1044-5005/98/010001 + 19 $25.00/0/mg970060 01998 Academic Press Limited

2 R. H. Chenhall and K. Langfield-Smith

both traditional and recently-developed management accounting practices) or the

emphasis that organizations intend to place on particular management accounting
practices in the future. The purpose of this article is to contribute to our knowledge
in this area regarding Australian practice. Additionally) these findings are compared
with those of other survey-based studies.
The remainder of the article is structured as follows. In Section 2 the research
method is presented. The third section contains a discussion of the survey results. A
comparison is made between findings from the current study and those of prior
surveys in a range of countries. Future directions for contemporary management
accounting practices are considered in Section 4. In Section 5, reasons underlying
some of the Australian findings are discussed. Conclusions and implications for
future research are presented in a final section.

2. Research method

A survey was administered to 140 manufacturing firms selected from the Business
Review Weekly list of Australia’s largest companies. These firms were either ‘strategic
business units’ (divisions of larger corporations) or companies in their own right.
The design of the survey was modelled on the manufacturing futures survey
developed by De Meyer et al. (1989) and Miller et al. (1992). Pilot tests were
undertaken with groups of managers and management accountants to refine the
design and focus the content. Within the survey, respondents were asked to indicate
whether their businesses had adopted each management accounting practice and then
for those who had adopted the practice) to assess the benefits gained over the past 3
years. Respondents were also asked the degree of emphasis that their business would
give to each practice over the next 3 years. Demographic features of the business were
obtained) including the position of the respondent) organizational size and industry.
These are summarized in Table 1. A list of the 42 survey items and further details of
the survey method are in the Appendix.
Surveys were not pre-numbered to allow the anonymity of respondents to be
preserved. A reminder letter was posted 3 weeks after the initial mail-out. Two
months after posting the follow-up letters, preliminary results were sent to all people
who requested them. The two mailings resulted in 78 usable responses, or a response
rate of 56%.
T o examine for non-response bias, the responses from the first 20% of returns and
those from the last 20% (which would have included mainly respondents to the
second mailing) were compared) to test if responses differed between the two groups.
Levels of significance were determined for each item using t-tests. No differences
were identified) providing some support for the absence of a non-response bias.

3. Survey results and discussion

In Table 2, each management accounting practice is ranked in order of the percent-

age of respondents who indicated their business had adopted the practice. The left
portion of Table 3, lists items in order of the average benefits derived from using each
 Adoption and Benefits of Management Accounting Practices 3

Table 1
Demographic data

Industry classification
Food and beverages 13
Wood and paper products 7
Chemical products 7
Metal industry 7
Machinery and equipment 21
Textiles, printing 4
Non-metallic, minerals 3
General construction 3
Other manufacturing 13
Total sample 78
Position of respondent
Chief accountant/group controller 67
Administrative manager 4
General manager 3
Other 4
Total sample 78
Size of organizations
No. of employees
0-200 16
201-500 18
501 1000
- 16
1001-2500 14
2500 + 14
Total sample 78

practice during the past 3 years, while the right-hand section details the future
emphasis to be given to each item. Standard deviations are provided to show the
extent of diversity of responses.
T o help discussion, the items listed in Table 2 are divided into three groups: the
first 15 items are classified as relatively high adoption, the next 14 as relatively moderate
adoption and the remaining 13, relatively low adoption. Similarly, the items in Table 3
are organized into three groups: high benefit, moderate benefit and low benefit. This
classification scheme provides a basis to compare, first, the relative adoption of items
across the sample and then the benefits derived from each item by adopters. The
classification scheme is not meant to imply that adoption (or benefits) are either high
or low in any absolute sense. For example, most items in the low adoption group
were used by more than 50% of the sample'.
As detailed in Table 2, a high proportion of firms adopted most of the manage-
ment accounting practices. Fifteen practices were adopted by at least 90% of the
sample and a further 16 practices were adopted by at least 80% of the companies. All
but two items classified as relatively low adoption were used by at least 50% of

'It should also be noted that the ranking of items on adoption does not necessarily correlate with rankings
of benefits received.
4 R. H. Chenhall and K. Langfield-Smith

Table 2
Relative adoption of management accounting practices

Rank Rank
High adoption Performance evaluation:
Budgeting for planning employee attitudes 11 88%
financial position 1 100% Performance evaluation:
Capital budgeting tools 2 99% team performance 12 87%
Budgeting for planning cash flows 2 99% Performance evaluation:
Budgeting to plan qualitative measures 12 87%
day-to-day operations 2 99% Benchmarking of product
Budgeting for controlling costs 2 99% characteristics 12 87%
Performance evaluation: Strategic plans developed 12 87%
return on investment 3 96% with budgets 12 87%
Performance on evaluation: Budgeting for compensating
budget variance analysis 4 95% managers 13 86%
Budgeting to coordinate Performance evaluation ongoing
activities across business units 5 94% supplier evaluation 14 86%
Benchmarking of operational Cost-volume-profit analysis 14 86%
processes 6 93% Performance evaluation:
Performance evaluation: cash flow return on investment 15 84%
non-financial measures 7 92% Benchmarking within the
Benchmarking of strategic priorities 8 91% wider organization 15 84%
Benchmarking of management
vrocesses 8 91% Low adovtion
Formal strategic planning 8 91% Absorption costing 16 80%
Long-range forecasting 9 90% Activity-based budgeting 17 78%
Performance evaluation: Benchmarking with outside
divisional profit 9 90% organizations 18 77%
Variable costing 19 76%
Moderate adoption Strategic planning separate
Performance evaluation: from budgets 20 70%
controllable profit 10 89% Product life cycle analysis 20 70%
Product profitability analysis 10 89% Activity-based management 21 68%
Performance evaluation: Shareholder value analysis 22 64%
balanced scorecard (mix Performance evaluation:
of fin and non-financial residual income 23 60%
measures) 11 88%
Performance evaluation: Activity-based costing 24 56%
customer satisfaction 11 88% Operations research techniques 25 55%
Value chain analysis 26 49%
Target costing 27 38%

respondents in the sample. Reasons for these relatively high rates of adoption)
particularly for recently developed practices) are considered in a later section.
To structure the discussion of the findings) first, management accounting practices
are classified as relating to either performance evaluation or planning. Second, the
findings relating to recently-developed) strategically-focused management accounting
techniques are presented.

Perfomance evaluation practices

Performance evaluation has been identified as an important function of management
accounting (Emmanuel et al., 1990). Of particular interest is the relative benefits that
 Adoption and Benefits of Management Accounting Practices 5

Table 3
Management accounting practices: past benejits and future emphasis

Management accounting Relative benefits Relative future

practices (past 3 years) emphasis
(next 3 years)
Mean SD Rank Mean SD Rank
High benefit
Budgeting for controlling costs 5.26 (1.28) 1 5.85 (1.01) 1
Performance evaluation: return on 5.18 (1.45) 2 5.60 (1.46) 4
investment
Performance evaluation: budget variance 5.1 1 (1.48) 3 5.49 (1 3 3 ) 6
analysis
Performance evaluation: divisional profit 5.06 (1.50) 4 5.51 (1.50) 5
Capital budgeting tools 4.87 (1.61) 5 5.44 (1.33) 7
Strategic plans developed with budgets 4.83 (1.56) 6 5.39 (1.69) 9
Budgeting for planning financial position 4.83 (1.41) 7 5.41 (1.17) 8
Performance evaluation: controllable profit 4.75 (1.40) 8 5.09 (1.50) 15
Product costing: absorption costing 4.69 (1.76) 9 4.80 (1.83) 25
Formal strategic planning 4.55 (1.44) 10 5.73 (1.05) 2
Performance evaluation: customer 4.49 (1.56) 11 5.17 (1 3 9 ) 12
satisfaction surveys
Budgeting for planning cash flows 4.40 (1.40) 12 5.24 (1.25) 10
Strategic plans developed separate from 4.37 (1.69) 13 4.37 (1.79) 34
budgets
Performance evaluation: non-financial 4.35 (1.51) 14 4.94 (1.50) 20
measures
Product profitability analysis 4.32 (1.42) 15 5.61 (1.11) 3
Moderate benefit
Budgeting for coordinating activities across 4.3 1 (1.31) 16 5.08 (1.48) 16
business units
Performance evaluation: cash flow return 4.3 1 (1.38) 17 4.88 (1.55) 22
on investrnent
Performance evaluation: ongoing supplier 4.26 (1.59) 18 4.94 (1.71) 19
evaluations
Budgeting to plan day-to-day operations 4.21 (1.73) 19 5.05 (1.34) 17
Performance evaluation: residual income 4.21 (1.53) 20 3.66 (2.10) 39
Product costing: variable costing 4.18 (1.49) 21 4.47 (1.69) 32
Performance evaluation: balanced 4.17 (1.52) 22 4.83 (1.50) 23
scorecard
Budgeting for compensating managers 4.17 (1.63) 23 4.41 (1.74) 33
Performance evaluation: qualitative 4.09 (1.39) 24 4.78 (1.54) 26
measures
Benchmarking of operational processes 4.09 (1.49) 25 5.15 (1.50) 13
Long range forecasting 4.04 (1.46) 26 5.21 (1.37) 11
Benchmarking of product characteristics 4.02 (1.53) 27 4.69 (1.56) 28
Performance evaluation: team performance 3.99 (1.44) 28 4.89 (1.56) 21
Benchmarking of management processes 3.90 (1.58) 29 5.12 (1.48) 14
Low benefit
Product costing: target costing 3.85 (1.73) 30 3.48 (2.17) 40
Cost-volume-profit analysis 3.79 (1.46) 31 4.37 (1.46) 35
Benchmarking within the wider 3.74 (1.40) 32 4.96 (1.44) 18
organization
Benchmarking of strategic priorities 3.66 (1.62) 33 4.81 (1.62) 24
6 R. H. Chenhall and K. Langfield-Smith

Table 3. (continued)
Performance evaluation: employee 3.65 (1.52) 34 4.63 (1.60) 31
attitudes
Benchmarking with outside organizations 3.61 (1.53) 35 4.78 (1.63) 27
Activity-based budgeting 3.58 (1.55) 36 4.63 (1.85) 30
Shareholder value analysis 3.38 (1.74) 37 4.25 (2.09) 37
Activity-based costing 3.23 (1.86) 38 4.68 (1.97) 29
Operations research techniques 3.20 (1.52) 39 3.36 (1.89) 41
Value chain analysis 3.17 (1.27) 40 3.24 (1.82) 42
Product life cycle analysis 3.16 (1.39) 41 3.67 (1.76) 38
Activity-based management 3.02 (1.46) 42 4.33 (1.80) 36

firms derive from financial, compared to non-financial measures (Lynch and Cross,
1992).

Financial measures
There is ample evidence from surveys conducted in many countries that financial
performance measures are of primary importance. In the U.K., a survey of the use of
performance measures by board members and executives in 77 manufacturing firms
found that financial measures, such as financial return and working capital, domi-
nated (CIMA, 1993). In a further U.K. study, Dugdale (1994) reported that high
benefits were received from budgeting. Respondents identified budgeting as a key
activity, ranking budget-related items third and eighth out of a range of 30 manage-
ment accounting techniques.
In the U.S., a survey by McKinnon and Bruns (1992) found that managers rated
budgeted compared to actual sales, profit and income as the most important
performance measures out of a list of 96 financial and non-financial measures. In
Australia, Joye and Blayney (1990) found that budget variances were used by 93% of
respondents for setting goals or evaluating performance. Also in Australia, Dean et al.
(199 1) found that budget expenditure (variance analysis) was used to some extent by
91% of respondents, operating income by 83% and return on investment by 68%.
Evidence from mainland Europe confirms the importance of financial measures.
For example, cost-based performance criteria are considered very important in
Belgium (Bruggeman et al., 1996) and Denmark (Israelsen et al., 1996); budgetary
measures based on standard costing and contribution margins are used widely in
Germany (Schemer, 1996); and financial accounting-based measures, particularly
ROI and profit, dominate performance evaluation in the Netherlands (Groot, 1996).

The current study. The findings of the current study confirm the importance, in
Australia, of financial measures of performance. Table 2 indicates relatively high
adoption rates for budgeting for controlling costs (ranked equal 2)) return on
investment (ranked 3)) budget variance analysis (ranked 4) and divisional profit
(ranked equal 9). The importance of these items is confirmed when examining the
benefits received from these techniques. The data reported in Table 3 indicate that
relatively high benefits are derived from traditional techniques such as budgeting for
controlling costs (ranked 1) and budget variance analysis (ranked 3) and conventional
 Adoption and Benefits of Management Accounting Practices 7

financial performance measures, such as return on investment (ranked 2)) divisional

profit (ranked 4) and controllable profit (ranked 8).

Non-jinancial measures
While financial measures continue to be useful, the growing importance of non-
financial measures is noted in many surveys. In the U.K., Bhimani (1994) reported
that executives were receptive to the use of non-financial indicators. In Dugdale’s
(1994) survey, non-financial measures ranked fourth out of 30 in importance, which
suggests that these measures were not seen as inconsistent with the high rankings
given to budgetary measures. Banerjee and Kane (1996) found that 85% of surveyed
CIMA members believed that accountants need to integrate non-financial and
financial information in their reporting.
In France, a strong tradition in employing the Tableau de Bord has influenced the
development of a variety of non-financial measures (Roberts, 1995; Lebas, 1996).
The Tableau de Bord is a reporting system that attempts to model the internal
operations of the organization and relate them to the firm’s environment. Through
the design of specific measures, imformation is provided on the condition of the firm
and how managers’ actions impact on the firm’s objectives. In Denmark, it has been
reported that non-financial measures, such as inventory turnover, on-time deliveries
and outgoing quality yields are used by more than 50% of companies (Israelsen et al.,
1996). In Belgium and the Netherlands, while financial performance measures
continue to dominate, non-financial measures have received increased attention;
particularly throughput measures in Belgium (Bruggeman et al., 1996) and in the
Netherlands, measures of customer satisfaction, quality and innovativeness (Groot,
1996). In Australia, measures of throughput, set-ups and working conditions were
identified as becoming increasingly important (Dean et al., 199 1).
In contrast to the above evidence, surveys have found that in some countries
non-financial indicators are not widely adopted. Non-financial indicators appear not
to be part of formal performance evaluation systems in Greece (Ballas and Venieris,
1996) and Italy (Barbato et al., 1996).

The current study. Table 3 indicates that many non-financial measures were included
in the high and medium adoption categories. The item non-financial measures was
ranked the seventh highest in adoption. Several specific non-financial measures were
included in the moderate adoption category: balanced scorecards, customer satisfac-
tion, employee attitudes (all ranked equal 11)) team Performance, qualitative mea-
sures (both ranked equal 12) and ongoing supplier evaluations (ranked 14). These
items are the type of measures that may emphasize and be used to monitor areas of
strategic importance (McNair and Mosconi, 1989; Lynch and Cross, 1992).
The data in Table 3 reveal that respondents derived high benefits from customer
satisfaction surveys (ranked 11) and non-financial measures (ranked 14). Relatively
moderate benefits were reported for ongoing supplier evaluations (ranked 1S),
balanced scorecards (ranked 22)) qualitative measures (ranked 24) and team perfor-
mance measures (ranked 28). However, measures of employee attitudes provided
relatively low benefits (ranked 34).
In summary, the findings suggest that financial performance measures continue to
be an important aspect of management accounting. However, these are being
supplemented with a variety of non-financial measures. The high benefits from
8 R. H. Chenhall and K. Langfield-Smith

non-financial measures is consistent with those researchers who have stressed the
importance of developing direct measures of the production processes (Howell et al. ,
1987; Vollmann, 1990; Schonberger and Knod, 1994). Furthermore, these studies
have indicated that measures, such as the number of defects, items reworked and
cycle time, have become well-established means of controlling manufacturing opera-
tions. The relatively low benefits, in the current study, of the more specific measures
of team performance and balanced scorecards is consistent with Kaplan’s (1994)
observations that companies have only just begun to implement these techniques.

Planning practices
In addition to providing information for evaluating performance, management ac-
counting provides information for planning (Emmanuel et al. , 1990). Traditionally,
this has been dominated by the application of budgetary systems to assist resource
planning in the short-term and capital budgeting and strategic planning for the
long-term.
Prior surveys have found that financial planning techniques, such as budgetary
planning, have maintained their primacy as planning tools for operational decisions.
In the U.K., Dugdale (1994) found that accounting practitioners believed that high
benefits were derived from using budgeting for planning (ranked third out of 30
techniques). Drury et al. (1993) found that 76% of companies used standard costing
widely to aid budgeting as well as performance evaluation. The extensive use of
formalized budgetary planning has been noted in several studies of European coun-
tries, including Denmark (Israelsen et al. , 1996)) Germany (Schemer, 1996)) Greece
(Ballas and Venieris, 1996) and Italy (Barbato et al., 1996). As indicated above, Joye
and Blayney (1990) found that budget variances were used by 93% of respondents
for settings goals and evaluating performance by Australian firms.
While several surveys have reported that the use of discounted cash flow analysis
and other formal capital evaluation tools is widespread (Butler et al., 1993; Drury et
al., 1993; Klammer et al., 1991; Carr and Tomkins, 1996)) evidence on the
usefulness of formal capital budgeting techniques is sparse. Dugdale (1994) reported
that capital budgeting received a relatively low rating for benefits received, ranking
only 22nd out of 30 management accounting techniques.
There is evidence that many large firms employ formal strategic planning. In a
survey of Fortune 500 companies in the U.S.A., Sinha (1990) concluded that formal
strategic planning contributed to decisions that were important, risky, global in
nature and involved divestments. In a study of 113 firms drawn from Fortune 500,
Capon et al. (1994) found that 24 firms employed sophisticated corporate planning,
34 used corporate financial plans, 37 used strategic plans at the divisional level only
and 11 used financial plans at the divisional level. Similarly, in the U.S., Powell
(1992) found that strategic planning was important but depended on the type of
industry. In Australia, Bonn and Christodoulou (1996) found that 72% of firms
drawn from the largest 100 manufacturers used formalized strategic planning sys-
tems.

The current study. The data presented in Table 2 indicate that six traditional planning
techniques were identified as relatively highly adopted, including three concerned
with budgeting and three with long-term planning. The budgeting practices were
budgeting for planning financial position (ranked 1)) budgeting for planning cash
 Adoption and Benefits of Management Accounting Practices 9

flows (ranked equal 2) and budgeting to plan day-to-day operations (ranked equal 2).
Techniques concerned with the long-term were capital budgeting tools (ranked equal
2)) formal strategic planning (ranked equal 8) and long-range forecasting (equal 9).
High benefits were identified with capital budgeting tools (ranked 5)) budgeting for
planning financial position (ranked 7)) formal strategic planning (ranked 10) and
budgeting for planning cash flows (ranked 12). Budgeting to plan day-to-day opera-
tions and long-range forecasting were accorded moderate benefits (ranked 19 and 26,
respectively).
The item strategic plans developed with budgets was moderately adopted (ranked
equal 12) and strategic plans developed separate from budgets of relatively low
adoption (ranked equal 20). However, both items were found to provide relatively
high benefits (ranked 6 and 13, respectively). Interestingly, cost-volume-profit
analysis and operations research techniques, which are promoted widely in many
textbooks and professional courses, were also found to have relatively low benefits
(ranked 3 1 and 39). It has been claimed that the simplifying assumptions underlying
cost-volume-profit analysis may make it difficult to apply in actual business situa-
tions, where more sophisticated models, such as spreadsheet-based sensitivity analy-
sis, may be preferred (Luoma, 1967; Cress and Pettijohn, 1985).
These findings suggest that both formal strategic planning and traditional bud-
getary planning practices were providing high benefits. Relatively moderate benefits
were reported for long range forecasting, which is typically used to support strategic
planning. While the precise nature of strategic planning may vary, the survey results
support the view that strategic planning is used widely and considered of benefit to
many businesses. This may be contrasted with the alternative view that formal
strategic planning is not widely used and does not help improve performance
(Mintzberg, 1994; Carr and Tomkins, 1996).

Strategically-focused techniques
In recent years many commentators have claimed that traditional management
accounting techniques are not suited for firms operating in contemporary settings
characterized by intense global competition, rapid technological change and the
development of new management approaches, such as total quality management,
just-in-time and flexible manufacturing systems (Cooper, 1988; Bromwich and
Bhimani, 1994; Bunce et al., 1995). A range of recently-developed techniques,
including activity-based costing, value chain analysis, target costing, product life
cycle analysis, shareholder value analysis and benchmarking have been proposed as
ways of linking operations to the company’s strategies and objectives.
Of all the recently-developed management accounting practices, activity-based
costing has gained a high profile as a technique to enhance the accuracy of product
costing and to help understand the way in which resources are used across the firm’s
value-chain to deliver strategic outcomes (Shank and Govindarajan, 1993).
Survey evidence suggests that over the past decade there has been a growing
awareness of activity-based costing, but the rate of implementation has been slow. In
the U.K., surveys in the early 1990s reported adoption rates of about 10% (Innes and
Mitchell, 1991; Nicholls, 1992; Drury et al., 1993). Similarly, adoption rates of 10%
were found in Ireland (Clarke, 1992) and 14% in Canada (Armitage and Nicholson,
1993). Also, surveys indicated that many managers were considering the adoption of
activity-based costing. For example, Drury et al. (1993) and Cobb et al. (1992)
10 R. H. Chenhall and K. Langfield-Smith

reported that 37% and 33% of respondents in their studies were considering adoption
of activity-based costing. Survey evidence suggests that adoption rates in the U.S.A.
may be higher than in the U.K. For example, Shim and Sudit (1995)) drawing on a
1993 survey, indicated that 27% of their respondents had adopted activity-based
costing and 38% intended to do so. Also, Green and Amenkhienan (1992) claimed
that 45% of firms used activity-based costing to some extent.
More recent evidence points to higher rates of adoption of activity-based costing.
In the U.K., Innes and Mitchell (1995) found that 20% of firms had adopted
activity-based costing and, interestingly, 33% of larger firms in the sample had
adopted activity-based costing. Banerjee and Kane (1996) reported that 22% of a
sample of CIMA members used activity-based costing, 31% believed it to be a
prerequisite for operating in current business environments and 25% who had not
implemented activity-based costing intended to do so in the next 6-24 months.
Similarly, a survey by Evans and Ashworth (1996) found that 21% of U.K. firms had
implemented activity-based costing and 4 1% were considering implementation. In
the U.S., Hrisak (1996) found that 53% of survey respondents were using activity-
based costing.
Evidence from mainland Europe suggests a slower rate of adoption of activity-based
techniques. The only survey evidence reporting the adoption of activity-based costing
comparable to that of the U.K. and U.S.A. relates to Belgium. Bruggeman et al.
(1996) found that 19.5% of firms had adopted activity-based costing and 49.5%
planned to do so; 13.8% had adopted activity-based management with 28.4%
intending to do so; and for activity-based budgeting, the relevant data were 13.9%
adoption and 58.6% planned adoption. Low adoption rates have also been reported
in Denmark (Israelsen et al., 1996). Ask et al. (1996) reported low adoption in
Sweden, but 25% of respondents to their survey planned to adopt activity-based
costing. Virtanen et al. (1996) report three surveys that show a growing adoption of
activity-based costing in Finland. These surveys indicate a 6% adoption in 1992
(Lukka and Granlund, 1996)) 11% in 1993 (Laitenen, 1995) and 24% using and
10% currently implementing activity-based costing in 1995 (Rautajoki, 1995). In
Germany, Scherrer (1996) reports that 3% of companies had adopted activity-based
costing. Activity-based techniques do not appear to have been developed by firms in
Greece (Ballas and Venieris, 1996)) Italy (Barbato et al., 1996) or Spain (Saez-Tor-
recilla et al., 1996).
Survey evidence on other recently-developed management accounting techniques
is not readily available. There is some evidence that forms of target costing have been
employed in several European countries. For example, in Denmark, where value
engineering has been popular for the past 20 years, target costing is used by 50% of
respondents (Israelsen et al., 1996). In Germany, it has been claimed that the recent
slump in the car industry has focused manufacturers on customer-required designs
and the use of target costing (Scherrer, 1996).
Benchmarking has been advocated widely as an important way of sensitising the
organization to external performance standards (Elnathan et al., 1996; McNair and
Leibfried, 1992). There is, however, limited evidence on its adoption and benefits
derived from its use. In the U.K., Drysdale and Dunn (1996) found that only 13% of
561 financial directors believed that benchmarking had been useful. In mainland
Europe, benchmarking appears to be in its infancy, although survey data are limited.
In Denmark, benchmarking was carried out by 25% of firms, involving a systematic
 Adoption and Benefits of Management Accounting Practices 11

analysis of key processes (Israelsen et al., 1996). In Australia, there is some evidence
of the widespread use of benchmarking. Bonn and Christodoulou (1996) found that
many large Australian manufacturers place considerable emphasis on benchmarking
against competitors and believed this would continue to be important in the future.
Rimmer et al. (1996) found that benchmarking was used extensively to establish
targets for best practice initiatives in a sample of 42 Australian firms involved in a
government-sponsored program to support management innovations.

The current study. The evidence from the current survey ranked the adoption of
activity-based techniques as relatively low, compared with other techniques surveyed:
activity-based budgeting (ranked 17)) activity-based management (ranked 2 1) and
activity-based costing (ranked 24). It should, however, be noted that the level of
adoption for these techniques was higher than found in prior studies. The benefits
from activity-based techniques were also in the relatively low category: activity-based
budgeting (ranked 36)) activity-based costing (ranked 38) and activity-based manage-
ment (ranked 42).
Benchmarking was important to most of the firms surveyed. Benchmarking of
operational processes, strategic priorities and management processes were in the
relatively high adoption group (ranked 6, equal 8 and equal 8, respectively), while
benchmarking of product characteristics and benchmarking within the wider organi-
zation, were of relatively moderate adoption (ranked equal 12 and equal 15). Also,
benchmarking with outside organizations was less common (ranked 18). While
adoption rates were relatively high for many aspects of benchmarking, the benefits
received relatively low rankings. Benchmarking of operational processes, product
characteristics and management processes were classed as of moderate benefit (ranked
25, 27 and 29, respectively), while benchmarking of strategic priorities (ranked 33)
and benchmarking within the wider organization, or with outside organizations,
provided relatively low benefits (ranked 32 and 35).
Finally, the survey findings identified some recently-developed techniques as of
relatively low adoption and low benefit. The rankings for adoption were: product life
cycle analysis (ranked equal 20)) shareholder value analysis (ranked 22) value chain
analysis (ranked 26) and target costing (ranked 27). In relation to benefits derived
from these techniques, the rankings were: target costing (ranked 30)) shareholder
value analysis (ranked 37)) value chain analysis (ranked 40) and product life cycle
analysis (ranked 4 1).

4. Future emphasis on management accounting practices

T o provide an indication of future directions, the survey investigated the emphasis

that firms intended to place on each management accounting practice over the next 3
years. The intended future emphasis for all items is provided on the right-hand side
of Table 3.
Respondents saw financial measures as continuing to be important in the future.
For example, the importance of budgeting for controlling costs, which received the
highest rank for benefits received, was affirmed by its high future emphasis (ranked
1). Similarly, budget variance analysis maintained its high level of importance
(ranked 3 for past benefits and ranked 6 for future emphasis). Return on investment
12 R. H. Chenhall and K. Langfield-Smith

(ranked 2 in past benefits) was also regarded as having continuing relevance in the
future (ranked 4). Also, divisional profit and controllable profit maintained their
importance: ranked 4 and 8 in past benefits and 5 and 15 for future emphasis. The
future emphasis on budgets for coordinating activities had the same ranking as for
past benefits (ranked 16).
Respondents indicated that traditional planning techniques will retain their impor-
tance in the future. For example, the future emphasis for formal strategic planning
(ranked 2)) capital budgeting tools (ranked 7)) budgeting for planning financial
position (rank 8 ) and cash flows (ranked 10) and budgeting to plan day-to-day
operations (ranked 17) had similar high ranking for past benefits (ranked 10, 5, 7, 12
and 19). Interestingly, while strategic plans developed with budgets was important as
indicated by both past benefits (ranked 6) and future emphasis (ranked 9)) strategic
plans developed separately from budgets was important in terms of past benefits
(ranked 13)) but dropped to rank 34 in the future.
Table 4 lists those management accounting practices that had at least a six-point
difference in ranking between past benefits and future emphasis (significant at
pI 0.15). This highlights those management accounting techniques where the degree
of emphasis is expected to change.
The areas where respondents indicated they would place relatively greater future
emphasis were strategic planning, product profitability analysis, long range forecast-
ing, all forms of benchmarking and all activity-based techniques. A common feature
of these items is their explicit or implicit focus on strategic issues. Items that were to
be given decreased emphasis in the future included traditional techniques of absorp-
tion costing, variable costing and residual income. Additionally, using budgets for
compensating managers was also less important in the future for respondents. This
trend is consistent with commentators who have predicted a decreasing use of
traditional techniques (Johnson, 1992; Kaplan, 1994).

5. Adoption of management accounting innovations in Australia

The survey results from the U.S.A., U.K. and mainland Europe, reported in this
article, suggest that the adoption of recently-developed management accounting
practices has lagged behind the prominence accorded to these techniques by many
commentators. The benefits derived from recently-developed management account-
ing techniques among Australian companies, reported in the current study, were
lower than benefits from traditional techniques. However, the rates of adoption of
recently-developed techniques were higher than those reported for other countries. In
this section we suggest reasons for the relatively high levels of adoption among
Australian firms in this study. These relate to the large size of the organizations
sampled and particular aspects of the Australian business environment.

The impact of large size

The current study examined the practices of a sample of firms drawn from Australia’s
largest manufacturing companies. There is considerable evidence that size is an
important factor influencing the adoption of more complex administration systems
(see Moores and Chenhall, 1994, for a review). More particularly, studies of
recently-developed management accounting practices (particularly activity-based
 Adoption and Benefits of Management Accounting Practices 13

Table 4
Management accounting practices: comparison of rankings of past bene$ts and future emphasis

Management accounting practices Relative rankings*

Past Future
benefits emphasis

Increased ranking
Formal strategic planning 10
Product profitability analysis 15
Benchmarking of operational processes 25
Long range forecasting 26
Benchmarking of management processes 29
Benchmarking within the wider organization 32
Benchmarking of strategic priorities 33
Benchmarking with outside organizations 35
Activity-based budgeting 36
Activity-based costing 38
Activity-based management 42
Decreased ranking
Product costing: absorption costing 9 25t
Strategic plans developed separate from budgets 13 34$
Performance evaluation: residual income 20 397
Product costing: variable costing 21 321
Budgeting for compensating managers 23 331
Product costing: target costing 30 409
*The probability that the observed differences in ranking are not due to random factors was
investigated by determining the significance of the difference in the z scores related to past
benefits and future emphasis. The levels of significance are as follows:
185%
$95%
997.5%
799%

costing) have shown that adoption rates are much higher in larger firms (Drury and
Tayles, 1994; Innes and Mitchell, 1995; Davies and Sweeting, 1993; Bjornenak,
1997).
Explanations for this finding can be found in research in the field of organizational
theory. It is well established that increased organizational size leads to an increased
complexity of tasks, which requires the division of labour. This specialization of tasks
leads to more extensive differentiation, where like tasks are grouped within common
units (Blau et al., 1976). The greater the emphasis on differentiation, the more
difficult is the task of ensuring that organizational subunits are acting towards the
achievement of a common purpose and coordinating their activities (Lawrence and
Lorsch, 1967). A response to these increased difficulties of integration is the develop
ment of more sophisticated integrative mechanisms, including information systems
(Galbraith, 1973). Management accounting innovations such as activity-based cost-
ing and balanced scorecards are examples of such systems.
A further reason for large firms being relatively high adopters of recently-developed
management accounting practices is their relatively greater access to resources to
experiment with administrative innovations. It has been noted in several surveys that
14 R. H. Chenhall and K. Langfield-Smith

an impediment to implementing innovative management accounting systems is the

prohibitive cost (Innes and Mitchell, 1995; Shields, 1995). As large organizations
may have more resources for the development of innovations, it seems likely that they
will experiment more with innovative accounting systems.

The Australian situation

Historically, Australia has had close cultural and business ties with the U.K. How-
ever, increasingly Australia has come to recognize that its economic future is linked
more closely with developments in the Pacific rim (Bonn and Christodoulou, 1996).
Consequently, there has been a growing exposure to business techniques from the
U.S.A. and Japan (Rimmer et al., 1996). It is therefore not surprising that the
adoption rates of management accounting innovations may be more comparable with
that of the U.S.A., rather than the U.K.
There are several other reasons why large Australian manufacturers have been
enthusiastic adopters of innovative management practices, including management
accounting practices. These concern the role of propagators of innovation whose aim
is to maximize the diffusion and acceptance of management and accounting innova-
tions (Brown, 1981; Bjornenak, 1997). A distinctive influence on the development of
Australian business over the 1980s and 1990s) has been the active role of the federal
government in propagating business innovations.
In 1987, the federal government released a report, Australia Reconstructed, that
indicated the country could no longer rely on its primary products to support the
balance of trade. It became clear that Australian manufacturing had to become
internationally competitive. While some larger manufacturers in key industries, such
as steel and chemicals, were successful in restoring their competitiveness, the govern-
ment believed that it would have to introduce policies to force business in general to
improve. Reforms throughout the 1980s) including the deregulation of financial
markets, gradual dropping of industry protection policies and the freeing up of labour
markets, provided the structural background for a more competitive economy and
the impetus for business to adopt improved management practices. By the early
1990s) the government recognized that the diffusion of innovative management
ideas, typically those developing in the U.S.A. and Japan, could be enhanced by its
participation in the dissemination process. This involved developing cooperative
alliances with industry bodies and establishing various government bodies to promote
the development and implementation of management innovations. These included
the Best Practice Demonstration Program and the National Industry Extension
Service. Many other agencies, such as international consulting firms and business
schools, became involved as partners with the government in providing advice on
management innovation (See Rimmer et al., 1996 for a full discussion of this
history).
Another characteristic of Australian business that may help explain high levels of
adoption of management accounting innovations is the extensive networking that has
developed between many large firms. This has arisen from common ownership ties,
the widespread development of cooperative supplier relationships and the growth of
industry-based and regionally-based benchmarking networks among many Australian
firms. In Norway, Bjornenak (1997) also found that high adopters of activity-based
costing received their information from the personal contact with change agents
 Adoption and Benefits of Management Accounting Practices 15

internal and external to the firm. The sharing and dissemination of knowledge among
firms about new management processes was found to be a stimulus for the adoption
of innovations among the Australian businesses studies by Rimmer et al. (1996).

6. Conclusions and implications for future research

The data reported in this article focus on the relative adoption and benefits obtained
from both traditional and recently-developed management accounting practices in
large Australian manufacturing companies. Across the sample, most of the practices
surveyed were adopted by the majority of firms. While the adoption rates for many
recently-developed practices were higher than those reported in surveys from other
countries, overall, traditional management accounting techniques were found to be
more widely adopted than recently developed techniques. Many firms intended to
place greater emphasis on these newer techniques in the future, particularly activity-
based techniques and benchmarking.
The results of the current study raise several issues that warrant future research.
First, it may be premature to assume that traditional management accounting
techniques lack relevance. Second, the nature of the dependence between traditional
and recently-developed management accounting techniques needs further investiga-
tion. Third, the relatively lower benefits associated with recently-developed tech-
niques raises the question of the conditions necessary to effectively implement these
techniques.
A final suggestion for future research relates to gaining a better understanding of
the factors that influence differences in the levels of adoption of recently-developed
management accounting techniques between countries. For example, it has been
noted that some ‘western’ innovations may not be adopted readily in various
European countries because of cultural factors and historic differences in the develop
ment of costing systems (Amat et al., 1994; Bescos and Mendoza, 1995). It was
suggested that factors specific to Australia, such as influences from the U.S.A. and
Japan and sponsorship activities of the Australian federal government, may have
contributed to the high rates of adoption of innovative practices.
Several limitations of the research design followed in this study should be men-
tioned. First, the study examined a large array of items and as with all surveys, it is
possible that respondents may have misinterpreted some items. This was considered
limited as care was taken to ensure that the survey was completed by individuals with
knowledge of the organizations’ accounting and management practices. Second, as
the sample selected was not random, the findings of this study should be interpreted
as relating to the largest manufacturing companies, not to the general population of
manufacturing companies. As size may be associated with the availability of resources
to experiment with new accounting techniques, it is likely that the sample included a
greater proportion of companies employing ‘advanced’ management accounting
practices than the total population of manufacturers.

References
Amat, J., Carmona, S. and Roberts, H., 1994. Context and change in management accounting
systems: a Spanish case study, Management Accounting Research, 5, 107-1 26.
Armitage, H. M. and Nicholson, R., 1993. Activity based costing: a survey of Canadian
practice, Issue Paper No. 3, Society of Management Accountants of Canada.
16 R. H. Chenhall and K. Langfield-Smith

Ask, U., Ax, C. and Jonsson, S., 1996. Cost management in Sweden: from modern to
post-modern, in Bhimani, A. (ed) Management Accounting: European Perspectives, Oxford,
Oxford University Press, pp. 199-217.
Ballas, A. and Venieris, G., 1996. A survey of management accounting practices in Greek
firms, in Bhimani, A. (ed.) Management Accounting: European Perspectives, Oxford, Oxford
University Press, pp. 123-139.
Banerjee, J., and Kane, W., 1996. Report on ClMA/JBA survey, Management Accounting,
October, 30, 37.
Barbato, M. B., Collini, P. and Quagli, 1996. Management accounting in Italy, in Bhimani,
A. (ed.) Management Accounting: European Perspectives, Oxford, Oxford University Press,
pp. 140-163.
Bescos, P. L. and Mendoza, C., 1995. ABC in France, Management Accounting (UK), April,
33-41.
Bhimani, A., 1994. Monitoring performance measures in UK firms, Management Accounting
(UK), January, 34-36, 54.
Bjornenak, T., 1997. Diffusion and accounting: the case of ABC in Norway, Management
Accounting Research, 8, 3-1 8.
Blau, P. M., Falbe, C. M., McKinley, W. and Tracy, D. K., 1976. Technology and
organization in manufacturing, Administrative Science Quarterly, 21, 20-40.
Bonn, I. and Christodoulou, C., 1996. From strategic planning to strategic management, Long
Range Planning, 29, 543-551.
Bromwich, M. and Bhimani, A., 1994. Management Accounting: Pathways to Progress, London,
The Chartered Institute of Management Accountants.
Brown, L. A., 1981. Innovation Diffusion: A New Perspective, London, Methuen.
Bruggeman, W., Slagmulder, R. and Waeytens, D., 1996. Management accounting changes:
the Belgian experience, in Bhimani, A. (ed.) Management Accounting: European Perspectives,
Oxford, Oxford University Press, pp. 1-30.
Bunce, P., Fraser, R. and Woodcock, L., 1995. Advanced budgeting: a journal to advanced
management systems, Management Accounting Research, 6, 253-266.
Butler, R., Davies, L., Pike, R. and Sharp S., 1993. Strategic Investment Decisions: Theory,
Practice and Process, London, Routledge.
Capon, N., Farley, J. U. and Hulbert, J. M., 1994. Strategic planning and financial perfor-
mance: more evidence, Journal ofManagewent Studies, 31, 105-1 10.
Carr, C. and Tomkins, C., 1996. Strategic investment decisions: the importance of SCM. A
comparative analysis of 51 case studies in the UK, US and German companies, Manage-
ment Accounting Research, 7, 199-217.
CIMA, 1993. Pefonnance Measurement in the Manufacturing Sector, London, Chartered
Institute of Management Accountants.
Clarke, P.J., 1992. Management Accounting Practices and Techniques in Irish Manufacturing
Finns, The 15th Annual Congress of the European Accounting Association, Madrid, Spain.
Cobb, J., Mitchell, F. and Innes, J., 1992. Activity Based Costing: Problems in Practice, London,
Chartered Institute of Management Accountants.
Cooper, R., 1988. Cost management concepts and principles: the rise of activity-based costing
-part one, what is an activity-based cost system, Journal of Cost Management, March,
45-54.
Cress, W. P. and Pettijohn, J. B., 1985. A survey of budget-related planning and control
policies and procedures, Journal of Accounting Education, 3, 61-78.
Davies, R.E. and Sweeting, R.C., 1993. Accounting Innovations and the Development of
Manufacturing Accounting Systems, 16th Annual Congress of the European Accounting
Association, Turku, Finland.
De Meyer, A., Nakane, J., Miller, J. and Ferdows, K., 1989. Flexibility: the next competitive
battle the manufacturing futures survey, Strategic Management Journal, 135- 144.
Dean G. W., Joye, M. P. and Blayney, P. J., 199 1. Strategic Management Accounting Survey:
Overhead Cost Allocation and Pe fonnance Evaluation Practices of Australian Manufacturers,
Monograph no. 8, Accounting and Finance Foundation, University of Sydney.
 Adoption and Benefits of Management Accounting Practices 17

Drury, C., Braund, S., Osborne, P. and Tayles, M., 1993. A survey of management
accounting practices in UK manufacturing companies, ACCA Research Occasional Paper,
Chartered Association of Certified Accountants.
Drury, C. and Tayles, M., 1994. Product costing in UK manufacturing organizations, The
European Accounting Review, 3(3), 443-469.
Drysdale, L. and Dunn, P., 1996. Financial Management Survey 1996: Current State of
Financial Management in the UK, Chartered Institute of Management Accounting.
Dugdale, D., 1994. Theory and practice: the views of CIMA and students, Management
Accounting (Urn, September, 56-59.
Elnathan, D. S., Lin, T. M. and Young, S. M., 1996. Benchmarking and management
accounting: a framework for research, Journal of Management Accounting Research, 8,
37-54.
Emmanuel, C., Otley, D. and Merchant, K., 1990. Accountingf o r Management Control, 2nd
edition, London, Chapman and H11.
Evans, H. and Ashworth, G., 1996. Survey conclusions: wakeup to the competition, Manage-
ment Accounting (Urn, May, 16-1 8.
Galbraith, J. R., 1973. Managing Complex Organisations, Reading, Ma, Addison Wesley.
Green, F. B. and Amenkhienan, F. E., 1992. Accounting innovations: a cross-sectional survey
of manufacturing firms, Journal of Cost Management, 6, 58-64.
Groot, T. L. C. M., 1996. Managing costs in the Netherlands: past theory, in Bhimani, A.
(ed.) Management Accounting: European Perspectives, Oxford, Oxford University Press, pp.
164-179.
Howell, R. A., Brown, I. D., Soucy, S. and Seed, A. H., 1987. Management Accounting in the
New Manufacturing Environment, Montvale, NJ, National Association of Accountants.
Hrisak, D., 1996. The controller as business strategist, Management Accounting (US), Decem-
ber, 48-49.
Innes, J. and Mitchell, F., 1991. Activity-based costing: a survey of CIMA members,
Management Accounting, October, 28-30.
Innes, J. and Mitchell, F., 1995. A survey of activity-based costing in the U K s largest
companies, Management Accounting Research, June, 137- 153.
Israelsen, P., Anderson, M., Rohde, C, and Sorensen, P. E., 1996. Management accounting in
Denmark theory and practice, in Bhimani, A. (ed.) Management Accounting: European
Perspectives, Oxford, Oxford University Press, pp. 31 -53.
Johnson, H. T., 1992. Relevance Regained: From Top-Down Control to Bottom-down Empower-
ment, New York, Free Press.
Joye, M. P. and Blayney, P. I., 1990. Cost and Management Accounting Practices in Australian
Manufactuving Companies: Survey Results, Monograph no. 7, The Accounting and Finance
Foundation, University of Sydney.
Kaplan, R. S., 1994. Management accounting (1 984-1994): development of new practice and
theory, Management Accounting Research, 5, 247-260.
Klammer, T., Koch, B. and Wilner, N., 1991. Capital budgeting practices-a survey of
corporate use, Journal of Management Accounting Research, Fall, 113-130.
Laitinen, E. K., 1995. Toimintolaskennassa ingelmina, Yritystalous,3, 66-69.
Lawrence, P. R. and Lorsch, J. W., 1967. Organization and Environment, Cambridge, MA,
Harvard University Press.
Lebas, M., 1996. Management accounting practice in France, in Bhimani, A. (ed.) Manage-
ment Accounting: European Perspectives, Oxford, Oxford University Press, pp. 74-99.
Lukka, K. and Granlund, M., 1996. Cost accounting in Finland: current practice and trends
of development, The European Accounting Review, 5, 1-28.
Luoma, G. A., 1967. Accounting Infomation in Managerial Decision Making for Small and
Medium Manufacturers, New York, NAA.
Lynch, R. L. and Cross, K. F., 1992. Measure Up-Yardsticks for Continuous Improvement,
Cambridge, MA, Basil Blackwell.
McKinnon, S. M. and Bruns, W. J., 1992. Management information and accounting informa-
tion: what do managers want, Advances in Management Accounting, l , 55-80.
McNair, C. J. and Leibfried, K. H. J., 1992. Benchmarking:A Toolfor Continuous Improvement,
Omneo.
18 R. H. Chenhall and K. Langfield-Smith

McNair, C. J. and Mosconi, W., 1989. Beyond the Bottom Line: Measuring World Class
Perfomance, Homewood Ill, Irwin.
Miller, J. G., De Meyer, A. and Nakane, J., 1992. Benchmarking Global Manufacturing,
Homewood, Illinios, Irwin.
Mintzberg, H., 1994. The Rise and Fall of Strategic Planning, New York, The Free Press.
Moores, K. and Chenhall, R. C., 1994. Framework and MAS evidence, in Moores, K. and
Booth, P. (eds) Strategic Management Acconnhng: Australian Cases, John Wiley and Sons,
Brisbane, pp. 12-26.
Nicholls, B., 1992. ABC in the UK ~ a status report, Management Accounting, May, 22-23.
Powell, T. C., 1992. Strategic planning as competitive advantage, Strategic Management
Journal, 13, 551-558.
Rautajoki, P., 1995. Tuotta vuuden mittaus ja anslysointi metalliteollisuudessa, Tampereen
Teknillinen korkeakkoulu, Tntkimasraportteja, 1.
Rimmer, M., Macneil, J., Chenhall, R., Langfield-Smith, K. and Watts, L., 1996. Reinventing
Competitiveness: Achieving Best Practice in Australia, Melbourne, Pitman Publishing.
Roberts, A., 1995. Management accounting in France, Management Accounting (Urn, March,
44-46.
Saez-Torrecilla, A., Fernandez-Fernandez, A., Texeira-Quiros, J. and Vaquera-Mosquero, M.,
1996. Management accounting in Spain: trends in thought and practice, in Bhimani, A.
(ed.) Management Accounting: European Perspectives, Oxford, Oxford University Press, pp.
180-190.
Scherrer, G., 1996. Management accounting: a German perspective, in Bhimani, A., (ed)
Management Accounting: European Perspectives, Oxford, Oxford University Press, pp.
100-122.
Shank, J. K. and Govindarajan, V., 1993. Strategic Cost Management, New York, The Free
Press.
Schonberger, R. J. and Knod, E. M., 1994. Synchroseruice ~ The Innovative Way to Build A
Dynasty of Customers, Burr Ridge, Illinios, Irwin.
Shields, M. D., 1995. An empirical analysis of firms’ implementation experience with
activity-based costing, Journal of Management Accounting Research, 7, 148- 166.
Shim, E. and Sudit, E., 1995. How manufacturers price products, Management Accounting
(Urn, February, 37-39.
Sinha, D. K., 1990. The contribution of formal planning to decisions, Strategic Planning
Journal, 11, 479-492.
Virtanen, K., Malmi, T., Vaivio, J. and Kasanen, E., 1996. Drivers of management account-
ing in Finland, in Bhimani, A. (ed.) Management Accounting: European Perspectives, Oxford,
Oxford University Press, pp. 2 18-24 1.
Vollmann, T., 1990. Changing manufacturing performance measurement, in Turney, P. B. B.
(ed) Perfomance Excellence in Manufacturing and Service Organisations, AAA, 109- 122.
 Adoption and Benefits of Management Accounting Practices 19

Appendix - survey questions used in this study

Respondents were asked to indicate the bene$ts gained from the technique over the
last 3 years and the degree of emphasis the business unit will place on each technique
over the next 3 years. The scales used to assess benefits were anchored at, no beneflt
(scored 1) to high benefit (scored 7) and future emphasis anchored at, no emphasis
(scored 1) to high emphasis (scored 7).

Long term planning

Formal strategic planning
Capital budgeting techniques
(e.g. NPV, IRR, Payback)
Strategic plans developed:
Together with budgets
Separate from budgets
Long range forecasting
Detailed budgeting systems for:
Controlling costs
Compensating managers
Coordinating activities across the
business units
Linking financial position, resources
and activities (e.g. activity
based budgets)
Planning:
Day-to-day operations
Cashflows
Financial position
Product costing
Absorption costing
Variable costing
Activity-based costing
Target costing
Performance evaluation based on:
Budget variance analysis
Controllable profit
Divisional profit
residual income
(e.g. interest adjusted profit)
return (profit) on investment
cash flow return on investment
non-financial measures
team performance
employee attitudes
qualitative measures
balanced scorecard (mix of finan-
cial and non-financial measures)
customer satisfaction surveys
ongoing supplier evaluations
Decision support systems
Cost-volume-profit analysis
(e.g. breakeven analysis)
Product life-cycle analysis)
Activity based management
Product profitability analysis
Benchmarking of:
product characteristics
operational processes
management processes
strategic priorities
Benchmarking carried out:
within the wider organisation
with outside organisations
Shareholder value analysis
Value chain analysis
Operations research techniques