a study of the emergence of management accounting system ethos and its influence on perceived system...

7/25/2019 A Study of the Emergence of Management Accounting System Ethos and Its Influence on Perceived System Success

1/26

AOS 387 Disk used No. pages 26, DTD=4.3.1

Version7.51eARTICLE IN PRESS

A study of the emergence of management accounting system

ethos and its influence on perceived system success

Alnoor Bhimani

Department of Accounting and Finance, London School of Economics and Political Science, Houghton Street,

London WC2A 2AE, UK

Abstract

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 influenced 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 Siemensa global firm 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 affected 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 significantly influenced the systems perceived success.# 2003 Elsevier Science Ltd. All

rights reserved.

1. Introduction

Past research suggests that different groups of

MAS users within organisations exhibit different

rationales, priorities and cultural orientations

(Ahrens, 1996, 1997, 1999; Appleyard & Pallett,

2000; Bamber, 1993; Birnberg & Shields, 1989;

Bruns & McKinnon, 1993; Ko & Mock, 1988; Lo n-

ing, 1994; Markus & Pfeffer, 1983; Young & Selto,

1991) and that these may influence their perceptions

of the success of MAS changeovers (Brewer, 1998;

Broadbent, 1992; Dent, 1991; Ezzamel, 1987; God-

dard, 1997a; Hopwood, 1989; Mouritsen, 1996;

OConnor, 1995; Roberts, 1990). Some researchers

suggest that changes in organisational control

systems tend to be deemed successful when

accompanied by organisation cultural values which

support the new systems (Das, 1986; Dent, 1987;

Robey & Farrow, 1982; Rowlinson, 1995; Zmud,

1979). Moreover, user involvement in the design

of information systems has been reported to

enhance the perceived success of a systems change

because user value assumptions become embedded

into the new systems architecture (Argyris &

Kaplan, 1994; Birnberg, 1998; Caplan, 1988; Fisher,

1998; Franz & Robey, 1986; Markus & Pfeffer,

1983; Shields & Young, 1989).

Whilst evidence exists that the introduction of a

novel management accounting system can bring

about desired consequences when the system users

0361-3682/03/$ - see front matter # 2003 Elsevier Science Ltd. All rights reserved.P I I : S 0 3 6 1 - 3 6 8 2 ( 0 2 ) 0 0 0 2 5 - 9

Accounting, Organizations and Society

www.elsevier.com/locate/aos
http://www.elsevier.com/locate/aos/a4.3dhttp://www.elsevier.com/locate/aos/a4.3d


2/26



consider the organisational values of their work-

ing environment to be consistent with those

embedded within the new system, there has been

little research on how such consistencies emerge.The present study aims to address this concern by

exploring how certain notional organisational

culture elements became embedded features of a

newly implemented MAS within a specific organi-

sation. It also aims to investigate how the align-

ment between the organisational culture elements

which were embedded within the MAS and the

organisational outlook of two MAS user groups

influenced their perception of the success of the

new system.

The site chosen for this study is the Fibre Optics

business unit (HLFO) of the SemiconductorsGroup of Siemens AGa global electronics and

electrical components firm. Operational officers

within HLFO have specific expertise either in

engineering (Technisch) or in business economics

(Kaufmannisch). Engineering and business officers

educational training differs in that the former tend

to possess engineering based qualifications

whereas the latter have a business economics aca-

demic background. These two distinct functional

expertises provide a basis for categorising opera-

tional officers at HLFO into two differentemployee groups. The new management account-

ing system adopted by HLFO is called process-

based target costing (PBTC) which was designed

by HLFO engineering officers between September

1995 and May 1996. PBTC became operational in

August 1996.

The information collected to achieve the two

aims of the investigation is derived from different

sources. Interviews were carried out between early

1995 and mid-1998 with company officers. Inter-

nal documents, accounting reports, statistical

data, graphical charts and official company his-

tories were consulted. Two questionnaires were

also used for collecting data on the MAS users

organisational culture orientation. One ques-

tionnaire was administered to engineering and busi-

ness officers prior to the introduction of the new

accounting system and the other was administered

following its implementation. Whilst HLFO was

in the process of designing and implementing the

new MAS, a corporate-wide culture change pro-

gramme was in progress at Siemens. The two

questionnaire administrations enabled changes in

the users organisational outlooks over this time

period to be assessed. The second questionnairealso included a question on the users perception

of the success of the new MAS.

The paper is structured as follows: following a

review of the literature dealing with organisational

culture and MAS ethos alignment, the paper dis-

cusses the emergence of the new MASs ethos in

the light the corporate culture change programme

being put into effect throughout Siemens. The

questionnaire and interview-based approach and

hypotheses for investigating how the alignment

between the organisational culture elements

characterising the MAS and the system usersorientation towards a developmental culture relate

to the new MASs perceived success are subse-

quently considered. Following a discussion of the

results of the investigation, the papers concluding

section addresses some of the implications of the

study and future research possibilities in the area.

2. Literature review

2.1. Management accounting systems andorganisational culture

The management accounting literature has only

recently started to show empirical concern with

the concept of organisational culture (Dent,

1991; Goddard, 1997a, 1997b; OConnor, 1995)

though the potential of studying links between

organisational culture and systems of control has

long been posited (Flamholtz, 1983; Hopwood,

1987; Markus & Pfeffer, 1983; Ouchi & Johnson,

1978). More recently, Shields (1995) and Birnberg

(1998, 2000) have reiterated the desirability of

investigating how cost management systems

adoptions and effects are conditioned by variables

such as organisational culture.

Whilst there is evidence to suggest that the per-

ceived implementation success of a new MAS is

influenced by whether its information output is

considered easy to use, accurate and timely,

investigations of organisational culture and con-

trol practices indicate that successful information

2 A. Bhimani/ Accounting, Organizations and Society


3/26



systems changes tend to result when supporting

and compatible organisational values are in place

(DeLone & McLean, 1992; Doll & Torkzadeh,

1988; Earley & Kanfer, 1985; Hogarth, 1993;Shields, 1995). Research studies suggest that the

introduction of novel information systems may

not bring about the desired effects if users do not

perceive the organisational characteristics and cli-

mate of their working environment to be con-

sistent with the values embedded within the new

system (Cushing,1990; Das, 1986; Robey & Far-

row, 1982; Rowlinson, 1995; Zmud, 1979). How

closely the cultural orientation of management

accounting information users aligns with the value

assumptions factored into the design of a MAS

has likewise been reported to have an influence onthe perceived implementation success of a new

system (Argyris & Kaplan, 1994; Birnberg, 1998;

Caplan, 1988; Shields & Young, 1989). Some

scholars posit the existence of direct linkages

between accounting systems characteristics and

corporate culture (Goddard, 1997a; OConnor,

1995; Soeters & Shreuder, 1988) and between

organisational culture and accounting systems

design (Bourn & Ezzamel, 1986; Broadbent, 1992;

Dent, 1991).

In the context of cost management innovations,Shields and Young (1989) and Young (1997) sug-

gest that often, novel systems are administrative

rather than technical in nature and as such, their

implementation fate is not independent of the

preferences, goals and strategies of top managers.

Foster and Swenson (1997), McGowan and

Klammer (1997) and Friedman and Lyne (1995,

1999) provide empirical support in this light.

Cooper, Kaplan, Maisel, Morrisey, and Oehm

(1992) offer some evidence that a variety of

behavioural and organisational factors are inter-

twined with the implementation of activity based

costing (ABC) systems and Anderson (1997) and

Anderson and Young (1999) explore the existence

of relationships between contextual variables

such as organisational commitment and shared

organisational values and ABC implementation

success.

Following an investigation of Canadian firms,

Gosselin (1997, p. 8) has reported that:

. . .administrative innovations such as ABC are

easier to adopt and implement in mechanistic

organizations. Based on a study of Finnish

organisations, Malmi (1997, p. 21) concludes that

user resistance can lead to ABC systems failureand that organizational culture is important in

explaining such resistance. Argyris and Kaplan

(1994) identify organisational culture change stra-

tegies that can be effected to overcome employee

resistance to the introduction of ABC and Hen-

ning and Lindahl (1995, p. 58) stress the impor-

tance of having an ABC system implementation

. . .fit the current culture of the organization.

Different levels of success in management infor-

mation systems implementations have also been

argued to depend on organisational groupings

(Cooper & Zmud, 1990; Cushing, 1990; Lucas,1975; Newman & Rosenberg, 1985). Research on

group polarisation suggests that group interaction

enhances the salience of value conformity (Barki

& Hartwick, 1989; Brown, 1965) and that it

increases familiarity with different information

elements (Bates, Amundson, Schroder, & Morris,

1995; Rutledge & Harrell, 1994). Moreover, inter-

group interaction causes bonding to a choice or

system as well as leads to a convergence of utili-

ties (Whyte, 1989, p. 49). Studies of the imple-

mentation of management accounting innovationssuggest that their information output . . .is used

for various purposes by various organizational

sub-groups (Malmi, 1996, p. 243) with effects

that are far from unambiguous (Ibid.).

Shields and Young (1989, 1994) believe that cost

management systems implementation success

depends on specific group based behavioural vari-

ables. Attention must be given to how well an

innovation such as the implementation of a new

MAS matches the preferences, goals, strategies,

agendas, skills and the resources of dominant

employee groups (Shields, 1995). In this light,

Scapens and Roberts (1993) have investigated the

emergence of resistance to the implementation of a

new information system within an organisation

with different subcultures. They report that

although different organisational participants can

be agreed on the desirability of altered infor-

mation systems for controlling internal oper-

ations, there may be . . .very different

perceptions of the precise nature of these infor-

A. Bhimani/ Accounting, Organizations and Society 3


4/26



mation needs (Scapens & Roberts, 1993, p. 31).

They document the disparity between divisional

managers predilection for information defined

primarily in economic terms and unit companymanagers preference for accounting information

focusing on production factors, scheduling

resources and delivery issues. These findings lend

appeal to Argyriss (1990, p. 503) contention that

an accounting systems technical features will be

premised on accounting information system

designers technical theory of control which

may not accord with the views of users. Markus

and Pfeffer (1983) have similarly documented

instances of information system implementation

failures whereby the ethos of newly implemented

information systems are at odds with the under-lying departmental culture of information user

groups.

Whilst this literature has sought to explore ways

in which systems changeovers are affected by their

designers and users organisational culture orien-

tations, it has not addressed the question of how

the technical configuration of management

accounting systems can evolve such as to embed

particular organisational culture elements. This is

one intent of the present study which also investi-

gates how far the alignment between the organi-sational culture elements espoused by two

functional employee groups within a business unit

of Siemens and those embedded within a new

MAS are associated with the users perceptions of

MAS success. To this end, a methodological

model to assess organisational culture orientation

is considered below.

2.2. The competing values model of organisational

culture

Organisation research concerned with the role

of organisational culture has had to contend with

a wide variety of definitions of organisational cul-

ture (see Martin, 1992; Reichers & Schneider,

1990; Weick, 1985 for reviews). For the purposes

of this paper, organisational culture is taken to refer

to the patterns of values and ideas in organisations

that shape human behaviour and its artefacts

(Zammuto & Krakower, 1991). This definition is

sufficiently broad as to be, in the main, identifiable

with most quantitative and/or qualitative organi-

sational culture studies (Pettigrew, 1979).

Although some researchers contend that organi-

sational culture cannot be effectively examinedusing quantitative methods (Frost, Moore, Louis,

Lundberg, & Martin, 1991; Louis, 1983; Schein,

1985; Smircich, 1983) and that culture needs to

be observed, more than measured (Schein, 1996,

p. 229), others see statistical analyses as being able

to contribute significantly to investigations of

organisational culture (Hofstede, Neuigen,

Okayre, & Sanders, 1990; Rousseau, 1990; Saf-

fold, 1988; Siehl & Martin, 1988; Wilkins &

Ouchi, 1983; Zammuto & Krakower, 1991). The

present study makes use of qualitative information

regarding cultural changes within Siemensobtained from internal corporate documents,

external publications as well as from interviews

with HLFO and other Siemens executives. The

study also derives information from the admini-

stration of two questionnaires based on a model

concerned with organisational culture elements.

Within the organisation study literature, a

number of different models exist for quantitatively

analysing organisational culture (see Xenikou &

Furnham, 1996). The present study focuses on

aspects of organisation culture which are exploredusing the competing values model (Cameron &

Quinn, 1998; Quinn, 1988; Quinn & Kimberly,

1984; Quinn & Rohrbaugh, 1981, 1983). The

competing values model differentiates between

underlying values which create meaning in orga-

nisational settings and the cultural artefacts that

reflect them. This model relies on the premise that

although cultural artefacts such as myths, lan-

guage, rituals and symbols are specific to organi-

sations, values are not. The model assumes that it

is not different sets of values which give rise to

different organisational cultures but varying

emphases on the limited set of values prevalent

within the larger society. This perspective is one

that is gaining favour among researchers inter-

ested in the relationships between national culture

and management accounting and control systems

(see Harrison & McKinnon, 1999).

Quinn and Kimberly (1984, p. 298) argue that

the competing values model can enable . . .such

things as the means of compliance, motives, lea-



5/26



dership, decision-making effectiveness, values and

organizational forms to be explored. This is

made possible by identifying different axes of

organisational effectiveness. Quinn and Kimberly(1984) propose that one of these relates to an

organisational focus ranging from, at one end, an

internal and micro-emphasis on the well-being and

development of people within the organisation to

stressing the well-being and development of the

organisation itself at the other extreme. Another

value dimension which they advance relates to

organisational structure ranging from empha-

sizing stability and control to stressing flexibility

and change. The competing values model thus

enables four resulting cultural types of organi-

sational orientations to be posited: group, develop-

mental, hierarchical and rational (see Fig. 1).Quinn and Kimberly (1984) consider that the

group culture is based on norms and values

associated with affiliation. It emphasises flexibility

and internal focus and stresses cohesion, morale

and member participation in decision making as

means and human resource development as ends.

The group cultures strategic orientation is one of

implementation through consensus building. The

developmental culture which stresses flexibility

Fig. 1. The competing values model [adapted from Quinn and Kimberly (1984)].



6/26



and an external focus is permeated by assumptions

of dynamic change. Growth and resource acqui-

sition as ends are enabled by readiness and flexi-

bility as means. It is the ideological appeal of thetask undertaken which motivates individuals.

The hierarchical culture underscores the rele-

vance of control and internal focus. Information

management and communication as means enable

the achievement of stability and control as ends.

Effectively, this cultural type reflects the values

and norms associated with bureaucracy. Sig-

nificance is given to orderly work situations with

sufficient co-ordination and distribution to pro-

vide organisational participants with a sense of

security, continuity and stability. Individuals

actions are directed by formally delineated rolesand enforcement is ordered by rules and regu-

lations. Finally, the rational cultural type stres-

ses control and external focus. Productivity and

efficiency as ends are brought about by planning

and goal setting as means. Achievement is

emphasised and individual motivation comes from

the meritocracy-based belief that competent per-

formance and achievement of designated organi-

sational objectives are to be rewarded.

Quinn and Kimberly (1984, p. 300) affirm that

although no organisation is likely to identifypurely with only one culture, . . .a distinctive cul-

ture reflective of one characteristic grouping as

opposed to another in terms of the competing

values model will prevail. Table 1 identifies char-

acteristic elements of each cultural type based on

the competing values model.The following section discusses the organisa-

tional programme of culture change at Siemens

and the emergence of the new management

accounting systemprocess based target costing

at HLFO. Its purpose is to delineate the manner in

which the culture change programme shaped the

cultural premise upon which the new MAS fea-

tures were founded in terms of the competing

values model dimensions. Whilst the study makes

use of several sources of information, for the fol-

lowing part, general information on Siemens was

obtained from official external and internal pub-lications as well as from published interviews with

company executives. Interviews were also under-

taken with Siemens managers both from within

and from outside the Fibre Optics unit (see

Table 2).

3. Culture change at Siemens

3.1. In pursuit of flexibility and external outlook

In early 1993, Siemens launched a company-

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,

cohesion, morale

Adaptability, readiness Communication information

management

Planning, goal setting

Ends Development of

human resources

Growth, resource

acquisition

Stability, bureaucracy,

control

Productivity efficiency

Compliance Affiliation Ideology Rules Contract

Motivation Attachment Growth Security Competence

Leadership Concerned supportive Inventive risk taking Conservative cautious Directive goal oriented

a Based on Quinn and Kimberly (1984).



7/26



time optimized processes (TOP). At the heart of

this organisational drive, was an attempt to

engender greater flexibility of operational prac-

tices and an enhanced outward management

orientation. Many managers across the organi-

sation perceived a need to alter their business

units accounting information systems once the

implementation of the TOP initiative had started

to take effect. The TOP programme aimed to

achieve greater customer and process orien-

tation, faster decision making, team-oriented

management, enhanced self-initiative and self-

responsibility (Siemens, 1994, p. 3). Alongside

these goals, managers sought more powerful cost

consciousness and more effective cost manage-

ment (Innovation Management Director com-

menting on the TOP initiative, 3/6/1996). To

understand how the Siemens-wide programme of

culture change affected the design of the new MAS

at HLFO, it is essential to consider the emergence

of TOP at Siemens.

The idea that it is essential to simplify and to

reduce decision processes and to place ourselves

closer to the market and to our customers (Karl

Heinz Kaske, President of Siemens, cited in

Michel & Longin, 1990, p. 161) was a concern

which had been expressed by Siemens top man-

agement since the mid-1980s. Kaske had articu-

lated a need for the organisation to become more

flexible, dynamic and competitive. He had sought:

. . .an internal structure to enable us to dis-

cover, develop and encourage our managers

entrepreneurial talents in order to allow them

total managerial control over projects rather

than simply partial authority (Ibid.)

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 Officer Siemens Nixdorf 30

Management Development Consultant Siemens Corporate Communications 30

General ManagerBusiness Improvement Siemens PLC (UK) 15

Human Resources Manager Private Communication Systems 30

Engineering Manager Siemens-Matsushita Components 20

TOP Programme Officer Drives and Standard Products 30

ManagerHuman 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 45Management 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



8/26



In 1985, Kaske restructured Siemens activities

into three distinct elements (divisions, regional

units and central services) to . . .enhance effi-

ciency, reduce costs and avoid duplication ofactivities (Ibid.). In 1989, the company put into

place further decentralization measures which cul-

minated into the present company structure con-

sisting of divisions, groups and business units.

During the 1990s, senior company executives

continued to voice concerns similar to Kaskes.

For instance, Siemens General Works Manager

indicated that:

. . .we harbour some doubts about whether

thinking in terms of competitive, market and

cost advantages truly permeates our corpora-tion (Siemens, 1990, p. 2).

A major problem according to him was that

personal goals and business goals often take

separate or even divergent paths (Ibid., p.3). One

difficulty faced by the organisation was perceived

to relate to information exchange and communi-

cation channels. A Senior Innovations Manager

had noted that

Within the organisation, there are obviousinter-company communication barriers.

There is talk of a wall of silence between the

upper levels and the rest of the staff, who are

left in ignorance regarding the background to

many decisions (Siemens, 1991a, p. 2).

Likewise, an Engineering Works Manager had

remarked that stumbling blocks stood in the

way of commitment and entrepreneurial action:

Many regard change primarily as a risk.

Innovative, entrepreneurial action becomes

shipwrecked on the jagged rocks of rigid

demarcation (Siemens, 1991b).

A year after his appointment as President and

Chief Executive Officer in 1992, Heinrich von

Pierer launched the time optimized processes

(TOP) culture change programme to tear down

barriers within the company (interview excerpts

form The Economist, 13/11/1996, p. 12). Heinrich

von Pierers basic strategy was to give equal weight

to both cost-cutting and reaping the rewards of the

cultural revolution (Ibid) through increased

flexibility in the way organizational processes werecarried out and greater awareness of external

market factors. Under TOP, two hundred and

sixty independent business units were created each

with responsibility for bringing about a change in

culture. Employees were to be remunerated on the

basis of results rather than rank as had been the

case traditionally. Staff were expected to assess

their superiors as well as be assessed by them. An

internal employee magazine noted TOPs aim to

achieve accelerated optimisation of all processes

in the value chains (Siemens, 1994, p. 2) and to

. . .design more efficient structures, decision pat-terns and processes (Siemens, 1994, p. 2). The

TOP initiative singled out productivity measures

as having three dimensions: quality, time and cost.

One Financial Manager noted that:

If we shorten and simplify our development

and marketing processes, then costs will go

down . . . quality will go up. Our aim is to be

faster, better and cheaper than our competi-

tors (4/6/1996).

During the early 1990s, senior managers within

the Semiconductors division at Siemens identified

a variety of problems including long decision pro-

cesses, excessive bureaucratic hurdles, repair and

quality problems arising from high levels of labour

demarcation, uncontrollable document complex-

ity, illogical process flows, inadequate inter-

departmental communication and ineffective

information systems structures. The TOP pro-

gramme attempted to fuel the implementation of

innovations such as time based management,

total quality management, total cycle time

analysis and kaizen among others so as to

foster . . .customer and process orientation, faster

decision making, team-oriented management,

enhanced self-initiative and self-responsibility

(Siemens, 1994, p. 3).

Once the implementation of TOP was under way,

it had an impact on work attitudes according to a

number of managers at Siemens. An Engineering

Manager indicated that a TOP motivated re-engi-



9/26



neering project had led to . . .teamwork, job-

rotation, group meetings, speaking your mind

which were practically inconceivable before, are

now all part of a days work (3/6/1996). An Inno-vation Management Director noted that: Today

there is a powerful cost consciousness in the com-

pany together with a broad palette of cost controls

(3/6/1996). He nevertheless believed that:

In comparison to our competitors, we cannot

claim to be front-runners in cost cutting... We

are profit-minded but the follow-through is

weak and inconsistent (Ibid)

and stressed that:

In the future, we will commit ourselves to

effective cost management at all levels and in

all functions . . . since consistent profit is an

important indicator of whether we are doing

the right thing and doing it right. TOP provides

a framework for moving in this direction

(Ibid.).

The TOP culture change programme continued to

receive wide publicity across all groups and divisions

and was made visible through a multitude of plat-forms: logos, office stationary, internal newsletter

articles and corporate confectionery among others.

Certain dimensions of the TOP initiative were to

become extensively reflected in the target cost

management system (process based target costing)

which was to be implemented at HLFO. In

particular, cost, quality and time concerns of the

programme of cultural change, were to be central

elements of the new MAS. Concurrently, factors

which underscored the relevance of flexible work

practices and high sensitivity to the enterprises

external environment were to be important

characterising features of the new system. One

TOP initiative publication stated that:

Time and quality are key to improved perfor-

mance and lowered costs. Significant cost dis-

advantages with competitors are attributable

to inadequate product design and wasteful

processes. It is here that out greatest potential

lies (Siemens, 1996).

It further stressed that:

. . .improved results. . .are dependent not only

on costs but also on the relationship betweenproductivity and costs which can be improved

. . . if infrastructure and processes are

improved as well as time and quality para-

meters (Siemens, 1996).

These elements of the TOP initiative were to

become embedded in the design of the new MAS.

3.2. Process based target costing

At HLFO, the belief that costing information of

a different type to that being provided was neces-sary had began to be voiced from early 1995. Until

late 1994, HLFO had controlled a large portion of

the fibre optics market for IBM mainframe com-

puters. But at this time, a foreign competitor

entered the market with the objective of taking

over a major part of Siemens market share in this

sector primarily by offering the same products at a

lower price. This led HLFO managers to consider

ways of reducing product costs initially through

more flexible production practices and efficiency

drives and subsequently by redesigning productionspecifications and processes so as to reduce overall

resource consumption over the longer term.

In order to remain competitive, HLFO man-

agers believed it was necessary to bring down the

total manufacturing costs of its subcomponent

parts to around one third of their original level in

the face of the emerging competitive threat.

HLFO started to focus on the emerging market

and financial information needs of design engi-

neers. In September 1995, HLFO initiated the

development of a target cost based accounting

system which aimed to provide accounting infor-

mation on market imposed cost ceilings for differ-

ent product functions. The system was developed

by a team of HLFO designers with engineering

functional expertise who interfaced with other

engineers in operational departments about their

information requirements. The design engineers

also liaised with HLFO accountants trained in

business economics about implementation issues

concerning PBTC.



10/26



Whilst the newly perceived information needs of

design engineers were being addressed, HLFO also

launched what it termed the Phoenix project in

September 1995 which was a re-engineering exer-cise to alter the manufacturing process. Phoenix

entailed the reconfiguration of manufacturing

such that all basic products would run on one

automated line prior to mass-customising the

product. All products were to use modularised

production steps according to individualised pro-

duct specifications.

Design engineers at HLFO had not traditionally

desired or been provided with extensive account-

ing information relating to either manufacturing

processes or to the selling prices of fibre optics

products. Their primary role had been to developleading edge technological innovations and to seek

ways of further improving product specifications,

performance and efficiency. The accounting sys-

tem in place at HLFO had been designed with the

object of allocating rather than tracing costs in

line with Siemens-wide accounting procedures.

This costing system divided material and produc-

tion elements into cost blocks and used volume-

based allocation methods. Direct material and

direct labour costs served as a basis for the appli-

cation of different overhead costs using predefinedoverhead rates. This practice did not seek to relate

resource changes in components to changes in

production or to enable costings for different gen-

erations of re-engineered products to be com-

pared. Thus, if for instance, a process change

resulted in the production time being reduced by

50%, the accounting system allocated the same

overhead cost amount to a smaller base by doubl-

ing the allocation ratio without providing design

engineers with information on the origins and

flows of costs.

The Phoenix project teams focus of attention

was mainly on analysing the production process.

But the production process was itself in large part

reflective of product design which determined the

basis of production workflow, timing and ultimately

costs. It was difficult for the design engineers to

address questions about the impact of a com-

ponent change on the cost of the production pro-

cess. What was deemed desirable was to have

linkages between the decisions made at the design

stage and the resultant effects on the production

costs. If such information could be made avail-

able, it would enable design decisions to take

account of production implications which them-selves had to be considered in the context of cus-

tomer requirements. A key element of the project

was the application of target costing concepts to

set market-defined parameters affecting produc-

tion cost, timing and quality factors. To enable

this, the engineering officers working on the

Phoenix initiative integrated engineering and cost

management information relating to costs, time

and quality factors into single reports. PBTCs

information output was thus intended to assist the

design and production engineering officers to relate

product function areas to the production process.PBTC became operational in August 1996 and

by April 1997, an HLFO officer who had set up

the software requirements for producing PBTC

information reports indicated that: All new

design projects are now using the tool and it is also

used for all existing products (24.4.97).

The implementation of PBTC necessitated

interaction among different operational depart-

ments and extensive communication between

engineering and business officers. TOPs basic

concerns included the transparency of organi-sational processes, quality accountability, team

orientated co-operation, market competition

awareness and cost consciousness which were also

central to PBTC. PBTC reports were intended to

enable the costs of functions to be compared to

the perceived customer value for those functions.

Moreover, functional cost drivers could be back-

tracked from functions to the production pro-

cesses so as to depict the trade-offs between

materials and processes, or automation and

labour costs. PBTC was to delineate production

flows visually at the design stage by producing

graphic images of time, cost and quality resource

consumption across processes. The design engi-

neers who had traditionally only dealt with pro-

duct specifications could now obtain direct visual

information on the effects of different design deci-

sions on specific production processes through the

availability of PBTC reports.

PBTC was also intended to enable responsibility

for achieving quality requirements to be tied to



11/26



specific operational personnel. Consequently, a

product defect at one stage of the overall produc-tion sequence could be associated with a particular

prior production step which gave rise to the prob-

lem. This would lead to further cost allocation

possibilities and the potential to refine existing

responsibility accounting relationships.

The conventional accounting information pre-

pared by HLFO accountants was based on exten-

sive calculative rules and detailed allocation

procedures. It was primarily a management infor-

mation collection and resource control tool. By

contrast, the PBTC system was flexibly designedto provide engineers with information they could

visualise and act upon in operational terms. PBTC

reports were not prepared on the basis of pre-

given standards, formats or rules, but were reflec-

tive of design engineers proclivities regarding

information representation and communication.

Whereas traditional accounting systems were

focussed on internal economic allocations, PBTC

was externally orientated in that it tied market

imposed time, quality and price specifications to

internal operational constraints. Under the com-

peting values model, the PBTC system might be

seen as most closely embedding external and flexi-

bility orientated values and thereby, of stressing

developmental culture characteristics.

The above discussion has focused on the manner

in which certain organisational culture change

elements became embedded within the new MAS.

This was the first objective of this investigation.

The paper now considers the methodology for

investigating how the alignment between the

organisational culture ethos of PBTC design fea-

tures and the system users orientation towards adevelopmental culture related to the new MASs

perceived success.

4. Measuring perceived MAS success

4.1. Questionnaires and interviews

A questionnaire was administered in May 1996

prior to the implementation of the novel manage-

ment accounting system (PBTC) to its two groupsof users categorised as engineering officers (Tech-

nisch) and business officers (Kaufmannisch). The

questionnaire contained a series of questions

about their perceptions of the degree to which

organisational culture types as delineated by the

competing values model are representative of their

functional department (see Appendix).1 This ex-

ante questionnaire was completed by 34 HLFO

officers (see Table 3 for information on the ques-

tionnaire respondent group). Another questionnaire

1 The competing values model questionnaire as used by Zam-

muto and Krakower (1991) in their surveys enables scores (from 0

to 100) to be aggregated by cultural types. Within the ques-

tionnaire instrument, the four cultural types based on the Quinn

and Kimberly (1984) typology are as follows: Department A

accords with the group type, B accords with the develop-

mental type, C accords with the hierarchical type and D

accords with the rational type. Zammuto and Krakower (1991,

p. 109) discuss the validity of the approach based on large scale

surveys. They note that the data met the criteria of internal

consistency, predictable relationships with other organisational

phenomena and discrimination among groups.

Table 3

Users of PBTC information at HLFO

Department Number of users

(ex-ante)

Usable

questionnaires

Number of users

(ex-post)

Usable

questionnaries

Production 6 T 4 T 6 T 5 T

Purchasing 1 K 1 K 1 K 1 K

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 4 K 4 K 5 K 5 K

Quality Control 3 T 2 T 3 T 3 T

Top Management 1 K 1 K 1 K 1 K

Total 34 30 33 31

T=Technisch (Engineering officer); K=Kaufmannisch (Business officer)



12/26



was administered to the same group of PBTC

information users in April 1997 (see Table 3). This

ex-post questionnaire, asked respondents once

again about their perception of the organisationalcultural types represented within their functional

departments and sought their judgement as to the

overall success of the newly implemented manage-

ment accounting system. Interviews were under-

taken prior to and following the administration of

the ex-post questionnaire to explore respondents

views on PBTC s implementation process and the

systems consequences as a further source of

information for the study.

The ex-ante and ex-post questionnaires were

administered in German. The German versions of

the questionnaires were translated from English toGerman by a German academic and back trans-

lated to English by another German academic.2

Some stylistic revisions were made to the German

questionnaire as a result of the double translation.

The first questionnaire was administered in May

1996. The ex-post questionnaire was administered

in April 1997 after the new accounting system was

fully operational. This questionnaire was struc-

tured in the same way as the first but included an

additional question asking respondents to assess

the overall success of PBTC using a scale from oneto five (1=totally successful, 2=mainly successful,

3=neither successful nor unsuccessful, 4=mainly

unsuccessful, 5=totally unsuccessful).

4.2. Hypotheses development

Business officers who staffed the Accounting

Department at HLFO had traditionally prepared

internal accounting information for operational

departments. This information was extensively

calculative and in accord with predetermined

company accounting reporting procedures. Busi-

ness officers within Siemens accounting depart-

ments receive training in the preparation of

detailed accounts of the flow of economic resources

within the organisation and are taught to apply

an extensive set of company specific rules and

standards for structuring accounting information.

Prior to being hired by Siemens, business officers

will have obtained university qualifications in

business economics.It is necessary to briefly consider business eco-

nomics education in Germany to provide some

insight on the intellectual background of Siemens

business officers. Ordinarily, the university level

degree (Diplom-Kaufmann) follows the study of

business economics [Betriebswirtschaftsleher

(BWL)] which emphasises the understanding of

sophisticated economic concepts underpinning

management principles including costing approa-

ches. Traditionally, German business economics

universities do not have close relationships with

industry (Lane, 1990; Lawrence, 1989, 1994).BWLs science-based tradition (Wissenschaft)

stresses systematic and disciplined conceptual

research sometimes at the expense of closeness to

industrial issues or practical concerns according to

some writers (Randlesome, Brierley, Bruton, Gor-

don, & King, 1990; Sheridan, 1995). In this light,

Locke (1989, p. 249) observes that . . .the Wis-

senschafttradition isolates the German professors

of business economics from praxis and notes that

German BWL today. . .is primarily under-graduate pre-experience and specialist research

graduate education (Locke, 1989, p. 176).

Locke (1989) provides various examples of

companies working with academic engineers but

seldom with business scholars. He cites one Sie-

mens manager who states that the firm tends not

to bring in German professors of business eco-

nomics to provide advice because they are too

inexperienced (Hermann Baumann cited in

Locke, 1989, p. 171).

HLFO accountants predilection for a struc-

tured numerical and procedural approach to the

preparation of accounting information was not

independent of their prior educational training.

The professional conception of the legitimate role

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

to economic representations of organisational

2 This was the case as the questions draw on the competing

values model instrument used in prior Anglophone studies.



13/26



activities which demarcate costs, functions and

departments via numerical data was at odds with

the precepts embodied within Siemens TOP pro-

gramme (Siemens, 1995) of cultural change. It wasalso at variance with the cross-functional and dia-

grammatic form of information representation

which characterised PBTC information reports.

The TOP programme confronted the basis of his-

torically derived precepts concerning the correct

role, format and presentation of financial infor-

mation. It emphasised flexible internal structures

and receptivity to external and market derived

influences which accord with the competing values

models developmental culture. By contrast,

business officers employed within the Accounting

Department could not be described as sharing thesame high level of developmental culture

orientation.

Contrary to business officers training, the edu-

cational background of engineering officers is

more closely aligned with a flexible orientation to

structuring data which makes little appeal to regi-

mented procedures and standardised information

formats or structures of communication. This is in

line with a developmental cultural orientation

under the competing values model. Educationally,

engineering officers at HLFO possess a Diplom-Ingenieur qualification following university level

engineering studies spread over 46 years. By tra-

dition, engineering education in Germany com-

bines the search for knowledge with practical

purposefulness. Consequently, German engineer-

ing degrees are characterised by a unique combi-

nation of scientific knowledge and craftsmanship

(Technik) (Head, 1992; Randlesome, 1988, 1993;

Randlesome et al., 1990; Sorge & Warner, 1986).

University engineering faculties maintain close

cooperation with industry: Where engineering

training is concerned, there is little formal detach-

ment of academic from practical aspects of train-

ing (Warner & Campbell, 1993, p. 93). In a

similar light, Lawrence (1989, p. 98) states that:

Technik is a force for integration. The Ger-

man company is Technik in organisational

form. The skilled worker, the foreman, the

superintendent, the technical director are all

participants in Technik . . . Technik is some-

thing which transcends hierarchy.

Locke (1989, p. 264) likewise notes that forengineers: Technik is the combination of know-

ledge and know-how necessary to make a pro-

duct. Moreover, . . . technical expertise is as

close to the shop-floor, and as close to the pro-

duction/line hierarchy, as possible (Warner &

Campbell, 1993, p. 98). Unlike BWL which is

generally more remote from practice, Technik-

based engineering education blends Wissenschaft

and functional purposefulness (Lawrence, 1994;

Maurice, Sorge, & Warner, 1980).

Past research suggests that the past learning of

an individual can be expected to influence the per-sons perceptions of the organisational and task

variables (Das, 1986, p. 217). Information channels

and modes of exchange can be shaped by users

prior professional training (Joyce & Sloam, 1990;

Kim, 1989). Within HLFO, the extent of integration

of conceptual and applied engineering concerns was

evident in the structuring of technical information

reports. Engineering analyses were indicative of the

systematic fusion of diagrammatic and quantitative

data and the blending of theoretical concepts and

practical issues. The engineering officers opera-tional concerns and proclivities influenced the

structuring of PBTC information which con-

trasted markedly with accountants prior notions

of legitimate information form and content.

There is also research evidence which indicates

that differences in cognitive styles and organi-

sational culture dimensions lead to consistent

relationships with decision making preferences

and information systems design (Dermer, 1971;

Driver & Mock, 1975; Hulin & Blood, 1968;

Huysman, 1970; Ives & Olson, 1984; Macintosh,

1985; Ouchi & Johnson, 1978; Seddon & Yip,

1992; Senn, 1978). Whilst individuals with an

internal locus of control (Reitz & Sewell, 1979,

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

what the prior literature suggests about the role of

past learning, it is argued here that engineering

officers will uphold a developmental culture by

virtue of their training and functional expertise



14/26



more so than business officers. The following

hypothesis is advanced:

Hypothesis 1. Engineering officers will indicatehigher developmental culture scores under the

competing values model than business officers

prior to PBTC implementation.

Although one might expect that engineering

officers will tend to generally remain culturally

more developmental than business officers, it is

important to ascertain that the contrast between

engineering and business officers cultural orienta-

tions did not significantly alter during the imple-

mentation of Siemens corporate-wide culture

change programme. Whilst transformations inorganisational values may take place over pro-

tracted lengths of time, it is unlikely that the cul-

tural change which Siemens sought to mobilise

through the TOP programme could have sig-

nificantly altered the organisational culture orien-

tation of business officers such that it would have

become more developmental than that of engi-

neering officers over the eleven months time period

between the two questionnaire administrations.

To establish that no such transformation took

place, the hypothesis that HLFO engineering offi-cers are culturally more developmental than busi-

ness officers after the implementation of PBTC is

tested via the following hypothesis:

Hypothesis 2. Engineering officers will indicate

higher developmental culture scores under the

competing values model than business officers fol-

lowing PBTC implementation.

Hypothesis 1 is essential for establishing the

more extensive developmental cultural orientation

among engineering as opposed to business officers

prior to PBTC implementation given the influ-

ence of their highly specific educational and

training background. Hypothesis 2 is necessary to

establish that neither the ongoing cultural change

programme nor the process of PBTC imple-

mentation materially altered this relationship.

Taken together, they provide the basis for asses-

sing how the alignment between the develop-

mental orientation of MAS users and that

embedded within the MAS influenced the per-

ceived success of the new system.

Zammuto and Krakower (1991) suggest that a

departmental culture which stresses flexibility asopposed to control is more conducive to favouring

an accounting innovation that can potentially

redirect managerial attention and alter organi-

sational processes. An internally oriented outlook

may be expected to coincide with a low inclination

to adopt management innovations which alter the

stability and continuity of control procedures as

opposed to an external orientation (Zammuto &

OConnor, 1992). Thus a developmental culture

orientation under the competing values model can

be expected to be more receptive to any account-

ing innovation which alters the status quo espe-cially where the accounting innovation enhances

information on the impact of external market and

customer influences on organisational activities.

Since PBTC attempts to provide enhanced

information on ways in which resources can be re-

allocated, a flexible orientation on the part of

users can be expected to heighten the relevance

and potential success perceived of PBTC more so

than a control orientation. In this respect, a

developmental culture orientation can be expected

to be more receptive to PBTC since it does notfavour structured information and extensive cal-

culative procedures and rules which characterise a

control orientation.

A developmental orientation does not favour-

ably view the running of internal operations via

formalisation, structure and extensive adminis-

trative rules. Such characteristics are antithetical

to the design and objectives of PBTC. PBTC pro-

vides information by integrating financial, opera-

tional, internal and market-based data. Its reports

are structured as a dynamic mix of visual, graphical,

quantitative and qualitative information. Financial

content is blended with operational data in PBTC

reports. Thus a user group with a high develop-

mental culture orientation will tend to consider

PBTC as more successful relative to a user group

which is less developmentally oriented. A low devel-

opmental orientation would suggest lesser receptivity

to viewing PBTC as successful as this new MAS

stresses an external and flexible orientation rather

than an internal and control oriented outlook.



15/26



The following hypothesis is posited:

Hypothesis 3. officers with higher developmental

culture scores under the competing values modelwill consider PBTC to be more successful than will

those with lower developmental scores.

To provide a deeper organisational perspective

to the questionnaire results, interviews were held

with users of the PBTC system following the

administration of the ex-post questionnaire. These

interviews were semi-structured in that questions

generally attempted to retain some focus on the

users outlook toward PBTCs usefulness and

consequences. The interviewees included employ-ees with Research & Development, Production and

Marketing & Strategy responsibilities. In addition,

interviews were held with individuals who had

played a role in the design and implementation of

the PBTC system. The next section discusses the

questionnaire results and their implications for the

hypotheses being tested in the light of the qualitative

information derived from these interviews.

5. Questionnaire results and interview analyses

The ex-ante questionnaire was distributed to the

34 relevant PBTC accounting information users at

HLFO identified in Table 3. Four questionnaires

were returned partially filled and were excluded

from the analysis. The ex-post questionnaire was

distributed to the corresponding group of 33 rele-

vant PBTC information users. Of the 33 ques-

tionnaire returns, two were partly filled and

unusable.

Hypotheses 1 and 2 are tested by reference to

two sided t-test scores and hypothesis 3 is tested

using regression analysis. Table 4 indicates that

engineering officers have a more developmentalorientation than business officers both prior to

and following PBTC implementation thereby

confirming hypotheses 1 and 2. The results con-

firm that engineering officers exhibit a higher

developmental value orientation than business offi-

cers both before and after PBTC implementation.

The interviews undertaken with various officers

at HLFO also provided qualitative evidence

underpinning the differing organisational value

orientations between engineering and business

officers both prior to and following PBTC imple-mentation. These interviews suggest that beliefs

about the usefulness and effects of PBTC were

infused with judgements about how departmental

attitudes differed. Individuals in some depart-

ments differentiated themselves from others in

terms of cultural outlook and as to how their

conception of the role of cost information differed

from that of business officers staffing the

Accounting Department. For instance, the Phoe-

nix Technical Project Leader viewed the R & D

Department as being the

. . .driver of PBTC since the accountants did

not realise that such a tool was required in

such a form (24.4.97).

The PBTC Software Developer likewise noted

that accountants are . . .conservative. They fulfil

their function and manage by the numbers but do

not accept new ideas easily (23.4.97). He indi-

cated that traditionally: . . .the accountants tasks

Table 4

t-Tests of developmental culture orientation of engineering and business officersa

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 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 officers group is significantly higher than the business officer group before and after PBTC

implementation.



16/26



are defined by formal constraints (23.4.97) and

observed that:

. . .before, we used to use overhead allocationsand when there were questions, the accoun-

tants simply analysed the problem in more

cost detail (23.4.97).

The Head of Production Planning offered a

similar view of the accountants:

PBTC had to come from one of us in R and

D or Production or from somebody in Sales

or Marketing but not from the Accounting

Department. We cannot expect this approach

from a classical Accounting department.They only expect the right numbers and then

have a help yourself mentality in relation

to other departments. Just pick from our

numbers what you need they seem to say

(3.7.97).

The Strategy and Marketing Manager was par-

ticularly critical of the accountants in that,

according to him PBTC calculations always bet-

ter match the reality than the results from the

accountants (25.4.97). He remarked that:

Accountants live in their own world, closed to

the outside, living within numbers and stay-

ing remote from the rest of development.

They believe more in their numbers than in

what is actually happening. To them, PBTC is

not thinkable. They just hide behind their

overhead costings (25.4.97).

He further noted that PBTC information users

intuitively recognise the advantages of the

system:

Tools allowing function analysis, forward

pricing, design to cost and customer discus-

sions are more and more in demand. But the

accountants who should be promoting these

tools react negatively (25.4.97).

An assistant to the top management team also

remarked that:

Accountants only want to use standard Sie-

mens accounting tools. They focus on existing

products and they fulfil standard Siemens

functionsand there are a lot of standardfunctions at Siemens (24.4.97).

In commenting on the type of information

provided by the Accounting Department, a pro-

duct developer from the R & D Department

(here referred to as Product Developer A) stated

that:

Accountants are more conservative because

of their structure and their approach. But

nothing is more deadly than columns and

columns of numbersthese are the so-callednumber cemeteries (Zahlenfriedhof). Con-

versely, PBTC shows us the results more

clearlythis helps (27.6.97).

In echoing this view, the Head of Production

Planning indicated that:

Accountants have their rules and financial

report regulations. You cannot expect flexi-

bility in their representation of data (3.7.97).

He pointed in humour that: . . .only if they

have time and they are bored, will they help us

(3.7.97) and noted that a specific type of

. . .accounting information is needed by R and

D, but accountants do not really care where

the costs come from (3.7.97).

The Head of Production Planning commenting

on the accountants cultural outlook noted that:

The accountant is cool. He is not emotionally

involved and hence, not as committed (3.7.97).

He indicated that:

I hope I did not give a too bad blow to any

accountant from the Accounting Department

but we could expect that they could help us a

little more in cost controlling. They are too

involved in their financial regulations. Their

transparency is only financial and thats the

big problem (3.7.97).



17/26



He further added that:

I am always amazed at how little transpar-

ency we have at HLFO. There is only anapparent transparency. It seems that the only

important thing is that the numbers add up

together finely. But the meaningfulness of the

information is missing. So it happens that we

bet on the wrong horse when we make a

decision (3.7.97).

The PBTC Project Leader also commented on

the differing outlooks between engineers and

accountants regarding PBTC based information:

With the Production people, communicationhas been easy because they already were

thinking about manufacturing processes in

the same way. For the accountants it has been

more difficult because with PBTC, they have

had to procure data in a form and depth they

have not been used to (25.4.97).

The tenor of these interviews are indicative of

perceived differences between engineering officers

and accountants and between traditional account-

ing information produced by the accountants andthe form and nature of PBTC information. Engi-

neering officers in R and D, Production and Sales

and Marketing considered themselves as being

more open than accountants to departing from

traditional precepts governing accounting infor-

mation content and form. Under the competing

values model, this view of accountants accords

with a lower developmental orientation in com-

parison with engineering officers. The ques-

tionnaire based results of hypotheses 1 and 2

therefore find some corroboration by way of the

interview results.

The results suggest that the enterprise-wide cul-

ture change programme was not significantly asso-

ciated with changes in the organisational outlooks

of engineering and business officers over the eleven

month time period between the two questionnaire

administrations. As might be expected, the orga-

nisational value orientations of the functional offi-

cers are not subject to change over short periods of

time. It is plausible also that any association

between organisational value orientation and per-

ceived MAS success which is tested in hypothesis 3

will remain equally stable over short time periods.

Hypothesis 3 is tested by reference to the fol-lowing regression model:

PBTC Success bo b1 DEVELOP e

where DEVELOP=Developmental culture score

under the competing values model.

The results of this regression are shown in

Table 5 and provide support for Hypothesis 3.

PBTC users with higher developmental scores

perceived PBTC to be more successful than

those with lower developmental culture scores.The R-square for the model is 0.683 and the coef-

ficient for DEVELOP is in the expected direction

and is significant. The coefficient for DEVELOP is

negative because lower scores for PBTC Success

signified higher perceived success.

The results of Hypothesis 3 are also corrobo-

rated by the interview results. A number of engi-

neers who were users of PBTC information

commented on the usefulness of the information

provided by the new MAS. The PBTC Project

Leader for instance, stated that:

PBTC gives a structured way of talking about

cost elements with our partners. It is a pro-

gress in the way that Accounting, Production,

Table 5

Developmental culture orientation and perceived PBTC suc-

cess: regression resultsa

Expected sign Coefficient (S.E.)

Intercept 5.058 (0.340)Develop 0.041*** (0.006)

AdjustedR-square=0.638; ***P


18/26



Marketing and Purchasing talk to each other

. . . This is a tool which creates an aha

effectwhat a sheet of paper with only rows

and columns would never be able to do(25.4.97).

Product Developer A likewise thought that with

the PBTC system, you do not consider single

pieces but complete work processes and product

functions (27.6.97). He noted that: All existing

processes should be broken down using the

methodology of PBTC (27.6.97). He considered

that this would make accessible to everybody, the

knowledge of the functionality and processes of

existing products (27.6.97). He believed that

PBTC is a progress compared to the old systembecause the cost transparency is much clearer

(27.6.97). Product Developer A explained that:

In R and D, we always have the same prob-

lem: we know vaguely the cost but it is very

difficult to know the real cost of diodes which

for example is an important cost driver. . .

PBTC helps a lot in relation to new develop-

ments to get the cost of components (27.6.97).

The Head of Production Planning was alsoreceptive to the new MAS. He remarked that:

PBTC is the only report that I can really use

(3.7.97). He added that:

Our cost structure is more like mud in a

swamp even if you could call mud clean. We

need cost details. . . Previously, we could not

really tell how much a function of the product

costed (3.7.97).

He observed that PBTCs information output is

useful in terms of . . .knowledge of cost drivers,

the flow of material and the visual stimulation of

problem areas and plans versus real comparisons

(3.7.97). A similar opinion was expressed by the

Phoenix Technical Project Leader from the R and

D Department who viewed PBTC as enabling to

look for the reason for a deviance within a pro-

cess and to look at how to reach our target

(25.4.97). The Phoenix Technical Project Leader

added that it is a tool to show the Strategy and

Marketing people what we are good at

(25.4.97).

Another Product Developer (here referred to as

Product Developer B) believed that:

PBTC as a product calculation tool, has to be

accepted and hence integrated into Siemens

standard procedures (13.1.98).

Product Developer B stressed that control

responsibility was an important issue:

PBTC should be used not only for the plan-

ning of new products but also for cost con-

trolling. From this controlling, the

optimisation of processes can be achieved(13.1.98).

He thought that PBTC helped match processes

and product functions to different individuals and

departments and that with the new MAS:

. . .problems such as the question of who is the

cost responsible person will be resolved

(13.1.98).

Such a view did not depart from one of the TOPinitiatives aims to replace division of labour with

division of responsibility (Siemens, 1995, p. 5).

Evidence of the perceived alignment between

functional users organisational outlooks and their

views as to the potential of PBTC further stemmed

from interviews. Product Developer B for

instance, noted that PBTC had quite significant

influences on product design decisions. He

thought that this was the result not so much of a

heightened cost focus on the part of engineers:

PBTC has not changed much in the heads of

the Project team because Phoenix was from

the beginning, a very cost conscious redesign

project and all employees were very sensitised

to this (13.1.98).

Rather, Product Developer B believed that pro-

duct design decisions were affected because PBTC

represented and highlighted costs in a particular

way. He cited various examples where particular



19/26



decisions were made because . . .PBTC helped

make certain interconnections obvious (13.1.98).

Product Developer B explained that with PBTC:

. . .the possibility to visualise the numbers had

emphasised the importance of the processes.

The employees of the Technical Production

Support division who are in charge of plan-

ning the production were directly, by the

information gathering and with the questions

associated with this, made attentive to possi-

ble cost drivers and have got through this, a

higher awareness of cost origins (13.1.98).

The PBTC Project Leader had commented that

. . .the way in which data is communicated, thatis, visually as opposed to just numbers, is very

important to some departments (25.4.97). A

similar view had been expressed by the Head of

Production Planning who thought that PBTCs

visual approach is very user friendly (3.7.97).

In line with the structuring of information con-

ventionally adhered to by engineers, PBTCs

structuring of information output was graphic and

visually diverse. The imagery of process flows, the

visual depictions of the magnitude of resource

allocations at different process steps and the dia-grammatic displays of cost incursions at various

operational stages are characteristic features of

PBTC reports. Engineering officers predilection

for integrating numerical and diagrammatic

representations is a hallmark of PBTC that is not

independent of their involvement in its design and

development. It is likely that prior conceptions of

the nature and role of the Accounting Department

and engineering officers contrasting perceptions

of the potential role of cost management infor-

mation influenced their judgements concerning the

new MAS. Engineering officers were predisposed

to consider the viability of an accounting system

which not only departed from the structural

representation of data favoured by accountants

but which was also intended to convey informa-

tion that was broader in scope, encompassing

operational, rather than just procedural financial

concerns. The expectation on the part of engi-

neering officers that accounting information pro-

duced by accountants was unlikely to be useful,

affected their predisposition to accounting infor-

mation stemming from the PBTC system. Beliefs

about the propriety and success of the new MAS

were conditioned by its origins as much as its formand substance. The business versus engineering

subcultures within HLFO in this light could be

differentiated in terms of their perception of the

new MASs success.

6. Discussion

The study has considered how certain notional

organisational culture elements became embedded

within the PBTC systems design features at

HLFO. It has also suggested that the degree towhich the notional organisational culture elements

embedded within the new MAS aligned with the

organisational outlook of the user groups was

significantly associated with the perceived success

of the new system. The study results support those

of other investigations which suggest that different

employee groups can subscribe to different orga-

nisation cultural values and that a MAS which is

more reflective of the organisation culture values

of one group is likely to be seen as being more

successful by that group. The study however goesbeyond the scope of prior investigations in that it

considers quantitative and qualitative information

collected prior to and following the implementa-

tion of the MAS under study.

Within the organisation investigated, there were

context specific factors underpinning the results of

the study. The TOP programme of culture change

at Siemens for instance, played a role in shaping

the MASs design features and by upholding cer-

tain notional culture elements, influenced what

came to be deemed as successful accounting

change within the organisation. During the time

period between the first and second questionnaire

administration, Siemens was actively engaged in a

programme of enterprise-wide culture change. A

principal objective of this programme was to alter

the form and extent of communication between

different parts of the organisation. Siemens TOP

initiative sought to . . .design more efficient

structures, decision patterns and processes (Sie-

mens, 1994, p. 2) and new forms of co-operation



20/26



(Siemens, 1995, p. 5). It encouraged organisational

participants across the enterprise to develop

greater sensitivity to external market changes,

increased flexibility in carrying out work activitiesand interacting with individuals across functions.

Whilst TOP was being implemented across Sie-

mens, HLFO initiated the Phoenix project in Sep-

tember 1995 which entailed the reconfiguration of

manufacturing by modularising production steps.

Phoenix was viewed as necessitating altered forms

of information exchange between departments in

relation to different operational processes. Just as

TOP was intended to reduce . . .the unending

series of co-ordination meetings (Siemens, 1995,

p. 5) and to tear down the barriers between dif-

ferent departments (Siemens, 1995, p. 5), soPhoenix aimed to reduce production complexity

by manufacturing basic products within single

automated lines before mass-customising through

subsequent individualised production processes.

The Phoenix exercise adhered to the ethos of the

TOP culture change programme.

Whilst Phoenix was focused on production sim-

plification, supporting information provision was

seen as an essential corollary. The idea of provid-

ing HLFO design engineers with detailed infor-

mation concerning production costs coincidedwith the implementation of the Phoenix initiative.

PBTC stressed three dimensions: market-led qual-

ity, process time tracking and cost resource flow

data. This premise underlying PBTC information

output was also broadly embodied within TOP

which sought to make Siemens faster, better and

cheaper than our competitors (Financial

Manager, 4/6/96) and to attain effective cost

management at all levels and in all functions

(Innovation Management Director, 3/6/96). Like

the Phoenix project, PBTCs aims were also char-

acterised by objectives subsumed within the TOP

programme of cultural change. The ability of the

PBTC system to achieve its aims was, in this light,

not independent of Siemens pursuit of TOP

objectives.

Aside from altered information monitoring and

reporting, Siemens progression towards a merito-

cratic and individualistic rewards-based culture

whereby traditional functional boundaries are

transcended in the pursuit of effectiveness and

transparency also affected the form and effects of

PBTC. Accountants had traditionally internalised

a professional conception of the need to econom-

ically map the organisation in terms of functionalboundaries and to allocate costs based on generic

procedural rationales. PBTC by contrast, repre-

sented an attempt at connecting and linking

resource flows by focusing on processes rather

than functional demarcations. The object was on

integrating time, resource, quality and cost con-

cepts rather than on merely reporting on overhead

allocations across individualised cost objects.

PBTCs embodiment of engineering officers infor-

mation structuring and reporting idiosyncrasies

contrasted with the procedural formality which

had permeated the Accounting Departmentsapproach to information development and repre-

sentation. The internal ethos of the organisation

which had in the past emphasised centralised

modes of control but which now stressed devolved

responsibilities, more dispersed information dis-

tribution and receptivity to alternative forms of

information flows, was at odds with the traditional

precepts still embedded in the functional priorities

of the Accounting Department.

The study brings to light the complex ways in

which a wide diversity of organisational factorscan influence the form and consequences of a new

accounting system. The qualitative information

derived from interviews and internal documents

suggests that perceptions of the impact of PBTC

were not unrelated to the notion that the new sys-

tem provided accounting information which in

content and form, was not originally conceived by

HLFO accountants. It has been argued that engi-

neering officers prior t

a study of the emergence of management accounting system ethos and its influence on perceived system...

Documents