Innovation of Management Accounting Practices and Techniques

Innovation of Management Accounting Practices and Techniques

Davood Askarany (The University of Auckland, New Zealand)
Copyright: © 2015 |Pages: 10
DOI: 10.4018/978-1-4666-5888-2.ch002
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Management Accounting Innovations

We may refer to relatively new managerial techniques (introduced over the past three decades) as ‘innovation’ in this article. Rogers (2003) defines an innovation as an idea, practice, or object that is perceived as new by an individual or other unit of adoption. Further, he suggests that if the individual has no perceived knowledge about an idea and sees it as new, it is an innovation. Likewise, Damanpour and Gopalakrishnan (1998) define innovation as the adoption of an idea or behaviour new to the organisation. The common criterion in any definition of innovation is newness. According to Rogers (2003), newness in an innovation might be expressed not only in terms of new knowledge, but also in terms of the first persuasion, or decision to adopt. Wolfe (1994) explains diffusion of an innovation as a way the new ideas are accepted (or not) by those to whom they are relevant. Rogers (2003) extends this definition to consider diffusion as a process by which an innovation is communicated through certain channels among the members of a social system. In line with above definitions, we may refer to the process of the evolution and the adoption of relatively newer managerial techniques as ‘diffusion’ in this article.

Key Terms in this Chapter

Balanced Scorecard: An integrated strategic performance management framework that helps organisations translate strategic objectives into relevant performance measures, by linking nonfinancial measures with a financial perspective in four areas of performance concerned with: financials, internal process, customers and innovation & learning.

Benchmarking: The search for industry best practice that will lead to superior performance. It emphasises an outward focus and seeks to improved performance by learning from the experience of effective organisations.

Strategic Management Accounting (SMA): A focus on the analysis of the external environment which mandates corrections and adjustments to the internal control systems structures and decision support systems which are vital for the survival of organisations. SMA has an orientation towards the organisation’s environment such as suppliers, customers, and its competitive position relative to both existing and potential competitors.

Activity Based Costing (ABC): An approach to costing that focuses on activities as the fundamental cost objects. It uses the cost of these activities as the basis for assigning costs to other cost objects such as products, services, or customers.

Target Costing: A form of costing system in which the manufacturing of a product or the provision of a service is restricted within a predetermined total cost ceiling so that a competitive price is achieved.

Activity Based Management (ABM): Use of ABC concepts to facilitate the identification and reduction of non-value-added activities.

Life Cycle Costing: Is a costing method which tracks and accumulates the actual costs attributable to each product from its initial research and development to its final customer servicing and support in the marketplace.

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