JOURNAL OF MANAGEMENT ACCOUNTING RESEARCHVolume Twenty-One2009pp. 3-18
The Case for Post-Modern ManagementAccounting: Thinking Outside the Box
Jacob G. BimbergUniversity of Pittsburgh
ABSTRACT: I argue that the time has come for management accounting researchersto again consider the orientation of our research. Over the past several decades, thefocus of research in management accounting has evoived. initiaiiy, research was heaviiyinfluenced by the needs of practice. After the Ford Foundation's initiative to profes-sionalize business education, research became more and more theoretical and inward-facing. At a time when practice is in need of assistance, our current focus has led toresearch that is primarily intended to enhance current models rather than assist insolving the problems of practice. After arguing that there is a need for a change, I öfterseveral examples of new research areas where management accounting research couldassist practice.
THE PRE-INTRODUCTION: THE THANK-YOUS
Let me begin by thanking Leslie Eldenburg (whose phone call took me by surprise),the members of the committee, Ramji Balakrishnan, Ken Euske, and DipankerGhosh, and the Management Accounting Section for this honor.
As always, there are many others whom one should thank for their help along the way.Given my “years of experience” the number is legion, and I will mention only a few. Iwould not have become an academic without the mentoring of Carl Nelson at Minnesota.The group at Chicago—Chuck Homgren, Nick Dopuch, and Joel Demski—helped merealize that management accounting was my interest. When I moved in the direction ofhuman behavior. Bill Cooper provided support, as did Lou Pondy and Anthony Hopwood,who were colleagues when they were much fevver in number. More recently, there are thedoctoral students in my Control Systems seminar—Mike Shields, Mark Young, and AriMukherji, to mention three—and my colleagues in the accounting group at the Universityof Pittsburgh, who keep the environment stimulating. And, of course a special debt is owedto my wife, Stephanie, who has been a sounding board, co-author and, too often, a correctcritic. To all of you, a heartfelt thanks.
INTRODUCTIONWhy we usually may not think of it that way, research in management accounting can
be viewed as one of our “products,” along with the educational materials that we producefor “consumption” by others. It therefore is important to reflect on the history of our
This paper is an extended (and more formal) version of the acceptance talk delivered at the Midyear Meeting ofthe Management Accounting Section in St. Petersburg, Florida, on January 9, 2009, upon receiving the Section's2009 Lifetime Contribution Award. It benefited from discussions with S. Bimberg, Anthony Hopwood, MarcEpstein, and Larry Gordon.
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research to better understand the current state of our product and possible direction(s) forfuture management accounting research.
I will identify three periods in North American management accounting research. Theyare the pre-World War II period, the post-World War II period, and the modem period. Asis true whenever we attempt to define a period when a particular mode was in vogue, atthe margins the periods overlap. The end of the pre-World War II period, despite the obviouscontradiction, did not end for most management accounting academics until the mid- tolate 1950s. The post-World War II period lasted from the late 1950s until the late 1970sor early 1980s, when the current, modem period began. For a review of the developmentin cost/management accounting through the end of the post-war period, see Kaplan (1984).'
Each of the three periods has its particular theme(s), dominant model(s), and, mostimportantly, target market for the “product.” For the prewar period, the dominant marketwas practice. The question asked was: “Is this research relevant to the problems of man-agement?” Often you could add: “on which I am consulting?” The central theme wassolving real-world problems with traditional and sometimes innovative accounting tools.The post-war period was a transitional period and can be characterized as one reflectingthe professionalizing of management education as encouraged by the Ford Foundation(Maher 2000). Its market still reflected the concems of practice to a significant degree, butthe importance of practice was declining, and publishing more formal research clearly wason the ascent. The modem period is the one with which you are most familiar—perhapsthe only one with which most of you have experience. It reflects a product that predomi-nately is interested in using our new tools to contribute to the literature, i.e., research forresearch's own sake, and to a far lesser degree with the concems of practice.
This leaves open the questions of if and when we might enter a new, post-modemperiod; what factors might lead to or inhibit the changes; and what the nature of thenext period may be. After briefly discussing the three periods noted above in the secondand third sections, I will explore the forces that could lead to the next period in the fourthsection, and the possible characteristics of the product and the market in the fifth section.The final section will summarize the arguments.
THE INITIAL TWO PERIODSAs noted above. North American management accounting in both the pre- and post-
World War II periods can be characterized as reflecting a significant level of interactionwith practicing managers in both the private and public sectors. Anthony (2003), in describ-ing his career, offers one example of the intellectual interactions among academics, man-agers, and consultants during these two periods. In the interactions Anthony describes, theproblem (the need for our product) typically emerged from practice. Academic accountantsserved as consultants and offered their insights into the “client's/consumer's” problems.Their product was attuned to and heavily influenced by the needs of practice.
What led to this interaction between academia and practice during these two periodsis something with which I have the least experience. However, given the level of academicsalaries during those two periods, serving as a consultant to a firm was not an undesirableactivity. It was not uncommon for a faculty member to have an ongoing relationship witha particular firm. This relationship could take the form of consulting, i.e., solving certainof the organization's problems, or participating in training programs for its managers. The
' I have italicized the names of prior winners of this award the first time their name is mentioned. My intentionis to highlight their contribution to where we are.
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The Case for Post-Modern Management Accounting 5
former led to a clearer understanding of the problems managers faced, while the latterprovided access to and understanding of the organization. There also was an interest on thepart of the professional organizations to tum to academics for insight into current issues,e.g., the (then) Controllership Foundation's sponsoring of research projects by Argyris(1952) and Simon et al. (1954).
The pre- and post-war periods differed on two important dimensions: the breadth ofthe disciplines incorporated into management accounting, and the likelihood of a publicationof some type resulting from the relationship. Following the efforts of the Ford Foundationto broaden the discipline base of management education (Maher 2000), management ac-counting faculty incorporated economics, operations research, and behavioral sciences(primarily psychology) into courses and seminars (Feltham 2005), as well as textbooks(Homgren 1962) and research (Chames and Cooper 1967; Bimberg and Nath 1967;Feltham 1968).
The post-war period was one of increasing emphasis on publishing in business schools.This likely is the result of the interaction with the other disciplines (e.g., economics andpsychology) where there already was a norm of publishing theoretical research. This normaffected the expectations for the faculty of business schools, including accounting. Thus,while some published research still was facilitated by the researcher's interaction withpractice, a significant proportion of the research in the post-war period presaged the trendtoward the type of model building that would characterize the modem period. For a dis-cussion, see Feltham (2005).
The question of whether the interaction between an academic and an organizationduring the pre- and post-war periods would ultimately lead to published research dependedon the individual, the issue, and the organization where the consulting took place. Con-sulting did not always lead directly to publishable research. Rather, it could provide accessat a later date to data or individuals for future research. In much the same manner that PeatMarwick's Research on Auditing initiative provided researchers with access to auditors,interacting with corporate managers provided researchers with access to professional man-agers and workers as participants in their studies (e.g., Churchill and Cooper 1964; Stedryand Kay 1966).
An interesting example of how the accounting practices affected the discussion ofacademics at the end of the prewar period is direct (variable) costing, which was firstdiscussed by practitioners. During the 1950s and beyond, many firms, e.g., Westinghouse,utilized direct costing for intemal reporting and evaluating at the divisional level. They thenappended an adjustment to the division's report to report the profit as measured by absorp-tion costing, which was used for financial statements. This raised the issue noted by Ferrara(2007) of the integration of financial and managerial accounting issues: Was direct costingappropriated for financial statements? See the exchange between Fess and Ferrara (1961)and Homgren and Sorter (1961); Sorter and Homgren (1962).
During the post-war period, many academics continued to maintain relationships withvarious organizations. While the tools they used may have become more sophisticated andthe need to publish clearly was increasing, their interests continued to be influenced byproblems in practice. As the post-war period progressed, the more “applied” managementaccounting researchers and the more theoretically oriented did not usually communicate.Each group's behavior reflected its own norms and agenda.
The post-war period should be seen as a transitional period in which managementaccounting researchers were exploring their new tools and the boundaries and complexitiesof their new domain. A series of committees was formed in the late 1960s and early 1970s
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under the auspices of the American Accounting Association to explore and publish reportson various aspects of management accounting. The 1965 Management Accounting Com-mittee's activities and report led to the presentation of two papers at the plenary session atthe AAA's annual meeting in 1966. The papers discussed the analytical (Chames andCooper 1967) and behavioral (Bimberg and Nath 1967) approaches to management ac-counting research.
As part of its sponsorship of the new management education, the Ford Foundation alsosponsored interdisciplinary conferences focusing specifically on management control(Bonini et al. 1964) or related to issues of control in an organizational context (Cooper etal. 1964). These conferences were significant because they brought together scholars acrossa wide array of disciplines, e.g., economics, operations research, sociology, psychology,and organizational behavior, as well as accounting. They reflected a stream of interdisci-plinary research that would be the joint product of accountants and researchers from otherdisciplines (e.g., Boland and Pondy 1983).
An interdisciplinary research focus was replacing the problems-of-practice orientationamong the younger scholars in management accounting. Behavioral researchers (e.g.,Hopwood 1972, 1974) and modelers (Demski 1967) still were interested in real-worldproblems; but more often, when researchers investigated problems that could be of potentialrelevance to managers, they did so in their offices rather than in consort with (or with anawareness of issues facing) managers (Kaplan 1977).
The end of the post-war period was characterized by the ascendancy of the new facultywhose training reflected the “new management education” advocated by the Ford Foun-dation and the decline of the role of the faculty trained during the prewar period. With thepassing of leadership to the new generation, the norms of North American managementaccounting researchers changed and the relative emphasis on research-for-research-sakeincreased, while the undertaking of research-for-practice-sake experienced a significant de-cline. The result would be, as is discussed in more detail in the next section, a profoundchange in the nature of management accounting and management accounting research inNorth America.
THE MODERN PERIODWhile the influence of economics was present during the post-war period (e.g., Feltham
1968; Demski and Feltham 1976), the publication of the principal-agent model (Ross 1973)and Stiglitz's (1974) sharecropper paper provided specific models researchers could use todescribe the issues central to management accounting (Feltham 2005). These papers affectednot only our research, but also our courses and textbooks (e.g., Dopuch et al. 1982). It isimportant to note, as is discussed later, that the predominance of the research orientationdid not exclude practice-motivated research by some management accounting researchersduring the modem period.
Reasonable papers to use as a rough benchmark for the beginning of the modem periodare Demski and Feltham's (1978) budgeting paper using Stiglitz's (1974) sharecroppermodel to describe different budgeting situations and Baiman's (1982) exposition of thenature of agency theory for accountants. It is clear that by the time the Conference onResearch and Current Issues in Management Accounting was held in 1984 (Hopwood andBromwich 1986), the issues raised by the economic models of contracting behavior werecentral to management accounting research regardless of the research method utilized.
The role of economic models during the modem period is significant for three reasons.First, they created an appealing world on which researchers could reflect while in their
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The Case for Post-Modem Management Accounting 7
offices. As the result the real world's problems were, typically, outside their domain. Themodels became their “world” and the focus of their research. Second, having a commonlanguage of discourse facilitated communication among researchers and, thereby, their re-search. Finally, the models appealed to a wide variety of researchers. Not only did analyticalmanagement accounting researchers such as Demski (Demski and Feltham 1978) utilizethe framework, but behavioral researchers such as Chow (1983) and archival researchers(Banker et al. 2000) also utilized elements of the paradigm to motivate their managementaccounting research.
What has resulted is a rich vein of research that is as diverse in the issues covered asit is in the methods used to investigate them. Covaleski et al. (2003) illustrated this in theirsurvey of budgeting research. As specific as their paper's focus sounds, it can be viewedas an attempt to discuss control systems in a cross-disciplinary manner. For example, theiruse of the term “budgeting” without an adjective such as “operating” or “capital” alreadysuggests a certain degree of generalizability to their discussion. Whether we view the re-search currently being produced by any research method—e.g., analytical, laboratory, ar-chival, or by topic (e.g., budgeting, incentive contracting, norms)—the bulk of our researchis classifiable as research-for-research-sake (and to impress our colleagues and our deans!).^
This should not suggest that there has not been significant management accountingresearch that has been intended to benefit practice. This research can be divided into twobroad categories. One is the research concerned with how the accounting system and theorganization function in practice, i.e., field research. These studies are intended to offerinsight into how management accounting affects the organization and vice versa (e.g..Merchant 1981, 1984; Simons 1987; Ansari and Euske 1987). Ideally, these studies ofpractice will assist in determining how we inform practice, i.e., a practice-research-practicecycle.
The other line of practice-oriented research is more concerned with providing newtechniques to assist management in adapting to changing economic environments, i.e., re-search to assist practice. Kaplan (2006) outlined the role of the balanced scorecard as alink between strategy and management accounting. The inclusion of nonfinancial measuresprovides the opportunity for management to integrate its strategic goals more explicitlywith management and operating control. Kaplan (2006) also discussed the role of account-ing measurement in managing a unit's activities. New approaches to costing such as ABC(e.g., Anderson 1995; Cooper and Kaplan 1992) and strategic costing (Shank 1989)^ wereintended to aid managers in making their decisions and remaining competitive.
In summary, the modem period has been one of rapid growth in research. This hasbeen accompanied by the introduction during the period of several new journals, includingthe Journal of Management Accounting Research, as outlets for this research. However, thetwo research orientations have become even more distinct. Research-for-research-sake isthe dominant orientation in our journals. Contracting models appear to have strongly influ-enced this research activity. New studies have built on prior research, turning more andmore “inward” as we have attempted to improve our models. While the research-for-practice sake line of research still is present, in North America it clearly is in the minority.To a significant degree, this practice-oriented research reflects a need for organizations to
^ North American researchers also undertook some field based research during this period. However, nearly all ofit was published in European-based journals (Merchant and Van de Stede 2006).
^ John Shank received the Distinguished Contribution to Management Accounting Award in 2008 in posthumousrecognition of his contributions to our disciplines.
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adapt to new and greater levels of competition. It reflects the practice determining researchcycle found in the earlier periods. As such, it develops new techniques to solve new prob-lems rather than transferring theoretical advances to practice as was the case in the post-war period, e.g., discounted cash flows.
DO WE NEED A POST-MODERN PERIOD?̂ *There are at least three reasons why I believe the time has come for us to explicitly
consider a change in the characteristics of our research product. The first is extemal toaccounting research. As I describe below, other disciplines with which we interact haveundergone or are undergoing a change in the direction their research is taking. This changeis a mixture of modem period research and contemporary problems. The second comesfrom within management accounting. As I read the remarks of previous recipients of thisaward, I see some support for the need for a change in the direction we take in the comingdecade(s). It is alluded to in my discussion of North American management accountingresearch. To rephrase the line from Hello Dolly, “There is a big world outside NorthAmerica, Bamaby.” There are European researchers and joumals whose research is differentfrom the North American modem period I described above. This is the world to whichAnthony Hopwood alluded in his remarks last year (Hopwood 2008). This world, viewedthrough the eyes of Hopwood and the contents of European joumals such as Accounting,Organizations and Society (AOS) and Management Accounting Research (MAR), is muchmore concemed with joining our new tools of analysis with the world of practice. Theircontents reflect the view that researchers should identify problems of consequence affectingorganizations and ascertain our role in solving them. Finally, there are a variety of papersbeing presented at this conference that reflect what I have labeled “post-modem manage-ment accounting.” Together these reasons lead me to argue that there is a need for us to atleast consider an evolutionary change in our research.
The Problem as I See ItWhile management accounting research has thrived during the modem period by the
usual metrics, and while its quality as demonstrated by the content of our joumals isrigorous, this has resulted in our becoming, as I noted earlier, more “inward-facing.” Bythat I mean we have viewed with favor papers whose contribution is the presentation of amodel or the enhancement of an existing model or tests of (usually existing) models. Rarelydoes even our field-based research suggest that its contribution is in identifying actions forpractice! Rather, our field research typically justifies its publication because it offers a modeland documents it with empirical support, e.g., Rowe et al. (2008). The contribution takesthe form of testing researchable hypotheses derived from the model.
In addition, our definition of interdisciplinary research emphasizes importing modelsand methods from other disciplines rather than undertaking joint research where the outputof our effort is co-authored with a colleague(s) from another discipline. This “go it alone”attitude diminishes our research in two important ways. First, colleagues from anotherdiscipline not only bring a different knowledge base, but also likely bring a different per-spective to the problem at hand. Second, they provide access to a different audience forour research—an audience to whom the “wonders of accounting” tmly do provide newand previous unknown benefits/insights.
This is not to suggest that using accounting and accounting research tools to help solvenon-accounting problems is something foreign to accounting researchers. We have a long
'' Post-modem is the term that has become generally accepted in other disciplines for such a period.
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The .Case for Post-Modern Management Accounting 9
history of researching issues of interest to a much broader audience than managementaccounting, such as those involving social responsibility (e.g., Epstein and Freedman 1994;Epstein and Wisner 2001) and program evaluation (e.g., Bimberg 1976; Bimberg andGandhi 1977). Moreover, these papers often appear in non-accounting joumais in order toreach the appropriate user audience.
It is important to note a significant characteristic of interdisciplinary research beingperformed in other disciplines, e.g., law or medicine, during the 21st century that is notoften found in accounting research. This is the tendency to look outside the boundaries ofone's discipline and join with researchers from other areas to solve problems of mutualinterest.^ In many instances the problem is an issue for one area, and the possible solutionis within the expertise of the collaborator. For example, Udel et al. (2005) reported theresults of collaboration between medical researchers and social decision theorists to studythe ability of patients ex ante to anticipate how bad they would feel after experiencingnecessary but debilitating surgery. The cooperation was beneficial to both groups partici-pating in the research. It gave the members of the medical profession better insight intothe patient's post-operative response: The patients were not as depressed by the outcomeas the patients had anticipated they would be. It gave the social decision theorists a chanceto utilize their research tools on a significant real-world problem and to contribute to knowl-edge on both an interesting (research-for-research-sake) and practical (research-for-practice-sake) project.
Projects like these and others have become a source for stories in the national and localmedia. Leonhardt (2008) went so far as to discuss the potential role of what he labeled”behavioral economics” researchers to assist the Obama administration. He observed,”Should Mr. Obama add a new kind of advisor to his team, one specifically charged withtranslating the lessons of behavioral revolution into real-world policies?” (Leonhardt 2008,Bl). In truth, I find it hard to believe that many of the potential candidates for the role heenvisages are any more qualified than some of my more creative colleagues in this section(also see Lotterman 2008).
When Leonhardt's (2008) observation is viewed in the context of the discussion ofFrey and Benz (2008), it is of even greater interest to us. Frey and Benz (2008) argue thatin the post-war period, economics tumed inward in a neoclassical phase not unlike what Ihave labeled our modem period. However, they point out that sometime around the tum ofthis century, a significant and influential portion of the economics profession recognized(as many management accounting researchers have as well) that the traditional model ofhuman behavior found in neoclassical theory did not explain the anomalies that were beingobserved in human behavior. As a result, not only were models developed that incorporatedconcepts from psychology (e.g., Rabin 1998), but researchers went on to apply these modelsand the results of their experiments to real-world problems and use real-world data to testthem. For example. Roth and Oxenfels (2002) used data from auctions on eBay to studybidding behavior.
In essence then, it would appear that changes are taking place all around us in the mixof research being undertaken. That research differs from the current, modem period researchin management accounting in two significant ways. First, this new research is less inward-facing in how it defines its “contribution.” Relevance to practice is an acceptable reasonfor its being undertaken (and published). This may be the absence of the “clinical” aspect
A project unrelated to management accounting but reflecting such an interaction between an accountant and anon-accountant is Pinsky and Young (2009).
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of our research to which Hopwood (2008) referred. Second, it is proactively involved withresearchers from other disciplines. One characteristic of a segment of the new research ineconomics to which Frey and Benz (2008) refer involves interdisciplinary teams rather thanresearchers from one discipline utilizing models and/or tools from another.
There are studies taking place in management accounting reflecting what I would labelas post-modemist, albeit at present much of it is taking place “under our academic radar”;i.e., it is being published primarily in non-accounting joumals. What appears to be missingat the present time is the presence of an identifiable force to promote or stimulate ourinterest in change. Though there clearly are organizations like the IMA and, more recently,the AICPA that have evidenced their interest in assisting us should we wish to change,there is no Ford Foundation-like organization explicitly committed to change on a grandscale the way the foundation was in the late 1950s and early 1960s. Nor does there appearto be, as yet, seminal papers such as Ross (1973) or Stiglitz (1974) that so enamor us thatthey lead to a reorienting of our research. Thus, I believe the change initially will/musttake the form of a series of independent appearing areas of research. These research topicsdiffer in substance but share a research-for-practice orientation. In the next section, I offersome potential issues relevant to the new, post-modemist period.
WHAT CHANGES MIGHT BE PRESENT IN A POST-MODERNIST PERIOD?It is important to remember that, regardless of the period, the central thmst of man-
agement accounting education and research has been what could be called control in thelarger sense of the term. I use control in the sense that includes not only the obviouselements of the control cycle of goal setting, performance measurement, reporting, andevaluation, but also the activities subsumed in planning, i.e., system design and resourceallocation decisions. I will refer to this broad definition as “control in the large,” or CIL.What I believe are central to the various aspects of CIL are the development of metricsappropriate for the purpose at hand and the development of systems to support the use ofthe metric(s). These are skills with value beyond the operation of for-profit or not-for-profitenterprises.
I see the benefits from any shift in the emphasis of our activities, i.e., a post-modemistperiod, to be one that not only enriches our activities and literature, but also affords greatervisibility to them. Our audience shifts from solely JMAR or JAR, TAR, CAR, AOS, or MAR,to a broader one that includes non-accountants. We might even see columnists such asLeonhardt suggesting that management accountants could be of assistance in some futurecrisis! If that is expecting too much, perhaps the local papers where our meetings are beingheld might find a presentation or two at our meetings of interest to their readers, as is thecase with economics' and psychology's annual meetings.
What, then, might we consider as potential post-modem avenues of research? I willsuggest four. What they have in common is that they involve, to varying degrees, thepotential for interaction with non-accountants. Some could involve researchers in other de-partments of the business school. Others could require interacting with faculty in otherschools, e.g., engineering, arts, and science. However, in each case an accountant(s) alreadyhas undertaken research on the question; thus these are not totally new and unexploredareas for management accounting research. This is important because it means each has atleast a mdimentary literature that can be accessed and can serve as an introduction to thetopic. They also share a certain degree of relevance and urgency to the events at hand.
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The Case for Post-Modem Management Accounting 11
Cyber Security*As our society tums more and more to computerization of records in an effort to
become more efficient and effective, and as the use of the Intemet and intranets for com-pleting transactions and communicating and transferring data becomes the norm, cybersecurity has become an important issue. The relevant questions include how to allocatefunds for cyber security against outside interventions. Gordon and Loeb (2002) apply theprincipal-agent model to the problem. Gordon et al. (2008) and Boss et al. (2009) considerwhich activities enhance the effectiveness of the control procedures in place. Each of thesepapers draws on management accounting tools already used in the modem period to analyzetraditional management accounting issues. Where they differ from research in the modemperiod is in the nature of the issue addressed and in their addressing their work to practi-tioners, e.g., chief information officers, in addition to an academic audience.
Gordon and Loeb (2002) and Gordon (2006) discuss the decision to invest in cybersecurity. One issue is whether cyber security decisions should be made using an intemalrate of retum (IRR) or net present value (NPV). While it is tempting to consider the issueusing one of the traditional models, it is clear that when an organization is concemed withsecurity—and the ramifications of a breach of cyber security—it may be undesirable to failto invest in a cost-effective investment (NPV) because its retum fails to meet a hurdle ratethat is in excess of the organization's cost of capital (IRR). Another relates to the size ofthe potential, as opposed to the expected, loss. Does one select a scheme that is best atavoiding large losses but may fail to detect smaller problems, or one that is less effectiveoverall but is modestly effective in preventing a wide range of different security threats?
Boss et al. (forthcoming) are concemed with security implementation. They stress theimportance of maintaining intra-organizational cyber security through the use of behavioralcontrols, i.e., enforcing the organization's policies. These would include, for example, rulesthat restrict the classes of data that can be downloaded to personal computers, the sharingof passwords, and leaving machines unattended. The reports of lost laptops underscore theimportance of the behavioral controls.
Medical AreaThe medical area is a “nontraditional industry” to which management accountants have
applied their tools (e.g., Covaleski and Dirsmith 1983; Bimberg 1976). The potential use-fulness of CIL is readily apparent. While the “output” may be more difficult to measurein some cases, the level of expenditures in the area makes the introduction of controlsappealing. One issue that occurs is the problem of determining the “output” of a profes-sional when the tasks performed vary both across time periods for an individual and amongindividuals in a given time period. The solution to this for surgeons was the “standardhemia.” Operating on a hemia was viewed as a fairly standard and well-defined procedure,and one that all surgeons understood. Using it as a point of reference, the difficulty of otherdiagnostic groups, i.e., surgical procedures, was rated relative to the hemia (Hughes et al.1972). In this way a surgeon's activity was measured and reported in terms of standardhemias. Using this measure, the workload of surgeons could be measured, evaluated, etc.
Evans et al. (1995) studied the impact on physicians of benchmarking their behavior.They took advantage of the significant amounts of data that a hospital, of necessity, mustcollect and utilized it to ascertain the effect of announcing a benchmark to physicians aboutpatients' length of stay on the physicians' subsequent behavior. As we might anticipate.
While the discussion here focuses on issues related to the organization, it is clear that these problems do transcendfirm boundaries. See Markoff (2009).
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they reported that announcing the existence of a benchmark/standard had the greatest effecton the behavior of doctors whose patients previously were staying longer, on average, thanthe benchmark suggested was appropriate and on the length of stay of patients whoseproblems were not life-threatening.
It is interesting to note the difference between the two sets of studies. Covaleski andDirsmith (1983) and Bimberg (1976) performed traditional accounting research in a non-traditional setting, i.e., medicine. Evans et al. (1995) used their research skills to evaluatethe effects of the hospital's efforts to use these control techniques to reduce its unnecessarycosts. The latter type of study, an archival study, is more likely to reflect the type of researchthat potentially can be undertaken in this area. This research not only would assist medicalfacilities in understanding which control techniques are effective and which are not, butalso would provide us with a chance to observe how our tools work in a nonstandardsetting.
Whistle-BlowingWhistle-blowing is the act of reporting an action that should not have been performed
(because it is illegal, contravenes organization policy, or is unethical) or of reporting thefailure to perform an act required by law or organizational policy. The public was madeaware of it through discussions in the press of the actions of individuals such as SherronWatkins in the Enron case or the unidentified whistle-blower in the Northrup case (Drew2009). Whistle-blowers can be motivated by the possibility of a reward (or of avoidingbeing part of a potentially unfavorable outcome) or for ethical/moral reasons. Whateverthe motivation, it would appear that, absent an active policy that encourages/rewardswhistle-blowers, it is part of the informal rather than the formal control system of theorganization.
Whistle-blowing existed and was studied long before Enron. In their extensive reviewof the whistle-blowing literature Miceli et al. (2008) argue that its origins go back to stud-ies of (with apologies to Sir Arthur Conan Doyle), the whistle that was not blown, e.g.,the Kitty Genovese case (Darley and Latane 1968), where numerous residents in nearbyapartments failed to report the attack on Genovese as it was occurring and, as a result,indirectly contributed to her death. Darley and Latane (1968) attributed the reluctance toreport the event as it was occurring (i.e., to whistle-blow) to a diffusion of responsibility.Miceli et al. (2008) argue that once we understand why people do not report inappropriateacts, we are in a better position to understand why people who do blow the whistle areinclined to do so. They offer a model to explain why people do or do not blow the whistle(Miceli et al. 2008, 38).
Unfortunately, as Mesmer-Magnus and Viswesvaran (2005) reported in their meta-analysis of the whistle-blowing studies, different research methods yielded different results.As one might expect, questionnaires that asked, “Would you report the act describedabove?” yielded much higher rates of likely whistle-blowing than studies where the partic-ipant had to perform the act. This raises questions of how best to undertake research inthis area.
In accounting, there has been little research that has been done on whistle-blowing perse. However, see Hunton and Rose (2008). More may be forthcoming because of Sarbanes-Oxley. There are, however, two sets of studies in management accounting that could informus about whistle-blowing and could assist anyone interested in the area. One set deals withthe willingness of individuals to inform the principal of team members who are free riding(Towry 2003) or to inform on a member of another group with whom they interact who is
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The Case for Post-Modem Management Accounting 13
not reporting tmthfuUy to the principal (Zhang 2008). These studies suggest that whistle-blowing may be inhibited by a strong identification with the group within which the in-appropriate behavior is occurring (Towry 2003) or the perceived unfairness of the boss/principal who is being cheated (Zhang 2008). The studies suggest the possibility that awide range of variables may inhibit the willingness of the individual to blow the whistle.It may be that the most likely whistle-blowers are individuals who perceive themselves tobe isolated from the group or organization and/or may feel a responsibility to a groupoutside the organization.
The other line of whistle-blowing research is concemed with individual ethical char-acteristics and how they affect an individual's job-related behavior. This research primarilyis concemed with how individuals' level of ethical development affects behavior when theyare performing their job. For discussions of these papers, see Lowers et al. (1997) andBimberg (2009). The link that is missing from this literature is the one between the de-gree of ethical development and the presence of sufficient moral indignation to incur thecosts of becoming a whistle-blower. Fehr and Gächter (2000) reported that individuals whoobserved instances of noncooperation that did not affect them were willing to punish theoffender. However, the whistle-blower's decision is a more complex one. The act of re-porting this behavior to a third party who makes the decision whether to punish the offendermeans the whistle-blower is a party to the activity, and not an outsider as in Fehr andGächter (2000). Not only has the whistle-blower given up decision rights vis-à-vis theparticipants in Fehr and Gächter's (2000) study, but the whistle-blower now is subject tojudgment by the third party. Thus the insertion of a third party changes the relationship ofthe whistle-blower relative to the participants in Fehr and Gächter (2000). The whistle-blower now is being evaluated and is subject to the risk of rejection. The costs are morecomplex than those used in the experiment.
Thus, an attempt to study the behavior of whistle-blowers may not offer straightforwardresearch models. It also will be difficult to research because of the difficulty of simulatingthe same reactions in participants as those they would have in the natural setting. That said,insight into the factors that encourage or inhibit whistle-blowing should be useful.
Social Responsibility, Green Issues, and SustainabilitySocial responsibility/accountability is not a new topic to accounting in general or man-
agement accounting in particular. It was actively researched in the early 1970s with aparticular emphasis on affirmative action and equal opportunity (e.g., Churchill and Shank1975; Epstein et al. 1976). It spawned a series of papers that attempted to develop socialmetrics under the rubric of “social accounting” both for researchers and for the classroom(e.g.. Seidler and Seidler 1975). However, much of the impetus was generated by therobustness of the economy, and when profits fell, so did interest in social accounting. Whatremained was the question of a link between a corporation's socially responsible behaviorand the shareholders' perception of the corporation (e.g., Epstein and Freedman 1994).
Recently, apparently stimulated by concems over the environment and long-run issuesof viability such as the supply of cmde oil, the issue again has become a topic for researchlinking socially responsible behavior, particularly energy efficiency, to those actions thatenhance long-mn sustainability. At present, among accounting researchers. Marc Epsteincontinues his long-term interest in the area (e.g., Epstein 1996; Epstein et al. 2006). Sig-nificantly, nearly all of the papers are not in accounting joumals, and those that are appearin European joumals.
Perhaps the simplest manner in which the issue of sustainability can be linked tomanagement accounting is found in Epstein and Wisner (2001). In an approach remindful
Journal of Management Accounting Research, 2009
14 Bimberg
of the advocates of social accounting some 30 years ago, they argue for the identifica-tion of those activities of the organization that would enhance the organization's environ-mentally sensitive actions and the organization's sustainability. Once these activities havebeen identified, they are no different than other objectives that contribute to the long-mnviability of the organization, e.g., customer satisfaction. They can become part of the or-ganization's sustainability balanced scorecard and, in tum, the organization's control sys-tem. For an experiment in this area, see Martin (2009).
Some Other, Somewhat Random IdeasLet me conclude with two rather tentative suggestions. One reflects the application of
what we do as accountants generically. The other is an idea that falls outside managementaccounting but draws on ideas that are central to some of our research.
Datar, Epstein, and Yuthas have embarked on a project intended to identify the metricsthat are the drivers of successful microfinance operations. These clearly are enterpriseswhose success or failure is important and whose greater success also should be encouraged.In their initial study (Datar et al. (2008), they argue that an institutional focus reports howwell the lender is doing but could obscure the performance of the recipients. Since therecipients are the intended beneficiaries of the activities, they argue, our metric must mea-sure how the recipients are doing as well. Their current project is to develop a set ofbusiness techniques and metrics that will assist the micro-entrepreneurs in managing theiractivities (personal conversation, Epstein 2008). We only can await their results.
The second topic comes out of the recent headlines. How can any meeting not mentionBemie Madoff? From reading the popular press, it is apparent that Madoff attempted tocreate an impression of exclusivity. Those who were permitted to invest had to meet certaincriteria. It would appear that once they “joined,” they never doubted their leader. This isremindful of Aronson and Mills' (1959) study of 50 years ago: Participants who wererequired to say what were then naughty words as part of an initiation into a group believedthe group to be much more desirable than those who did not experience the “initiation.”Some commentators have suggested that those who invested with Madoff placed unusualtmst in him (e.g., Nocera 2009). In short, initiation worked, as Madoff knew or found outit did. The question is: Did this initiation test lead the members to place greater tmstin the group leader who initiated them? Would it, in tum, lead them to be less critical inevaluating the leader and/or data about his performance?
CONCLUSIONWhat I have advocated is not a revolution, but evolution. Perhaps what I am doing is
simply jumping in front of a post-modemist parade that already is under way. If that is thecase, it is all the better. My primary concem is that we do not become so inward-facingthat we lose track of the world from which we came and into which we send our students.Not only do we need to concem ourselves with the intemal validity of our research, i.e.,its rigor, but we need to enhance our extemal validity, i.e., the aspect of our research thatmakes our efforts relevant to practice as well.
In this regard I am not alone. The IMA has worked to encourage relevance in both ourresearch and our education materials. More recently, the AICPA has also joined in thiseffort. What is important is that we begin to see the benefits of this type of research andnot merely the costs which Hopwood (2008) acknowledged last year.
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