Accounting information in new product development: a structuration perspective

Abstract

New product development (NPD) plays a key role in sustaining competitiveness for many organisations. Accounting information is presented in the literature as a valuable NPD resource, which facilitates cross-functional dialogue, communicates profit objectives and supports managers in managing resources and controlling costs. However, these assertions are largely normative. They have not been firmly established in the empirical literature resulting in an unclear picture of how managers use accounting information in an NPD context. With this in mind, the objective of this dissertation is to explore the role of accounting information in NPD. To meet the objective of the study an in depth case study of the manufacturing division of a large group was conducted. The findings are explored using Structuration Theory as a theoretical lens. Structuration Theory provides a model which allows us to make sense of social actions in organisations or institutions. NPD is a complex social action involving a wide range of agents all acting together but in different ways, guided by their own internal structures as well as by external social structures. By using Structuration Theory it was possible to explore the detailed nature of structures, both internal and external, which shape managers’ use of accounting information during NPD. The findings demonstrate how managers in different circumstances throughout the case group use accounting information in different ways, and often differ in their perceptions of what constitutes accounting information. Senior managers review aggregated pro-forma schedules of accounting information prepared by the Finance function at pre-determined points in the formal NPD process. In contrast, members of the NPD Team draw on simpler, less sophisticated accounting information, on an improvised basis, throughout NPD. This illustrates how the senior managers’ use of accounting information is informed by the rules and normative expectations associated with the formal NPD process, while the routines and recognisable language associated with accounting information influence its more informal use by members of the NPD Team. However, these rules and routines cannot be examined in isolation from the human beings who draw on them. A manager’s use of accounting information is guided as much by his phenomenological perspective as it is by the institutionalised structures he encounters. This recognition of the significance of agency and structure is the central tenet of Structuration Theory. The study adds to existing literature on the role of accounting information in NPD by providing empirical evidence of the multi-dimensional use of accounting information in an NPD context. It also contributes to a wider stream of literature which examines the changing role of the management accountant by exploring the implications of the decentralisation of accounting information. The study also presents a number of theoretical contributions. Firstly, it broadens our understanding of the sociological processes effecting accounting information systems in action. Secondly, it offers enhanced insights into issues of freedom, choice and determination within external structures. Finally, by operationalising Structuration Theory in a way that few studies have to date, the study demonstrates the potential for Structuration Theory to guide future empirical research