Relevance re-focused ‐ a preliminary exploration of management accounting in 'new' business models

Abstract

This paper explores how management accounting has evolved over recent years with the advent of web-based businesses without “bricks and mortar” and “high street shops”. Johnson and Kaplan (1987) argued that a dominant influence of financial accounting was one of the major reasons why management accounting had remained fairly static up to the 1980’s. Ever since, “newer” and “more relevant” techniques have been reported within the management accounting literature e.g throughput accounting (Dugdale and Jones, 1998) or strategic management accounting (Kaplan and Norton, 1992). Within the past ten years, though, the pace of technological change has impacted how business is done. Such change may also have influenced the way how businesses make decisions, and in turn, how they apply management accounting practices. Using constructs on general organisational change (Dawson, 2003) in an exploratory case study, we attempt to interpret the process of change in the business and resulting changes in management accounting. The case is “WebAccounting” (WA), which offers accounting software to small business online. Preliminary results show that there was a shift in focus from decision-relevant costs to decision-relevant revenues. Key performance indicators are mainly non-financial, based on and driven by the increased focus on revenues rather than costs. Additionally, WA inadvertently used some traditional management accounting techniques, albeit in a re-focused manner. Due to this paper’s exploratory nature, we cannot claim generalisability of results. However, given the novel nature of our findings and the lack of research to date on new business models and management accounting practices, we hope to encourage further research