Management And Accounting Web

Granlund, M. and K. Lukka. 1998. It's a small world of management accounting practices. Journal of Management Accounting Research (10): 153-179.

Summary by Mohamed Gomaa
Ph.D. Program in Accounting
University of South Florida, Spring 2002

Behavioral Issues Main Page | International Aspects Main Page

The main purpose of this article is to identify and analyze forces that seem to be causing convergence in (micro-level) management accounting practices around the world. By micro level the authors refer to behavioral patterns and styles of information use, like budgetary-related behavior. Therefore, micro level deals with the practical "doing" of management accounting. On the other hand, the macro level would deal with concepts, ideas, techniques, systems designs, and the purpose of using certain pieces of management accounting information. In their study, the authors are most interested in the identification of similarities of management accounting practices across countries. One of the initial observations that motivated the authors to conduct this study is the fact that seemingly similar managerial ideas or system designs seem to be gaining an increasing foothold over all the industrialized/post industrial world.

The Drivers of Global Homogenization

Figure 1 presents the factors directing management accounting practices towards convergence or divergence. The authors argue that the drivers of convergence have started to dominate those of divergence. In figure 1, the authors present a framework of relevant factors and include an argument of general tendencies for convergence across nations and firms. The authors believe that in the analysis of modern organizations both the economic and institutional pressures have an important role to play. The authors used the institutional isomorphism model as the primary means to structure the institutional analysis. They classified the explanatory variables, or drivers of global homogenization of management accounting practices into:

Coercive pressures

Normative pressures, or

Mimetic processes.

Institutional isomorphism is based on two core ideas:

Environments are collective and interconnected, and

Organizations must be responsive to external demands and expectations in order to survive.

"The constituents that exert these demands or pressures include such institutions as the state, professions, capital markets and public opinion." (p. 159) The authors believe that the cause of converging responses emerge from the search for legitimacy (social fitness) and efficiency (economic fitness).

Drivers of Convergence

Economic Pressures

The authors start their analysis by addressing the economic pressures underlying the global trend of management accounting practice. Management accounting practices are adaptive to changes in their environments through varying degrees of responsiveness. The particularities of the business, corporate size and technology may determine the range of possible changes. The problems caused by global or regional recessions, or downturns in major stock markets, have global economic effects causing pressures on organizations. Advances in information technology direct and support the movement of corporate practices towards increasing global exchange of knowledge, goods and services. Intensified globalization of markets and competition is driving global management accounting homogenization through the increased importance of global value chains, foreign investments, and international joint ventures. Porter (1996) suggests that in order for a firm to succeed in the global market place, it needs to develop unique competitive strategies in response to changes in economic competition.

Non-financial measures have emerged as a reaction to economic pressures such as globalization of competition and rapid technological development. These pressures have created the need for better process management and enhanced balancing of the short and long-term perspectives in management control.

Coercive Pressures

"Coercive pressures reflect the enforcing regulative aspects of certain institutions." (p.162) The authors believe that there are clear pressures on firms to change their management accounting practices to be consistent with the mandates of transnational institutions. Figure 1 provides a summary of some of the factors driving convergence or divergence. The authors state that while there are observable routes for management accounting homogenization that originates from transnational harmonization of legislation and regulation, there are also other important sources of isomorphism that relate to corporate (inter-) dependencies. These pressures result from other companies upon which the company is dependent.

Normative Pressures

Normative pressures are concerned with social obligations and appropriate social conduct in human behavior. These pressures are mediated by values, norms and roles, which people adopt in their various domains of social conduct. The main difference between normative and coercive pressures is that normative pressures are less compelling by nature than coercive pressures.

Two aspects of professionalization that are prominent sources of isomorphism have been suggested by DiMaggio and Powell (1983):

University Education

Management accounting programs in different countries use the same books and teaching case materials.

Professional networks

They mold perceptions about professional behavior.

National and professional associations drive convergence both at national and international levels. There is a trend towards similarity of professional expertise.

National and corporate cultures have been seen as the most important drivers of divergence. At the micro level of management accounting practices, the influence of national cultures is in the direction of driving divergence. At the macro level of management accounting practices, national culture’s impact on management accounting practices is diminishing.

Mimetic Processes

"Mimetic processes are linked to the cognitive and socially constructed side of human behavior." (p.167) Mimetic processes suggest that companies copy publicly known and appreciated models of operation from each other. They especially copy from successful companies that have a good reputation. A large global consulting industry that supports the mimetic process is propagating various solutions for current managerial problems.


This paper shows a need to reconsider the focus of research that analyses international management. The traditional approach strongly emphasizes the role of differences. The authors believe that even though the impact of cultural differences on management accounting are diminishing and can be located at the micro level, current management accounting practices are driven by forces at the macro level, at which various global pressures of convergence are at work. Therefore, the authors believe that the significance of the global similarities perspective is increasing.


Related summaries:

Chow, C. W., Y. Kato and K. A. Merchant. 1996. The use of organizational controls and their effects on data manipulation and management myopia: A Japan vs. U.S. comparison. Accounting, Organizations and Society 21(2-3): 175-192. (Summary).

Cohen, J. R., L. W. Pant and D. J. Sharp. 1993. Culture-based ethical conflicts confronting multinational accounting firms. Accounting Horizons (September): 1-13. (Note).

Cooke, T. E. 1993. The impact of accounting principles on profits: The US versus Japan. Accounting and Business Research 23 (Autumn): 460-476. (Summary).

Epstein, M. J. and J. Manzoni. 1997. The balanced scorecard and tableau de bord: Translating strategy into action. Management Accounting (August): 28-36. (Summary).

Gaiser, B. 1997. German cost management systems. Journal of Cost Management (September/October): 35-41. (Summary).

Gaiser, B. 1997. German cost management systems (part 2). Journal of Cost Management (November/December): 41-45. (Summary).

Hayes, R. H. and W. J. Abernathy. 2007. Managing our way to economic decline. Harvard Business Review (July-August): 138-149. (This is a reprint of the their 1980 article above with a retrospect by Hayes on page 141). (Summary).

Hofstede, G. 1987. The cultural context of accounting. In Accounting and Culture: Plenary Session Papers and Discussants' Comments from the 1986 Annual Meeting of the American Accounting Association, edited by B. E. Cushing. American Accounting Association: 1-11. (Summary).

Hofstede, G. and H. Schreuder. 1987. A joint reply to Montagna. In Accounting and Culture: Plenary Session Papers and Discussants' Comments from the 1986 Annual Meeting of the American Accounting Association, edited by B. E. Cushing. American Accounting Association: 29-30. (Summary).

Keys, D. E. and A. van der Merwe. 1999. German vs. U.S. cost management. Management Accounting Quarterly (Fall): 19-26. (Summary).

Martin, J. R., W. K. Schelb, R. C. Snyder, and J. C. Sparling. 1992. Comparing the practices of U.S. and Japanese companies: The implications for management accounting. Journal of Cost Management (Spring): 6-14. (Summary).

O'Clock, P. and K. Devine. 2003. The role of strategy and culture in the performance evaluation of international strategic business units. Management Accounting Quarterly (Winter): 18-26. (Summary).

Sharman, P. A. 2003. Bring on German cost accounting. Strategic Finance (December): 30-38. (Summary).

Williams, J. J. and A. E. Seaman. 2001. Predicting change in management accounting systems: National culture and industry effects. Accounting, Organizations and Society 26(4-5): 443-460. (Summary).