Some management accounting commentators have suggested that the field of man- agement accounting did not see great alterations from the 1920s until the late 1970s when Far East countries ’ competition overwhelmed many Western firms (Johnson
and Kaplan, 1987). Others contest this view (Ezzamel et al. , 1990). The field nev- ertheless moved to adopt a series of novel approaches designed to cope with these challenges during the 1980s (Bromwich and Bhimani, 1994). As argued in this book, it is likely that during the next decade rapid changes in technology, the glo- balisation of business activities and the extreme financial turmoil being witnessed in many markets, plus the concerns with risk and global governance, will usher in a wave of calls for further changes in the field.
We have noted that advances in information technology and digitisation have created new relationships between and across enterprise processes. Information technology and web-based exchanges are increasingly extensive across firms and are becoming central to their economic activities. The term ‘ digital economy ’ has been coined to represent:
… the pervasive use of IT (hardware, software, application and telecommunica- tion) in all aspects of the economy, including internal operations of organisations (business, government and non-profit); and transactions between individuals, acting both as consumers and citizens, and organisations.
Atkinson and McKay (2007, p. 7).
Communication technologies – including the telegraph, radio and television – have, over much of the past century, evolved very rapidly in terms of functionality, capacity and features, and have often done so independently of computer technolo- gies. Mobile telephony has further changed the shape of interfacing and information exchange in almost unbounded ways. Computers (especially personal computers) have, since their initial availability in the 1940s, developed at so fast a pace as to now affect the lives of essentially every organisational participant. Another indus- try which has seen extensive re-shaping over the past century is that of media and entertainment. As distinct industries, what has been achieved by communication and computer technologies, alongside the transformation of media and entertainment as well as the software industry, has been very wide-reaching. But importantly the emergence of a digital economy could only come about through the convergence of previously distinct industries.
It is now impossible to envisage these industries outside the context of their merged potential. The internet could only achieve its large-scale impact because of the very extensive availability of computers and network technologies. This altered possibilities for media and commerce, enabling them to be fully ‘ electronified ’ . The ready presence of software applications and content enabled, and was in turn further enabled, by connectivity. IT systems and their modus operandi achieved continuous growth because of standardised connecting platforms and the near commoditisation of their individual modules, and they were fuelled by the co-ordination enabling
capacity of networked IT systems. In essence digital convergence is at the core of the present day irreversibly networked environment, which has integrated and is fur- ther integrating previously distinct industries. Today the further conceptualisation of technological systems is undertaken on the premise that they must be networkable and subject to dynamic changes (Castells, 2001).
People can, in such a world, act while thinking how to act. Objectives here get defined by and within managerial action. Activities embed objectives. Objectives emerge during action rather than being decided prior to decisions (Bhimani and Bromwich, 2009). The digital age is an enmeshed world of inter-penetrating digital devices that re-shape all areas of economic activity. Financial control and manage- ment accounting activities as part of the digital economy are being altered, are inte- grating decision making and action, and are re-engineering the strategy, technology and cost information interface.
Within emerging organisational structures in today’s economy, the idea that stra- tegic decisions should be premised on categorical dissociation from action may be misguided. The advent of digitisation and its attendant consequences for the conver- gence of industries, as discussed above, suggest that businesses cannot extract all technological or operational choices from their strategic decision-making processes.
Management theorists and commentators presume generally that decision- making activities and managerial action are and should be sequential. Certainly dur- ing the early 1990s much effort was placed on developing a ‘ scientific ’ notion of management whereby some organisational participants think and others engage in action (Drori and Meyer, 2006). In many ways this presumption continues in that the doing of things is regarded as an activity that is purposefully distinct from the defining of desired activities to be executed. Just as calculation is keenly viewed as a legitimate domain of accounting in spite of the different approaches to under- standing its operation in enterprises (Mennicken, 2002), so, this line of thinking – about objectives followed by and distinguished from action – is also an integral essence of prescribed approaches to the management function (Mintzberg, 1989) including management accounting.
Financial managers and accountants are being encouraged to be more strategic, which assumes objectives precede action. This is in part related to professional man- agement accountancy bodies embracing a more strategic posture for their expertise and seeking to encourage strategic thinking in the practice of financial and cost man- agement. This is not to say that management accountancy promotes the maintenance of a traditional staff instead of line role for accountants in practice, but that strategy is conceptualised in prescriptive terms as an activity dissociated from operation though preceding it. Many cost management approaches, including activity-based manage- ment, product life-cycle costing, target cost management, customer profitability anal- yses and strategic investment appraisal among others, have been predicated on the idea that strategic thinking should direct managerial action (Bhimani, 2009a).
The meshing of strategic, technological and operational decisions is indicative of a need to reformulate management accounting precepts across some areas. An important point of departure is to explore, within different contexts, the applica- bility of the premise that action follows structured cogitation and analysis and the actual use of management accounting information in novel organisational settings (Hopwood, 1983).
The shift towards converging industries across many economic markets, and the co-mingling of strategic, technological and operational decisions within many new organisations within these markets, make it desirable to investigate both what constitutes managerially useful information and the idea that strategic intent, tech- nological options and management accounting information usage are distinct cat- egories that are separable from one another and that adhere to a sequential path.
What constitutes relevant information, and the presumed sequence of its deploy- ment in organisationally networked contexts, may now need to be rethought. Just as convergence among previously distinct and independent industries has integrated pursuit and action and, perhaps, decision making and process, so management accounting may not retain its present significance without exploration of alternative modes of existence.
Financial information relevance is today more about the effective representation of strategic and technological inter-dependencies enabling managerial decisions to align with contemporary organisational action. Enterprises which depart from the conventional industrial model often fuse strategic and financial considerations.
Their inter-relationships make it difficult for management accounting to prevail in a world of assumed reporting entry points at pre-defined structural nodes. Financial control and management information is becoming integral to, and immanent within, assessments of operational, strategic and cost considerations. Collaborative firm linkages and virtual enterprises represent extensive possibilities as arenas of man- agement accounting change and innovation. Some possible implications of organi- sational forms along these lines for management accounting are discussed below.