The Distinction and Relation between the
Role and Function of Management
Accountants (MAs)
University of Groningen Faculty of Economics and Business
Research Master in Economics Specialization: Innovation and Organization
Wouter Moossdorff 1934465 August 2013
Supervisor: Prof. dr. ir. P.M.G. van Veen-Dirks RC Second assessor: Prof. dr. D.M. Swagerman
Abstract
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Introduction
This paper aims at elaborating on the earlier findings of a paper by the author. Moossdorff (2012) studied the role and function of management accountants (MAs) and found that there should be made a distinction between the role and function when configuring the management accountant's job, because both constitute a different aspect of the job. The paper used Riedijk et al.'s (2002) description of role and function. They defined role as 'the way in which the MA operates towards other members of the organization' and function as 'the scope of the MA's tasks' (i.e. in what kind of activities the MA engages in). However, most studies do not make a distinction between the role and function of MAs and use both as synonyms.
Within this field of research, scholars commonly refer to the distinction between MAs as bean counters and business partners (Lambert and Sponem, 2012). Friedman and Lyne (1997) described the bean counter, based on their interviews, somewhat strikingly as "an accountant who produces financial information which is regarded as of little use in efficiently running the business and, as a result, its production has become an end in itself" (Friedman and Lyne, 1997, p. 20). It is commonly held that the main task of the bean counter is to record numbers and produce reports (Hopper, 1980). The business partner can be described as a management accountant that is more involved in supporting operational managers in their decision making (e.g. Pierce and O'Dea, 2003; Burns and Baldvinsdottir, 2005).
Further, it has been argued that the management accountant's 'role/function' is currently subject to change in that the MA is transforming from a bean counter into a business partner (e.g. Granlund and Lukka, 1998a,b; Burns and Vaivio, 2001). Rapidly changing business environments force MAs to work more closely with the operational managers and to support them with information that is aligned to these manager's needs (Friedman and Lyne, 1997; Chenhall and Langfield-Smith, 1998a; Pierce and O'Dea, 2003), instead of providing basic reports that are often seen as irrelevant (Pierce and O'Dea, 2003).
However, although these studies, and others that were not mentioned, have contributed a lot to our understanding of both types of MAs and the transition between the bean counter and business partner type, according to Lambert and Sponem (2012), empirical evidence of this transition is scarce. For this reason, they provided a typology of four types of management accountants based on twelve case studies and concluded that "the 'myth' of the management accountant as business partner - close to and heeded by operational managers - is not as commonplace as is widely believed" (Lambert and Sponem, 2012, p. 587). They found that the type of MA depends on the authority of the management accounting department on the one side and on the perceptions and intentions of the operational managers regarding the role of the management accounting department on the other side. Lambert and Sponem's (2012) study provided us with an enriched understanding of the interaction and relationship between management accountants and operational managers and gave some indications of the presence of a distinction between the role and function of MAs by distinguishing between activities and the position of the management accounting function as opposed to operational management. Although this enrichment, the distinction between the role and function is not clear. Since it was not the purpose of Lambert and Sponem (2012) to focus on this distinction, we wish to elaborate on this distinction by using the findings of our earlier study (i.e. Moossdorff, 2012) and by collecting additional data.
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online survey. These interviews led to several interesting findings regarding the distinction between the role and function of management accountants, namely that the role of the MA strongly depends on the relationship with the operational manager and the position within the structure. Therefore, we decided to perform an additional literature review on these issues (i.e. relationship building and the positions of MAs). Because it is out of the scope of the current paper to explore these issues into more depth, the second purpose of this paper is to provide two suggestions for future research, one that addresses relationship building in a MA-manager setting and another that focuses on our proposed distinction between the role and function (including the determinants). These suggestions satisfy Lambert and Sponem's (2012) claim that too little empirical research has been conducted on the field of the role (and function) of management accountants. As such the contributions of our paper are twofold. First, it goes beyond Byrne and Pierce's (2007) study of the antecedents, characteristics and consequences that are associated with the roles of MAs by providing an understanding of the differences between role and function and the main determinants of both. Secondly, since empirical research is scarce, our study contributes by providing two examples of an empirical study.
The paper is structured as follows. The next section gives an overview of the current literature on the role and function of management accountants in which we focus on our proposed distinction between this role and function. Moreover, within this section we have a look at the future by discussing future implications for the role and function of MAs. Then we describe our methodology for the additional statistical analyses based on the data of Moossdorff (2012) and for conducting the interviews and the literature review. The subsequent section reports on our findings with respect to these analyses, interviews and the review. Next, the findings of both studies are integrated and discussed. The paper ends with a conclusion in which we conclude our findings, provide suggestions for future research and address the limitations of our study.
Background
This section provides a theoretical background that supports our suggestion to make a distinction between the function and role of management accountants (MAs). First, we describe how the management accountant's job has developed. Secondly, we emphasize on the difficulties within the MA's job that arise from the literature and thirdly how our proposed distinction between the role and function helps to understand these difficulties. Finally, we have a look at the future role and function of MAs.
The development of the management accountant's job
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This new way of looking at the management accounting job also changed the perceptions on how this job was 'used' to be (i.e. being a bookkeeper) and how it was ought to 'become' under the new interpretation of the job (i.e. being a business partner). Friedman and Lyne (1997), for example, described the bean counter (i.e. the bookkeeper) as an accountant who produces financial information that is of little use in efficiently running the business. In other words, it seems like that bean counters are of no use to the organization. However, Granlund and Lukka (1997), who studied the transition of MAs from bean counters into change agents, stated that a certain kind of historiography, or at least watch over, prevails as the basis of all accounting, regardless of what other parts the job consists of. Apparently, it is probably too early to say that the bean counter is useless, because the standard reporting tasks are still present and need to be done, although most likely by a small amount of experts (Burns and Vaivio, 2001). Also, no clear empirical evidence of a shift from bean counters towards business partners has been found (Malmi et al., 2001; Vaivio, 2006; Lambert and Sponem, 2012). Moreover, Vaivio (2006) showed that most research still empirically discerns the bean counter phenomenon. This is supported by Baldvinsdottir et al. (2009a): "If management accountants have indeed transformed from bean counters to business partners, we would still argue that these changes have far more to do with the increasing integration of management accounting in businesses and the improved availability of information than with deeper shifts in the nature of the role" (p. 34). They further claimed that the traditional activities of the management accountant's job are still relevant. A recent study by Lambert and Sponem (2012) also showed that both types of MAs are present within their case studies and thus that the bean counter is still very much 'alive'.
All in all, although the literature often speaks of the MA as a business partner, empirical support for a change from the bean counter towards the business partner is scarce and it seems that both types are still present in practice.
Difficulties in the management accountant's job
A first difficulty that has been raised in the literature is that of role conflict and role ambiguity (Maas and Matejka, 2009). As mentioned in the previous paragraph, the MA's job can be divided into two responsibilities: at the one side MAs have a functional responsibility and at the other side a local responsibility (Maas and Matejka, 2009). These responsibilities are similar to the categorization of Sathe (1983) between the financial reporting and internal control responsibility and the management-service responsibility. According to Sathe (1983), the former entails that MAs need to "insure that reported financial information pertaining to the relevant organizational unit is accurate and that internal control practices conform to corporate policy and procedures" (p. 31) while the latter holds that MAs need to "help the management team in the business decision-making process" (p. 31). Maas and Matejka (2009) found that increasing the emphasis on the functional responsibility is negatively associated with decision-making support to the management. Additionally, they conclude that it is not possible to store both responsibilities at one person (see also Hopper (1980)), a finding that is opposed to what Sathe (1983) suggested. Sathe (1983) speaks of a strong controller as a MA that can fulfill both responsibilities simultaneously. However, also Granlund and Lukka (1997) find it hard to imagine that one single person can simultaneously fulfill both responsibilities since they differ fundamentally.
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the interviewed managers to improve MA's information provision. For example that MAs should be more timely and flexible. Also in Byrne and Pierce (2007), a difference in perceptions was found. "Where there was little interaction between the operational manager and the management accountant, there was sometimes the need to convince managers that the involvement of MAs may mean that managers actually achieve better results" (Byrne and Pierce, 2007, p. 492). The influence of good relationships and communication and interaction between the MAs and the (operational) managers in order to reconcile these different perceptions, was also found by Burns and Baldvinsdottir (2005). Within the Burns and Baldvinsdottir (2005) study, the operational managers and the MAs had the same perceptions of what the job of the MA should look like since the company wants to increase its business orientation and are therefore seeking for an involved MA. One interviewee mentioned that in order to change the orientation it was necessary to change the manager's as well as the MA's perception of the MA's job. In support of this, many studies have pointed to how rapidly changing business environments force MAs to work more closely with the operational managers and support them with information that is aligned to the manager's needs (Friedman and Lyne, 1997; Chenhall and Langfield-Smith, 1998a; Pierce and O'Dea, 2003). This common understanding helps to agree upon the function and role of the management accountant.
Thirdly and finally, many scholars found support that MAs lack the skills to be able to fully support managers in their decision making. Burns and Baldvinsdottir (2005) found that 'their' hybrid accountants needed additional skills, besides their technical accounting expertise, for this new type of position. However, it is questioned whether or not all accountants have the ability to develop broader competencies. In addition, Järvenpää (2007) and Chenhall and Langfield-Smith (1998b) found that accountants should develop social skills and business-knowledge in order to be able to assist managers (see also Scapens and Jazayeri, 2003). Another issue that might be a consequence of this lack of skills, is the lack of interaction between the MA and the managers (e.g. Friedman and Lyne, 1997; Pierce and O'Dea, 2003). It was found that the interaction between MAs and managers improves when the former are decentralized and thus located closer to the managers (Hopper, 1980).
The distinction between the role and function of management accountants
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that there is a relation between the way in which the MA's job is organized and how the MA acts. A similar relationship was studied by Van Sell et al. (1981) when they reviewed literature on role conflict and role ambiguity. They used the role episode model of Kahn et al. (1964) to review the literature and "this model depicts the interpersonal process between the person being sent expectations (the focal person) and those sending the expectations (role senders)" (Van Sell et al., 1981, p. 46). In our setting, the focal person is the MA while the role senders can be regarded as the organization as a whole, but also as individuals such as operational managers. The role senders communicate a certain expectation of what the MA's job should entail, while the focal person communicates back by responding through his actions and behavior. In order to advance the description of this distinction between the organization (i.e. the role) and the interpretation (i.e. the function) of the MA's job, we need to get an understanding of the characteristics that determine both.
Van Sell et al. (1981) distinguished between three factors that are influencing the relationship between role senders and the focal person. Organizational factors, such as structure, are conceptualized as influencing the expectations of the role senders and interpersonal factors, such as frequency of interaction and participation, influence the way in which the focal person responds to these expectations. Personal factors, such as values, education and age, influence the interpersonal process between the two 'parties'. Many of these factors have also been studied in a management accounting setting. Most notable, Byrne and Pierce (2007) provided a comprehensive set of antecedents and characteristics with respect to the MA's job and most of them are also mentioned in Van Sell et al.'s (1981) review of the role episode model. However, Byrne and Pierce's (2007) overview does not distinguish between the role and function and is merely a list of characteristics that might influence the MA's job. They for example included activities as characteristics of the 'role of MAs' while we suggest that this is the function part of the job (i.e. the interpretation of the job). They further defined consequences and it seems these are a combination of the antecedents and the characteristics. However, the process of how they determined the consequences is not clear. Apart from this, their overview does provide insight in important determinants of the MA's job and thus it has potential to advance our understanding with regard to the distinction between the role and the function. However, to what part of the job in specific (i.e. role and/or function) and what type of role (e.g. bean counter and business partners) they refer, is not explained explicitly. Therefore, we now describe three determinants that are often recognized as determinants of the organization and interpretation of the MA's job by referring to underlying studies that provided evidence of the impact of these determinants on the MA's job: (1) the structure of the organization and thus the formal and physical position of the MAs, (2) the relationship and interaction between operational managers and MAs, and (3) the MA's feeling with the business.
Firstly, the structure and the position of the MA's. Many scholars have pointed at the importance of the position of the MA in determining the role (s)he is playing (e.g. Hopper, 1980; Burns et al., 1996; Chenhall and Langfield-Smith, 1998b; Jablonsky and Barsky, 1999; Burns and Baldvinsdottir, 2005). Speaking of the distinction between the bean counter and the business partner, it is found that MAs who seek to fulfill a management support role need to be situated closely to operational managers while bean counters are normally located centrally (Hopper, 1980; Burns and Vaivio, 2001).
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managers and because of the close collaboration in implementing activity-based techniques. Hopper (1980) found that operational managers interact more with their MAs when they (i.e. the MAs) are decentralized and positioned nearer to the managers. This resulted in less conflictive interpersonal relationships between the two. At the other hand, Friedman and Lyne (1997, 2001) categorized the bean counter as someone who is "single-mindedly preoccupied with precision and form, methodical and conservative, and a boring joyless character" (2001, p. 423). In this situation, the relationships with managers are often described as either bad or worse (i.e. absent).
Finally, the MA's feeling with the business is considered to be a crucial characteristic of a business partner (e.g. Granlund and Lukka, 1998a; Jablonsky and Barsky, 1999) and thus the opposite is true for the bean counter (Friedman and Lyne, 1997). In their categorization, Granlund and Lukka (1998a) mentioned that is was not expected from bean counters to have knowledge of the business while it was expected from business partners (see also Jablonsky and Barsky, 1999). Järvenpää (2007) studied the decentralization of MAs as business controllers and noted that they became part of the business unit. This 'belonging to a new group' was also related to the increased requirement of MAs to have an extensive knowledge of the business. Similar conclusions were drawn earlier by Chenhall and Langfield-Smith (1998b).
Based on the previous, we can conclude that many characteristics of the MA role and function have already been studied. However, they have not been characterized as such. Byrne and Pierce (2007) did provide an insightful overview of antecedents and characteristics that influence the role of MAs, but they did not provide a clear relationship between the groups of items. We argue that we can provide such a relationship by using the distinction between the role and function of MAs. In the discussion section we will provide further analysis on this, also based on the results of our additional work that is part of the current research.
We claim that this understanding of the distinction between the role and function of MAs advances our knowledge of the MA's job by giving issues such as role conflict and ambiguity and different perceptions a 'position'. In other words, the distinction between the role and function helps us to understand what determinants might lead to role ambiguity and conflict and how they may be solved. Moreover, it will provide us with a more comprehensive view of the MA's job and how the different parts and characteristics are linked together which would enable us to explain why there might be a lack of interaction between the MA and the manager.
The future of the management accountant's job
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(2009a,b) also mentioned that the traditional management accountant, and thus the bean counter role, is still relevant.
Based on this, it can be said that the literature is inconclusive of how the role of MAs develops in the future. It seems that both types of MAs are present and that the traditional role as well as the new business partner role are both valuable positions within organizations, especially when referring to their different orientations (see e.g. Sathe, 1983; Hopper, 1980; Maas and Matejka, 2009). Our understanding of the distinction between the role and function of the MA's job, as described in the previous paragraph and as will be further described in the discussion section, will guide the direction of future research and possibly our understanding of the future role(s) of MAs.
Methodology
This study consists of three different, sequential parts. Firstly, additional analysis on the data gathered in our earlier study (i.e. Moossdorff, 2012) will be conducted. Secondly, since our first study was a quantitative one, we conducted a number of interviews in order to support our evidence with empirical, qualitative data. Finally, based on the findings of these interviews and the statistical analyses, we performed an overall literature review on the subjects that yielded as important contributors to our understanding of the distinction between the role and function of MAs. This section now continues with the description of the data collection and analysis procedures for each of the three studies.
The 2012-study and additional analysis
Data collection procedures
We gathered our data for the first study, and thus for the additional statistical analysis which are also based on this data, through an online survey. The main focus of this survey was to investigate how the respondents could be categorized for their role and function. We made a distinction between two categorizations which could be regarded as each other's opposites: bean counter and business partner. The survey questions were also directed at this distinction and can roughly be divided into three parts: (1) general questions on the respondent's organization and personal characteristics, such as age and gender, (2) a role part, and (3) a function part. Within the role part, we added triggers that could be, based on previous literature, regarded as role determinants (see Appendix A). The function part consisted of the activities performed by MAs which were mainly derived from Malmi et al. (2001) (see Appendix B). All questions within the role part were formulated on a Likert-2 or -5 scale in which, according to the literature, the first or most left answer applies to the bean counter and the last or most right answer to the business partner. The function part also consisted of questions on a Likert-5 scale which asked to describe the importance of the activities in the daily routine. We asked the respondent to assess the importance (from not important to very important) of these activities in the present as well as how this importance changed as compared to 5 years ago (i.e. the past) and how it will change in the next three years (i.e. the future). The role questions were not divided in different periods and all applied to the current situation of the respondent.
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Our sample respondents are mostly working at large organizations (more than 500 full time equivalents (fte)), while the core businesses of these organizations are evenly distributed among the available options (e.g. manufacturing/ industrial, financial service and public sector/ government). Most respondents are male (86.7%), while the average age was 41 years and the average work experience in a financial function 16 years.
Data analysis procedures
The procedures of data analysis of our first study were largely aligned with a prior study on the roles of MAs (i.e. Verstegen et al., 2007). We conducted a factor analysis for the function part in order to bring down the number of activities into a smaller amount of factors. Subsequently, we clustered the factors into four clusters: (1) predominantly bean counter, (2) more bean counter than business partner, (3) more business partner than bean counter, and (4) predominantly business partner. These results led to a function classification of the respondents. Then we used the answers of the questions within the role part to make a role classification (i.e. again either bean counter or business partner). For this, we calculated the total amount of 'points' the respondents scored on these questions. Since all questions were structured in such a way that the first or most left answers always apply to the bean counter categorization while the last or most right answers apply to the business partner, we were able to group the respondents based on a total score analysis (i.e. summing the answers of all questions). Here we also grouped the respondents in the four groups as mentioned earlier. Finally, we compared both classifications to investigate whether there were differences among the two classifications. This then resulted in our prior conclusion that there should be made a distinction between the role and function classification.
Within the first study, we performed all of the previous described procedures for the data that applied to the present. So we used the data on the role classification as well as the importance of the activities at present to investigate the distinction between the role and function of MAs (or controllers) at present. Within the current study, we will perform two extra analysis. Firstly, we will look into the future by configuring a function classification based on the importance of the activities in the future. This classification is then compared with the role classification of the previous study. Based on this analysis, we can determine whether the distinction between the role and function of MAs becomes more profound. For these analysis, we have to perform a new factor and cluster analysis. Also here, we will check for multicollinearity before we configure the factors. More details are attached in Appendix C. Secondly, we will assess what general triggers (questions) and/or role triggers (questions) can be regarded as determinants of the function classification for the present as well as the future classification. Following Verstegen et al. (2007), we will use step-wise backward logistic regression to determine the significant power of the underlying characteristics in predicting group membership. Also, more details on these procedures are provided in Appendix C. The interviews
Direction of the interviews
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an important role in influencing the perceptions and expectations of managers by the information they provide (Argyris, 1952; Hopwood, 1974). As such, it is interesting to take our research to the role and function of MAs and MA's relationship with operational managers a little further by addressing their leadership behavior.
Case selection
In selecting the case companies, we tried to capture a wide range of industries in order to be able to investigate whether there are differences between organizations across different industries as well as to increase the generalizability of our findings. Ultimately, we selected two companies within the energy sector (although both fulfill a different function within this industry) and one in healthcare (i.e. a hospital). For confidentiality reasons, we do not enclose the real names of the companies and instead refer to them as cases A-C. Within the first organization we spoke with a manager of the controllers of some of the support-units, within the second with the manager of the department Revenue Controlling while we interviewed the financial director of the third organization.
Data collection procedures
We use semi-structured interviews for data collection. The interview schedule consists of two parts in which questions focus on: (1) the role and function of MAs, and (2) the leadership behaviors of MAs. For the first part we do not directly ask the respondents to describe their role in terms of a bean counter or a business partner (see also Lambert and Sponem, 2012). Instead we ask them to describe how these management accountants feel their job is organized and what activities are most important. The second part of the questionnaire focuses on leadership behaviors. These questions are based on the seven categories of behaviors within the transformational and transactional leadership styles as distinguished by Yukl (2013). The questionnaire can be found in Appendix E.
Data analysis procedures
The data gathered through the interviews will be analyzed in two stages: first-order analysis and second-order analysis. Our first-order analysis (Van Maanen, 1979) consists of writing a case report for each interview (case) and of making comparisons between cases. After the case reports were written, they were corresponded with the respective interviewees in order to check the correctness of our interpretations and thus to increase the internal validity. The second-order analysis (Van Maanen, 1979) looks more closely at the theoretical foundations and interprets the data from a theoretical perspective. Additional cross-case analysis (Eisenhardt, 1989) will be performed to investigate whether there are 'theoretical' patterns to be observed throughout the cases.
Literature review
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Results
Additional analysis on the 2012-study data
Within this section we describe the results on the role and function classifications and the comparison analysis of both periods (i.e. present and future). In addition, we provide the outcomes of the logistic regression analysis which determined the significant power of the underlying triggers in predicting group membership.
Role classification
The respondents of the first part (166 in total) were grouped based on their total score on the role-based triggers. This classification did not change as compared to the 2012-study for the present, since the future equals the present classification as we have only collected data on the (role-based) triggers once. The final role classification is shown in table 1.
Frequency
(1) Bean counter (full) 1
(2) Bean counter 28
(3) Business partner 116
(4) Business partner (full) 21
Total 166
Table 1: Present and future role classification (all respondents)
One respondent could be regarded as a full bean counter, 28 respondents more as bean counter than as business partner, 116 more as business partner than as bean counter and 21 respondents as business partners.
In order to be able to make a comparison of this role classification with the function classification, the same sample should be used. Therefore, the role classification of the respondents that also answered the questions regarding the function classification, is shown in table 2.
Frequency
(1) Bean counter (full) 1
(2) Bean counter 23
(3) Business partner 81
(4) Business partner (full) 13
Total 118
Table 2: Present and future role classification (respondents that fully completed the survey)
Function classification
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Factor Label (present) Label (future)
1 Managing and planning the finance & control function Internal support and control
2 Financial reporting and budgeting Internal reporting and control
3 Development of accounting information systems Budgeting
4 Advanced financial reporting Corporate restructuring
5 Internal support and control Internal planning
6 Internal auditing External auditing and control
7 External accounting, auditing and control External support
8 Strategic planning and risk management Investing and risk management
9 Corporate restructuring Development of accounting information systems
Table 3: Present and future factor labels
Secondly, the factors were clustered. As described in Appendix C, we found a four-cluster solution. The first two clusters are corresponding to bean counters, in which the first represents full bean counters and the second respondents that are more bean counter than business partner based on their function. The latter two clusters correspond to the business partner, in which cluster number three holds respondents that are more business partner than bean counter and number four full business partners. Table 4 summarizes the four clusters for each period displaying the number of respondents and the underlying factors that correspond with each cluster.
Cluster Present Future
No of respondents Underlying factors No of respondents Underlying factors
(1) Bean counter (full) 34 1, 2, 6 34 1, 2, 3, 9
(2) Bean counter 33 3, 5 22 5
(3) Business partner 18 7 35 4
(4) Business partner (full) 33 4, 8, 9 27 6, 7, 8
Table 4: Present and future cluster solution
In the present (future) 67 (56) respondents could be regarded as either full bean counter or more as bean counter than as business partner for their function classification. At the other side, in the present (future) 51 (62) respondents could be categorized as either full business partner or as more business partner than as bean counter for their function. We can thus observe that there is change in the importance of the work activities of the management accountants throughout time. The business partner activities become slightly more important in the future.
Comparison analysis
13 Present Function Classification Total (1) Bean counter (full) (2) Bean counter (3) Business partner (4) Business Partner (full)
Role classification (1) Bean counter (full) 1 0 0 0 1
(2) Bean counter 13 4 1 5 23
(3) Business partner 19 26 15 21 81
(4) Business partner (full) 1 3 2 7 13
Total 34 33 18 33 118
Table 5: Present comparison analysis
Future Function classification Total (1) Bean counter (full) (2) Bean counter (3) Business partner (4) Business partner (full)
Role classification (1) Bean counter (full) 1 0 0 0 1
(2) Bean counter 12 1 4 6 23
(3) Business partner 19 19 26 17 81
(4) Business partner (full) 2 2 5 4 13
Total 34 22 35 27 118
Table 6: Future comparison analysis
In the present categorization, 27 respondents are classified equally for their function and role, while this changed to 32 respondents in the future. The remaining respondents (i.e. 91 and 86 for the present and future respectively), have been classified differently on their function and role. These 'mismatches' can be categorized in two groups; (1) mismatches within the own type of MAs (i.e. the respondents that are categorized differently for their role and function but still fall within the same specific role type (e.g. 1 and 2 or 3 and 4)) and (2) mismatches across the types of MAs (i.e. the respondents that are differently categorized for their role and function and fall within different types (e.g. 1 and 4 or 2 and 3)). This first group are the less severe mismatches, while the second group are the mismatches that contribute most to the argument of making a distinction between the role and function. When we look at the first group of mismatches, we can distinguish 13 (12) and 23 (22) mismatches within the bean counter and business partner groups respectively for the present (future). The second group of mismatches consists of 55 (52) respondents for the present (future).
Logistic regression
14 Present B Sig. Orientation ,641 ,041 Conservative vs progressive ,455 ,070 Objective vs subjective -,523 ,076 Constant -6,263 ,004
Table 7: Present Logistic Regression Backward
Future
B Sig.
Business complexity -,470 ,066
ICT impact ,721 ,016
Size ,315 ,081
Importance of knowledge in business ,726 ,051
Conservative vs progressive ,798 ,007
Constant -9,043 ,003
Table 8: Future Logistic Regression Backward
The results on the present show that bean counters are associated with orientations towards the past, conservatism and subjectivity. Conversely, business partners are associated with orientations towards the future, progressivism and objectivity. For the future, the conservatism vs progressivism trigger is still significant. The other two are not, but other triggers show significant predictive power. Bean counters are here associated with small organizations that are complex and where the impact of ICT is small. Additionally, knowledge in business is not important for bean counters. At the other hand, business partners are again associated with progressivism. Moreover, they seem to work in large, simple organizations where ICT has much impact. Also, the knowledge in business of MAs is important.
Interviews
Within this section we provide a description of the main events within the case studies that were selected for this study. Subsequently, we make cross-case comparisons in order to relate the three cases.
Case A: Energy-sector
The interviewee explained that management accounting is exercised on two levels throughout the organization: on a corporate level and a business-unit level. She herself is the manager of a part of the controllers that are working at the corporate level. Controllers within the organization can be described as business-partner or project-administrator, in which the latter one works more decentralized (i.e. on a business-unit level). The former group mostly fulfills a supporting role at the corporate level.
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As mentioned, the interviewee is the manager of a group of controllers. The role of these controllers was described as being the linking pin between finance and the workfloor; as a controller you are a business partner. The controller is mainly an adviser to other managers and therefore the relation between controllers and managers is functionally, but not hierarchically.
"Ideally, the controller should spent more than half the time on advising".
However, not all managers have the same perception of this role as becomes clear in the following quote:
"The controller takes the position of adviser, but also that of a critical business partner; I try to advise, but also to go beyond and ask questions, I try to be a cooperative business partner....However, not everyone sees the controller as an adviser".
When we further asked whether the managers themselves collect financial information, besides the reports that are communicated to them by the controllers, the interviewee answered:
"They (the managers) can all access the accounting system, so if they want they can request any information they want. However, they rarely do this. But you, as a controller, can stimulate project leaders to request for more information or to do this by themselves. For this, we give presentations to these leaders to show that some information may be useful to them and how they can use it".
Apparently, the controller plays a crucial role in advising managers and in stimulating them to use different sources of information. It lies in these two characteristics of the relation between controllers and managers what enables controllers to influence the perceptions and expectations of the managers.
"You influence other managers already by providing information, but also through the role you play. You try to influence them (the managers). I always say; I am the controller, so I am the adviser, it is your (the manager's) decision and money, but my advice would be this... I certainly try to influence, but I not always succeed at this". Personality differences between managers and controllers are mentioned as a cause of not being able to influence managers in the desired way. Whether controllers are able to influence managers also depends on the situation. Some managers are more eager to learn, and therefore more open for new things, while others find it sufficient when current ways of doing their work are sufficient enough. An example was given of a manager that was newly appointed. This manager received a specific assignment and for that she is eager to learn a lot. She is requesting a lot of information from the interviewee and her departments. Within this situation, the controller can fulfill a more influential role, because the manager is open to receive feedback and information.
For the controller to be able to play a leadership role, it was argued that the relation between the manager and the controller is essential:
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In addition, also here it was mentioned that the functional position of the controllers is key in determining the relation between controllers and managers instead of purely the hierarchical relationship.
"In my opinion you do not have to be hierarchically positioned below someone {in order to get acquainted with the business}, you can also do this through your relationships. The hierarchy should not justify why you have a good relationship with someone".
Finally, the interviewee assigned an important role to the controller in stimulating managers to approach problems from different perspectives. However, she also emphasized that controllers should avoid to become too involved in the activities of the manager. In the end, it is the managers responsibility, but the controller should support as much as possible.
Case B: Energy-sector
This organization, which is active in the oil and gas industry, was recently reorganized towards a structure that distinguishes between countries instead of continents, in this case Europe. Each country now has one finance manager and beneath this manager two "finance in the business managers" and one controller. Finance is organized in four parts: (1) Finance in the Business, (2) Projects & Technology, (3) Central Finance Controllers and (4) Finance Operations. The first two are positioned closely to the core activities (i.e. the operational side) of the organization, while the latter two are centralized at the corporate level. According to the interviewee, this structure influences the role of the controllers. The departments of Finance in the Business and Projects & Technology work closely with the operating people and deal with issues like costs, budgets and the approval of these budgets. In addition, Projects & Technology manages large projects like maintenances. Central Finance Controllers are located at the corporate level and this group is divided in five subgroups. The interviewee is the manager of one of these departments (i.e. Revenue Controlling). Their main contacts are with the other departments on the corporate level as well as with the Finance in the Business people. Finally, the Finance operations can be seen as the administrators that do the actual operating financial work like invoicing.
"We (the Central Finance Controllers) focus on the entire organization. When you work in Finance in the Business, you are aligned to a cluster of fields and within this cluster you focus on a couple of fields. We work at a more corporate level and the Finance in the Business people work closely with the operating departments of for example four/ five fields, and these people know everything about these specific fields. They (the Finance in the Business people) have a more detailed look and are therefore more involved. They have more contact with the operating personnel, while we mainly communicate with "office-people"".
This structure also enables different roles for the two groups of finance people:
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There is frequent contact between the Central Finance Controllers, and Revenue Controlling in specific, and the other departments at the corporate level (i.e. Commercial, Production & Services and IT). The interviewee and his department try to influence people within these departments in order to come to a solution that is the best for all parties. However, it depends on the person and the specific moment in time whether they succeed.
"It depends on the person and on time. We recently switched to a new system and with it a new process, so that was a period of change. We needed new inputs to feed our department. For that, we fulfilled a coaching and influencing role during this period in order to change other people. Along the way the process improved and was better integrated across departments and then your role, as a controller, changes; you then maintain the way it is. You are fine-tuning and at some point you have reached the 'optimum' and then it is a matter of maintaining this state by ensuring that the things that have been agreed to, are executed. In addition, at some point in time people have had enough changes and then you should step back a little".
"It depends on the person. I have had to deal with people that told me for one and a half year: why are we doing all this, it was good the way it was. Why do we need to change all in a sudden? This asks for a different approach than when people say: hé, that is a nice initiative, how can I assist you? ... You have to deal with these different views by taking a particular stance in order to control a situation like this.
Additionally, the interviewee mentioned that it is important that his whole department supports the way they are working and how they convey this message throughout other departments.
"... I cannot influence all parties so they will change, on my own, I need my team for that. Internally, within my own department, I have to get everyone on the same track. Outside your department, you need your team to influence other people".
"{You are more a role model} to your 'own' people, the people that report to you. But up the hierarchy, to managers with more experience in a high position, I am not a role model".
With respect to standards, the interviewee and his department aim to standardize as much as possible. However, there is always contact between the department and the 'client' about standardizations and it is also not a problem if people deviate from the standards, but they should at least inform the interviewee about this. The interviewee and his department then play a supporting role in trying to solve issues that may lead to situations which result in not meeting the standards. However, this role is no more than signaling and cooperating, because the controllers do not have enough knowledge to really make a statement on what to change in order to be able to stick to the standards the next time.
Case C: Health care-sector
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"My own role is strongly related to the activities of the other directors. I am showing them where we are at the moment, but I also provide a critical lens and act as a sparring partner for the other directors. At the same time, I continuously struggle with the question: how can we improve the control of our organization? What is happening in the environment? The health-care sector is very turbulent at the moment. What does the changed view of customers (i.e. the outside world) mean for the hospital and how do we react?"
The operational side of the organization is organized in twenty centers, which all have two managers; one general manager and one health-care specialist. Within these centers, controllers have an advising role. This change from a more reporting role towards an advising role has recently been deployed.
"It used to be that all analyses were made and reports were written here at the Planning & Control department, which were then communicated with the management of the centers. However, currently these center managers themselves have to prepare the reports and analyses while the controller acts as an adviser. This is a major change and not every manager is able to do this... As a controller you really have to know what the manager is able to do, how far is he developed in doing this work; the intention is that the manager does most of the work, while the controller is the adviser".
In his role as financial director, the interviewee strongly influences other managers in his team, and mainly in two ways:
"My strategy: you can either do revolution or evolution. With revolution you suddenly want to change everything, while with evolution you consistently make smaller changes. The latter style is mine. I used to call it like "valsplat" in cycling: you are not aware of going up, but you do and afterwards you see: wow, I really did a lot".
Currently, many changes take place in the health-care sector and thus the organization should change accordingly. The interviewee has an important role in transferring the need to change as becomes clear in the following quote:
"{I am conveying the necessity to change} by continuously repeating the message; 'repeating is the strength of the message'. There is some skepticism, because my colleagues (the other members of the management team) already work here for a long time; they think that things will work out. But in continuously showing what is happening and what the impact will be, it is about the role you take; do your colleagues trust you? If so, then they will listen to you and your message is heard. But, this requires you to keep conveying the same message and to support this with a good story".
And this is exactly what is important for a controller. A controller should be able to communicate with people and to support them.
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ensure that everything goes the way it should go? {This is the most important part for me}".
When we switched to the questions on whether the case organization was relying on standards, the interviewee answered that this really depends on the situation of the organization (see quotes below).
"We have a loose style of controlling the organization. Are we heavily discussing all kind of reports, indicators; no. But are the results good; yes. It is very important to determine the nature of the organization; what is best for the organization? Currently, everything goes alright, so why should we change that? At the moment, there is tension here. I try to adjust the control of the organization on what the organization is capable of and at the same time on the developments in the environment".
"We have almost no standards, but in the current changing markets we are moving towards more standardization. Generally speaking, you can do two things when things are getting tougher; either increasing the control or allowing more responsibility for the employees. We try to find a mix between the two solutions".
It was mentioned that it is key to preserve individual strengths and to learn from each other, instead of standardizing everything. Currently, there is a tension whether the organization should standardize more or not and whether the center managers should produce their own reports and analyses or that controllers should provide custom-made packages of information that help these managers to make their decisions. The aforementioned quotes give an impression of how these tensions are shaped and what the role of controllers can be in controlling them.
Cross-case analysis
One key similarity between the cases is that they all distinguish between two types of controllers; (1) the type of controller that prepares reports and analyses and, (2) the type of controller that gives advice to managers. Within case A the latter type is positioned within the corporate-unit while the former group, in this case the project administrators, are positioned at the business-unit level. For Cases B and C the opposite is true. Within these organizations the controllers at the corporate-level are more focused on reporting while the lower-level controllers can be regarded as the advisers of the managers.
This difference can be related to the position of the controller's client (i.e. the operating managers). Within case A the managers are also positioned at the corporate-level, while the managers of Cases B and C are located at the business-unit level. The controllers that are also positioned at the business-unit level here, are the advisers, at least according to the interviewees. Additionally, within case B, the interviewee and his department does fulfill an advising role. However, not for the operating managers, but for the other corporate-level departments of the Finance function. The same applies to Case C, in which the interviewee, who is the financial director, does perform in an advising role towards his peers. As such, the difference between the cases is that the position of the operating managers differs and this influences the specific role of the controller within each case.
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strongly functional, but not hierarchical. All in all, the controller is positioned and the role description is defined in such a way that the controller is able to be an adviser to the manager. In Case B, the interviewee mentioned that the business-unit controllers have a lot of contact with the operating personnel within this unit and that the corporate-level controllers mainly have contact with other corporate people. This functional set-up determines the roles of both type of controllers (i.e. that of adviser versus that of reporter/ analyzer). The same applies for Case C. As such, the functional position of the controllers may be a determinant for the role that controllers fulfill.
When we then look at the relationship between the role of controllers and their leadership role from a cross-case perspective, we can summarize, based on the cases, that the leadership behaviors that controllers show are related to the role they fulfill (i.e. the position they take). This is also mentioned by the interviewee of Case A. She said that the extent to which you can influence managers depends on your position. A similarity here across all cases is that controllers influence managers already by deciding upon what information is to be communicated. The relation between the controller and the managers is said to be of great importance in the process of influencing these managers. The interviewee of Case A emphasized that the functional relation with the manager determines the success of a controller. This functional relation is, as mentioned earlier, also related to the position of the controller within the organization. For example, in Case B, the interviewee and his department are not closely positioned to the operating managers and therefore have no strong functional relation and therefore not a lot of influencing 'power'. Additionally, personality differences between controllers and managers also determine the success of controllers in being leaders (i.e. influencing the managers). Within Case A an example was given in which a manager did not follow the interviewee's advice and the interviewee imputed this to personality differences. The interviewee of Case B mentioned that the age and experience differences between him and the other corporate-level managers did not make him a role model to these managers. However, it seems that age and experience differences do not limit the controller's credibility and status within the organization, and thus the possibilities to influence other managers. Again, the functional relation between the controller and manager is key within this respect.
Finally, the interviewee of Case C emphasized the importance of not trying to change or influence too much. He distinguished between revolutionary and evolutionary change in which the former means that everything is radically changed while the latter implies that small changes are made consistently. Also within Case B, the interviewee described a situation in which a new system was applied. During the process of implementing this new system, the interviewee faced two groups: (1) people that were open for the change of the system and (2) people that questioned the necessity of this new system and thus who resisted the change. The interviewee mentioned that each group asked for a different approach by him and his team. The first group was eager to learn and it was relatively easy to communicate the need to change and to implement the change. However, the second group needed more guidance and in order to be able to influence them, the interviewee mentioned that is was important that his own department was backing him up by also communicating the necessity of the change.
21 Literature review
The final part of our study is a literature review on the topics that emerged from the interviews. We address the following two topics. Firstly, we found a relation between the functional and physical position of the operational manager as opposed to the MA's position and the role of the MA. Secondly, the interviews revealed that relationship building, on a functional as well as a personal level, between the MA and the managers is important if the MA wishes to fulfill a role as adviser and leader. The personalities of both functionaries were shown to have an important influence on a successful collaboration between the two. This section continues by describing the literature on these topics.
Functional and physical position of MAs and managers and the role of MAs
We are here interested in studies that examined the positions of MAs and managers and how these relate to the role of MAs. As mentioned in the methodology section, we used Business Source Premier and Google Scholar as databases for our search to relevant papers. We searched mainly through using keywords like 'position of MAs and managers', 'role of MAs' and 'physical position of MAs and managers', either independently or combined. The results of this search are described below.
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managers. Thus, although the MAs were positioned more closely to the operational managers, their role still remained that of bean counters. Thirdly, Chenhall and Langfield-Smith (1998b) also found that the ability to build personal relationships and to gain trust of others is especially an important skill for business partners.
We wish to conclude the above described discussion as that the role of MAs seems to depend on their position towards the operational managers within the organization. However, as Burns and Baldvinsdottir (2005) concluded, a structural and physical location closely to the operational managers is not enough to regard a MA as a business partner. Different perceptions (Lambert and Sponem, 2012, p. 586) can lead to role conflict (Hopper, 1980) and relationship building between MAs and operational managers is often described as an important prerequisite when MAs want to fulfill a business-partner role (e.g. Byrne and Pierce, 2007; Nor-Aziah and Scapens, 2007; Lambert and Sponem, 2012). However, Lambert and Sponem (2012) did find that physical proximity is required in order to build relationships. More literature on the relationship between the MA and the operational manager is discussed in the next section.
MAs and managers: relationship building and personalities
Lambert and Sponem (2012) recognized that the position of the MA department influences the relationships and the role it plays with regard to other departments. A distinction between hierarchical relations and functional relations can be made. The former are set through the organizational structure, while the latter is softer and depends on the interaction between, in this case, MAs and operational managers. Lambert and Sponem (2012) described the MA department as a support staff and thus as a department that has no hierarchical relationship with operational managers. Consequently, "MAs authority is limited to its ability to provide information or advice to operational managers" (Lambert and Sponem, 2012, p. 568). It is thus important for MAs to build on their relationship with the operational managers in order to be able to perform as a business partner (see also Burns and Baldvinsdottir, 2005). Burns and Baldvinsdottir (2005) found that close day-to-day contact and relationship building was essential for MAs in communicating their knowledge and expertise (i.e. fulfilling a support/ advising role). Chenhall and Langfield-Smith (1998b) mentioned that "accountants who continue to derive their authority from their position in a formal hierarchy are likely to have difficulty being accepted by teams" (Chenhall and Langfield-Smith, 1998b, p. 382) (i.e. relationship building is essential to be accepted by others and thus the functional position is not sufficient (see Burns and Baldvinsdottir, 2005)). A good relationship increases the willingness of operational managers to present issues of concerns to MAs (Byrne and Pierce, 2007) and to gain their trust (e.g. Chenhall and Langfield-Smith, 1998b). However, many have argued that MAs need to build social skills in order to be able to build these relationships (e.g. Scapens and Jazayeri, 2003; Burns and Baldvinsdottir, 2005; Järvenpää, 2007). In addition, the knowledge in business of MAs should be expanded when an assisting role is aimed for (Pierce and O'Dea, 2003).
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Discussion
Past research has explored a lot regarding the role and function of management accountants (MAs). The earliest studies (e.g. Kester, 1928; Hopper, 1980; Sathe, 1983) were all quite descriptive in the sense that they did not provide much empirical evidence. These studies already distinguished between two types of MAs or two responsibilities of MAs that are now often referred to as (1) bean counters, and (2) business partners or (1) the financial reporting and internal control, and (2) the management-service responsibility. In contribution to these prior studies, many case studies have been conducted on the role of MAs (e.g. Burns and Baldvinsdottir, Järvenpää, 2007). However, a lack of empirical evidence on the changing roles of MAs is often recognized (e.g. Malmi et al., 2001; Riedijk et al., 2002; Vaivio, 2006; Lambert and Sponem, 2012). Although there may not be much empirical foundations to support a role change towards MAs as business partners, we do know much about the different roles of MAs. Byrne and Pierce (2007) made a characterization of the roles of MAs by providing an overview of antecedents and characteristics that can be seen as determinants for these roles. Lambert and Sponem (2012) also provided an overview of the roles of MAs and distinguished between four types of MAs and witnessed organizations with different styles of management accounting departments. In conclusion, prior research has contributed a lot to our understanding of the roles of MAs.
However, the overview of Byrne and Pierce (2007) was merely a list of possible antecedents and characteristics. They did not provide relations between the groups and how they related to the common distinction that is made between bean counters and business partners. Also, studies do not make a clear distinction between the role and the function of MAs, while both constitute a different aspect of the job (see Riedijk et al., 2002). Hopper (1980) recognized that roles are linked to three central concepts (i.e. expectations, behaviour and structure). The expectations can be regarded as the role, and the behaviour as the function when referring to Riedijk et al.'s (2002) definitions. Although Lambert and Sponem (2012) did relate different characteristics, in this case authority and the perceptions and intentions of operational managers, to the different types of MAs, they did not address the distinction between the role and function. Since we believe that an understanding of this distinction can help us in addressing problems that may arise in the MA practice (e.g. role conflict, lack of skills, lack of interaction), and increase our understanding of how the MA's job is shaped, we conducted two studies (the current and the 2012-study) on the role and function distinction. Where the first study provided statistical support for making a distinction between the role and function, so furthered the second study our understanding of this distinction by conducting additional analysis and moreover by gathering empirical evidence. More importantly, this second study (i.e. the current study) found an explanation of how to relate the role and function of MAs. This discussion proceeds as follows. Firstly, the findings of our quantitative study are described. Secondly, the findings that resulted from our interviews and literature review (i.e. qualitative study) are examined. Thirdly, the two studies are integrated and the findings discussed. Finally, we conclude with a descriptions of our main findings and contributions.
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changing. However, the main conclusion of this quantitative study remains that a distinction should be made between the role and function of MAs if we want to fully understand the MA's job. Based on Riedijk et al.'s (2002) and Hopper's (1980) definitions the role addresses how the MA relates to other members of the organizations (i.e. his/her role set), while the function describes the activities the MA engages in. Besides a distinction between the role and function, we also found, amongst others, that knowledge of the business is an important determinant for the function classification (i.e. business knowledge is required for business partners). This is in line with prior studies that also found support for such a relation (e.g. Chenhall and Langfield-Smith, 1998a,b; Jablonsky and Barsky, 1999; Järvenpää, 2007).
Secondly, the quantitative study emphasized on this distinction by providing empirical support for this distinction through conducting interviews at three organizations. Additionally, literature was explored based on the issues that emerged from the interviews. Based on the interviews, we found that the position of the MA as well as the operational managers determine the role of MAs and thus the activities they engage in. All three cases made a distinction between MAs at the corporate level and the business-unit level. The role of the respective MA depends on the position of their main client, in most cases the operational managers but in some cases managers of other supporting departments such as in Case B. Additionally, we found that relationship building is an important prerequisite for MAs that wish to be a business partner for their managers. Mainly in Cases A and B it was recognized that it is important for a MA to take into account the differences between persons when interacting with them. Moreover, the interviewee within Case A explained that personal relationships with managers are crucial for building successful work-relations (i.e. functional relationships). Another important task of MAs is gaining the trust of the client as became evident in Case C. Our review further supports the importance of relationship building. We also concluded that the position of MAs determines the possibilities of relationship building and leadership possibilities. The interviewee of Case A emphasized that the position in the hierarchy should not justify why you have a good relationship with someone. To the contrary, relationships should exist and be maintained for a functional reason (i.e. to help each other). In all cases it becomes clear that it is difficult to build relationships when the MA is physically positioned far away from the client. This finding that the position of the MAs is related to their relationship building possibilities is in contrast with Hopper (1980) who found that structure has little effect on personal relationships. However, we argue that the structure and thus the position of MAs determines the structural and functional relationship of MAs with others. These relationships are essential, we argue, for building personal relationships, because personal relationships are less often build when there is no contact required between two persons in an organizational context (i.e. functionally). Lambert and Sponem (2012) also found that physical proximity is required for building relationships.
