Constructing servitization strategies. Accounting information in supporting NPD processes

Anteprima

In the last decades, a fruitful stream of research has paid attention to the servitization strategy analysing the role of accounting in supporting it. We deeply investigate the role of accounting information in verifying the validity of a servitization strategy. Drawing on the pragmatic constructivism, we identify the key elements of servitization strategy associated to possibilities, facts, and values that could contribute to transform new possibilities into factual possibilities. Focusing on New Product Development (NPD) processes, we aim to analyse the use of accounting information in managing two development projects. In particular, the accounting information, acting as a communication means can verify the validity of a company servitization strategy in order to complete the construction of that strategy.

We conducted an interpretive case-study at a division of a multinational, manufacturing company operating in the semiconductor industry. Case evidence showed how the revisions to the projects, suggested from accounting communications during the NPD phases, allowed a realignment of the two projects to the servitization strategy at the company level, which was validated with respect to the new devices.

Keywords: Servitization Strategy, New Product Development, Pragmatic Constructivism, Accounting Information Systems

Bibliografia
  1. Abernethy M.A., Brownell P. (1997), Management control technologies in research and de-velopment organizations: the role of accounting, behavior and personnel controls, Accounting, Organizations and Society, 22, pp. 233 – 248.
  2. Abernethy M.A., Stoelwinder J. U. (1991), Budget Use, Task Uncertainty, System Goal Orientation and Subunit Performance: A Test of the ‘Fit’ Hypothesis in Non-For-Profit Hospitals, Accounting, Organizations and Society, 16, 2, pp. 105-120.
  3. Ahren T., Chapman C. S. (2004), Accounting for flexibility and efficiency: a field study of management control systems in a restaurant chain, Contemporary Accounting Research, 21, 271– 301. Doi: 10.1506/VJR6-RP75-7GUX-XH0X.
  4. Amabile T.M., Conti R., Coon H., Lasenby J., Herron M. (1996), Assessing the work environment for creativity, Academy of Management Journal, 39(5), pp. 1154–1184. Doi: 10.2307/256995.
  5. Bergfors M.E., Larsson A. (2009), Product and process innovation in process industry: a new perspective on development, Journal of Strategy and Management, 2:3, pp. 261-276. Doi: 10.1108/17554250910982499.
  6. Birnberg J.G. (1988), Discussion of an empirical analysis of the expenditure budget in research and development, Contemporary Accounting Research, 4, pp. 582-587. Doi: 10.1111/j.1911-3846.1988.tb00686.x.
  7. Bisbe J., Otley D. (2004), The effects of the interactive use of management control systems on product innovation, Accounting, Organizations and Society, 29(8), pp. 709–737.
  8. Briers M., Chua W.F. (2001), The role of actor-networks and boundary objects in management accounting change: A field study of an implementation of activity-based costing, Accounting, Organizations and Society, 26(3), pp. 237–269.
  9. Brown S., Esembardt K. M. (1997), Product development. Past research, recent findings and future directions, Academy of Management Review, 20, pp. 343– 378.
  10. Brownell P. (1985), Budgetary systems and the control of functionally differentiated organizational activities, Journal of Accounting Research, 23, pp. 502-512.
  11. Chua W.F. (1995), Experts, networks and inscriptions in the fabrication of accounting images: A story of the representation of three public hospitals, Accounting, Organisations and Society, 20(2/3), pp. 111–145.
  12. Clark K.B., Fujimoto T. (1991), Product development performance, Boston, Harvard Business School Press.
  13. Cooper R., Slagmulder R. (2004), Interorganisational cost management and relational context, Accounting, Organisations and Society, 29(1), pp. 1–26. Doi: 10.1016/S0361-3682(03)00020-5.
  14. Cooper R.G., Kleinschmidt E.J. (1987), New products: What separates winners from losers? Journal of Product Innovation Management, 4(3), pp. 169–184. Doi: 10.1111/1540-5885.430169.
  15. Damanpour F. (1991), Organizational innovation: a meta-analysis of effect of determinants and moderators, Academy of Management  Journal, 34 (3), pp. 555–590. Doi: 10.2307/256406.
  16. Davila T. (2000), An empirical study on the drivers of management control systems’ design in new product development, Accounting, Organizations and Society, 25, pp. 383–409.
  17. Davila T., Wouters M. (2004), Designing cost-competitive technology products through cost management, Accounting Horisons, 18(1), 13–26. Doi: 10.2308/acch.2004.18.1.13.
  18. Day GS. (1990), Market Driven Strategy: Processes for Creating Value, New York, Free Press.
  19. Desarbo W.S., Di Benedetto A., Song M., Sinha I. (2005), Revisiting the Miles and Snow strategic framework: uncovering the interrelationships between strategic types, capabilities, environmental uncertainty, and firm performance, Strategic Management Journal, 26, pp. 47-74. Doi: 10.1002/smj.431.
  20. Ditillo A. (2004), Dealing with uncertainty in knowledge-intensive firms: the role of management control systems as knowledge integration mechanisms, Accounting, Organizations and Society, 29, pp. 401– 421. Doi: 10.1016/j.aos.2003.12.001.
  21. Dougherty D., Hardy C. (1996), Sustained product-innovation in large, mature organisations: Overcoming innovation- to-organisation problems, Academy of Management Journal, 39(5), pp. 1120–1153.
  22. Gebauer H., Bravo-Sanchez C., Fleisch E. (2008), Service strategies in product manufacturing companies, Business strategy series, 9(1), pp. 12 – 20.
  23. Gerwin D., Kolodny H. (1992), Management of advanced manufacturing technology: Strategy, organisation and innovation, Chichester, John Wiley and Sons.
  24. Grant R.M. (1991), The resource-based theory of competitive advantage: implications for strategy formulation, California Management Review 33(3), pp. 114-135. Doi: 10.2307/41166664.
  25. Gupta A.K., Wilemon D.L. (1990), Accelerating the development of technology-based new products, California Management Review, 32, 24-44. Doi: 10.2307/41166603.
  26. Hambrick D.C. (1983), Some tests of the effectiveness and functional attributes of Miles and Snow’s strategic types, Academy of Management Journal 26(March), pp. 5–25.
  27. Hayes D.D. (1977), The contingency theory of managerial accounting, The Accounting Review, 52(1), pp. 22-39.
  28. Hofer C.W., Schendel D. (1978), Strategy Formulation: Analytical Concepts. West: St Paul, MN.
  29. Howells J. (2000), Innovation and Services, UMIST internal publication.
  30. Jørgensen B., Messner M. (2010), Accounting and strategizing: A case study from new product development, Accounting, Organizations and Society, 35, 2, pp. 184–204. Doi: 10.1016/j.aos.2009.04.001.
  31. Korhonen T., Stormi K., Laine T., Liew A. (2016), Examining technical and behavioural possibilities in developing fleet services in the machinery manufacturing context, Proceedings of Pragmatic Constructivism,  6, 1, pp. 3-13.
  32. Laine T., Cinquini L., Suomala P., Tenucci A. (2016), Roles of accounting and control in New Service Development within Servitization – a literature review and research implications. http://www.naplesforumonservice.it/uploads//files/Laine%2CCinquini%2C%20Suomala%2C%20Tenucci.pdf
  33. Laine T., Paranko J., Suomala P. (2012a), Management accounting roles in supporting servitization: Implications for decision-making at multiple levels, Managing Service Quality, 22, 3, pp. 212-232.
  34. Laine T., Paranko J., Suomala P. (2012b), Using a business game concept to enhance servitization: a longitudinal case study, Managing Service Quality, 22, 5, 428-446.
  35. Lay G., Copani G., Jäger A., Biege S. (2010), The relevance of service in European manufacturing industries, Journal of Service Management, 21(5), 715–726.
  36. Leonard-Barton D. (1995), Wellsprings of knowledge. Building and sustaining the sources of innovation, Boston: Harvard Business School Press.
  37. Lindholm A., Laine T., Suomala P. Forthcoming. (2017), The potential of management accounting and control in global operations – profitability-driven service business development, Journal of Service Theory and Practice.
  38. Mathieu V. (2001), Service Strategies within the Manufacturing Sector: Benefits, Costs and Partnership, International Journal of Service Industry Management 12(5), pp. 451 – 475. Doi: 10.1108/EUM0000000006093.
  39. Miles R.E., Snow C.C. (1978), Organisational strategy, structure and process, New York: McGraw-Hill.
  40. Miller P., Rose N. (1990), Governing economic life, Economy and Society, 19(1), pp. 1–31.
  41. Naranjo-Gil D., Hartmann F. (2007), Management accounting systems, top management team heterogeneity and strategic change, Accounting, Organizations and Society, 32, pp. 7-8, pp. 735–756. Doi: 10.1016/j.aos.2006.08.003.
  42. Neely A. (2008), Exploring the Financial Consequences of the Servitization of Manufacturing, Operations Management Research, 1(2), pp. 103 – 118.
  43. Nixon B. (1998), Research and development performance measurement: a case study, Management Accounting Research, 9, pp. 329-355.
  44. Nørreklit H., Nørreklit L., Mitchell F. (2007), Theoretical conditions for validity in accounting performance measurement, in Neely, A. (Ed.), Business Performance Measurement – Frameworks and Methodologies, Cambridge University Press, Cambridge, pp. 179-217.
  45. Nørreklit H., Nørreklit L., Mitchell F. (2010), Towards a paradigmatic foundation for accounting practice, Accounting, Auditing & Accountability Journal, 23, 6, pp. 733-758.
  46. Nørreklit L., (2013), Reality as a construct: outline of a pragmatic constructivist perspective, Proceedings of Pragmatic Constructivism, 3, 2, pp. 57-66
  47. Oliva R. Kallenberg R. (2003), Managing the Transition from Products to Services, International Journal of Service Industry Management, 14, pp. 160-172.
  48. Ouchi W.G. (1979), A Conceptual Framework for the Design of Organizational Control Mechanisms, Management Science, pp. 833-848.
  49. Pettigrew A. (1977), Strategy Formulation as a Political Process, International Studies of Management and Organization, 7 (2). pp. 78-87.
  50. Porter M.E. (1980), Competitive Strategy, New York, Free Press.
  51. Robson K. (1992), Accounting numbers as inscription: Action at a distance and the development of accounting, Accounting, Organisations and Society, 17(7), 685–708.
  52. Rockness H.O., Shields M.D. (1984), Organisational control systems in research and development, Accounting, Organizations and Society, 9, pp. 165-177.
  53. Rockness H.O., Shields M.D. (1988), An empirical analysis of the expenditure budget in research and development, Contemporary Accounting Research, 4, pp. 568-581.
  54. Scapens R.W. (2004), Doing case study research. In Christopher E., Lee B. (Ed), The real life guide to accounting research, Oxford, UK, Elsevier Lrd.
  55. Shilling M.A., Hill C.W.L. (1998), Managing the new product development process: strategic imperatives, The Academy of Management Executive, 67-81.
  56. Simons R. (1990), The role of management control systems in creating competitive advantage – New perspectives, Accounting, Organisations and Society, 15(1/2), pp. 127–143.
  57. Simons R. (1995), Levers of Control: How Managers Use Innovative Control Systems to Drive Strategic Renewal, Boston, Harvard Business School Press.
  58. Souder W.E., Sherman J.D., Cooper R.D. (1998), Environmental uncertainty, organisational integration, and new product development effectiveness: A test of contingency theory, Journal of Production Innovation Management, 15(6), pp. 520–533.
  59. Tenucci A., Cinquini L. (2015), Will Accounting Information be Relevant in the Servitization Process? in Baines T., Harrison D., Servitization: the theory and impact, Proceedings of the Spring Servitization Conference, pp. 99-106.
  60. Tenucci A., Laine T. (2016), The role of management accounting in servitization, CIMA Executive Summary Report, vol. 12, 3, pp. 1-12.
  61. Tidd J., Bessant J., Pavitt K. (1997), Managing Innovation. Integrating technological, market and organizational change, Chichester: John Wiley & sons.
  62. Tushman M.L., O’Reilly C.A. (1997), Winning through innovation: A practical guide to leading organisational change and renewal, Boston, MA: Harvard Business School Press.
  63. Vandermerwe S., Rada J. (1988), Servitization of Business: Adding Value by Adding Services, European Management Journal 6(4): 314 – 324. Doi: 10.1016/0263-2373(88)90033-3.
  64. Vernona G. (1999), A resource-based view of product development, Academy of management review, 24 (1), pp. 132-142.
  65. Walsham G. (2006), Doing interpretative research, European Journal of Information Systems, 15, pp. 320-330.
  66. White A.L., Stoughton M., Feng L. (1999), Servicizing: The Quiet Transition to Extended Product Responsibility, U.S Environmental Protection Agency Office of Solid Waste; http://infohouse.p2ric.org/ref/17/16433.pdf
  67. Widener S.K. (2007), An empirical analysis of the levers of control framework, Accounting, Organisations and Society, 32(7/8), pp. 757–788.
  68. Wise R., Baumgartner P. (1999), Go Downstream: The New Profit Imperative in Manufacturing, Harvard Business Review, 77(5), pp. 133 – 140.
  69. Yin R. (2014), Case study research. Design and methods (5th ed.), Sage Publications, Thousand Oak.
  70. Ziger B., Maidique M. (1990), A model of new product development: An empirical test, Management Science, 36(7), pp. 867–883. Doi: 10.1287/mnsc.36.7.867.