Several conclusions can be drawn from extant literature in management accounting about performance measurement choice. First, it appears from the overview presented here that management accounting employs a rich variety of theoretical frameworks that are informed by different social sciences (primarily sociology, psychology and economics).
Each perspective makes different choices about assumptions, variables investigated and causal-model form, while holding constant, or disregarding, other potentially important issues. As a result, recent commentaries about the state-of-the-art in management accounting research emphasize a divide in the empirical management accounting literature (cf. Zimmerman, 2001 and Merchant et al. 2003). Noting this problem in the empirical literature that studied organizational incentives, Merchant et al. (2003:251) sharply criticize the extant chasm between disciplines:
“Many researchers seem to lock quickly into a single research discipline, paradigm or theory and ignore developments and insights from other fields, that could shed light on the research issue on which they are focusing. These narrow, single discipline- or paradigm bound foci have hindered research progress by fragmenting the literature, by hindering communication (because of the concurrent use of highly specialized jargon with quite similar meaning), and by suggesting incomplete, and in some cases, incorrect conclusions”.
In order to overcome the current divide, many suggest in alternative to adopt an integrative research approach to provide more complete theory-driven understanding of the management accounting-related phenomenon under investigation (Ittner and Larcker, 2001; Hopwood, 2002; Ittner and Larcker, 2002b; Covaleski et al., 2003; Luft and Shields, 2003). In particular, a research strategy that would combine economics-based and behavioral approaches, as opposed to fixating on a purely economic model (cf.
Zimmerman, 2001), is argued to be more likely to produce substantive insights about managerial accounting.
Concerning the behavioral-based studies summarized before, in general support was found to theories claiming that the choice of action plans and performance measures needs to be contingent on organizational characteristics. However, several shortcomings are associated with these studies (cf. Ittner and Larcker, 2001:382). First, each study tends to examine only one or a few uses of performance measures (e.g., compensation or capital justification), while ignoring other potential uses (e.g., planning and problem identification) that may be equally or more important to firm’s success. Second, the studies overlook the properties or “quality” of information used for decision-making and control (among others, dimensions of accessibility, timeliness, reliability and understanding of information), even though information system characteristics are likely to influence decision-making quality and the incentive effects of control systems.
Moreover, the distinction between design and use of management control and performance measurement is unclear or not explicitly addressed in most of the studies in this area (Langfield-Smith, 1997). Prior research on performance measurement system innovations indicates that technical and organizational factors can play an important role in the perceived success and use of management accounting system implementation (e.g.
Shields, 1995; Anderson and Young, 1999; Cavalluzzo and Ittner, 2004). Future studies can make a significant contribution by examining how these factors interact with system design choices to influence actual use and performance measurement outcomes. In particular, it appears that strategy-MCS relationship is still an under-researched topic in management accounting and control (Dent, 1990; Langfield-Smith, 1997; Fisher, 1998;
Kald et al., 2000; Van der Stede et al., 2003). According to Kald and Rapp (2001), not many studies examined in detail both the design and use of performance measurement in relation to the business strategy pursued. The effect of specific functional strategies on the
design of management accounting and control systems has been proposed in past accounting research as a critical issue that has not received adequate research attention.
Moreover, external factors can be expected to influence extent and manner to which performance measurement systems are used within organizations. Previous studies have only preliminarily investigated the consistency in performance measures used internally for different purposes or the alignment between the use of the same measures for internal planning/control and external reporting, despite claims that performance is enhanced when measurement systems are aligned with internal and external critical success factors (cf. Epstein and Birchard, 1999; Eccles et al., 2001). Provided that the boundaries between managerial and financial accounting are increasingly fictitious, empirical evidence regarding the linkages between the two areas remains undernourished.
While some recent results emerged in performance measurement studies in the public sector (e.g. Geiger and Ittner, 1996; Eggleton, Silalahi and Chong, 2001; Modell, 2001;
Cavalluzzo and Ittner, 2004), more research is needed in for-profit sectors on this issue (cf. Joseph, Turley, Burns, Lewis, Scapens and Southworth, 1996)
Based on these discussions about management accounting research on performance measurement choice and taking into account the scant literature in (positivist) environmental accounting literature, this dissertation represents one of the first empirical studies in environmental management accounting. Despite anecdotal evidence about the increased diffusion of environmental-related performance measurement systems, relatively little is known about driving factors and consequences associated with these “innovative” MCS. Consequently, following the research questions proposed in Chapter 1, in the remainder of the dissertation I will explore design attributes and use of environmental performance measures by drawing on mainstream research in management accounting. In particular, I develop three directions of further investigation, also in the attempt to contribute to the limitations of extant research mentioned above.
First, following the discussion about the paradigmatic divide that characterizes the literature, I will investigate the use of environmental performance measures by integrating behavioral- and economics-based research streams. The attempt is to identify the most relevant explanatory variables of performance measurement choice from both groups of studies and to empirically test the explanatory power of a combined approach rather than in isolation. As a related issue, I will also argue in the next chapter about the need to move forward the usual dichotomy financial versus non-financial performance measures (practice-defined variable in Luft and Shields, 2003:188), and focusing instead on more specific underlying management accounting systems attributes and performance measure properties (theory-defined variable in Luft and Shields, 2003:188). Recent examples pointing in this direction are Ittner et al. (2003a), Ittner, Larcker and Randall (2003b), Van der Stede et al. (2003), Abernethy et al. (2004), Cavalluzzo and Ittner (2004), Gibbs et al.
(2004b; 2004a) and Malina and Selto (2004).
Second, after having examined the contingency-based literature, I will explore the role of strategy as main explanatory factor of performance measurement choice. The discussion presented in Section 2.2.1 about the analogies between environmental strategy and quality strategy reveals fruitful avenues of research.
Third, I will extend current behavioral-research by exploring extent, manner and consistency of use in the attempt to explain the differential use of management accounting information for internal decision-making and control versus external accountability. In this respect, the study contributes to our knowledge regarding the use of performance measures in function of different purposes as a topic of research suggested by recent articles (Ittner et al., 2003b; Abernethy and Vagnoni, 2004).