Researching the Level of Diffusion of Selective Management Accounting Techniques by Bangladeshi Firms

Shil, Nikhil Chandra; Hoque, Mahfuzul; Akter, Mahmuda Article Researching the Level of Diffusion of Selective Management Accounting Techniques by Bangladeshi Firms Journal of Accounting and Management Information Systems (JAMIS) Provided in Cooperation with: The Bucharest University of Economic Studies Suggested Citation: Shil, Nikhil Chandra; Hoque, Mahfuzul; Akter, Mahmuda (2015) : Researching the Level of Diffusion of Selective Management Accounting Techniques by Bangladeshi Firms, Journal of Accounting and Management Information Systems (JAMIS), ISSN 2559-6004, Bucharest University of Economic Studies, Bucharest, Vol. 14, Iss. 4, pp. 704-731 This Version is available at: https://hdl.handle.net/10419/310607 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by/4.0/ Accounting and Management Information Systems Vol. 14, No. 4, pp. 704-731, 2015 Researching the level of diffusion of selective management accounting techniques by Bangladeshi firms Nikhil Chandra Shila1, Mahfuzul Hoqueb and Mahmuda Akterb a East West University, Bangladesh b University of Dhaka, Bangladesh Abstract: Application of different management accounting techniques in corporate management sets the tune of the respective corporate in terms of its level of competition, needs for critical decision making, complexity of operations, and stages of different life cycles. This paper applies a quantitative research methodology based on structured questionnaire survey to highlight the diffusion status of different management accounting techniques in selective manufacturing companies operating in Bangladesh. As the manufacturing sector in Bangladesh is getting stronger day by day in terms of generating employment, contributing to GDP, mobilizing resources, and improving other economic factors; a sound management accounting practices via application of different management accounting techniques receive increased attention. The outcome of the paper will definitely help the management accounting practitioners, educators and researchers for policy implications. International community will also be benefited from the research outcome demonstrated by Bangladeshi firms due to the perceived importance of Bangladesh in newly defined economic zone led by India and China. Keywords: Diffusion, management accounting techniques, management accounting practices, Bangladesh JEL codes: M41 1 Corresponding authors: Nikhil Chandra Shil, Department of Business Administration, email addresses: [email protected], [email protected] Researching the level of diffusion of selective management accounting techniques by Bangladeshi firms Vol. 14, No. 4 705 1. Introduction The development of management accounting practices is interestingly converged within the industrialized areas of the world (Granlund & Lukka, 1998). However, this relationship is applicable to mostly new and innovative ideas in management accounting. The relevance lost debate, initiated by a set of articles (e.g. Kaplan, 1983, 1984) and the best-selling book by Johnson and Kaplan (1987), that management accounting research, practice and teaching had failed to keep up with changes in the business environment and that as a result management accounting had lost its relevance for planning, decision making and control, has ushered a new dimension in management accounting research. Such critical observation has solid empirical foundation that this development had weakened the competitive position of US corporations. Thus the debate requested management accounting practitioners to involve into more research on management accounting practice, including survey and field studies, and for academia and researchers to act as communication channels for the diffusion of management accounting innovations (MAIs). This call brought extra momentum to develop innovative management accounting techniques followed by the study of diffusion of such techniques. Based on the concern as raised above, this paper deploys a motivated effort of studying the diffusion of selective management accounting techniques in Bangladesh which is characterized as late adopter of innovative tools due to weak demand side of innovation diffusion. Bangladesh economy was initially explained as an economy leaded by agricultural sector. However, from 90s an economic transformation has been witnessed due to the wide scale privatization effort undertaken by the then government encouraging private investment. It takes couple of years after its independence which is the capital formation regime followed by the exercise of entrepreneurial role when the country has advanced significantly in its industrialization initiative. Now Bangladesh is observing a steady growth in major economic parameters, struggling successfully to have a strong manufacturing sector to ensure a balanced economic growth and confirms some notable achievements which upgrade the country to lower middle income country status from least developed country status. It is in line with the millennium development goals (MDGs) which are properly manifested in 2021 vision of becoming a middle income country within that time. Recently Bangladesh has also signed Sustainable Development Goals of United Nations which exert extra strain on improving its economic status. Thus it has been observed huge investment in education sector; enrichment of professional accounting education; opening the border for easy flow of man, machine and resources; all of which shows the high commitment of the regulators to confirm a highly productive manufacturing sector. Due to these Accounting and Management Information Systems 706 Vol. 14, No. 4 reasons, Bangladesh has successfully attracted the international community in its research and practices. Lot of professional accountants from countries other than Bangladesh is working in Bangladeshi manufacturing firms. Still most of the manufacturing firms in Bangladesh are first generation firms enjoying some policy support from the local regulators. It is really interesting to survey the competitiveness of these firms via the application of different innovative management accounting techniques. This is the main motivating factor of the study. The word ‘diffusion’ becomes colloquial in management accounting research since the seminal work of Drury and Tayles (2000). It is the process whereby an innovation is spread or disseminated (Bjornenak, 1997). Rogers (1995) has provided an operational definition saying that diffusion is a process whereby an innovation is communicated through certain channels over time among the members of a social system. The speed and range of a diffusion process can be understood through three important social phenomena (Bjørnenak, 1997). First of such phenomena is resistance in the form of unwillingness to make organizational changes or of theoretical objections from academics. Barriers to diffusion is the second one which is driven by lack of resources or cultural/linguistic obstacles. Barriers are also related to the third and final factor, namely the information field of potential adopters. It may be evident that the extent of contacts a potential adopter has made, that person’s information field, are insufficient to convince the individual to adopt the innovation. The rate of diffusion is seriously affected by underlying information field. A strong foundation of management accounting practices comes from high level of integration between the supply side and the demand side. A targeted focus on the information field brought the supply side of the diffusion process into consideration. Traditionally, diffusion studies have focused on organization’s demand for innovations and put special emphasize on the role of potential adopters of innovations in expediting the communication process. The supply side (information field) was considered as a passive factor in the diffusion process. However, recent studies (Abrahamson, 1991, 1996; Abrahamson & Fairchild, 1999) have revised the judgment putting more emphasis on the supply side. With this, studies on the diffusion of management accounting innovation receive extra attention (Bjørnenak, 1997; Gosselin, 1997; Malmi, 1999). For example, a study revealed that the contacts of the potential adopters with the propagators of ABC results the rate of adoption better than efficient-choice variables (Bjørnenak, 1997). Another study (Malmi, 1999) showed that fashionsetting organizations exert considerable influence in the take-off stage, i.e., during the period with high rates of adoption, of the diffusion process. A similar study explains the reasons of low adoption rates of ABC due to weak supply side as demonstrated by the absence of compulsory further professional education in management accounting, the lack of practitioner journals devoted specifically to Researching the level of diffusion of selective management accounting techniques by Bangladeshi firms Vol. 14, No. 4 707 management accounting, and the absence of executive MBA programmes (Clarke et al., 1999). Even though studies have shown that the adoption of ABC benefits the organization, its level of adoption is still considered low. It establishes the requirement of strong integration between adopters and the information field from academia or practitioners. Bangladesh enjoys a strong supply side, however, demonstrates a weak demand side which is properly demonstrated in this paper showing a very poor relationship between level of diffusion and different firm specific factors. It is expected that the paper will explore the level of diffusion along with the causal factors for providing policy support to the researchers, practitioners, academia and regulators for corrective actions. For successful diffusion, researchers stress the importance of making innovations compatible with the societies to which they are transmitted (Alvarez, 1998; Mazza & Alvarez, 2000). Studies also argue that whether the innovations will receive attention on part of the adopters largely depends on cultural discourses and legitimization of the respective society. The supply side (innovators) can easily popularize an innovation in a specific location by matching the design characteristics and rhetorical elements of the innovation (i.e. the bundling) to the preferences and knowledge of the potential adopters which requires an understanding on adopters’ requirements and capacities. A certain degree of ambiguity about the content of fashionable concepts which opens the concepts to different interpretations and uses, will potentially increase the supply side effect in the diffusion process, for example by including elements in the bundling process that reduce barriers and resistance to change. The degree of ambiguity regarding its content endows the innovation with its interpretative viability. Thus, the innovation can be made more compatible with new social settings if a high level of interpretative viability can be ensured (Benders & van Veen, 2001). Innovators can go for a mechanism of publicity among the targeted adopters to increase the level of acceptability and to reduce the level of ambiguity (Figure 1). Thus, the role of innovators (early fashion-setting adopters, consulting firms, researchers, academics and others) who can be treated as supply side drivers is very important in the whole diffusion process (Abrahamson, 1991). This paper particularly focuses on the level of diffusion of different management accounting innovations. At the same time, it focuses on the drivers of such diffusion. A presumption of weak diffusion really exists which brings new research agenda in the form of studying the impact of different demand side and supply side factors. In a society offering strong supply side, weak diffusion is being caused by poor demand side which has been uncovered in this paper considering different factors like accuracy, profitability, turnover, net assets as proxy to demand side factors. The analysis is based on a structured questionnaire Accounting and Management Information Systems 708 Vol. 14, No. 4 survey where the data is analyzed through different descriptive and inferential statistics. This study will bring some insights regarding the applicability of different management accounting techniques and play certain role to converse in academia so that the strong reciprocity between practitioners and academia may be established. Figure 1. Innovators vs. adopters in a diffusion process Innovators Innovation Publicity Acceptance Change Wholesale Adoption New Adopted Innovators Adopters Others Unaccepted Modified Adoption Break No Adoption Diffusion Publicity Adopters Researching the level of diffusion of selective management accounting techniques by Bangladeshi firms Vol. 14, No. 4 709 The paper has been divided into five sections. Section one has introduced the paper followed by a detail literature review in section two. Section three presents the research methodology which is followed by findings and analysis in section four. Finally the paper concludes the discussion in section five. 2. Literature review 2.1 Diffusion New beliefs, ideas, knowledge, programs, practices and technologies can be communicated between members of a social system over time through a process known as diffusion (Rogers, 2003). Diffusion theory fits well with the practical exigencies of moving research to practice as evidenced by its use in quite diverse disciplines including sociology, medicine, psychotherapy, education, communication, and public health. As such this theory assists in outlining and offers explanations for patterns of innovation promulgation that take place among different and distinct communities of practice (Green et al., 2009). As described by Brownson et al. (2006), the diffusion of research to a practice context involves negotiating four potential barriers that may prevent academic research from more effectively engaging with practice. These barriers; discovery, translation, dissemination and change, are depicted in Figure 2. Discovery Translation Dissemination Change … the creation of Knowledge through rigorous research that provides the scientific foundation of a discipline. … adapting generalized findings from the discovery stage into a form useful to target populations. … transmitting translated research findings to end users. ….. changing organizational practices on the basis of evidence from scientific research Figure 2. Barriers to research diffusion (Source: Gautam, 2008) Figure 2 maintains that diffusion is not an instantaneous act, but rather, is dependent upon successfully addressing four mutually related, yet independent potential barriers to harvesting knowledge generated by academic research for application to practice. Discovery, “the creation of knowledge through rigorous research that provides the scientific foundation of a Accounting and Management Information Systems 710 Vol. 14, No. 4 discipline” (Gautam, 2008), can represent an important impediment to the closer integration of research and practice. Often represented as a “knowledge production” problem (Van de Ven & Johnson, 2006), the discovery barrier often manifests as a failure to pose questions of interest to management (Rynes et al., 2001; Vermeulen, 2005), ignoring basic questions about the purpose of scholarly work (Pettigrew, 2005), or knowledge “lost before translation” (Shapiro et al., 2007). An underlying explanation offered for this knowledge production problem is that a research-practice divide transpires due to practitioners facing daily pressures that are disconnected from research questions posed by academics. The need for management accounting researchers to therefore, “ask the right questions” in the first place, is a fundamental prerequisite if our research efforts are not to become isolated from practice. Overcoming the translation barrier requires academic research be presented in a form that is coherent and digestible for practitioners. In the management accounting literature, academic research has been regularly cited as a major obstacle to bridging the research-practice gap. Mautz (1978) concluded that researchers are incompetent in communicating research matters to practitioners, and in another paper, Werner (1978) argued that practitioners will only give research a ‘Fair Chance’ if it is offered to them as interesting, readable and understandable way. Failure in translation has been attributed as being a primary cause of the increasing and contended, irreversible gap between research and practice (Baxter, 1988). This observation has been repeated consistently in subsequent decades, for example being raised by van Helden and Northcott (2010), who argue that the understandability of research findings are often hindered by poor presentation, such as excessive attention to methodology and theory, or by ignoring any research implications of potential relevance and interest to practitioners. Dissemination involves exposing practitioners to research findings via appropriate media, distribution or communication channels (Gautam, 2008). Concern that management accounting research does not engage with practice often focus on this barrier. A number of causes have been attributed. They include, a focus upon communicating with academic colleagues, in preference to practitioners (Malmi & Granlund, 2009); the time lags involved in academic publishing versus the practitioners short-term decision requirements (Inanga & Schneider, 2005); the general reluctance of practitioners to attempt reading management accounting research journals (Scapens, 2008; Inanga & Schneider, 2005) and, their disinterest in research outputs employing other presentation modes (Mitchell, 2002). Change, is the goal of applied academic research. Management accounting change in organizations has to be seen as an evolutionary, path dependent process in which existing ways of thinking (institutions), circuits of power and trust in Researching the level of diffusion of selective management accounting techniques by Bangladeshi firms Vol. 14, No. 4 711 accountants can all have an impact on the way in which the actors within the organization respond to external institutional and economic pressures (Dumitru et al., 2011). It involves implementing practices triggered by research based evidence (Gautam, 2008). This particular barrier is arguably independent of the diffusion process (Green et al., 2009), being largely related to the management of change. The area of change management has been extensively researched in the organizational, strategic and general management literatures, and a summary of these findings is far beyond the scope of this paper. Nevertheless, as Brownson et al. (2006) observe, common to much of this literature is the recognition that parties to the change need to be “ready, willing, and able” to embrace new ways of operating if the adoption of the change is to be successful and sustainable. If meaning is, to a large extent, derived from context (Laughlin, 2011), consequential and convincing connection of research with specific organizational settings is important. Thus, this barrier to the diffusion of academic research to practice is in effect, about contextualizing research to demonstrate to practitioners, its amenability to adoption. 2.2 Innovation While diffusion has consistently been defined as the process whereby the innovation is spread or disseminated (Bjornenak, 1997), the definition of innovation is not straight forward. On its own, the word innovation may be understood to be an idea, practice, or object that is perceived to be new to its adopters (Zaltman et al., 1973; Rogers, 1995; 2003). Likewise, organizational innovation is consistently defined as the adoption of an idea or behavior that is perceived as new by an organization (Hage & Aiken, 1970; Zaltman et al., 1973; Daft & Becker, 1978; Hage, 1980; Damanpour, 1988, 1991; Zammuto & O’Connor, 1992). The innovation can be a new product, a new service, a new technology, or a new administrative practice. The common criterion accepted for the idea to be considered as an innovation is perceived newness. According to Rogers (1995, 2003), newness might be determined in terms of new knowledge regarding the idea, and decision of adopting the idea by any social unit. There is no requirement that the innovation must always be new in its kind rather it could be either old or new ideas adopted in new settings (Evan & Black, 1967; Van de Ven, 1986). Firth (1996) also echoed the same observation stating that the adoption of an old idea in a new context where this idea is regarded as new may be viewed as an innovation. Ax and Bjornenak (2005) also confirmed that innovation may be old ideas applied to new settings or even old ideas being reintroduced into the same setting at a later point in time. Thus the idea of newness in innovation study needs careful consideration. A number of metaphors like translation, imitation, fashion and editing have also been used to describe the processes of travelling new ideas among the members Accounting and Management Information Systems 718 Vol. 14, No. 4 4.1 Respondents’ profile The study was conducted based on a very rich respondents’ profile due to the gravity of the subject itself. Respondents’ demographic biography is presented below: Table 2. Demographic data Demographic Profile of Respondents Frequency Percentage a) Educational Background Professional Degrees 46 35 Graduated 66 51 Undergraduate 11 9 Others 6 5 129 b) Years of Experience Less than 5 years 25 22 5 – 10 Years 44 39 More than 10 years 44 39 113 100 c) Intention to Switch Yes 20 18 No 93 82 113 100 d) Number of Jobs Less than 3 56 50 3 - 5 50 44 More than 5 7 6 113 100 e) Organizational Designation i) Top Level Management Managing Director 2 Director 7 Chief Financial Officer 5 Country Manager 2 Group CFO 3 Finance Controller 6 VP Finance and Company Secretary 3 Total 28 25 ii) Mid Level Management Production Supervisor 2 General Manager 7 Manager 25 Assistant Manager 11 Chief Accountant 3 Assistant General Manager 2 Deputy General Manager 2 Researching the level of diffusion of selective management accounting techniques by Bangladeshi firms Vol. 14, No. 4 719 Demographic Profile of Respondents Frequency Percentage Assistant Finance Controller 3 Head of Accounts 5 Total 60 53 iii) Lower Level Management Executive 18 Accounts Officer 7 25 22 Total 113 100 As already mentioned, mostly all the respondents are affiliated with different professional accounting institutes, most of them are already qualified members and few others are student members. In terms of years of experience, a good percentage of respondents (78%) are having more than 5 years of experience. It reflects the required maturity of the respondents to address a questionnaire related to accounting system design and its application. In another case, it reveals that only 18% of the respondents have an intention to switch current job. It signifies that the accounting practitioners are not severely job hopper which is a good prerequisite for ensuring a sound management accounting practice. Satisfaction with the job is a very important criterion for innovation and adoption of different management accounting techniques. In terms of managerial hierarchy, only 22% respondents are holding lower level management position. And these respondents come from highly decentralized organization where there are independent departments taking care of cost and management accounting related issues. Due to the structured questionnaire, these executives are referred by top level management and thus it is expected that there will be no asymmetry of feedback given by them. It is also nice to observe that in most of the firms, top level and mid level management plays role as management accountant which is supportive for applying different management accounting techniques. 4.2 Corporate profile This section presents the profiles of companies participated in the survey in terms of different size and profitability related parameters. These parameters are important to find out any potential impact of firm related variables on the ultimate outcome. Like respondents’ profile, corporate profile of the responding firms is also very rich. More than 80% of the firms are in operation for more than 10 years. More than 40% of the firms are having more than 1,000 employees. Around 40% of the firms have annual turnover of more than 1,000 million. Accounting and Management Information Systems 720 Vol. 14, No. 4 Table 3. Corporate profile Corporate Profile Frequency Percentage a) Years in Operation 0-10 20 18 11-20 56 50 21 - 30 11 10 31 - 40 13 12 41-50 4 3 More than 50 9 7 113 100 b) Number of Employees 0-1000 65 58 100 1 - 2000 18 16 2001 - 3000 14 12 3001-4000 7 6 4001-5000 2 2 More than 5000 7 6 113 100 c) Annual Turnover Less than 100 million 36 32 101 – 1000 million 31 27 1001-10,000 million 34 30 More than 10,000 million 12 11 113 100 d) Net Assets Less than 100 million 25 22 101 – 1000 million 47 42 1001 - 10,000 million 30 27 More than 10,000 million 11 9 113 100 4.3 Management accounting techniques This study caters to provide diffusion status of different management accounting techniques in practice. For that purpose, a total of 21 techniques have been identified and a survey was conducted to identify the level of application of those techniques to understand the market of management accounting in Bangladesh. Based on the feedback of the respondents in 5 point Likert scale, a descriptive statistics may be presented with mean, standard deviation, maximum and minimum data values as in table 4. Out of 21 techniques, 2 have average values more than 4, 9 have average values more than 3 but less than 4 and other 10 have values less than 3. The analysis highlights that out of 21 management accounting techniques, cash flow statement analysis and budgetary control are highly used followed by ratio analysis, Researching the level of diffusion of selective management accounting techniques by Bangladeshi firms Vol. 14, No. 4 721 variable costing and other tools. In a separate section, the author has tried to identify whether this level of diffusion is being driven by any firm specific factors like profitability, turnover, net assets etc. Table 4. The diffusion of management accounting techniques Descriptive Statistics N Minimum Maximum Mean Std. Deviation Cash Flow Statement Analysis 113 .00 5.00 4.1947 1.17912 Budgetary Control 113 .00 5.00 4.0619 1.31124 Ratio Analysis 113 .00 5.00 3.8496 1.24801 Variable Costing 113 .00 5.00 3.6726 1.30550 Total Quality Management 113 .00 5.00 3.6195 1.45356 Fund Flow Analysis 113 .00 5.00 3.5044 1.37011 Variance Analysis 112 .00 5.00 3.3482 1.46865 Standard Costing 113 .00 5.00 3.2920 1.44964 Absorption Costing 111 .00 5.00 3.2793 1.47815 Segment Reporting 113 .00 5.00 3.1681 1.44483 Responsibility Accounting 113 .00 5.00 3.0973 1.44522 Balanced Scorecard 113 .00 5.00 2.9912 1.52066 Target Costing 113 .00 5.00 2.9646 1.58638 Activity Based Costing 113 .00 5.00 2.9558 1.53756 Process Re-engineering 113 .00 5.00 2.9115 1.37294 CVP Analysis 113 .00 5.00 2.9027 1.48784 Inter-firm Comparison 113 .00 5.00 2.8584 1.41968 Lean Manufacturing 113 .00 5.00 2.4956 1.52435 Theory of Constraints 113 .00 5.00 2.4071 1.41823 Kaizen Costing 113 .00 5.00 2.1593 1.42407 Back-flush Costing 113 .00 5.00 2.1327 1.27828 4.4 Exploratory factor analysis As already mentioned, this study uses 21 management accounting techniques to understand the level of diffusion of different management accounting techniques. However, using these 21 techniques separately for inferential analysis is operationally difficult and will not bring any merit in analysis. Thus, categorizing these techniques into smaller groups is important for making the analysis worthy Accounting and Management Information Systems 722 Vol. 14, No. 4 and manageable. Exploratory factor analysis is done as a data reduction technique to identify whether any grouping among them is possible or not. A summary of the factor analysis is presented below: Table 5. Factor analysis results Measures Values 1. Measure of Sampling Adequacy .817 2. Level of Significance .000 3. Number of Factors Extracted 6 4. Cumulative Percentage 67.985 6. Reliability – Cronbach’s Alpha .863 Interpretive adjectives for the Kaiser-Meyer-Olkin Measure of Sampling Adequacy are: in the 0.90 as marvelous, in the 0.80's as meritorious, in the 0.70's as middling, in the 0.60's as mediocre, in the 0.50's as miserable, and below 0.50 as unacceptable. The value of the KMO Measure of Sampling Adequacy for this set of variables is .817, which would be labeled as 'meritorious'. Bartlett's test of sphericity tests the hypothesis that the correlation matrix is an identity matrix; i.e. all diagonal elements are 1 and all off-diagonal elements are 0, implying that all of the variables are uncorrelated. If the Sig value for this test is less than our alpha level, we reject the null hypothesis that the population matrix is an identity matrix. The Sig. value for this analysis leads us to reject the null hypothesis and conclude that there are correlations in the data set that are appropriate for factor analysis. This analysis meets this requirement. A total of 6 factors have been extracted having more than 1 eigenvalues with a cumulative percentage of about 68 which is within the accepted range. Finally alpha value of .863 ensures the reliability (α=.863>.70). The six factors as per the rotated component matrix are presented below with different management accounting techniques in each factor: Table 6. Factor analysis and associated techniques Factors Management Accounting Techniques 1Controlling Tools Standard Costing, Responsibility Accounting, Segment Reporting, Theory of Constraints, Activity Based Costing 2 - Costing Tools Back - flush Costing, Target Costing, Lean Manufacturing 3 - Reporting Tools CV P Analysis, Variable Costing, Absorption Costing, Total Quality Management 4 - Analytical Tools Variance Analysis, Fund Flow Analysis, Interfirm Comparison 5 - Performance Measurement Tools Cash Flow Statement Analysis, Ratio Analysis, Budgetary Control, Balanced Scorecard 6 - Quality Management Tools Process Re - engineering, Kaizen Costing Researching the level of diffusion of selective management accounting techniques by Bangladeshi firms Vol. 14, No. 4 723 4.5 Regression analysis This section presents the result of regression analysis. The purpose of this analysis is to identify any relationship between diffusion of management accounting techniques and other variables like accuracy, profitability, turnover and net assets. In two different modules (two ways of grouping management accounting techniques), four models are run considering four different variables. Module 1: In this module, 6 factors as identified by exploratory factor analysis are considered as independent variables where accuracy, profitability, turnover and net assets are considered as dependent variables in four different models. Based on the grouping, the dataset is manipulated to bring average value of all the 21 techniques into six categories. The regression runs result the following summary: Table 7. Regression models Dependent Variables Model 1: Accuracy Model 2: Profitability Model 3: Turnover Model 4: Net Assets Beta Sig. Beta Sig. Beta Sig. Beta Sig. Controlling Tools .244 .074 .061 .668 - .081 .577 - .190 .195 Costing Tools .006 .959 .014 .912 -.090 .484 -.074 .563 Reporting Tools .256 .038 - .293 .024 .038 .770 .213 .119 Analytical Tools .028 .813 .047 .696 .239 .066 .298 .018 Performance Measurement Tools -.100 .368 .021 .859 .035 .765 -.061 .601 Quality Management Tools -.233 .048 -.059 .631 .046 .706 .142 .255 ANOVA F 2.463 1.188 1.109 2.650 Sig. .029 .319 .363 .020 Model Summary R .353 .256 .250 .382 R Square .124 .065 .062 .146 Values of R2 in all the four models are poor in terms of the explanatory power of the variables. However, model 1 (with accuracy as dependent variable) and model 4 (with net assets as dependent variable) become significant at p<.050. From this, an inference could be drawn that the level of diffusion has some connectivity with the level of accuracy and net assets. It is highly established in management accounting literature that the very purpose of management accounting is to supplement accurate decision making process. And the research puts a very important conclusion that the level of application of different management accounting techniques will be guided by the size variable which is the value of net assets. It has confirmed a very important purpose of management accounting which is resource utilization. Thus, when a company invests significantly in its fixed assets base, it is more concerned on the efficient utilization of the recourses Accounting and Management Information Systems 724 Vol. 14, No. 4 which exerts a form of compulsion of implementing different management accounting techniques to achieve the target. A close look at the beta value in different models also result some interesting findings. Out of six groups, only four groups become significant at different level which can be reproduced as under: Table 8. Variables in the regression model Groups Dependent Variables Significance Relationship Controlling Tools Accuracy P<.100 Positive Reporting Tools Accuracy P<.050 Positive Profitability P<.05 0 Negative Analytical Tools Turnover P<.100 Positive Net Assets P<.050 Positive Quality Management Tools Accuracy P<.050 Negative Controlling and reporting tools show a positive significant relationship with accuracy whereas quality management tools become significant but negative. It may mean that high level of diffusion in quality management tools results low level of accuracy as prevalent in current study. Reporting tools show a negative relationship with profitability which may be due to the disparity of financial accounting and management accounting. And finally both turnover and net assets (size variable) show a positive relationship with analytical tools. Module 2: In this module, management accounting techniques are grouped by following different criteria. To bring further merit to diffusion study, 21 management accounting tools have been regrouped into three based on their average score out of 5. The following rules are applied for such grouping: Table 9. Groupings based on diffusion Groups Rules Tools Highly Diffused Tools Average score above 4.00 Cash Flow Statement Analysis, Budgetary Control Moderately Diffused Tools Average score above 3.00 but less than 4.00 Ratio Analysis, Variable Costing, Total Quality Management, Fund Flow Analysis, Variance Analysis, Standard Costing, Absorption Costing, Segment Reporting, Responsibility Accounting Lowly Diffused Tools Average score less than 3.00 Balanced Scorecard, Target Costing, Activity Based Costing, Process Re-engineering, CVP Analysis, Inter-firm Comparison, Lean Manufacturing, Theory of Constraints, Kaizen Costing , Back - flush Costing Researching the level of diffusion of selective management accounting techniques by Bangladeshi firms Vol. 14, No. 4 725 Based on these 3 revised groupings, four different models are formulated again considering the four variables (accuracy, profitability, turnover and net assets) as dependent in each model with the following summary results. Table 10. Regression models for techniques based on the level of diffusion Dependent Variables Model 1: Accuracy Model 2: Profitability Model 3: Turnover Model 4: Net Assets Beta S ig. Beta Sig. Beta Sig. Beta Sig. Highly Diffused Tools -.270 .020 -.065 .595 .078 .524 -.065 .609 Moderately Diffused Tools .567 .000 -.170 .299 .155 .329 .191 .266 Lowly Diffused Tools -.162 .193 .043 .756 -.069 .610 .088 .544 ANOVA F 5.724 1.32 8 1.078 1.813 Sig. .001 .269 .362 .150 Model Summary R .372 .191 .174 .232 R Square .138 .037 .030 .054 It is very interesting to note that, as per this analysis, only model 1 (with accuracy as dependent variable) becomes significant where around 14% of variation in accuracy is explained by different management accounting tools. Highly diffused tools become significant individually (p<.050) though it shows a negative relationship with accuracy. However, moderately diffused tools become significant (p<.010) and shows positive relationship. Lowly diffused tools are not significant. 5. Conclusions Application of different management accounting techniques largely depends on the demand on such techniques by the practitioners for their decision making needs. At the same time, the reciprocity of knowledge between the academia and the practitioners also play an important role in smooth diffusion process. Finally the characteristics of the markets in terms of competition, maturity, life cycle, customer base etc are also active parameters for the diffusion process. Considering all the prerequisites, Bangladeshi firms are exposed to less risk and criticality in terms of doing business which results a low diffusion of different management accounting techniques. Other countries with a similar economic status may observe the research findings for their own policy interventions. Out of twenty one techniques used in the study, cash flow statement analysis and budgetary control techniques received the highest score (more than four out of five) which are traditional management accounting techniques in a global set up. Innovative techniques like balanced scorecard, activity based costing, target Accounting and Management Information Systems 726 Vol. 14, No. 4 costing, lean manufacturing, theory of constraints, process reengineering etc. received a very low status in terms of diffusion. It echoes the definition as given by Firth (1996) that using a new idea or even the adoption of an old idea in a new context, where this idea is regarded as new, may be viewed as an innovation. Thus, Bangladeshi firms are very slow in accommodating globally diffused innovative tools in a similar pace rather there is a tendency of absorbing old tools in new settings. This status is not an exception from a global perspective where most of the countries demonstrate the choice of using traditional techniques over advanced techniques. To give a different dimension in the study of diffusion, the paper has tried to identify any causal relationship between management accounting techniques with some other variables. The interesting finding is that management accounting techniques has some relationship with accuracy and one size variable, net assets. This justifies some major roles that management accounting plays to ensure accuracy in decision making and to support the top level management in taking investment decisions. However, other variables considered in the study like profitability, turnover doesn’t show any notable relationship with the diffusion which may be further researched. This study only considers manufacturing firms which may also be extended by covering service sectors for wider perspectives. Further studies may also be conducted on the significance of management accounting curriculum in different universities. It may be a very strong reason for weak diffusion of management accounting techniques. Report on Observance of Standards and Codes (ROSC) of World Bank (2003) echoes the same observation where the World Bank team expressed their concern that most of the Universities in Bangladesh are not offering majoring in accounting degree and professional accounting courses are being taught by non-professionals. However, this paper brings a new dimension in studying level of diffusion of different management accounting techniques with different classifications through factor analysis and based on the scores like highly, moderately and lowly diffused tools which is absent in prior researches. At the same time it has collated the level of diffusion with different factors to bring some policy issues which is the contribution of this paper. References Abrahamson, E. 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