Privatisation and Management Accounting Changes (MACs) : a case study in Iran

Farahani, A

Abstract

Despite increasing changes in the business environment, the results of the studies reveal that management accounting systems do not change or change at a much slower rate than expected. This failure has raised much debates at the topic of management accounting research during the last recent decades, investigating the change of management accounting in response to increasing changing of business environment. Despite this focus, there is still less empirical evidence in the field of MAC and the dynamics of MAC, especially concerning the relationship between MAC and privatisation as an important evidence of environmental change. In particular, in the context of developing and less developed countries (LDCs) there is much less empirical evidence in this area of research and so far the majority of studies has been done in context of developed countries. In response to this lack, this study aimed to investigate the change of management accounting practices of an Iranian automobile manufacturing company after privatisation. The most important emphasis of this study was about the change dynamics of management accounting systems, focusing on the complex interactions between internal (such as power relationship and organisational culture) and external factors (such as religion oriented political condition and the regulatory system) which shaped the privatised company’s management accounting practices. In this regard, the study provided empirical findings relating to this case study, where the design of the MASs were shaped by dynamics of an unusual socio-political and institutional environment, Iran’s, mix, “religious and political ideology and privatisation”.
To achieve this purpose, the study employed an interpretive approach and the research empirical data primarily collected from face-to-face semi-structured interviews as the primary method of data collection. The study’s theoretical framework was based upon institutional theory and its extensions, as well as structuration theory, introducing a new theoretical framework by combining three frameworks namely: 1) Dillard et al., (2004) framework; 2) Seo & Creed (2002) framework; and 3) Bums & Scapens (2000). The research findings revealed the change of management accounting systems that occurred in the Iranian automobile case company after privatisation over a period of 27 years that is from 1993 to 2020, through the implementation of an integrated management system, including changes to budgeting process and system, the costing system and performance measurement system. Additionally, the findings identified the application of some new-developed practices such as Balanced Scorecard (BSC) system that played a ceremonial role
4
in this case study. The case company also applied Activity Based Costing (ABC) system after privatisation, a new system that failed in initial stage of its implementation.
The findings of this study extended the MA and MAC literature by using of alternative approaches, which is not common in case of LDCs. The combined-institutional framework utilised in this study helped in explaining, interpreting and understanding MACs which occurred within the particular context of the case company in the Iranian automobile industry. The conceptual framework developed in this study highlights the role which wider political and economic structures can play in shaping processes of MAC, and it helps the understanding of the reasons for change, stability and resistance to change in organisational level. The case illustrates that the differing political ideology and new regulatory system as well as uncertain socio-economic condition were crucial factors underlying the MACs in this case company. By changing existing management strategy based on new political ideology and emergence new regulatory system, along with wider socio and economic pressures, the privatised company’s management accounting system changed, sought to legitimise the new management accounting system based on new socio-political and economic conditions. Additionally, the case revealed that the company’s MACs after privatisation was relatively well received by users “outside” the management accounting department and therefore faced not internal resistance. This findings research, however, does not confirm the known behavioural implications of the direct relationship between the processes of MAC and privatisation, rejecting this idea that privatisation automatically resulted in MAC in this case study. In this case study, the research findings suggest that the impact of privatisation on MASs was conditional and much more complicated, significantly was influenced by particular wider socio-economic and political context of Iran.

Citation

Farahani, A. Privatisation and Management Accounting Changes (MACs) : a case study in Iran. (Thesis). University of Salford

• Thesis Type: Thesis
• Deposit Date: Nov 9, 2021
• Publicly Available Date: Nov 9, 2021
• Award Date: Jan 6, 2021