BUS707 - Literature Review: Impact of Culture on Accounting

This literature review explores the intricate relationship between organizational culture and accounting practices, drawing upon four academic articles published from 2010 onwards. It highlights common themes such as the integration of sustainability accounting and lean management accounting practices to overcome the shortcomings of conventional accounting systems. The review also identifies differing perspectives, including the focus on lean practices in manufacturing firms, the definition of sustainability accounting, and the impact of human factors on business. Managerial implications are discussed, emphasizing the importance of information management and the development of sustainable accounting as a tool for measuring organizational culture. The review concludes by addressing limitations in the selected articles and suggesting directions for future research, including interdisciplinary studies and in-depth analyses of the roles of accounting in various cultural contexts. Desklib provides access to this and other solved assignments to aid students.

Running head: ACCOUNTING AND ORGANIZATIONAL CULTURE
ACCOUNTING AND ORGANIZATIONAL CULTURE
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Literature Review
Brief Summary
The work culture within an organization being immensely important, it is subject to
change with respect to the demands of the market. However, the management, while
operating these changes, frequently overlook the necessary changes that are required to do
away with the shortcomings of a traditional accounting system. Accounting systems exist and
function in a nuanced format, which has a direct bearing on organizational culture, especially
through efficient distribution of finances across various operative mediums within the
organization, which are in turn, proportionate with optimizing revenue generation through
performance. Thus, accounting systems of emerging economies tread a complicated path, the
handling of which requires certain managerial skills, which also takes into consideration the
spiritual, socio-psychological, as well as material factors pertaining to a prospective
organizational culture. The interrelation between the two variables, organizational culture and
accounting, are subject to certain key pedagogical dimensions, which seeks behavioural and
communicative changes within an organization. Accounting in this regard, takes into account
not only the financial capital, but also the intellectual capital, and their collaborated bearing
on a well-developed value proposition. Accounting helps in organizing and economizing a
company’s activities by channelizing management accounting practices, leading to the
sustainable development of the company. Hence, accounting draws largely on sustainable
dimensions. A process of ‘lean thinking’, elimination of redundant elements through
economic assessment helps in the process. Annual reports or accounts seek to improve
performativity and productivity thereby enhancing the profitability not only through
management of finances, but also that of the intellectual capital, which, although cannot be
measured on quantitative terms, still has a direct bearing on the finances (Clarke, Seng and
Whiting 2011). Thus the literature review attempts to highlight the points of commonality

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and differences between the aforementioned areas of accounting and organizational culture
from a critical and theoretical perspective, especially around four specific articles. .
Common Themes
Apart from the fact that all the four chosen articles are directly related to the
managerial decisions for improvement of organizational culture based on an assessment
through efficient accounting systems and vice-versa, there are further subtle areas or themes
which are common across all of them.
A progressive organization, which integrates dynamic changes within its framework,
must also encompass modern techniques of sustainability accounting and ‘lean Management
Accounting Practices (MAP)’ which attempts to overcome the incompetence of conventional
accounting practices which were unable to keep pace with the dynamic changes, and
produced faulty information, which directly impacted the workflow of the company. Those
accounting practices are reported to allocate costs arbitrarily with short-term focus rather than
strategic accounting practices. Significant developments have been made in the fields of
finance accounting, cost accounting and management accounting, all leading to sustainability
accounting which reconsiders the social, environmental and economic risks and benefits,
bordering on the work culture within the organization, which interact with a nuanced
corporate accounting system. The paper by Fullerton, Kennedy and Widener (2014) focuses
on these management accounting practices through efficient use of ‘lean thinking’ in
manufacturing industries. Through a framework of ‘contingency theory’, which has been
referred to in the articles, it shows how strategic use of lean MAP and ‘value stream costing’
(VSC) can lead to a developed performance index for the company, along with the
empowerment of the employees (Fullerton, Kennedy and Widener 2014). Thus, it has a
significant bearing on the existing work culture within the organization, especially through
adoption of sustainable accounting techniques, which gives significant importance to

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intellectual capital (IC), which relates to behavioural accounting. Value Added Intellectual
Coefficient (VAIC) is a measuring tool for IC which makes use of readily available
quantifiable and audited information for an essentially qualitative analysis (Clarke, Seng and
Whiting 2011). Thus, accounting, with all its nuances, serves the “territorializing”,
“mediating”, “adjudicating” and “subjectivizing” functions (Miller and Power 2013).
Thematic Differences
Although the four concerned articles talks about the relation and interdependence of
organizational culture and accounting at large from a theoretical perspective, there are
marked differences in the approach and the thematic aspects which they cover. While Miller
and Power gives a general idea about the interconnection between the two concerned
variables, focussing on the four major roles played by accounting, and how they relate to the
structure and function of the organization, Fullerton, Kennedy and Widener focuses more on
lean practices of manufacturing firms by taking primary data from a niche quarter.
Schaltegger and Burritt, through a nuanced discussion attempts to define the very term
‘sustainability accounting’, drawing nourishment from other theoretical terms and practices
bordering around sustainable development and other aspects of corporate accounting, and
attempts an integration of ‘sustainability accounting’ within the very framework of an
organizations business processes and performance. Clarke, Seng, and Whiting focuses more
on the human factor and its impact on business, how it is socially, psychologically and
spiritually connected to accounting and organizational culture.
Managerial Implications
The changes in the behavioural patterns within an organization, resulting from
contingent features of the interior environment, has implications for managerial operative
changes. It is at this level that accounting gears as well as gets geared by socio-psychological,
and spiritual dimensions, which in turn is shaped by management of information (Schaltegger

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and Burritt 2010). The communication of these information helps in operationalizing
sustainable accounting. Such operations encompasses social and environmental issues, both
internal as well as external, which has a direct impact on the company’s finances. From a
managerial perspective, the development of sustainable accounting, which is itself a
measuring tool for organizational culture, encompasses assessment and comparison of
products, communications and rewards regarding performativity, all of which are directly
related to the improvement of intellectual capital. Similarly, the operation of VAIC index
comprises yardsticks like ‘human capital efficiency’ (HCE), ‘structural capital efficiency’
(SCE) and ‘capital employed efficiency’ (CEE) (Clarke, Seng and Whiting 2011). These
efficiency measurement tools, along with sustainability and accountability seeks to be
motivational tools for the actors within a broader framework of accounting systems. Like
Schaltegger and Burritt, the article by Fullerton, Kennedy and Widener also focus on the
distribution of information within the structure of lean MAP, which seeks to improve the
operations performance through improved leadership and communication standards which
are integral parts of the work culture within an organization. One practical implication that
comes out of the operation personnel is that they are unable to work independently and must
cooperate with the management accountants for accelerating their efficiency and production.
The collaboration of these productive operation personnel along with the accounting
personnel can modernize the accounting systems through improved organizational culture,
which, in turn, is again further motivated by the updated accounting systems and the cycle
continues.
Limitations and Future Research Directions
The article on lean MAP says was prepared based on the opinions coming out of a
survey. The respondents were chosen from a selective area of people who have attended the
Lean Accounting Summit and were not randomly chosen. Besides, the measurements and

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data interpretation were being done by the author. Both are pointers to biasness of opinions.
The measurement of VSC is unidirectional and lacks comparative plurality. This particular
study provides a scope for an integrated study of operations and accounting long term
analysis of evidence collected randomly from a large cross section, bearing on
interdisciplinary subjects which has a direct effect on a firm’s accounting and organizational
culture. This would lead to sustained success of lean MAP.
On the other hand, the article titled ‘Sustainability Accounting for Companies’
suggests that plurality complicates the theory and gives less importance to environmental
impacts and organizational performance. Hence, the requirements proposed for corporate
practice of sustainability accounting system opens up pathways for a multifaceted theoretical
research approach that has, at the same time, real-time significance where the two variables
of organizational culture and accounting are proportionately amalgamated where it serves the
utilitarian approach.
The article focussing on Intellectual Capital (IC) comes up with three major
challenges that are commonly faced by IC measures – firstly, unavailability of important
information and research tools to outsiders; secondly, the information regarding that comes
out regarding qualitative judgement risks being opinionated; thirdly, it is difficult to
qualitative information into quantitative financial terms. Although, VAIC is capable of
overcoming these challenges, however, it has its own share of limitations. A significant
proportion of the information that is used by VAIC, comes from tangible assets. The
interrelation between IC and performance of an organization being a virgin territory in the
context of research and study, this paper opens up immense possibilities of research in this
field. The focus on VAIC acts as a motivational factor in this regard.
The article by Miller and Power, although discusses the various avenues of
accounting and organizational culture, however, it disregards the relative corporate traditions

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of countries like Italy, Germany, Sweden and Japan. Thus, although apparently the
propositions appear to assume a universal dimension, in reality it fails to do so. This paper
opens the prospects of further in-depth studies of the four key roles of accounting and their
environmental impact, both within as well as outside the organization. In this process the
varied traditions pertaining to ‘accounting’, ‘organizing’ and ‘economizing’ should be
considered.

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Reference List
Clarke, M., Seng, D. and Whiting, R.H., 2011. Intellectual capital and firm performance in
Australia. Journal of Intellectual Capital, 12(4), pp.505-530.
Fullerton, R.R., Kennedy, F.A. and Widener, S.K., 2014. Lean manufacturing and firm
performance: The incremental contribution of lean management accounting
practices. Journal of Operations Management, 32(7-8), pp.414-428.
Miller, P. and Power, M., 2013. Accounting, organizing, and economizing: Connecting
accounting research and organization theory. The Academy of Management Annals, 7(1),
pp.557-605.
Schaltegger, S. and Burritt, R.L., 2010. Sustainability accounting for companies: Catchphrase
or decision support for business leaders?. Journal of World Business, 45(4), pp.375-384.