the relationship between corporate culture and the use of management accounting innovations in vietnamese companies a study of techcombank

THE RELATIONSHIP BETWEEN CORPORATE CULTURE AND THE USE
OF MANAGEMENT ACCOUNTING INNOVATIONS IN VIETNAMESE
COMPANIES: A STUDY OF TECHCOMBANK






BY
NGUYEN QUYNH THU







Graduation Project Submitted to the Department of Business Studies, HELP
University College, in Partial Fulfillment of the Requirements for the Degree of
Bachelor of Business (Accounting) Hons
October 2011
2

Declaration of Originality and Word Count


DECLARATION

I declare that this graduation project is based on my original work except for
quotations and citation which have been duly acknowledged. I also declare that it has

not been previously or concurrently submitted for any other courses/degrees at HELP
University College or other institutions.
Word Count: 11,602 words.



Nguyen Quynh Thu
Date




3

ACKNOWLEDGEMENT
The completion and result of this thesis paper is not only the achievement of efforts
from me but also the indispensable supports from a lot of helpful people. Firstly, I
would like to express my gratefulness to my dear teachers at the International
School, Vietnam National University where I spent nearly five years studying,
researching and growing. They have helped me and my friends enlarge our
knowledge as well as share with us lots of valuable experiences and lessons in life
which I will never forget. Especially, I would love to extend my heartfelt thanks to
my thesis’ supervisor, Mrs. Phan Thu Huong for her instruction and encouragement
during the time. She was not only the person who initiated and inspired me to the
topic of this paper, but also continuously supported and consulted me to find out
solutions and complete this paper. Without her and other teachers’ advices and helps,
I could not come to the destination and attain this result.
Additionally, it is my great honor to receive the enthusiastic supports from all
managers, chief accountant and other accounting staff who are involved in the survey
conducted in this thesis. Although the relationship between me and those people is

not close; however, I received one hundred percent replies over the questionnaire
papers sent through both emails and in hands. Based on their answers, the influence
of corporate culture on management accounting innovations in Techcombank has
been found out and contributed a big value to this research.
Finally, from the bottom of my heart, I would like to express my great thanks to all
of my family members and friends for their vital encouragement and cares during the
time conducting this thesis.
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Once again, I’d love to send the profound feeling to the above-mentioned people,
hadn’t been for all their supports and suggestions, this paper cannot be properly
accomplished.

5

ABSTRACT

THE RELATIONSHIP BETWEEN CORPORATE CULTURE AND THE USE
OF MANAGEMENT ACCOUNTING INNOVATIONS IN VIETNAMESE
COMPANIES: A STUDY OF TECHCOMBANK
By
NGUYEN QUYNH THU
October 2011
Supervisor: Mrs. Phan Thu Huong
Corporate culture is no longer a new term for developing countries. It has developed
through the long history and nowadays it is expected to perform by any enterprises in
the world. However, the term is not familiar to Vietnamese enterprises until the
recent years when the economy is more open, corporate culture plays an important
role in development and initiation of Vietnamese enterprises.
In particular, this graduation project represents the results of research on the
relationship between corporate culture and the use of management accounting
innovations in Vietnamese companies, a case study of Techcombank. The objective
of the research is to access the understanding of Techcombank’s managers and
accountants about the influence of corporate culture on the initiations of managerial
accounting system.
In this thesis, the author reviews knowledge related to corporate culture and
management accounting innovations involving definitions, elements, roles and
theories of several international researches (Schein, Quinn and Rohrbaugh). The
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author also analyzes the relationship between Techcombank’s corporate culture and
its management accounting innovations based on models of Schein, Quinn and
Rohrbaugh. Finally, from the success of Techcombank, the author will propose some
useful experience lessons for Vietnamese companies.
















7

TABLE OF CONTENT

Declaration of Originality and Word Count 2
Acknowledgement 3
Abstract 5
Table of contents 7
List of Figures 11

List of Abbreviations 13
CHAPTER I – INTRODUCTION 14
1.1. Research background 14
1.2. Research objectives 15
1.3. Research significant 16
1.4. Research questions 16
1.5. Scope of research 16
1.6. Structure of research 17
CHAPTER II – LITERATURE REVIEW 18
2.1. Overview of corporate culture 18
2.1.1. Definition of culture 18
2.1.2. Definition of corporate culture 19
2.1.3. The role of corporate culture in business 20
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2.1.3.1. Fostering innovation and invention 20
2.1.3.2. Creating corporate vision, shared values and beliefs 22
2.1.3.3. Creating the competitive advantage 22
2.2. Overview of the innovation of management accounting 23
2.2.1. Definition of management accounting 23
2.2.2. Definition of management accounting innovation 24
2.2.3. The role the innovation of management accounting 24
2.3. The relationship between corporate culture and the use of management
accounting innovations 26
2.3.1. Iceberg’s principle - The model of Edgar H. Schein 26
2.3.1.1. Artifact 27
2.3.1.2. Espoused values 28
2.3.1.3. Assumptions 28
2.3.2. The competing value framework of corporate culture 29
2.3.2.1. Human relations 30

2.3.2.2. Open systems 31
2.3.2.3. Rational goals 31
2.3.2.4. Internal processes 32
CHAPTER III – RESEARCH METHODOLOGY 33
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3.1. The survey 33
3.1.1. Objectives of survey 33
3.1.2. Questionnaire design 34
3.2. Case study 35
3.2.1. Objectives of case study 35
3.2.2. Data collection 36
3.2.3. Data analysis 37
CHAPTER IV – RESEARCH RESULTS AND EXPERIENCE LESSONS . 39
4.1. Findings from the survey 39
4.1.1. Detail findings 39
4.1.2. Overall findings from the survey 50
4.2. Findings from case study 52
4.2.1. Overview of Techcombank 52
4.2.2. Corporate culture of Techcombank 53
4.2.2.1. Artifacts 53
4.2.2.2. Espoused values 55
4.2.2.3. Assumptions 57
4.2.3 Management accounting innovations in Techcombank 58
4.2.3.1 ABC method 59
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4.2.3.2 BSC method 60
4.2.4. The positive relationship between corporate culture and the use of
management accounting innovation in Techcombank 61

4.2.4.1. Human relations 63
4.2.4.2. Open systems 64
4.2.4.3. Rational goals 66
4.2.4.4. Internal processes 68
4.3. The experience lessons for Vietnam enterprises 70
4.3.1. Improving the awareness of people about corporate culture and its relationship
with management accounting 70
4.3.2. Establishing corporate culture for long-term strategy and development of
management accounting 71
CHAPTER V – RECOMMENDATION AND RESEARCH LIMITATIONS73
5.1. Recommendations 73
5.2. Research Limitations 74
CHAPTER VI – CONCLUSION 76
6.1. Summary 76
6.2. Conclusion Remarks 77
REFERENCES 79
APPENDICES 82
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LIST OF FIGURES

Figures
Title
Page



Chapter II

Figure 2.1
Role of corporate culture in organizational commitment
21
Figure 2.2
Corporate culture – Iceberg’s principle
27
Figure 2.3
The competing values model of corporate culture
32
Chapter IV


Figure 4.1
Necessary for building corporate culture in Techcombank
40
Figure 4.2
Elements of corporate culture in Techcombank
40
Figure 4.3
Roles of corporate culture in Techcombank
41
Figure 4.4
Difficulties in building corporate culture in Techcombank
42
Figure 4.5
Initiative methods of managerial accounting in Techcombank
43
Figure 4.6
The most understandable method in managerial accounting in
Techcombank

43
Figure 4.7
Roles of management accounting innovations in Techcombank
44
Figure 4.8
Levels of manager use management accounting innovations in
Techcombank
45
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Figure 4.9
Difficulties in using management accounting innovations in
Techcombank
46
Figure 4.10
Level of impact of corporate culture on the innovations in
managerial accounting system in Techcombank
47
Figure 4.11
Problems in the relationship between corporate culture and
managerial accounting innovations in Techcombank
48
Figure 4.12
Solutions for problems in the relationship between corporate
culture and managerial accounting innovations in
Techcombank
49
Figure 4.13
Relations of BSC in Techcombank
61

Figure 4.14
Illustrate the relationship between corporate culture and
management accounting innovations based on the competing
value model
62
Figure 4.15
The influence of human relations on management accounting
innovations
64
Figure 4.16
The influence of open systems on management accounting
innovations
66
Figure 4.17
The influence of rational goals on management accounting
innovations
67
Figure 4.18
The influence of internal processes on management accounting
innovations
69

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LIST OF ABBREVIATIONS

Abbreviations
Full name
Techcombank
Vietnam technological and commercial joint stock bank

ABC
Activity-based costing
ABM
Activity-based management
BSC
Balanced scorecard
TC
Target costing
%
Percentage (Percent)










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CHAPTER I – INTRODUCTION

1.1. Research background
For the last ten years, “corporate culture” has been a popular concept with
organizations and the society. Together with the development of the global economy,
organizations require not only technological advance, human resource or capital
flows but also corporate culture to ensure management success and access to
international market. According to Maloney and Federle (1990), and Flamholtz and

Randle (1998), nearly all organizations acknowledged that an organization’s well
founded culture could contribute to the accomplishment in every aspect of
performance such as economy and finance.
In particular, for accountants, corporate culture plays a crucial role on the
managerial accounting system. However, the relationship between the corporate
culture and the management accounting innovations is not clear, which many
organizations do pay adequate attention to. Accountants often are less interested in
corporate culture and its influences on the accounting innovations. Therefore, the
first step to build a strong corporate culture is that organization must understand and
consider its culture as beliefs and expectations which can powerfully shape the
behavior of individuals and groups in the organization (Schwartz and Davis (1981),
Schein (1990), and O’ Reilly III et al. (1991)).
Indeed, corporate culture is powerful driver of the economy as well as the social
development. Nevertheless, within the scope of the study, this research only
concentrates on analyzing the influence of the corporate culture on the management
accounting innovations, and how this provides managers with information designed to
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support and enrich decision making. In advanced manufacturing environment, new
management accounting techniques are needed by managers (Green and Amankhienan
(1992)). Besides, this research focuses on Techcombank, one of the leading banks in
Vietnam as an example of Vietnamese enterprises. Consequently, I have chosen the
topic “The relationship between corporate culture and the use of management
accounting innovations in Vietnamese companies: A case study of Techcombank”
as a graduation project in the hope that some results and recommendations from this
thesis can become a reference to help further develop a successful corporate culture for
the company.

1.2. Research objectives
The study concentrates on the concepts of corporate culture and the

relationship between corporate culture and the use of management accounting
innovations. From the case study of Techcombank, I expect the good
recommendation will be made for creating corporate culture process of this
company. Therefore, this research aims to:
i. Systematize the basic issues of corporate culture and the management
accounting innovation
ii. Understand what is the relationship between the corporate culture and the
innovations of managerial accounting in Techcombank
iii. Understand why and how the corporate culture influences on the use of
managerial accounting innovations in Techcombank
iv. Find out some solutions and recommendations to upholding the good effects
of corporate culture on the use of management accounting innovations in
Techcombank
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1.3. Research significant
Vietnam appropriates the value of human as well as the value of culture.
Therefore, an enterprise built without cultural foundation has difficulty in increasing
trust of its staff, customers and the society. Because of this reason, the research
focuses on understanding the value of the corporate culture, in particular,
understanding the relationship between the corporate culture and the innovation of
management accounting. This research only aims at Techcombank – one of the
leading companies of Vietnam in banking industry. Accordingly, this study will
explore whether Techcombank has built a stable corporate culture as well as a good
relationship between the corporate culture and the management accounting.

1.4. Research questions
This research paper attempts to address the three questions. Firstly, what is
corporate culture? And what is the innovation of management accounting? Secondly,

what is the relationship between the corporate culture and the use of management
accounting innovations in Techcombank? Finally, what are the experience lessons
from building corporate culture in Techcombank in order to achieve the efficiency of
management accounting innovations?

1.5. Scope of research
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Due to time limitation, the research only concentrates on concept of corporate
culture and its relationship with the use of management accounting innovations in a
specific company. It is Techcombank – the best enterprise in banking industry in
Vietnam.
The content of this research is specific information of corporate culture at
Techcombank in two year: 2009 and 2010 and its relationship with the use of
management accounting innovations. From the results of survey and case study, this
thesis might draw lessons for Vietnam enterprises in building and developing their
own corporate culture.

1.6. Structure of the research
The preferable structure of the thesis consists of six chapters. The first
chapter identifies an overview and background of research topic as well as research
significant. Chapter II is literature review that covers definitions and theories deal
with corporate culture, management accounting innovations, and their combination.
Chapter III is research methodology that presents the research methods as well as
data collection. The results are then present in chapter IV, which refer to the findings
from the selected research methods. Besides, it also discusses the experience lessons
for Vietnamese enterprises. Discussion on recommendations and research limitations
is then presented in chapter IV. The last chapter summarizes the key findings and an
overall evaluation for the whole study.

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CHAPTER II – LITERATURE REVIEW

2.1. Overview of corporate culture
2.1.1. Definition of culture
According to anthropologist Edward B. Taylor, the first person to give the
definition of “culture”, culture is “that complex whole which includes knowledge,
belief, art, morals, law, custom, and any other capabilities and habits acquired by
man as a member of society.” (Edward B. Taylor, Primitive Culture 1 (3d ed. 1889))
It means that culture plays a crucial role in life of human beings. When the human
factor is considered as an engine to establish and reform society, culture becomes a
basic measure to assess activities as well as a thorough understanding of human
beings.
In fact, culture is a hard concept to define. During many centuries, there are
many different definitions of culture after Edward B. Taylor’s notion. For example,
Useem, J., & Useem, R. (1963) stated that “culture has been defined in a number of
ways, but most simply, as the learned and shared behavior of a community of
interacting human beings” (Human Organization, 22(3), p.169).
However, this research only reviews a united definition of culture following
Edward B. Taylor in order to find an easier manner to reach the matter of the
organizational culture.


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2.1.2. Definition of corporate culture
In the earlier seventies of the twenties century, the term of
“corporate/organizational culture” was widely used by research professions and

managers in many organizations over the world, especially in Japanese and
American corporations. And until the nineteenth decade, many in-depth researches
about corporate culture as well as its influence on the development of enterprises
were carried out. This is one of the main reasons why there are many different
concepts of “corporate culture”.
According to Schein H.Edgar (2004), corporate culture was considered as
“the system of shared beliefs, values and standards of solving problems, which is
created in the forming and developing process of a corporation and demonstrated
through physical and nonphysical forms and behaviors of its members.” This
concept means that corporate culture is similar to culture in society that includes
norms, values, beliefs and patterns of behavior of each individual in society.
Besides, Rob Goffee (2003) briefly talked about corporate culture in his book
“The character of a corporation: How your company’s culture can make or break
your business”. He said that “a company’s culture is often buries so deeply inside
rituals, assumptions, attitudes, and values that it becomes transparent to an
organization’s members only when, for some reason, it changes.” It implies that
corporate culture is influenced by the internal integrity of the corporation, the
environment and how well the corporation is competing in the market as well as its
effectiveness.
In general, corporate culture, in its true meaning, means “the way we do things
round here”, or behavior. Therefore, organizations of all size posses some type of
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corporate culture, in which every corporation has a set of values and goals that help to
define what the business is all about.

2.1.3. The role of corporate culture in business
The concept of corporate culture is popular on the world. However, in Vietnam,
in the last few years, enterprises have been aware of corporate culture. In particular,
when Vietnam has been an official member of World Trade organization (WTO) in

2007, this stimulates Vietnamese economic development rapidly in the harmony way
with the global trend. Consequently, understanding of the corporate culture is one of
the essential issues that Vietnamese enterprises need to emphasize when taking part in
the international market. So, what is the role of corporate culture in Vietnamese
enterprises?
This thesis will discuss three main characteristics about role of corporate
culture in Vietnamese companies, as following:

2.1.3.1. Fostering innovation and invention
Corporate culture is considered an engine to encourage innovation and
invention in organizations.
According to the study by Zahariah Mohd Zain, Razanita Isahak, and Eelane
K Ghani (2009), corporate culture plays an important role in changing
“Organizational Commitment” that helps organizations explore the relative strength
of employees’ attachment or involvement with their organization. These authors built
a specific framework through four hypotheses including teamwork, training and
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development, communication, and rewards and recognition to indentify objective of
corporate culture in invention organizational commitment.

Figure 2.1: Role of corporate culture in Organizational Commitment

Next, following Olu Ojo (Business Intelligent Journey, 2003), corporate
culture is a key to innovate the way that an organization assesses the employee job
performance as well as organizational productivity. The research showed that
corporate culture brings the change in “binding on all member and staff of the
company as this will encourage uniformity among members of the organization and
enhance commitment and group efficiency”.

Indeed, a lot of authors and researches identify the concept of corporate
culture as well as its role on innovations such as the influence of corporate culture on
organizational commitment (Zahariah Mohd Zain, Razanita Isahak, and Eelane K
Ghani, 2009), the assessment of organizational culture (Teemu Reiman & Pia
Oedewald, 2002), the role of organizational culture in organizational change (Iivari
& Netta, university of Oulu) and so on. However, based on the concept of corporate
culture, this research will mention a different area. Corporate culture play an
Corporate culture
 Teamwork
 Training and Development
 Communication
 Rewards and Recognition

Organizational
commitment
22

essential role in innovations in managerial accounting that helps managers make key
decisions.

2.1.3.2. Creating corporate vision, shared values and beliefs
Corporate culture plays an important role in creating corporate vision, shared
values and beliefs for each enterprise. According to Japanese proverb, “Vision
without action is a daydream. Action without vision is a nightmare.” Like the mantra
with only few words, corporate vision shows what the corporation aims at and its
customers should expect from it to achieve in the near or distant future.
Consequently, the role of corporate culture is letting everyone consisting of staff,
customers and company’s partners know what the company is all about.
Next, corporate culture creates shared values that guide decisions and
behaviors of managers, employees, and shareholders. Therefore, every member of
the company should have the feeling of shared values because this is what unites
everybody.
Finally, according to English proverb, “The key to all action lies in belief.” It
means when the company believes in its activities or products, it will be very
successful or at best mediocre in gaining its clients’ belief. Accordingly, the role of
corporate culture can be considered as a selection of clients who believe in what the
company has to offer.

2.1.3.3 Creating the competitive advantage
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A solid corporate culture can bring competitive advantages to any enterprise.
Indeed, enterprises that want to achieve these benefits have to get three important
determinants including human resource, capital and technology. Human resources
can adjust, choose and develop the company’s competitive advantages. Meanwhile,
corporate culture which directly influences each member of organization plays a
crucial role in proving human resource. Therefore, indirectly, organizational culture
can have an effect on competitive advantages of an organization when taking part in
the international marketplace.

2.2. Overview of the innovation of management accounting
2.2.1. Definition of management accounting
Management accounting refers to the process of preparing management
reports and accounts which provide accurate and timely financial as well as statistical
information and data required by accounting management agents in a company to
make day-to-day and short-term decisions.
Management accounting plays an important role in organizations today.
According to Chadwick (2000), he said that “management accounting uses
accounting, finance, and management together with the leading edge techniques
required to drive successful businesses.” It states that a management accounting
system is good if it consists of a responsibility to manage a wide variety of critical
information. Consequently, those included the need to anticipate and be prepared to
deal with various ethical dilemmas.


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2.2.2. Definition of management accounting innovation
In the last fifteen years, some managerial accounting innovations have
significantly developed for application by most businesses. Since the publication of
Johnson and Kaplan’s (1987) Relevance Lost: The Rise and Fall of Management
Accounting, “innovations such as activity-based costing/management, the balanced
scorecard, value-chain analysis and economic value-added systems have been
introduced by organizations to improve the quality of information and management
within those organizations.” It means that initiation in managerial accounting is
considered as a new idea by an adopting enterprise which serves as an underlying
design rule for financial and nonfinancial information systems that aid leaders make
decisions to fulfill the objectives of an enterprise (Foster and Datar, 2000). Hence,
the process of adopting management accounting innovations can be beneficial for

most organization.
Moreover, management accounting is also considered as an operational
control system that defines objectives, measures progress and rewards or punishes
performance in firms. Consequently, the innovation in management accounting
including productive and unproductive elements of a scheme is competent of
modifying management activities in an approach that could create a positive or a
negative assessment relying on the information involved in the statistics.

2.2.3. The role the innovation of management accounting
Nowadays, modern corporations manage and maintain their prosperity in the
intensive competitive environments of business through continuous innovations.
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Consequently, innovation in managerial accounting system has been one of the
essential determinants driving modern organizations.
Since the late 80s, many researches have that focus on the innovative
management accounting practices to eliminate the redundant accounting practices
and encourage a more dynamic and initiative approach to managerial accounting. For
example, in the modern management accounting practice, cost accounting applies the
central method to compare actual and budgeted costs of raw materials or labor used
during a production period. This method will be blended with new techniques
including life cycle cost analysis and ABC which is designed to correspond with
specific characteristics of modern businesses. Therefore, it not only minimizes
machine breakdowns and quality control failures but also maximizes the efficiency
of business operations (Hopper, Northcott & Scapens, 2007).
Moreover, innovations in management accounting can be characterized as
purely radical and administrative. Hence, it allows business to outline the initiative
process as composed of invention and mobilization of an idea; selection and support;
diffusion and implication (Chenhall, 2005).
In addition, management accounting innovations also provide information

that is considered as a platform for leaders to conduct an overview of the entire
internal structure in order to facilitate the control functions in an organization.
Therefore, it is also responsible for offering a scorecard by which the organization’s
overall performance is rated by outsiders.
In conclusion, managerial accounting innovation is the core of any
management scheme. According to Coombs, Hobbs & Jenkins (2005), before any
management accounting innovation, “accounting information is affected by the