a study of the emergence of management accounting system ethos and its influence on perceived system success

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A study of the emergence of management accounting system
ethos and its influence on perceived system success
Alnoor Bhimani
Department of Accounting and Finance, London School of Economics and Political Science, Houghton Street,
London WC2A 2AE, UK
Abstract
This study considers how certain notional organisational culture elements became embedded in the design of an
innovative management accounting system (MAS) and how the alignment between the cultural premise of the MAS
and that espoused by MAS users influenced the perceived success of the new system. The research data for the study
were obtained over a three and half year period and derive from interviews, questionnaire responses and public as well
as internal corporate documents. The site chosen for the study is a division of Siemens—a global firm in the electronics
and electrical components industry. Two employee groups with functional expertise in engineering and business eco-
nomics respectively comprise the MAS user groups. During the development and implementation phases of the new
MAS, Siemens was actively engaged in a corporate-wide culture change programme that was supportive of the new
MAS initiative. The study results are in two parts. First they report on the manner in which the organisational pro-
gramme of culture change affected the cultural premise of the new system. Second, they indicate that the degree of
alignment between the organisational culture elements which were embedded within the MAS and the organisational
outlook of the two user groups significantly influenced the system’s perceived success. # 2003 Elsevier Science Ltd. All
rights reserved.
1. Introduction
Past research suggests that different groups of
MAS users within organisations exhibit different
rationales, priorities and cultural orientations
(Ahrens, 1996, 1997, 1999; Appleyard & Pallett,
2000; Bamber, 1993; Birnberg & Shields, 1989;
Bruns & McKinnon, 1993; Ko & Mock, 1988; Lo
¨
n-

ing, 1994; Markus & Pfeffer, 1983; Young & Selto,
1991) and that these may influence their perceptions
of the success of MAS changeovers (Brewer, 1998;
Broadbent, 1992; Dent, 1991; Ezzamel, 1987; God-
dard, 1997a; Hopwood, 1989; Mouritsen, 1996;
O’Connor, 1995; Roberts, 1990). Some researchers
suggest that changes in organisational control
systems tend to be deemed successful when
accompanied by organisation cultural values which
support the new systems (Das, 1986; Dent, 1987;
Robey & Farrow, 1982; Rowlinson, 1995; Zmud,
1979). Moreover, user involvement in the design
of information systems has been reported to
enhance the perceived success of a systems change
because user value assumptions become embedded
into the new systems’ architecture (Argyris &
Kaplan, 1994; Birnberg, 1998; Caplan, 1988; Fisher,
1998; Franz & Robey, 1986; Markus & Pfeffer,
1983; Shields & Young, 1989).
Whilst evidence exists that the introduction of a
novel management accounting system can bring
about desired consequences when the system users
0361-3682/03/$ - see front matter # 2003 Elsevier Science Ltd. All rights reserved.
PII: S0361-3682(02)00025-9
Accounting, Organizations and Society
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consider the organisational values of their work-

ing environment to be consistent with those
embedded within the new system, there has been
little research on how such consistencies emerge.
The present study aims to address this concern by
exploring how certain notional organisational
culture elements became embedded features of a
newly implemented MAS within a specific organi-
sation. It also aims to investigate how the align-
ment between the organisational culture elements
which were embedded within the MAS and the
organisational outlook of two MAS user groups
influenced their perception of the success of the
new system.
The site chosen for this study is the Fibre Optics
business unit (HLFO) of the Semiconductors
Group of Siemens AG—a global electronics and
electrical components firm. Operational officers
within HLFO have specific expertise either in
engineering (Technisch) or in business economics
(Kaufmannisch). Engineering and business officers’
educational training differs in that the former tend
to possess engineering based qualifications
whereas the latter have a business economics aca-
demic background. These two distinct functional
expertises provide a basis for categorising opera-
tional officers at HLFO into two different
employee groups. The new management account-
ing system adopted by HLFO is called process-
based target costing (PBTC) which was designed
by HLFO engineering officers between September

1995 and May 1996. PBTC became operational in
August 1996.
The information collected to achieve the two
aims of the investigation is derived from different
sources. Interviews were carried out between early
1995 and mid-1998 with company officers. Inter-
nal documents, accounting reports, statistical
data, graphical charts and official company his-
tories were consulted. Two questionnaires were
also used for collecting data on the MAS users’
organisational culture orientation. One ques-
tionnaire was administered to engineering and busi-
ness officers prior to the introduction of the new
accounting system and the other was administered
following its implementation. Whilst HLFO was
in the process of designing and implementing the
new MAS, a corporate-wide culture change pro-
gramme was in progress at Siemens. The two
questionnaire administrations enabled changes in
the users’ organisational outlooks over this time
period to be assessed. The second questionnaire
also included a question on the users’ perception
of the success of the new MAS.
The paper is structured as follows: following a
review of the literature dealing with organisational
culture and MAS ethos alignment, the paper dis-
cusses the emergence of the new MAS’s ethos in
the light the corporate culture change programme
being put into effect throughout Siemens. The
questionnaire and interview-based approach and

hypotheses for investigating how the alignment
between the organisational culture elements
characterising the MAS and the system users’
orientation towards a developmental culture relate
to the new MAS’s perceived success are subse-
quently considered. Following a discussion of the
results of the investigation, the paper’s concluding
section addresses some of the implications of the
study and future research possibilities in the area.
2. Literature review
2.1. Management accounting systems and
organisational culture
The management accounting literature has only
recently started to show empirical concern with
the concept of ‘organisational culture’ (Dent,
1991; Goddard, 1997a, 1997b; O’Connor, 1995)
though the potential of studying links between
organisational culture and systems of control has
long been posited (Flamholtz, 1983; Hopwood,
1987; Markus & Pfeffer, 1983; Ouchi & Johnson,
1978). More recently, Shields (1995) and Birnberg
(1998, 2000) have reiterated the desirability of
investigating how cost management systems
adoptions and effects are conditioned by variables
such as organisational culture.
Whilst there is evidence to suggest that the per-
ceived implementation success of a new MAS is
influenced by whether its information output is
considered easy to use, accurate and timely,
investigations of organisational culture and con-

trol practices indicate that successful information
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systems changes tend to result when supporting
and compatible organisational values are in place
(DeLone & McLean, 1992; Doll & Torkzadeh,
1988; Earley & Kanfer, 1985; Hogarth, 1993;
Shields, 1995). Research studies suggest that the
introduction of novel information systems may
not bring about the desired effects if users do not
perceive the organisational characteristics and cli-
mate of their working environment to be con-
sistent with the values embedded within the new
system (Cushing,1990; Das, 1986; Robey & Far-
row, 1982; Rowlinson, 1995; Zmud, 1979). How
closely the cultural orientation of management
accounting information users aligns with the value
assumptions factored into the design of a MAS
has likewise been reported to have an influence on
the perceived implementation success of a new
system (Argyris & Kaplan, 1994; Birnberg, 1998;
Caplan, 1988; Shields & Young, 1989). Some
scholars posit the existence of direct linkages
between accounting systems characteristics and
corporate culture (Goddard, 1997a; O’Connor,
1995; Soeters & Shreuder, 1988) and between
organisational culture and accounting systems
design (Bourn & Ezzamel, 1986; Broadbent, 1992;

Dent, 1991).
In the context of cost management innovations,
Shields and Young (1989) and Young (1997) sug-
gest that often, novel systems are administrative
rather than technical in nature and as such, their
implementation fate is not independent of the
preferences, goals and strategies of top managers.
Foster and Swenson (1997), McGowan and
Klammer (1997) and Friedman and Lyne (1995,
1999) provide empirical support in this light.
Cooper, Kaplan, Maisel, Morrisey, and Oehm
(1992) offer some evidence that a variety of
behavioural and organisational factors are inter-
twined with the implementation of activity based
costing (ABC) systems and Anderson (1997) and
Anderson and Young (1999) explore the existence
of relationships between contextual variables
such as organisational commitment and shared
organisational values and ABC implementation
success.
Following an investigation of Canadian firms,
Gosselin (1997, p. 8) has reported that:
‘‘ administrative innovations such as ABC are
easier to adopt and implement in mechanistic
organizations’’. Based on a study of Finnish
organisations, Malmi (1997, p. 21) concludes that
user resistance can lead to ABC systems failure
and that organizational culture is ‘‘important’’ in
explaining such resistance. Argyris and Kaplan
(1994) identify organisational culture change stra-

tegies that can be effected to overcome employee
resistance to the introduction of ABC and Hen-
ning and Lindahl (1995, p. 58) stress the impor-
tance of having an ABC system implementation
‘‘ fit the current culture of the organization’’.
Different levels of success in management infor-
mation systems implementations have also been
argued to depend on organisational groupings
(Cooper & Zmud, 1990; Cushing, 1990; Lucas,
1975; Newman & Rosenberg, 1985). Research on
group polarisation suggests that group interaction
enhances the salience of value conformity (Barki
& Hartwick, 1989; Brown, 1965) and that it
increases familiarity with different information
elements (Bates, Amundson, Schroder, & Morris,
1995; Rutledge & Harrell, 1994). Moreover, inter-
group interaction causes ‘‘bonding to a choice or
system as well as leads to a convergence of utili-
ties’’ (Whyte, 1989, p. 49). Studies of the imple-
mentation of management accounting innovations
suggest that their information output ‘‘ is used
for various purposes by various organizational
sub-groups’’ (Malmi, 1996, p. 243) with effects
that are ‘‘far from unambiguous’’ (Ibid.).
Shields and Young (1989, 1994) believe that cost
management systems implementation success
depends on specific group based behavioural vari-
ables. Attention must be given to how well an
innovation such as the implementation of a new
MAS matches the preferences, goals, strategies,

agendas, skills and the resources of dominant
employee groups (Shields, 1995). In this light,
Scapens and Roberts (1993) have investigated the
emergence of resistance to the implementation of a
new information system within an organisation
with different subcultures. They report that
although different organisational participants can
be agreed on the desirability of altered infor-
mation systems for controlling internal oper-
ations, there may be ‘‘ very different
perceptions of the precise nature of these infor-
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mation needs’’ (Scapens & Roberts, 1993, p. 31).
They document the disparity between divisional
managers’ predilection for information defined
primarily in economic terms and unit company
managers’ preference for accounting information
focusing on production factors, scheduling
resources and delivery issues. These findings lend
appeal to Argyris’s (1990, p. 503) contention that
an accounting system’s technical features will be
premised on accounting information system
designers’ ‘‘technical theory of control’’ which
may not accord with the views of users. Markus
and Pfeffer (1983) have similarly documented
instances of information system implementation
failures whereby the ethos of newly implemented

information systems are at odds with the under-
lying departmental culture of information user
groups.
Whilst this literature has sought to explore ways
in which systems changeovers are affected by their
designers and users’ organisational culture orien-
tations, it has not addressed the question of how
the technical configuration of management
accounting systems can evolve such as to embed
particular organisational culture elements. This is
one intent of the present study which also investi-
gates how far the alignment between the organi-
sational culture elements espoused by two
functional employee groups within a business unit
of Siemens and those embedded within a new
MAS are associated with the users’ perceptions of
MAS success. To this end, a methodological
model to assess organisational culture orientation
is considered below.
2.2. The competing values model of organisational
culture
Organisation research concerned with the role
of organisational culture has had to contend with
a wide variety of definitions of organisational cul-
ture (see Martin, 1992; Reichers & Schneider,
1990; Weick, 1985 for reviews). For the purposes
of this paper, organisational culture is taken to refer
to the patterns of values and ideas in organisations
that shape human behaviour and its artefacts
(Zammuto & Krakower, 1991). This definition is

sufficiently broad as to be, in the main, identifiable
with most quantitative and/or qualitative organi-
sational culture studies (Pettigrew, 1979).
Although some researchers contend that organi-
sational culture cannot be effectively examined
using quantitative methods (Frost, Moore, Louis,
Lundberg, & Martin, 1991; Louis, 1983; Schein,
1985; Smircich, 1983) and that ‘‘culture needs to
be observed, more than measured’’ (Schein, 1996,
p. 229), others see statistical analyses as being able
to contribute significantly to investigations of
organisational culture (Hofstede, Neuigen,
Okayre, & Sanders, 1990; Rousseau, 1990; Saf-
fold, 1988; Siehl & Martin, 1988; Wilkins &
Ouchi, 1983; Zammuto & Krakower, 1991). The
present study makes use of qualitative information
regarding cultural changes within Siemens
obtained from internal corporate documents,
external publications as well as from interviews
with HLFO and other Siemens executives. The
study also derives information from the admini-
stration of two questionnaires based on a model
concerned with organisational culture elements.
Within the organisation study literature, a
number of different models exist for quantitatively
analysing organisational culture (see Xenikou &
Furnham, 1996). The present study focuses on
aspects of organisation culture which are explored
using the competing values model (Cameron &
Quinn, 1998; Quinn, 1988; Quinn & Kimberly,

1984; Quinn & Rohrbaugh, 1981, 1983). The
competing values model differentiates between
underlying values which create meaning in orga-
nisational settings and the cultural artefacts that
reflect them. This model relies on the premise that
although cultural artefacts such as myths, lan-
guage, rituals and symbols are specific to organi-
sations, values are not. The model assumes that it
is not different sets of values which give rise to
different organisational cultures but varying
emphases on the limited set of values prevalent
within the larger society. This perspective is one
that is gaining favour among researchers inter-
ested in the relationships between national culture
and management accounting and control systems
(see Harrison & McKinnon, 1999).
Quinn and Kimberly (1984, p. 298) argue that
the competing values model can enable ‘‘ such
things as the means of compliance, motives, lea-
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dership, decision-making effectiveness, values and
organizational forms’’ to be explored. This is
made possible by identifying different axes of
organisational effectiveness. Quinn and Kimberly
(1984) propose that one of these relates to an
organisational focus ranging from, at one end, an
internal and micro-emphasis on the well-being and

development of people within the organisation to
stressing the well-being and development of the
organisation itself at the other extreme. Another
value dimension which they advance relates to
organisational structure ranging from empha-
sizing stability and control to stressing flexibility
and change. The competing values model thus
enables four resulting cultural types of organi-
sational orientations to be posited: group, develop-
mental, hierarchical and rational (see Fig. 1).
Quinn and Kimberly (1984) consider that the
‘‘group’’ culture is based on norms and values
associated with affiliation. It emphasises flexibility
and internal focus and stresses cohesion, morale
and member participation in decision making as
means and human resource development as ends.
The group culture’s strategic orientation is one of
implementation through consensus building. The
‘‘developmental’’ culture which stresses flexibility
Fig. 1. The competing values model [adapted from Quinn and Kimberly (1984)].
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and an external focus is permeated by assumptions
of dynamic change. Growth and resource acqui-
sition as ends are enabled by readiness and flexi-
bility as means. It is the ideological appeal of the
task undertaken which motivates individuals.
The ‘‘hierarchical’’ culture underscores the rele-

vance of control and internal focus. Information
management and communication as means enable
the achievement of stability and control as ends.
Effectively, this cultural type reflects the values
and norms associated with bureaucracy. Sig-
nificance is given to orderly work situations with
sufficient co-ordination and distribution to pro-
vide organisational participants with a sense of
security, continuity and stability. Individuals’
actions are directed by formally delineated roles
and enforcement is ordered by rules and regu-
lations. Finally, the ‘‘rational’’ cultural type stres-
ses control and external focus. Productivity and
efficiency as ends are brought about by planning
and goal setting as means. Achievement is
emphasised and individual motivation comes from
the meritocracy-based belief that competent per-
formance and achievement of designated organi-
sational objectives are to be rewarded.
Quinn and Kimberly (1984, p. 300) affirm that
although no organisation is likely to identify
purely with only one culture, ‘‘ a distinctive cul-
ture reflective of one characteristic grouping as
opposed to another’’ in terms of the competing
values model will prevail. Table 1 identifies char-
acteristic elements of each cultural type based on
the competing values model.
The following section discusses the organisa-
tional programme of culture change at Siemens
and the emergence of the new management

accounting system—process based target costing
at HLFO. Its purpose is to delineate the manner in
which the culture change programme shaped the
cultural premise upon which the new MAS fea-
tures were founded in terms of the competing
values model dimensions. Whilst the study makes
use of several sources of information, for the fol-
lowing part, general information on Siemens was
obtained from official external and internal pub-
lications as well as from published interviews with
company executives. Interviews were also under-
taken with Siemens managers both from within
and from outside the Fibre Optics unit (see
Table 2).
3. Culture change at Siemens
3.1. In pursuit of flexibility and external outlook
In early 1993, Siemens launched a company-
wide culture change programme referred to as
Table 1
Organisational culture type characteristics under the competing values model
a
Culture types
Characteristics Group Developmental Hierarchical Rational
Flexibility vs control Flexibility Flexibility Control Control
External vs internal Internal External Internal External
Means Member participation,
cohesion, morale
Adaptability, readiness Communication information
management
Planning, goal setting

Ends Development of
human resources
Growth, resource
acquisition
Stability, bureaucracy,
control
Productivity efficiency
Compliance Affiliation Ideology Rules Contract
Motivation Attachment Growth Security Competence
Leadership Concerned supportive Inventive risk taking Conservative cautious Directive goal oriented
a
Based on Quinn and Kimberly (1984).
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time optimized processes (TOP). At the heart of
this organisational drive, was an attempt to
engender greater flexibility of operational prac-
tices and an enhanced outward management
orientation. Many managers across the organi-
sation perceived a need to alter their business
units’ accounting information systems once the
implementation of the TOP initiative had started
to take effect. The TOP programme aimed to
achieve greater ‘‘customer and process orien-
tation, faster decision making, team-oriented
management, enhanced self-initiative and self-
responsibility’’ (Siemens, 1994, p. 3). Alongside
these goals, managers sought ‘‘more powerful cost

consciousness and more effective cost manage-
ment’’ (Innovation Management Director com-
menting on the TOP initiative, 3/6/1996). To
understand how the Siemens-wide programme of
culture change affected the design of the new MAS
at HLFO, it is essential to consider the emergence
of TOP at Siemens.
The idea that ‘‘it is essential to simplify and to
reduce decision processes and to place ourselves
closer to the market and to our customers’’ (Karl
Heinz Kaske, President of Siemens, cited in
Michel & Longin, 1990, p. 161) was a concern
which had been expressed by Siemens’ top man-
agement since the mid-1980’s. Kaske had articu-
lated a need for the organisation to become more
flexible, dynamic and competitive. He had sought:
an internal structure to enable us to dis-
cover, develop and encourage our managers’
entrepreneurial talents in order to allow them
total managerial control over projects rather
than simply partial authority (Ibid.)
Table 2
Interviews undertaken with managers at Siemens
Interviewee Siemens unit Duration (min)
Information Manager Defence Electronics 30
TOP Programme Executive Siemens Plessey Sytems 30
Innovation Management Director Siemens Nixdorf 45
Innovation Management Officer Siemens Nixdorf 30
Management Development Consultant Siemens Corporate Communications 30
General Manager—Business Improvement Siemens PLC (UK) 15

Human Resources Manager Private Communication Systems 30
Engineering Manager Siemens-Matsushita Components 20
TOP Programme Officer Drives and Standard Products 30
Manager—Human Resources Strategy Semiconductors 45
Information Systems Manager Semiconductors 60
Finance Director Private Communication Systems 30
Deputy Director Public Communications Networks 20
Engineering Consultant Electronic Components 45
Management Training Corporate Human Resources 30
Regional Manager (Europe) Development 30
Information Systems Manager Infrastructure Services 45
PBTC Software Developer HLFO 45
Phoenix Technical Project Leader HLFO 90
Head of Production Planning HLFO 45
Strategy and Marketing Manager HLFO 30
Assistant to General Manager HLFO 30
Product Developer A HLFO 20
Product Developer B HLFO 45
PBTC Project Leader HLFO 90
Financial Manager HLFO 90
General Manager HLFO 120
Head of Accounting HLFO 90
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In 1985, Kaske restructured Siemens’ activities
into three distinct elements (divisions, regional
units and central services) to ‘‘ enhance effi-
ciency, reduce costs and avoid duplication of

activities’’ (Ibid.). In 1989, the company put into
place further decentralization measures which cul-
minated into the present company structure con-
sisting of divisions, groups and business units.
During the 1990’s, senior company executives
continued to voice concerns similar to Kaske’s.
For instance, Siemens’ General Works Manager
indicated that:
we harbour some doubts about whether
thinking in terms of competitive, market and
cost advantages truly permeates our corpora-
tion (Siemens, 1990, p. 2).
A major problem according to him was that
‘‘personal goals and business goals often take
separate or even divergent paths’’ (Ibid., p.3). One
difficulty faced by the organisation was perceived
to relate to information exchange and communi-
cation channels. A Senior Innovations Manager
had noted that
Within the organisation, there are obvious
inter-company communication barriers.
There is talk of a wall of silence between the
upper levels and the rest of the staff, who are
left in ignorance regarding the background to
many decisions (Siemens, 1991a, p. 2).
Likewise, an Engineering Works Manager had
remarked that ‘‘stumbling blocks’’ stood in the
way of commitment and entrepreneurial action:
Many regard change primarily as a risk.
Innovative, entrepreneurial action becomes

shipwrecked on the jagged rocks of rigid
demarcation (Siemens, 1991b).
A year after his appointment as President and
Chief Executive Officer in 1992, Heinrich von
Pierer launched the ‘‘time optimized processes’’
(TOP) culture change programme to ‘‘tear down
barriers within the company’’ (interview excerpts
form The Economist, 13/11/1996, p. 12). Heinrich
von Pierer’s basic strategy was to give equal weight
to both cost-cutting and reaping the rewards of the
‘‘cultural revolution’’ (Ibid) through increased
flexibility in the way organizational processes were
carried out and greater awareness of external
market factors. Under TOP, two hundred and
sixty independent business units were created each
with responsibility for bringing about a change in
culture. Employees were to be remunerated on the
basis of results rather than rank as had been the
case traditionally. Staff were expected to assess
their superiors as well as be assessed by them. An
internal employee magazine noted TOP’s aim to
‘‘achieve accelerated optimisation of all processes
in the value chains’’ (Siemens, 1994, p. 2) and to
‘‘ design more efficient structures, decision pat-
terns and processes’’ (Siemens, 1994, p. 2). The
TOP initiative singled out productivity measures
as having three dimensions: quality, time and cost.
One Financial Manager noted that:
If we shorten and simplify our development
and marketing processes, then costs will go

down quality will go up. Our aim is to be
faster, better and cheaper than our competi-
tors (4/6/1996).
During the early 1990’s, senior managers within
the Semiconductors division at Siemens identified
a variety of problems including long decision pro-
cesses, excessive bureaucratic hurdles, repair and
quality problems arising from high levels of labour
demarcation, uncontrollable document complex-
ity, illogical process flows, inadequate inter-
departmental communication and ineffective
information systems structures. The TOP pro-
gramme attempted to fuel the implementation of
innovations such as ‘‘time based management’’,
‘‘total quality management’’, ‘‘total cycle time
analysis’’ and ‘‘kaizen’’ among others so as to
foster ‘‘ customer and process orientation, faster
decision making, team-oriented management,
enhanced self-initiative and self-responsibility’’
(Siemens, 1994, p. 3).
Once the implementation of TOP was under way,
it had an impact on work attitudes according to a
number of managers at Siemens. An Engineering
Manager indicated that a TOP motivated re-engi-
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neering project had led to ‘‘ teamwork, job-
rotation, group meetings, speaking your mind

which were practically inconceivable before, are
now all part of a day’s work’’ (3/6/1996). An Inno-
vation Management Director noted that: ‘‘Today
there is a powerful cost consciousness in the com-
pany together with a broad palette of cost controls’’
(3/6/1996). He nevertheless believed that:
In comparison to our competitors, we cannot
claim to be front-runners in cost cutting We
are profit-minded but the follow-through is
weak and inconsistent (Ibid)
and stressed that:
In the future, we will commit ourselves to
effective cost management at all levels and in
all functions since consistent profit is an
important indicator of whether we are doing
the right thing and doing it right. TOP provides
a framework for moving in this direction
(Ibid.).
The TOP culture change programme continued to
receive wide publicity across all groups and divisions
and was made visible through a multitude of plat-
forms: logos, office stationary, internal newsletter
articles and corporate confectionery among others.
Certain dimensions of the TOP initiative were to
become extensively reflected in the target cost
management system (process based target costing)
which was to be implemented at HLFO. In
particular, cost, quality and time concerns of the
programme of cultural change, were to be central
elements of the new MAS. Concurrently, factors

which underscored the relevance of flexible work
practices and high sensitivity to the enterprise’s
external environment were to be important
characterising features of the new system. One
TOP initiative publication stated that:
Time and quality are key to improved perfor-
mance and lowered costs. Significant cost dis-
advantages with competitors are attributable
to inadequate product design and wasteful
processes. It is here that out greatest potential
lies (Siemens, 1996).
It further stressed that:
improved results are dependent not only
on costs but also on the relationship between
productivity and costs which can be improved
if infrastructure and processes are
improved as well as time and quality para-
meters (Siemens, 1996).
These elements of the TOP initiative were to
become embedded in the design of the new MAS.
3.2. Process based target costing
At HLFO, the belief that costing information of
a different type to that being provided was neces-
sary had began to be voiced from early 1995. Until
late 1994, HLFO had controlled a large portion of
the fibre optics market for IBM mainframe com-
puters. But at this time, a foreign competitor
entered the market with the objective of taking
over a major part of Siemens’ market share in this
sector primarily by offering the same products at a

lower price. This led HLFO managers to consider
ways of reducing product costs initially through
more flexible production practices and efficiency
drives and subsequently by redesigning production
specifications and processes so as to reduce overall
resource consumption over the longer term.
In order to remain competitive, HLFO man-
agers believed it was necessary to bring down the
total manufacturing costs of its subcomponent
parts to around one third of their original level in
the face of the emerging competitive threat.
HLFO started to focus on the emerging market
and financial information needs of design engi-
neers. In September 1995, HLFO initiated the
development of a target cost based accounting
system which aimed to provide accounting infor-
mation on market imposed cost ceilings for differ-
ent product functions. The system was developed
by a team of HLFO designers with engineering
functional expertise who interfaced with other
engineers in operational departments about their
information requirements. The design engineers
also liaised with HLFO accountants trained in
business economics about implementation issues
concerning PBTC.
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Whilst the newly perceived information needs of

design engineers were being addressed, HLFO also
launched what it termed the ‘Phoenix’ project in
September 1995 which was a re-engineering exer-
cise to alter the manufacturing process. Phoenix
entailed the reconfiguration of manufacturing
such that all basic products would run on one
automated line prior to mass-customising the
product. All products were to use modularised
production steps according to individualised pro-
duct specifications.
Design engineers at HLFO had not traditionally
desired or been provided with extensive account-
ing information relating to either manufacturing
processes or to the selling prices of fibre optics
products. Their primary role had been to develop
leading edge technological innovations and to seek
ways of further improving product specifications,
performance and efficiency. The accounting sys-
tem in place at HLFO had been designed with the
object of allocating rather than tracing costs in
line with Siemens-wide accounting procedures.
This costing system divided material and produc-
tion elements into cost blocks and used volume-
based allocation methods. Direct material and
direct labour costs served as a basis for the appli-
cation of different overhead costs using predefined
overhead rates. This practice did not seek to relate
resource changes in components to changes in
production or to enable costings for different gen-
erations of re-engineered products to be com-

pared. Thus, if for instance, a process change
resulted in the production time being reduced by
50%, the accounting system allocated the same
overhead cost amount to a smaller base by doubl-
ing the allocation ratio without providing design
engineers with information on the origins and
flows of costs.
The Phoenix project team’s focus of attention
was mainly on analysing the production process.
But the production process was itself in large part
reflective of product design which determined the
basis of production workflow, timing and ultimately
costs. It was difficult for the design engineers to
address questions about the impact of a com-
ponent change on the cost of the production pro-
cess. What was deemed desirable was to have
linkages between the decisions made at the design
stage and the resultant effects on the production
costs. If such information could be made avail-
able, it would enable design decisions to take
account of production implications which them-
selves had to be considered in the context of cus-
tomer requirements. A key element of the project
was the application of target costing concepts to
set market-defined parameters affecting produc-
tion cost, timing and quality factors. To enable
this, the engineering officers working on the
Phoenix initiative integrated engineering and cost
management information relating to costs, time
and quality factors into single reports. PBTC’s

information output was thus intended to assist the
design and production engineering officers to relate
product function areas to the production process.
PBTC became operational in August 1996 and
by April 1997, an HLFO officer who had set up
the software requirements for producing PBTC
information reports indicated that: ‘‘All new
design projects are now using the tool and it is also
used for all existing products’’ (24.4.97).
The implementation of PBTC necessitated
interaction among different operational depart-
ments and extensive communication between
engineering and business officers. TOP’s basic
concerns included the transparency of organi-
sational processes, quality accountability, team
orientated co-operation, market competition
awareness and cost consciousness which were also
central to PBTC. PBTC reports were intended to
enable the costs of functions to be compared to
the perceived customer value for those functions.
Moreover, functional cost drivers could be back-
tracked from functions to the production pro-
cesses so as to depict the trade-offs between
materials and processes, or automation and
labour costs. PBTC was to delineate production
flows visually at the design stage by producing
graphic images of time, cost and quality resource
consumption across processes. The design engi-
neers who had traditionally only dealt with pro-
duct specifications could now obtain direct visual

information on the effects of different design deci-
sions on specific production processes through the
availability of PBTC reports.
PBTC was also intended to enable responsibility
for achieving quality requirements to be tied to
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specific operational personnel. Consequently, a
product defect at one stage of the overall produc-
tion sequence could be associated with a particular
prior production step which gave rise to the prob-
lem. This would lead to further cost allocation
possibilities and the potential to refine existing
responsibility accounting relationships.
The conventional accounting information pre-
pared by HLFO accountants was based on exten-
sive calculative rules and detailed allocation
procedures. It was primarily a management infor-
mation collection and resource control tool. By
contrast, the PBTC system was flexibly designed
to provide engineers with information they could
visualise and act upon in operational terms. PBTC
reports were not prepared on the basis of pre-
given standards, formats or rules, but were reflec-
tive of design engineers proclivities regarding
information representation and communication.
Whereas traditional accounting systems were
focussed on internal economic allocations, PBTC

was externally orientated in that it tied market
imposed time, quality and price specifications to
internal operational constraints. Under the com-
peting values model, the PBTC system might be
seen as most closely embedding external and flexi-
bility orientated values and thereby, of stressing
developmental culture characteristics.
The above discussion has focused on the manner
in which certain organisational culture change
elements became embedded within the new MAS.
This was the first objective of this investigation.
The paper now considers the methodology for
investigating how the alignment between the
organisational culture ethos of PBTC design fea-
tures and the system users’ orientation towards a
developmental culture related to the new MAS’s
perceived success.
4. Measuring perceived MAS success
4.1. Questionnaires and interviews
A questionnaire was administered in May 1996
prior to the implementation of the novel manage-
ment accounting system (PBTC) to its two groups
of users categorised as engineering officers (Tech-
nisch) and business officers (Kaufmannisch). The
questionnaire contained a series of questions
about their perceptions of the degree to which
organisational culture types as delineated by the
competing values model are representative of their
functional department (see Appendix).
1

This ex-
ante questionnaire was completed by 34 HLFO
officers (see Table 3 for information on the ques-
tionnaire respondent group). Another questionnaire
1
The competing values model questionnaire as used by Zam-
muto and Krakower (1991) in their surveys enables scores (from 0
to 100) to be aggregated by cultural types. Within the ques-
tionnaire instrument, the four cultural types based on the Quinn
and Kimberly (1984) typology are as follows: Department A
accords with the ‘‘group’’ type, B accords with the ‘‘develop-
mental’’ type, C accords with the ‘‘hierarchical’’ type and D
accords with the ‘‘rational’’ type. Zammuto and Krakower (1991,
p. 109) discuss the validity of the approach based on large scale
surveys. They note that ‘‘the data met the criteria of internal
consistency, predictable relationships with other organisational
phenomena and discrimination among groups’’.
Table 3
Users of PBTC information at HLFO
Department Number of users
(ex-ante)
Usable
questionnaires
Number of users
(ex-post)
Usable
questionnaries
Production 6 T 4 T 6 T 5 T
Purchasing 1 K 1 K 1 K 1 K
Marketing and Strategy 2 T, 1 K 2 T, 1 K 2 T, 2 K 2 T, 2 K

R & D 16 T 15 T 13 T 12 T
Accounting 4 K 4 K 5 K 5 K
Quality Control 3 T 2 T 3 T 3 T
Top Management 1K 1K 1K 1K
Total 34 30 33 31
T=‘‘Technisch’’ (Engineering officer); K=‘‘Kaufmannisch’’ (Business officer)
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was administered to the same group of PBTC
information users in April 1997 (see Table 3). This
ex-post questionnaire, asked respondents once
again about their perception of the organisational
cultural types represented within their functional
departments and sought their judgement as to the
overall success of the newly implemented manage-
ment accounting system. Interviews were under-
taken prior to and following the administration of
the ex-post questionnaire to explore respondents’
views on PBTC ’s implementation process and the
system’s consequences as a further source of
information for the study.
The ex-ante and ex-post questionnaires were
administered in German. The German versions of
the questionnaires were translated from English to
German by a German academic and back trans-
lated to English by another German academic.
2
Some stylistic revisions were made to the German

questionnaire as a result of the double translation.
The first questionnaire was administered in May
1996. The ex-post questionnaire was administered
in April 1997 after the new accounting system was
fully operational. This questionnaire was struc-
tured in the same way as the first but included an
additional question asking respondents to assess
the overall success of PBTC using a scale from one
to five (1=totally successful, 2=mainly successful,
3=neither successful nor unsuccessful, 4=mainly
unsuccessful, 5=totally unsuccessful).
4.2. Hypotheses development
Business officers who staffed the Accounting
Department at HLFO had traditionally prepared
internal accounting information for operational
departments. This information was extensively
calculative and in accord with predetermined
company accounting reporting procedures. Busi-
ness officers within Siemens’ accounting depart-
ments receive training in the preparation of
detailed accounts of the flow of economic resources
within the organisation and are taught to apply
an extensive set of company specific rules and
standards for structuring accounting information.
Prior to being hired by Siemens, business officers
will have obtained university qualifications in
business economics.
It is necessary to briefly consider business eco-
nomics education in Germany to provide some
insight on the intellectual background of Siemens’

business officers. Ordinarily, the university level
degree (Diplom-Kaufmann) follows the study of
business economics [Betriebswirtschaftsleher
(BWL)] which emphasises the understanding of
sophisticated economic concepts underpinning
management principles including costing approa-
ches. Traditionally, German business economics
universities do not have close relationships with
industry (Lane, 1990; Lawrence, 1989, 1994).
BWL’s science-based tradition (Wissenschaft)
stresses systematic and disciplined conceptual
research sometimes at the expense of closeness to
industrial issues or practical concerns according to
some writers (Randlesome, Brierley, Bruton, Gor-
don, & King, 1990; Sheridan, 1995). In this light,
Locke (1989, p. 249) observes that ‘‘ the Wis-
senschaft tradition isolates the German professors
of business economics from praxis’’ and notes that
German BWL today is primarily under-
graduate pre-experience and specialist research
graduate education (Locke, 1989, p. 176).
Locke (1989) provides various examples of
companies working with academic engineers but
seldom with business scholars. He cites one Sie-
mens manager who states that the firm tends not
to bring in German professors of business eco-
nomics to provide advice because they are too
‘‘inexperienced’’ (Hermann Baumann cited in
Locke, 1989, p. 171).
HLFO accountants’ predilection for a struc-

tured numerical and procedural approach to the
preparation of accounting information was not
independent of their prior educational training.
The professional conception of the legitimate role
of Siemens’ accountants with BWL training was
not conducive to the integration of accounting
information with other types of operational data.
The characteristic Wissenschaft-based approach
to economic representations of organisational
2
This was the case as the questions draw on the competing
values model instrument used in prior Anglophone studies.
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activities which demarcate costs, functions and
departments via numerical data was at odds with
the precepts embodied within Siemens’ TOP pro-
gramme (Siemens, 1995) of cultural change. It was
also at variance with the cross-functional and dia-
grammatic form of information representation
which characterised PBTC information reports.
The TOP programme confronted the basis of his-
torically derived precepts concerning the correct
role, format and presentation of financial infor-
mation. It emphasised flexible internal structures
and receptivity to external and market derived
influences which accord with the competing values
model’s ‘‘developmental’’ culture. By contrast,

business officers employed within the Accounting
Department could not be described as sharing the
same high level of ‘‘developmental’’ culture
orientation.
Contrary to business officers’ training, the edu-
cational background of engineering officers is
more closely aligned with a flexible orientation to
structuring data which makes little appeal to regi-
mented procedures and standardised information
formats or structures of communication. This is in
line with a developmental cultural orientation
under the competing values model. Educationally,
engineering officers at HLFO possess a ‘‘Diplom-
Ingenieur’’ qualification following university level
engineering studies spread over 4–6 years. By tra-
dition, engineering education in Germany com-
bines the search for knowledge with practical
purposefulness. Consequently, German engineer-
ing degrees are characterised by a unique combi-
nation of scientific knowledge and craftsmanship
(Technik) (Head, 1992; Randlesome, 1988, 1993;
Randlesome et al., 1990; Sorge & Warner, 1986).
University engineering faculties maintain close
cooperation with industry: ‘‘Where engineering
training is concerned, there is little formal detach-
ment of academic from practical aspects of train-
ing’’ (Warner & Campbell, 1993, p. 93). In a
similar light, Lawrence (1989, p. 98) states that:
Technik is a force for integration. The Ger-
man company is Technik in organisational

form. The skilled worker, the foreman, the
superintendent, the technical director are all
participants in Technik Technik is some-
thing which transcends hierarchy.
Locke (1989, p. 264) likewise notes that for
engineers: ‘‘Technik is the combination of know-
ledge and know-how necessary to make a pro-
duct’’. Moreover, ‘‘ technical expertise is as
close to the shop-floor, and as close to the pro-
duction/line hierarchy, as possible’’ (Warner &
Campbell, 1993, p. 98). Unlike BWL which is
generally more remote from practice, Technik-
based engineering education blends Wissenschaft
and functional purposefulness (Lawrence, 1994;
Maurice, Sorge, & Warner, 1980).
Past research suggests that ‘‘the past learning of
an individual can be expected to influence the per-
son’s perceptions of the organisational and task
variables’’ (Das, 1986, p. 217). Information channels
and modes of exchange can be shaped by users’
prior professional training (Joyce & Sloam, 1990;
Kim, 1989). Within HLFO, the extent of integration
of conceptual and applied engineering concerns was
evident in the structuring of technical information
reports. Engineering analyses were indicative of the
systematic fusion of diagrammatic and quantitative
data and the blending of theoretical concepts and
practical issues. The engineering officers’ opera-
tional concerns and proclivities influenced the
structuring of PBTC information which con-

trasted markedly with accountants’ prior notions
of legitimate information form and content.
There is also research evidence which indicates
that differences in cognitive styles and organi-
sational culture dimensions lead to consistent
relationships with decision making preferences
and information systems design (Dermer, 1971;
Driver & Mock, 1975; Hulin & Blood, 1968;
Huysman, 1970; Ives & Olson, 1984; Macintosh,
1985; Ouchi & Johnson, 1978; Seddon & Yip,
1992; Senn, 1978). Whilst individuals with an
‘‘internal locus of control’’ (Reitz & Sewell, 1979,
p. 73) react favourably to certain organisational
settings, others with an ‘‘external locus of control’’
do not (Reitz & Sewell, 1979, p. 73). In the light of
what the prior literature suggests about the role of
past learning, it is argued here that engineering
officers will uphold a developmental culture by
virtue of their training and functional expertise
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more so than business officers. The following
hypothesis is advanced:
Hypothesis 1. Engineering officers will indicate
higher developmental culture scores under the
competing values model than business officers
prior to PBTC implementation.
Although one might expect that engineering

officers will tend to generally remain culturally
more developmental than business officers, it is
important to ascertain that the contrast between
engineering and business officers’ cultural orienta-
tions did not significantly alter during the imple-
mentation of Siemens’ corporate-wide culture
change programme. Whilst transformations in
organisational values may take place over pro-
tracted lengths of time, it is unlikely that the cul-
tural change which Siemens sought to mobilise
through the TOP programme could have sig-
nificantly altered the organisational culture orien-
tation of business officers such that it would have
become more developmental than that of engi-
neering officers over the eleven months time period
between the two questionnaire administrations.
To establish that no such transformation took
place, the hypothesis that HLFO engineering offi-
cers are culturally more developmental than busi-
ness officers after the implementation of PBTC is
tested via the following hypothesis:
Hypothesis 2. Engineering officers will indicate
higher developmental culture scores under the
competing values model than business officers fol-
lowing PBTC implementation.
Hypothesis 1 is essential for establishing the
more extensive developmental cultural orientation
among engineering as opposed to business officers
prior to PBTC implementation given the influ-
ence of their highly specific educational and

training background. Hypothesis 2 is necessary to
establish that neither the ongoing cultural change
programme nor the process of PBTC imple-
mentation materially altered this relationship.
Taken together, they provide the basis for asses-
sing how the alignment between the develop-
mental orientation of MAS users and that
embedded within the MAS influenced the per-
ceived success of the new system.
Zammuto and Krakower (1991) suggest that a
departmental culture which stresses flexibility as
opposed to control is more conducive to favouring
an accounting innovation that can potentially
redirect managerial attention and alter organi-
sational processes. An internally oriented outlook
may be expected to coincide with a low inclination
to adopt management innovations which alter the
stability and continuity of control procedures as
opposed to an external orientation (Zammuto &
O’Connor, 1992). Thus a developmental culture
orientation under the competing values model can
be expected to be more receptive to any account-
ing innovation which alters the status quo espe-
cially where the accounting innovation enhances
information on the impact of external market and
customer influences on organisational activities.
Since PBTC attempts to provide enhanced
information on ways in which resources can be re-
allocated, a flexible orientation on the part of
users can be expected to heighten the relevance

and potential success perceived of PBTC more so
than a control orientation. In this respect, a
developmental culture orientation can be expected
to be more receptive to PBTC since it does not
favour structured information and extensive cal-
culative procedures and rules which characterise a
control orientation.
A developmental orientation does not favour-
ably view the running of internal operations via
formalisation, structure and extensive adminis-
trative rules. Such characteristics are antithetical
to the design and objectives of PBTC. PBTC pro-
vides information by integrating financial, opera-
tional, internal and market-based data. Its reports
are structured as a dynamic mix of visual, graphical,
quantitative and qualitative information. Financial
content is blended with operational data in PBTC
reports. Thus a user group with a high develop-
mental culture orientation will tend to consider
PBTC as more successful relative to a user group
which is less developmentally oriented. A low devel-
opmental orientation would suggest lesser receptivity
to viewing PBTC as successful as this new MAS
stresses an external and flexible orientation rather
than an internal and control oriented outlook.
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The following hypothesis is posited:

Hypothesis 3. officers with higher developmental
culture scores under the competing values model
will consider PBTC to be more successful than will
those with lower developmental scores.
To provide a deeper organisational perspective
to the questionnaire results, interviews were held
with users of the PBTC system following the
administration of the ex-post questionnaire. These
interviews were semi-structured in that questions
generally attempted to retain some focus on the
users’ outlook toward PBTC’s usefulness and
consequences. The interviewees included employ-
ees with Research & Development, Production and
Marketing & Strategy responsibilities. In addition,
interviews were held with individuals who had
played a role in the design and implementation of
the PBTC system. The next section discusses the
questionnaire results and their implications for the
hypotheses being tested in the light of the qualitative
information derived from these interviews.
5. Questionnaire results and interview analyses
The ex-ante questionnaire was distributed to the
34 relevant PBTC accounting information users at
HLFO identified in Table 3. Four questionnaires
were returned partially filled and were excluded
from the analysis. The ex-post questionnaire was
distributed to the corresponding group of 33 rele-
vant PBTC information users. Of the 33 ques-
tionnaire returns, two were partly filled and
unusable.

Hypotheses 1 and 2 are tested by reference to
two sided t-test scores and hypothesis 3 is tested
using regression analysis. Table 4 indicates that
engineering officers have a more developmental
orientation than business officers both prior to
and following PBTC implementation thereby
confirming hypotheses 1 and 2. The results con-
firm that engineering officers exhibit a higher
developmental value orientation than business offi-
cers both before and after PBTC implementation.
The interviews undertaken with various officers
at HLFO also provided qualitative evidence
underpinning the differing organisational value
orientations between engineering and business
officers both prior to and following PBTC imple-
mentation. These interviews suggest that beliefs
about the usefulness and effects of PBTC were
infused with judgements about how departmental
attitudes differed. Individuals in some depart-
ments differentiated themselves from others in
terms of cultural outlook and as to how their
conception of the role of cost information differed
from that of business officers staffing the
Accounting Department. For instance, the Phoe-
nix Technical Project Leader viewed theR&D
Department as being the
driver of PBTC since the accountants did
not realise that such a tool was required in
such a form (24.4.97).
The PBTC Software Developer likewise noted

that accountants are ‘‘ conservative. They fulfil
their function and manage by the numbers but do
not accept new ideas easily’’ (23.4.97). He indi-
cated that traditionally: ‘‘ the accountants’ tasks
Table 4
t-Tests of developmental culture orientation of engineering and business officers
a
Engineering Business t (P-value)
Mean (standard deviation) Mean (standard deviation)
Ex-ante developmental orientation (H1) 39.04 (20.99) 19.05 (11.15) 3.291 (0.004)
Ex-post developmental orientation (H2) 41.00 (24.87) 18.89 (14.16) 3.115 0.005
a
A two-sided t test was used to test the hypotheses, H1 and H2, that the true means of the developmental scores under the com-
peting values model of the engineering officers group is significantly higher than the business officer group before and after PBTC
implementation.
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are defined by formal constraints’’ (23.4.97) and
observed that:
before, we used to use overhead allocations
and when there were questions, the accoun-
tants simply analysed the problem in more
cost detail (23.4.97).
The Head of Production Planning offered a
similar view of the accountants:
PBTC had to come from one of us in R and
D or Production or from somebody in Sales
or Marketing but not from the Accounting

Department. We cannot expect this approach
from a classical Accounting department.
They only expect the right numbers and then
have a ‘‘help yourself’’ mentality in relation
to other departments. ‘‘Just pick from our
numbers what you need’’ they seem to say
(3.7.97).
The Strategy and Marketing Manager was par-
ticularly critical of the accountants in that,
according to him ‘‘PBTC calculations always bet-
ter match the reality than the results from the
accountants’’ (25.4.97). He remarked that:
Accountants live in their own world, closed to
the outside, living within numbers and stay-
ing remote from the rest of development.
They believe more in their numbers than in
what is actually happening. To them, PBTC is
not thinkable. They just hide behind their
overhead costings (25.4.97).
He further noted that PBTC information users
‘‘intuitively’’ recognise the advantages of the
system:
Tools allowing function analysis, forward
pricing, design to cost and customer discus-
sions are more and more in demand. But the
accountants who should be promoting these
tools react negatively (25.4.97).
An assistant to the top management team also
remarked that:
Accountants only want to use standard Sie-

mens accounting tools. They focus on existing
products and they fulfil standard Siemens
functions—and there are a lot of standard
functions at Siemens (24.4.97).
In commenting on the type of information
provided by the Accounting Department, a pro-
duct developer from the R & D Department
(here referred to as Product Developer A) stated
that:
Accountants are more conservative because
of their structure and their approach. But
nothing is more deadly than columns and
columns of numbers—these are the so-called
‘‘number cemeteries’’ (Zahlenfriedhof). Con-
versely, PBTC shows us the results more
clearly—this helps (27.6.97).
In echoing this view, the Head of Production
Planning indicated that:
Accountants have their rules and financial
report regulations. You cannot expect flexi-
bility in their representation of data (3.7.97).
He pointed in humour that: ‘‘ only if they
have time and they are bored, will they help us’’
(3.7.97) and noted that a specific type of
accounting information is needed by R and
D, but accountants do not really care where
the costs come from (3.7.97).
The Head of Production Planning commenting
on the accountants’ cultural outlook noted that:
‘‘The accountant is cool. He is not emotionally

involved and hence, not as committed’’ (3.7.97).
He indicated that:
I hope I did not give a too bad blow to any
accountant from the Accounting Department
but we could expect that they could help us a
little more in cost controlling. They are too
involved in their financial regulations. Their
transparency is only financial and that’s the
big problem (3.7.97).
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He further added that:
I am always amazed at how little transpar-
ency we have at HLFO. There is only an
apparent transparency. It seems that the only
important thing is that the numbers add up
together finely. But the meaningfulness of the
information is missing. So it happens that we
bet on the wrong horse when we make a
decision (3.7.97).
The PBTC Project Leader also commented on
the differing outlooks between engineers and
accountants regarding PBTC based information:
With the Production people, communication
has been easy because they already were
thinking about manufacturing processes in
the same way. For the accountants it has been
more difficult because with PBTC, they have

had to procure data in a form and depth they
have not been used to (25.4.97).
The tenor of these interviews are indicative of
perceived differences between engineering officers
and accountants and between traditional account-
ing information produced by the accountants and
the form and nature of PBTC information. Engi-
neering officers in R and D, Production and Sales
and Marketing considered themselves as being
more open than accountants to departing from
traditional precepts governing accounting infor-
mation content and form. Under the competing
values model, this view of accountants accords
with a lower developmental orientation in com-
parison with engineering officers. The ques-
tionnaire based results of hypotheses 1 and 2
therefore find some corroboration by way of the
interview results.
The results suggest that the enterprise-wide cul-
ture change programme was not significantly asso-
ciated with changes in the organisational outlooks
of engineering and business officers over the eleven
month time period between the two questionnaire
administrations. As might be expected, the orga-
nisational value orientations of the functional offi-
cers are not subject to change over short periods of
time. It is plausible also that any association
between organisational value orientation and per-
ceived MAS success which is tested in hypothesis 3
will remain equally stable over short time periods.

Hypothesis 3 is tested by reference to the fol-
lowing regression model:
PBTC Success ¼ b
o
þ b
1
DEVELOP þ e
where DEVELOP=Developmental culture score
under the competing values model.
The results of this regression are shown in
Table 5 and provide support for Hypothesis 3.
PBTC users with higher developmental scores
perceived PBTC to be more successful than
those with lower developmental culture scores.
The R-square for the model is 0.683 and the coef-
ficient for DEVELOP is in the expected direction
and is significant. The coefficient for DEVELOP is
negative because lower scores for PBTC Success
signified higher perceived success.
The results of Hypothesis 3 are also corrobo-
rated by the interview results. A number of engi-
neers who were users of PBTC information
commented on the usefulness of the information
provided by the new MAS. The PBTC Project
Leader for instance, stated that:
PBTC gives a structured way of talking about
cost elements with our partners. It is a pro-
gress in the way that Accounting, Production,
Table 5
Developmental culture orientation and perceived PBTC suc-

cess: regression results
a
Expected sign Coefficient (S.E.)
Intercept 5.058 (0.340)
Develop – À0.041*** (0.006)
Adjusted R-square=0.638; ***P< 0.01.
a
The model is Perceived PBTC success=b
o
+b
1
DEVEL-
OP+e. Perceived PBTC success is measured on a scale from
one to five (1=totally successful, 2=mainly successful, 3=nei-
ther successful nor unsuccessful, 4=mainly unsuccessful,
5=totally unsuccessful). DEVELOP is measured by the aggre-
gate score from 0 to 100 allotted to Department B which cor-
responds to ‘‘developmental’’ culture in the questionnaire
instrument. The significance level of the coefficient of
DEVELOP was determined using two-tailed t-test.
A. Bhimani / Accounting, Organizations and Society 17
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Marketing and Purchasing talk to each other
This is a tool which creates an ‘‘aha’’
effect—what a sheet of paper with only rows
and columns would never be able to do
(25.4.97).
Product Developer A likewise thought that with

the PBTC system, ‘‘you do not consider single
pieces but complete work processes and product
functions’’ (27.6.97). He noted that: ‘‘All existing
processes should be broken down using the
methodology of PBTC’’ (27.6.97). He considered
that this would ‘‘make accessible to everybody, the
knowledge of the functionality and processes of
existing products’’ (27.6.97). He believed that
‘‘PBTC is a progress compared to the old system
because the cost transparency is much clearer’’
(27.6.97). Product Developer A explained that:
In R and D, we always have the same prob-
lem: we know vaguely the cost but it is very
difficult to know the real cost of diodes which
for example is an important cost driver
PBTC helps a lot in relation to new develop-
ments to get the cost of components (27.6.97).
The Head of Production Planning was also
receptive to the new MAS. He remarked that:
‘‘PBTC is the only report that I can really use’’
(3.7.97). He added that:
Our cost structure is more like mud in a
swamp even if you could call mud clean. We
need cost details Previously, we could not
really tell how much a function of the product
costed (3.7.97).
He observed that PBTC’s information output is
useful in terms of ‘‘ knowledge of cost drivers,
the flow of material and the visual stimulation of
problem areas and plans versus real comparisons’’

(3.7.97). A similar opinion was expressed by the
Phoenix Technical Project Leader from the R and
D Department who viewed PBTC as enabling to
‘‘look for the reason for a deviance within a pro-
cess and to look at how to reach our target’’
(25.4.97). The Phoenix Technical Project Leader
added that it is a tool to show the Strategy and
Marketing people ‘‘what we are good at’’
(25.4.97).
Another Product Developer (here referred to as
Product Developer B) believed that:
PBTC as a product calculation tool, has to be
accepted and hence integrated into Siemens’
standard procedures (13.1.98).
Product Developer B stressed that control
responsibility was an important issue:
PBTC should be used not only for the plan-
ning of new products but also for cost con-
trolling. From this controlling, the
optimisation of processes can be achieved
(13.1.98).
He thought that PBTC helped match processes
and product functions to different individuals and
departments and that with the new MAS:
problems such as the question of who is the
cost responsible person will be resolved
(13.1.98).
Such a view did not depart from one of the TOP
initiative’s aims to replace ‘‘division of labour with
division of responsibility’’ (Siemens, 1995, p. 5).

Evidence of the perceived alignment between
functional users’ organisational outlooks and their
views as to the potential of PBTC further stemmed
from interviews. Product Developer B for
instance, noted that PBTC had quite significant
influences on product design decisions. He
thought that this was the result not so much of a
heightened cost focus on the part of engineers:
PBTC has not changed much in the heads of
the Project team because Phoenix was from
the beginning, a very cost conscious redesign
project and all employees were very sensitised
to this (13.1.98).
Rather, Product Developer B believed that pro-
duct design decisions were affected because PBTC
represented and highlighted costs in a particular
way. He cited various examples where particular
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decisions were made because ’’ PBTC helped
make certain interconnections obvious’’ (13.1.98).
Product Developer B explained that with PBTC:
the possibility to visualise the numbers had
emphasised the importance of the processes.
The employees of the Technical Production
Support division who are in charge of plan-
ning the production were directly, by the
information gathering and with the questions

associated with this, made attentive to possi-
ble cost drivers and have got through this, a
higher awareness of cost origins (13.1.98).
The PBTC Project Leader had commented that
‘‘ the way in which data is communicated, that
is, visually as opposed to just numbers, is very
important to some departments’’ (25.4.97). A
similar view had been expressed by the Head of
Production Planning who thought that ‘‘PBTC’s
visual approach is very user friendly’’ (3.7.97).
In line with the structuring of information con-
ventionally adhered to by engineers, PBTC’s
structuring of information output was graphic and
visually diverse. The imagery of process flows, the
visual depictions of the magnitude of resource
allocations at different process steps and the dia-
grammatic displays of cost incursions at various
operational stages are characteristic features of
PBTC reports. Engineering officers’ predilection
for integrating numerical and diagrammatic
representations is a hallmark of PBTC that is not
independent of their involvement in its design and
development. It is likely that prior conceptions of
the nature and role of the Accounting Department
and engineering officers’ contrasting perceptions
of the potential role of cost management infor-
mation influenced their judgements concerning the
new MAS. Engineering officers were predisposed
to consider the viability of an accounting system
which not only departed from the structural

representation of data favoured by accountants
but which was also intended to convey informa-
tion that was broader in scope, encompassing
operational, rather than just procedural financial
concerns. The expectation on the part of engi-
neering officers that accounting information pro-
duced by accountants was unlikely to be useful,
affected their predisposition to accounting infor-
mation stemming from the PBTC system. Beliefs
about the propriety and success of the new MAS
were conditioned by its origins as much as its form
and substance. The business versus engineering
subcultures within HLFO in this light could be
differentiated in terms of their perception of the
new MAS’s success.
6. Discussion
The study has considered how certain notional
organisational culture elements became embedded
within the PBTC system’s design features at
HLFO. It has also suggested that the degree to
which the notional organisational culture elements
embedded within the new MAS aligned with the
organisational outlook of the user groups was
significantly associated with the perceived success
of the new system. The study results support those
of other investigations which suggest that different
employee groups can subscribe to different orga-
nisation cultural values and that a MAS which is
more reflective of the organisation culture values
of one group is likely to be seen as being more

successful by that group. The study however goes
beyond the scope of prior investigations in that it
considers quantitative and qualitative information
collected prior to and following the implementa-
tion of the MAS under study.
Within the organisation investigated, there were
context specific factors underpinning the results of
the study. The TOP programme of culture change
at Siemens for instance, played a role in shaping
the MAS’s design features and by upholding cer-
tain notional culture elements, influenced what
came to be deemed as successful accounting
change within the organisation. During the time
period between the first and second questionnaire
administration, Siemens was actively engaged in a
programme of enterprise-wide culture change. A
principal objective of this programme was to alter
the form and extent of communication between
different parts of the organisation. Siemens’ TOP
initiative sought to ‘‘ design more efficient
structures, decision patterns and processes’’ (Sie-
mens, 1994, p. 2) and ‘‘new forms of co-operation’’
A. Bhimani / Accounting, Organizations and Society 19
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(Siemens, 1995, p. 5). It encouraged organisational
participants across the enterprise to develop
greater sensitivity to external market changes,
increased flexibility in carrying out work activities

and interacting with individuals across functions.
Whilst TOP was being implemented across Sie-
mens, HLFO initiated the Phoenix project in Sep-
tember 1995 which entailed the reconfiguration of
manufacturing by modularising production steps.
Phoenix was viewed as necessitating altered forms
of information exchange between departments in
relation to different operational processes. Just as
TOP was intended to reduce ‘‘ the unending
series of co-ordination meetings’’ (Siemens, 1995,
p. 5) and to ‘‘tear down the barriers between dif-
ferent departments’’ (Siemens, 1995, p. 5), so
Phoenix aimed to reduce production complexity
by manufacturing basic products within single
automated lines before mass-customising through
subsequent individualised production processes.
The Phoenix exercise adhered to the ethos of the
TOP culture change programme.
Whilst Phoenix was focused on production sim-
plification, supporting information provision was
seen as an essential corollary. The idea of provid-
ing HLFO design engineers with detailed infor-
mation concerning production costs coincided
with the implementation of the Phoenix initiative.
PBTC stressed three dimensions: market-led qual-
ity, process time tracking and cost resource flow
data. This premise underlying PBTC information
output was also broadly embodied within TOP
which sought to make Siemens ‘‘faster, better and
cheaper than our competitors’’ (Financial

Manager, 4/6/96) and to attain ‘‘effective cost
management at all levels and in all functions’’
(Innovation Management Director, 3/6/96). Like
the Phoenix project, PBTC’s aims were also char-
acterised by objectives subsumed within the TOP
programme of cultural change. The ability of the
PBTC system to achieve its aims was, in this light,
not independent of Siemens’ pursuit of TOP
objectives.
Aside from altered information monitoring and
reporting, Siemens’ progression towards a merito-
cratic and individualistic rewards-based culture
whereby traditional functional boundaries are
transcended in the pursuit of effectiveness and
transparency also affected the form and effects of
PBTC. Accountants had traditionally internalised
a professional conception of the need to econom-
ically map the organisation in terms of functional
boundaries and to allocate costs based on generic
procedural rationales. PBTC by contrast, repre-
sented an attempt at connecting and linking
resource flows by focusing on processes rather
than functional demarcations. The object was on
integrating time, resource, quality and cost con-
cepts rather than on merely reporting on overhead
allocations across individualised cost objects.
PBTC’s embodiment of engineering officers’ infor-
mation structuring and reporting idiosyncrasies
contrasted with the procedural formality which
had permeated the Accounting Department’s

approach to information development and repre-
sentation. The internal ethos of the organisation
which had in the past emphasised centralised
modes of control but which now stressed devolved
responsibilities, more dispersed information dis-
tribution and receptivity to alternative forms of
information flows, was at odds with the traditional
precepts still embedded in the functional priorities
of the Accounting Department.
The study brings to light the complex ways in
which a wide diversity of organisational factors
can influence the form and consequences of a new
accounting system. The qualitative information
derived from interviews and internal documents
suggests that perceptions of the impact of PBTC
were not unrelated to the notion that the new sys-
tem provided accounting information which in
content and form, was not originally conceived by
HLFO accountants. It has been argued that engi-
neering officers’ prior training which emphasised
the integration of Wissenschaft and applied con-
cerns influenced their preferences in relation to the
structuring of PBTC reports. The significance of
Technik as the embodiment of both conceptual
engineering knowledge and craftsmanship as part
of engineering officers’ training was not, within
HLFO, independent of the structure and content
of the PBTC system’s output which dia-
grammatically integrated costing data with other
forms of operational information. Additionally,

the new MAS’s form and content brought into
sharp focus the absence of representations of
20 A. Bhimani / Accounting, Organizations and Society
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purely economic data which had traditionally been
provided by the Accounting Department.
The analysis suggests that the interview com-
ments of PBTC system users are broadly in line
with the questionnaire results which indicate that
different users’ organisational outlooks affected
their perception of the success of the newly imple-
mented MAS. The interviews provided a backdrop
of organisational detail to the statistical analyses of
respondent replies. The qualitative comments are
indicative of the perceived success of PBTC as hav-
ing been possibly tied to the pre-existing proclivities
of the engineering officers toward information
representation and how they sought to understand
the cost implications of design changes. The study
is, in this regard, indicative of the potential of
methodological triangulation whereby quantitative
and qualitative analyses can be coupled to shed
greater light on the subject under investigation
(Ashton, 1982; Bamber, 1993; Birnberg, Shield, &
Young, 1990; Brownell & Trotman, 1988).
A void continues to exist in our knowledge of
the diversity of factors which can affect user
receptivity to novel accounting systems. The pre-

sent investigation posits the existence of con-
tingencies between different cultural orientations
espoused within the organisation under study,
those factored into its new accounting system and
perceptions of the propriety of a user based
accounting system design as opposed to one pro-
cured by the Accounting Department based on
traditional accounting information precepts. In
this light, the study points to the usefulness of
examining some of the conditioning forces affect-
ing the ultimate perceived impact of a novel
accounting system within an organisation and of
exploring ways in which an accounting system can
a priori embody organisational value elements of
primary significance and utility to its designers. A
possible avenue for further research might thus be
to contrast the present study with a similar analy-
sis of the implementation of a MAS designed out-
side the organisation and to assess whether under
such circumstances, different groups of users per-
ceive the impact of the system differently.
There exists little analysis within the accounting
literature of the interrelationships between factors
influencing accounting transformations which
arise from outside and from within the organisa-
tion. Whereas a number of past studies have
focused on the external origins of internal
accounting changes and on the influencing forces
at the margins of accounting (see Hopwood &
Miller, 1994; Luft, 1997; Miller, 1998), the present

study leans more toward an examination of forces
conditioning an emerging MAS from within the
organisation. The predisposition of engineering
officers to structuring information in ways that
contrast with accountants’ notions of appropriate
accounting data representation has here been
argued to find possible origins outside the organi-
sation. This investigation suggests that a variety of
intra-organisational forces shaped the new MAS’s
form, content and effects. Siemens’ historical shift
from being highly centralised to adopting a
decentralised form with more autonomous busi-
ness units, its ongoing programme of culture change
and its traditionally focussed and detailed standard
accounting procedures were instrumental in influ-
encing the structure and consequences of process
based target costing. The emergence and receptivity
of the new MAS can in this light, be argued to have
been conditioned by intra-organisational forces
which themselves are partially shaped by more pro-
tracted extra-organisational factors. This study is
thereby suggestive of accounting change being tied
to transformations that are multifaceted in origin
and which inhere it with a specificity that is intra- as
well as extra-organisationally rooted.
Acknowledgements
The comments made on an earlier draft of this
paper by Thomas Ahrens, Robert Chenhall,
Maurice Gosselin, Graeme Harrison, Anthony
Hopwood, Peter Miller, Cedrik Neike, Neale

O’Connor, Michael Shields and Holger Vieten are
gratefully acknowledged. The paper has also
greatly benefited from the comments of partici-
pants at the Manufacturing Accounting Seminar
held at the University of Edinburgh in June 1997
and at the Manufacturing Accounting Workshop
held at the Copenhagen Business School in March
1999. The review suggestions of two anonymous
reviewers have greatly contributed to the paper.
A. Bhimani / Accounting, Organizations and Society 21
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Appendix. Competing values model questions
3
The questions below will provide information on whether process based target costing is associated with
the type of department that your department is most like. Each of these items contains four descriptions.
Please distribute
100 points among the four descriptions depending on how similar the description is to
your department. None of the descriptions is any better than the others; they are just different. For each
question, please use all 100 points.
For example, in question 1, if department A seems very similar to mine, B seems somewhat similar, and
C and D do not seem similar at all. I might give 70 points to A and the remaining 30 points to B.
(a) Department Character (Please distribute 100 points)
______ Department A is a very personal place. It is a lot like an extended family. People seem to share a lot of
themselves.
______ Department B is a very dynamic and entrepreneurial place. People are willing to stick their necks out
and take risks.
______ Department C is a very formalized and structured place. Bureaucratic procedures generally govern what
people do.

______ Department D is very production-oriented. A major concern is with getting the job done. People are not
very personally involved.
(b) Department Leader (Please distribute 100 points)
______ The head of Department A is generally considered to be a mentor,asage,orafather or mother figure.
______ The head of Department B is generally considered to be an entrepreneur,aninnovator,orarisk taker.
______ The head of Department C is generally considered to be a coordinator,anorganiser,oranadministrator.
______ The head of Department D is generally considered to be a producer,atechnician,orahard driver.
(c) Department ‘‘Glue’’ (Please distribute 100 points)
______ The glue that holds Department A together is loyalty and tradition. Commitment to this institution runs
high.
______ The glue that holds Department B together is commitment to innovation and development. There is an
emphasis on being first.
______ The glue that holds Department C together is formal rules and policies. Maintaining a smooth running
operation is important here.
______ The glue that holds Department D together is the emphasis on tasks and goal accomplishment.A
production orientation is commonly shared.
(d) Department Emphases (Please distribute 100 points)
______ Department A emphasises human resources. High cohesion and morale in the institution are important.
______ Department B emphasises growth and acquiring new resources. Readiness to meet new challenges is
important.
______ Department C emphasises performance and stability. Efficient, smooth operations are important.
______ Department D emphasises competitive action and achievement. Measurable goals are important.
3
Used with permission from Zammuto and Krakower (1991).
22 A. Bhimani / Accounting, Organizations and Society
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