Management Accounting Practices in Support of Lean Management Strategy in Service Organizations

Abstract

Lean strategy is becoming more and more popular, not only in manufacturing but also in service organizations. Drawing on previous research (e.g. Kennedy, Widener, 2008; Fullerton et al., 2013) the paper aims to empirically examine whether service organizations use specific management accounting systems (MAS) to support lean strategy. The case study method was used in the research to gain a deeper understanding of the phenomena analyzed. It was found that there is a positive and significant association between lean practices and employee empowerment, whiteboard use and individual process costing. There were no positive and significant associations, however, between lean practices and MAS simplicity. Thus, it was generally observed that departments with higher use of lean methods also use management accounting practices more extensively. Limited evidence was found, however, that in the case of company management, accounting practices work together (as a package) to support lean strategy. Only in the case of employee empowerment and whiteboards were associations between their use and top management support for lean initiatives found.

It was surprising that some department managers, who used lean tools extensively, pointed out that they would like to obtain much more detailed financial information from the Accounting Department than is now possible. It was also observed that management accounting tasks related to lean practices are moving from the Accounting Department to operational departments. The management accounting system, according to both the managers and accountants we interviewed, is still, in part, a set of data and not a mode of action, which is contrary to the lean management philosophy.

DOI: http://dx.doi.org/10.5755/j01.ee.29.5.20763