Attributes of Innovation and Management Accounting Changes

INTRODUCTIONResearch on usefulness, capability, and adoption and diffusion of ABC (as a potential solution to deal with the lack of efficiency and capability of traditional cost and management accounting practices) has been one the most attractive topics in the area of costing in the past three decades (Askarany, Brierley, & Yazdifar, 2012; Askarany, Smith, & Yazdifar, 2007; Askarany & Yazdifar, 2012; Baird, 2007; Cannavacciuolo, Iandoli, Ponsiglione, & Zollo, 2012). Highlighting the advantages and capabilities of ABC, an accumulated body of literature suggests that ABC can contribute to the organisational performance in many ways, such as cost reduction, cost estimation, performance measurement, and the like (Homburg, 2005; Satoglu, Durmusoglu, & Dogan, 2006; Thyssen, Israelsen, & Jorgensen, 2006). However, despite its reported merits in the literature, the adoption of ABC is not very popular in general (Al-Omiri & Drury, 2007b; Askarany & Smith, 2008; Askarany & Yazdifar, 2007). Furthermore, evidence of how organisations in developing countries receive ABC is scant.Addressing the diffusion of ABC, many studies have investigated the effects of a vast majority of contextual factors on the diffusion of ABC (Al-Omiri & Drury, 2007b; Askarany & Smith, 2004; Baird, 2007). Many of these studies have produced mixed and inconsistent results (Al-Omiri & Drury, 2007b; Baird, 2007; Libby & Waterhouse, 1996). According to the economic theory (Van Helden & Tillema, 2005), organisations are more likely to adopt a new technique (innovation) if it adds value to the organisation or improves organisational performance (e.g., added value, profit, quality, etc.). In other words, the benefits of an innovation, its relative advantage over the current practice, its costs, its complexity, and other factors, can be considered as factors that determine the adoption of an innovation, and they should be evaluated by the economic theory. These determining factors are called 'characteristics of innovation' under the diffusion of innovation theory (Askarany, 2009; Rogers, 2003). Both the economic and diffusion of innovation theories suggest that these factors determine the economic preferences of an innovation and thus its adoption and diffusion. However, to our knowledge, no study has examined these theories in relation to ABC in developing countries. Hence, the current study was designed to provide evidence of the adoption of and diffusion of ABC in the Sultanate of Oman (as a developing country) and examine the significance of the effect of innovation characteristics on the adoption and diffusion of ABC in practice.The remainder of the paper is structured as follows. Next section presents the literature review, followed by the research methodology, the findings, and finally discussion, implications, and conclusions.LITERATURE REVIEWThe prominent argument about ABC is that it can cope with some of the shortcomings of traditional accounting techniques, such as being too late, too aggregated, and too distorted (Gosselin, 1997; Innes & Mitchell, 1991). However, despite its reported merits in the literature, the survey-based evidence suggests that the adoption of ABC is not a very popular option and in many cases (Al-Omiri & Drury, 2007b; Askarany & Smith, 2008; Askarany & Yazdifar, 2007). Askarany and Yazdifar (2012) reported a huge variation (from 4% to 78%) in the adoption of ABC in the literature. To investigate the implementation of ABC, many studies have tried to specify the contextual factors influencing the adoption and diffusion of ABC in practice (Askarany et al., 2007; Baird, 2007). However, most of the reported influencing factors do not appear to have a significant influence on the diffusion process of cost and management accounting innovations. For example, Booth and Giacobbe (1998) found no support for the effect of a various influencing factors classified as "demand and supply factors" on the diffusion of accounting innovations. …