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 theoretical influence of the research is threefold: (a) the research adds to the literature by responding to calls to provide empirical research on the functioning of MAS in a lean environment, especially in service organizations, (b) it suggests that service companies recognize the need to change MAS in response to changes in their strategy, (c) it also investigates associations between different management accounting (MA) practices, examining if they work as a package in support of lean strategy in a service organization. These are important issues that keep MA research up to date with the practical problems of world-class organizations, and they move the knowledge of MA forward. 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. Thus, it was generally observed that departments with higher use of lean methods also use MA practices more extensively. Limited evidence was found, however, that in the case of company MA practices work together (as a package) to support lean strategy. It was also observed that MA tasks, related to lean practices, are moving from the Accounting Department to operational departments.