Accounting, Innovation and Inter-Organisational Relationships

317 Pages·2018·1.78 MB·English

by  Martin Carlsson-Wall, Håkan Håkansson, Kalle Kraus, Johnny Lind, Torkel Strömsten

Accounting, Innovation and
Inter-Organisational Relationships
Successful innovation is a true challenge and especially when today’s companies
are intertwined in close inter-organisational relationships and networks with
e.g. customers and suppliers. Research has indicated that accounting can
play important roles in such innovation processes, but there is little in-depth
systematic knowledge about this issue.
Accounting, Innovation and Inter-Organisational Relationships gathers
leading researchers from all around the world to, based on in-depth field
work, explore the interconnections between accounting, innovation and
inter-organisational relationships.
Accounting, Innovation and Inter-Organisational Relationships thus becomes
an important source for researchers and practitioners interested in accounting
and inter-organisational relationships as well as the related disciplines of
management, marketing, innovation and strategy.
Martin Carlsson-Wall is an Associate Professor in the Department of
Accounting at the Stockholm School of Economics, Sweden.
Håkan Håkansson is a Professor of International Management at the BI
Norwegian Business School, Norway.
Kalle Kraus is a Professor in the Department of Accounting at the Stockholm
School of Economics, Sweden, and in the Department of Accounting at
Monash University, Monash Business School, Australia.
Johnny Lind is a Professor in the Department of Accounting at the Stockholm
School of Economics, Sweden.
Torkel Strömsten is an Associate Professor in the Department of Accounting
at the Stockholm School of Economics, Sweden.
Routledge Studies in Accounting
A Philosophy of Management Accounting
A Pragmatic Constructivist Approach
Edited by Hanne Nørreklit
Cost Accounting in Government
Theory and Applications
Edited by Zachary Mohr
Auditing Teams
Dynamics and Effi ciency
Mara Cameran, Angela Kate Pettinicchio and Angelo Detillo
The History and Tradition of Accounting in Italy
Edited by David Alexander, Roberto Di Pietra, Stefano Adamo
and Roberta Fasiello
The Social Function of Accounts
Reforming Accountancy to Serve Mankind
John Flower
The Role of the Management Accountant
Local Variations and Global Infl uences
Lukas Goretzki and Erik Strauss
Interventionist Management Accounting Research
Theory Contributions with Societal Impact
Jouni Lyly-Yrjänäinen, Petri Suomala, Teemu Laine
and Falconer Mitchell
Accounting, Innovation and Inter-Organisational Relationships
Edited by Martin Carlsson-Wall, Håkan Håkansson, Kalle Kraus,
Johnny Lind and Torkel Strömsten
For more information about this series, please visit: www.routledge.com/
Routledge-Studies-in-Accounting/book-series/SE0715
Accounting, Innovation
and Inter-Organisational
Relationships
Edited by Martin Carlsson-Wall, Håkan
Håkansson, Kalle Kraus, Johnny Lind
and Torkel Strömsten
First published 2018
by Routledge
711 Third Avenue, New York, NY 10017
and by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2018 Taylor & Francis
The right of Martin Carlsson-Wall, Håkan Håkansson, Kalle Kraus,
Johnny Lind, and Torkel Strömsten to be identified as the authors
of the editorial material, and of the authors for their individual
chapters, has been asserted in accordance with sections 77 and 78 of
the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic, mechanical,
or other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or
retrieval system, without permission in writing from the publishers.
Trademark notice : Product or corporate names may be trademarks
or registered trademarks, and are used only for identification and
explanation without intent to infringe.
Library of Congress Cataloging-in-Publication Data
A catalog record for this book has been requested
ISBN: 978-1-138-08261-8 (hbk)
ISBN: 978-1-315-11099-8 (ebk)
Typeset in Sabon
by Apex CoVantage, LLC
Contents
1 Introduction: Accounting, Innovation and Inter-Organisational
Relationships 1
MARTIN CARLSSON-WALL, HÅKAN HÅKANSSON, KALLE KRAUS,
JOHNNY LIND AND TORKEL STRÖMSTEN
2 The Interplay Between Innovation and Accounting:
The Border-Crossing Q-Linea Project and Its Within-
Border Accounting 12
ANDREA PERNA AND ALEXANDRA WALUSZEWSKI
3 The Role of Deals and Economic Calculations for Temporary
Solutions in Innovation Processes 29
CARL HENNING CHRISTNER, JOHNNY LIND AND
TORKEL STRÖMSTEN
4 Venture Capital Systemic Synergies and Networked
Management Control in Rapid Scaling of Innovative
New Business Ventures 49
PER INGVAR OLSEN
5 Fostering Corporate Innovation by Living Apart Together:
Management Accounting Information Exchange in the
Bosch Startup Platform 82
MARC WOUTERS AND MICHAEL PELZ
6 We Went Too Far, and We Learnt From It: Management
Control in the Development of the Boeing Dreamliner 104
JODIE MOLL AND FIONA HARRIGAN
7 Accounting, Cross-Company Negotiations, and Time-Based
Compromises: A Case Study of Product Innovation 130
MARTIN CARLSSON-WALL AND KALLE KRAUS
vi Contents
8 Developing Innovation via Tensions Between Focal Firms
and Suppliers: The Role of Accounting in Creating
Heterarchies Across Organisational Boundaries 140
JAN MOURITSEN AND KIM S. HALD
9 Combining Differentiated Knowledge for Innovation across
Organizations: The Role of Accounting and Management
Controls 157
ANGELO DITILLO AND ARIELA CAGLIO
10 Supplier-Initiated Open Book Accounting: Using Accounting
Information to Initiate Changes in a Services Supply Chain 176
SANDER VAN TRIEST AND JACCO BLOM
11 Accounting and Networking 197
ANNA DUBOIS AND LARS-ERIK GADDE
12 What’s Successful? Accounting for the Outcome
of Governmental Innovation Policy 216
JENS EKLINDER-FRICK AND ALEXANDRA WALUSZEWSKI
13 The Governance of Collaborative Product Development 238
JELTJE VAN DER MEER-KOOISTRA AND ROBERT W. SCAPENS
14 The Allure of Innovation: Assembling a Novel Public–
Private Partnership 261
PAUL ANDON, JANE BAXTER AND WAI FONG CHUA
15 Accounting, Innovation and Inter-Organisational
Relationships: Insights From the 13 Empirical Cases 275
MARTIN CARLSSON-WALL, HÅKAN HÅKANSSON, KALLE KRAUS,
JOHNNY LIND AND TORKEL STRÖMSTEN
16 Accounting, Innovation and Inter-Organisational
Relationships: Avenues for Future Research 285
MARTIN CARLSSON-WALL, HÅKAN HÅKANSSON, KALLE KRAUS,
JOHNNY LIND AND TORKEL STRÖMSTEN
List of Contributors 302
Index 305
1 Introduction
Accounting, Innovation and Inter-
Organisational Relationships
Martin Carlsson-Wall, Håkan Håkansson, Kalle
Kraus, Johnny Lind and Torkel Strömsten
Dreams of glory, yes, but innovation projects are often characterised by
problems and frustration. Companies often underestimate the complexity
and end up in situations with no obvious way out. From a financial perspec-
tive, innovation projects are therefore high-risk endeavors as they require a
hefty development budget at the same time as they strongly affect future rev-
enues and costs (D avila, 2000, 2 005 ); innovation projects separate winners
from losers (D avila et al., 2009b; Chenhall and Moers, 2015 ). The Finnish
company Nokia is a case in point. In 2007, Nokia had a global market share
of 50% and had become a leading “best practice company” (www.statista.
com; Vuori and Huy, 2016 ). However, Nokia faced its own innovation fail-
ures at the same time as Apple and Samsung introduced new, exciting prod-
ucts, and Nokia quickly lost market share. In 2013, Nokia’s market share
fell below three percent, and the company was sold to Microsoft. A winner
had suddenly become a loser.
Boeing is another company that has experienced the glory as well as the
problems and frustration of innovation. When the 787 Dreamliner project
started in April 2004, it was one of Boeing’s largest innovation projects ever.
The development budget was nearly 20 billion dollars, and with its radical
lightweight design, Boeing promised to reduce airplane fuel consumption and
operating costs (S henhar et al., 2016) . In 2007, three years after the project
was launched, Boeing had sold more than 500 airplanes, and it looked like a
smashing success (E lahi et al., 2014) . However, the Dreamliner project turned
into a nightmare with technical problems and constant delays (H arrigan,
2014) . When the airplane was finally ready to fly in 2011, the development
costs had doubled to nearly 40 billion dollars (S henhar et al., 2016) .
Importantly, the Dreamliner project is not a story about innovation in
relation to one company; rather, it is a story about accounting, innova-
tion and inter-organisational relationships . Consider All Nippon Airways
(ANA): This Japanese airline wanted to be the first customer for the 787
Dreamliner and therefore placed a large order to make the maiden journey
before the Beijing Olympics in 2008. In addition to an expectation of public
relations benefits, ANA made a bet that the lower operating costs would
help it expand its business to new destinations without sacrificing profits.
2 Martin Carlsson-Wall et al.
When Boeing had to postpone the deliveries, this highly affected the finan-
cial performance of ANA. Interestingly, suppliers two or three tiers down the
supply chain were also affected. For many of these small component suppli-
ers, a three-year delay almost meant they went bankrupt because Boeing did
not pay any suppliers before customers such as ANA could pay them. So,
not only gave accounting measures such as revenue growth and operating
costs impulses and justification for Boeing to start the Dreamliner project,
but the delays also almost turned an entire airplane ecosystem from finan-
cial winners to financial losers. With such practical relevance and with great
potential to make theoretical contributions (c.f., C henhall and Moers, 2015;
Moll, 2015 ), the focus of this book is therefore to explore the interconnec-
tions between accounting, innovation and inter-organisational relationships.
We take a broad perspective on accounting, including archetypes, control
systems and specific techniques (c.f., Caglio and Ditillo, 2008) . This broad
and more holistic view is suitable when a research conversation is in a nascent
stage (E dmondson and McManus, 2007) , but it also follows how account-
ing is conceptualised in related research domains such as “accounting and
inter-organisational relationships” ( Caglio and Ditillo, 2008; Håkansson
et al., 2010a) and “accounting and innovation” ( Davila et al., 2009a; Chen-
hall and Moers, 2015; Moll, 2015 ).
When it comes to our perspective on innovation, an obvious starting point
is the unit of analysis in that our focus is on innovation that occurs b etween
organisations ( Håkansson and Waluszewski, 2002; Hoholm and Araujo,
2011 ). Such inter-organisational innovation includes innovation in dyads,
such as the collaboration between Boeing and ANA, as well as innovation
in networks in which a number of companies are connected to each other
directly and indirectly. Another aspect when it comes to our perspective
on innovation is whether to focus primarily on the outcome or the process
of inter-organisational innovation. For example, an important outcome of
inter-organisational innovation is the various forms of interdependencies
that are created. Sometimes these interdependencies are strong, creating
problems of overembeddedness (U zzi, 1997) , but there are also situations
when the lack of mutual adaptations results in poor quality or increased
costs ( Tomkins, 2001 ). Having a process focus, on the other hand, is about
studying how organisations are coping and trying to navigate in this com-
plex web of interdependencies. Often, due to incomplete knowledge about
outcomes, such a process perspective can be expected to highlight the need
for pragmatic compromises. It is not possible to have clear winners and
losers because inter-organisational innovation is about interactively finding
compromises, i.e., temporary solutions, that two or more parties can ‘live
with’. In this book, we focus on such a process perspective, highlighting
that that inter-organisational innovation can be characterised as a messy
and unpredictable process that is guided by pragmatic compromises con-
cerning which interdependencies that should be increased or reduced when
resources are combined across organisational boundaries.
Introduction 3
Accounting and
Accounting and
inter-organisational
innovation
relationships
Accounting and
inter-organisationaI
innovation
(focus of this book)
Inter-organisational
innovation
Figure 1.1 Focus of this book and related research domains.
Figure 1.1 illustrates how accounting and inter-organisational innovation
relates to other research conversations. To start with, in the upper left corner,
we have the “accounting and inter-organisational relationships” literature
( Caglio and Ditillo, 2008 ; Håkansson et al., 2010a ). This literature emerged
in the mid-1990s when accounting scholars began to pay more attention to
various forms of inter-organisational arrangements such as strategic part-
nerships, alliances, outsourcing relationships and joint ventures. An early
milestone was a special issue in Accounting, Organizations and Society in
1996 edited by Anthony Hopwood, and since then a research conversation
has evolved covering different theoretical perspectives, empirical settings
and research methodologies. As a way to summarise this type of research, we
published the book A ccounting in Networks in 2010. A central part of that
book was different theoretical perspectives with chapters covering Transac-
tion Cost Economics (A nderson and Dekker, 2010) , The Industrial Network
Approach (H åkansson et al., 2010b ), Actor Network Theory (M ouritsen
et al., 2010) and Institutional Theory (S capens and Varoutsa, 2010 ). When
reading our 2010 book as well as the published journal articles in this domain,
it was evident that many of the chapters and articles, explicitly or implicitly,
described inter-organisational innovation. In the 2010 book, for example,
Van der Meer-Kooistra and Kamminga (2010) discussed innovation in joint
ventures, Mouritsen et al. (2010 ) used innovation examples from LeanTech
and Intel and Carlsson-Wall and Kraus (2010 ) showed how underlying
assumptions about the product development process could help to theorise
guiding and synchronising roles of inter-organisational target costing. When