Strategic Management Accounting and Managerial Decision-Making

361 Pages·2008·1.5 MB·English

Strategic Management Accounting and Managerial
Decision-Making reconceptualised: towards a
collaboratively oriented theory of organizational
decision enhancement (ODE)

David Anthony Holloway B. Com, MBA

This thesis is presented for the degree of Doctor of Philosophy at Murdoch University
2006
I declare that this thesis is my own account of my research and contains as its main
content work which has not previously been submitted for a degree at any tertiary
education institution.

Signed

David A. Holloway

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Abstract

This thesis critically assesses the literature on strategic management accounting that is
budgeting and corporate governance and also the managerial decision-making literature
(primarily in the areas of strategic planning and change management). It is essentially a
theory building and analytical thesis utilising a critical social science approach. The main
aim is the construction of a collaborative theory of decision-making and associated
methodology that will underpin and explain a more ‘robust’ construction of decision
outcomes within an individual organizational context.
In doing so it evaluates and synthesises Habermas’s theory of communicative action with
the intention of incorporating key elements as well as insights from Latour, complexity
theory and Peirce in relation to doubt-driven inquiry in a proposed collaboratively
oriented theory of organizational decision enhancement (ODE). ODE theory is argued to
be widely applicable in the decision-making process utilised by organizations (private,
public and non-profit). The claims implicit within the theory and its associated decision-
making methodology are assessed empirically at the strategic planning level. This was
part of an action research project commenced in July 2001 with Tertiary Institution’s1
current strategic planning round covering the planning time horizon 2003-2007.
ODE theory postulates that effective decision-making in a world of uncertainty is best
undertaken in a practical and collaborative group process. The theory, that I have derived,
is stated as follows:
Optimal decision-making which a particular group of decision makers can construct
in a world of uncertainty and risk is a pragmatic, recursive and democratised process.
The process minimises the role of individual power, authority, self-interest and ego.
This collaborative approach focuses on the force of the ‘better argument’, utilises
constructive conflict (CC) and continuous, conscious, collaborative adaptation
(CCCA) and results in the selection and monitoring of a ‘best-option’ decision
outcome.
The theory minimises the role of power and authority, focuses on the Habermasian
concept of the force of the ‘better argument’, maximises the utility of resistance to change
and results in the selection of a ‘best-alternative’ option that is subjected to a rigorous,
performance measure-based monitoring feedback loop. In so doing this thesis extends
significantly the earlier extant literature on organizational decision-making. It effectively
revisits the notion of teams and groups in the organizational context and argues for
organizations to seriously consider ‘reengineering’ the decision-making methodology and
approach to one that necessitates effective devolution and delegation of decision-making
powers. I argue that organizations should allow for and promote a ‘cascade’ effect to let
control, power, authority and collective responsibility filter down through the
organizational layers.
Effectiveness and not efficiency (falsely perceived as timely) should be the aim of well-
constructed decision outcomes. The adaptability and self-organising capability of the
workforce requires an inclusive, not exclusive, decision-making methodology to unlock
and realise the full future potential of the organization.

1 The empirical element of the thesis utilises an analysis of an Australian mid-sized research intensive
university in the tertiary education sector. The participants’ confidentiality and anonymity are protected
by using pseudonyms and ensuring that the organization is referred to as the Tertiary Institution and
individual managers that are named are referred to as Senior Manager A, B, and C for example.
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To my partner, friend and wife Donell
for all her encouragement, insights, faith, support and love
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Acknowledgements
This has been a lengthy journey—both intellectually and in time. The depth of support
and encouragement that I have received from all quarters has provided me with the
strength to complete this journey.
My first and heartfelt thanks must go to my key supervisor and friend John de Reuck who
has inspired, supported, cajoled, critiqued and advised me unstintingly throughout this
process. I would never have gotten this far without his support and encouragement. I
also owe a deep sense of gratitude to Associate Professor Lanny Entrekin who took over
the principal supervisor role late within the process— during the writing phase—for the
past two years. His insights and constructive critique have certainly helped to round off
and complete the thesis.
My thanks go to all my personal friends and also my colleagues within the Murdoch
Business School and within the wider university who also been very supportive and
encouraging during the entire period of my enrolment as a part-time PhD candidate. They
have all been aware of the range of ‘ups’ and ‘downs’ which I have encountered on the
way and which afflicts all those who go through such similar travails. I have also
received strong support from the hierarchy within the Business School and the Division
which has helped immensely in getting to this stage. I would also like to acknowledge the
level of support provide by the Divisional postgraduate research office and in particular
Ms. Georgina Wright. She and her office have helped to organize many events,
workshops and seminars that significantly helped me and many others within the Division
to successfully complete the final drafting and submission of their theses.
There are many other people who have been an integral part of my support network which
has enabled me to get this far:
• My parents Clifford and Vivienne for their wholehearted support, prayers and love
through all the different phases of my life and of course their unstinting input
during various discussions, debates as well as the usual family gatherings and the
other most important elements of a healthy family life.
• My parents-in-law Don and Audrey who have been a second and close set of
parents for a long period of time. My heartfelt thanks for all your support and
encouragement over the years.
• My brothers and sisters: Andrew, Anne, Mark and Kathryn who have helped me
to keep ‘sane’ and realise that there are always more important things in life.
Also, to my wider family network: Annette, Bronwyn, Craig, Linton, Max, Vicki,
Maureen, Greg and Terry. Many thanks for all your support and encouragement.
• My wonderful daughters Carlie and Louise and my great son Jordan. I cannot say
enough about the richness that you have brought to my life and continue to do so.
Your love, support and help has been more than invaluable. I look forward to a
full and fulfilling future with you all. My love for you knows no bounds. I should
also mention with great fondness Kosta, Timmy, Bugsy, Bosstone and Fabio for
their unconditional love and their willingness to go on long walks!!
My final, but first in my heart, need is my total acknowledgment for my partner and best
friend Donell. You have been, and continue to be, the lynch-pin of my life. You have
always been there through many years of both joys and sorrows. During this study phase
you have provided real input, wit and intelligence as well as ensuring real balance in my
life. I am deeply grateful for your love and unstinting care and support. My karma debt
is high.
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Table of Contents

1 CHAPTER - INTRODUCTION AND BACKGROUND........................1
1.1 Introduction...............................................................................................................1
1.2 Background – Organizational Decision-Making......................................................4
1.2.1 Mainstream models of Decision-Making.........................................................................5
1.2.2 Potential Paradigm Shifts.................................................................................................7
1.3 Managerial Decision Making and Strategic Management Accounting....................9
1.3.1 Managerial Decision Making...........................................................................................9
1.3.2 Strategic Management Accounting................................................................................11
1.3.3 Four Key Areas of Organizational Decision Making....................................................13
1.4 Research Approach.................................................................................................16
1.5 Key Definitions........................................................................................................17
1.6 Contribution and Limitations..................................................................................21
1.7 Structure of the Thesis.............................................................................................24
1.8 Conclusion..............................................................................................................27
2 CHAPTER - THEORETICAL RESEARCH FRAMEWORK;
RESEARCH PROBLEMS AND RESEARCH METHODOLOGY....29
2.1 Introduction.............................................................................................................29
2.2 Theoretical Underpinnings, Assumptions and Approaches....................................30
2.2.1 Epistemology – Social Sciences....................................................................................32
2.2.2 Ontology – Social Sciences...........................................................................................38
2.2.3 Theoretical Frameworks................................................................................................41
2.2.4 Research Methodologies................................................................................................47
2.2.5 Research Methods..........................................................................................................48
2.2.6 Thesis Research Design and Methods...........................................................................49
2.2.6.1 Qualitative Research................................................................................................................................49
2.2.6.2 Autoethnography.....................................................................................................................................54
2.2.6.3 Action Research.......................................................................................................................................56
2.2.7 Research Problems and Research Questions.................................................................58
2.2.8 Case Study Site, Sampling and Participant Interview Process......................................61
2.2.8.1 Data Collection........................................................................................................................................62
2.2.8.2 Interviews................................................................................................................................................65
2.2.8.3 Ethical Considerations.............................................................................................................................66
2.3 Conclusion..............................................................................................................66
3 CHAPTER - LITERATURE REVIEW - MANAGERIAL DECISION
MAKING – CURRENT STATE OF PLAY AND CRITIQUE............68
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3.1 Introduction.............................................................................................................68
3.2 Aims, Objectives and Focus of the Literature Review............................................68
3.3 Managerial Decision-Making Domains: Corporate Governance, Strategic
Planning, Budgeting and Change Management.....................................................71
3.3.1 Corporate Governance...................................................................................................71
3.3.1.1 Managerial Decision-Making Prerogative: Private Sector.......................................................................74
3.3.1.2 Managerial Decision-Making Prerogative: Public Sector........................................................................77
3.3.1.3 International Developments.....................................................................................................................79
3.3.1.4 Australian Context...................................................................................................................................83
3.3.1.5 World’s Best Practice Corporate Governance Model..............................................................................87
3.3.1.6 Does Good Governance = Good Corporate Performance?......................................................................88
3.3.1.7 Implications and Future Directions..........................................................................................................90
3.3.1.8 Corporate Governance Summary.............................................................................................................92
3.3.2 Strategic Planning..........................................................................................................93
3.3.2.1 Traditional/Intentional Strategic Planning...............................................................................................93
3.3.2.2 Emergent Strategic Planning...................................................................................................................95
3.3.2.3 Strategic Planning Summary...................................................................................................................98
3.3.3 Budgeting.......................................................................................................................99
3.3.3.1 Management Accounting and Budgeting...............................................................................................100
3.3.3.2 Developments in the Budgeting Literature............................................................................................102
3.3.3.3 Alternative Research Approaches to Management Accounting and Budgeting.....................................106
3.3.3.4 Possible Solutions from within the Mainstream Literature....................................................................107
3.3.3.5 Beyond Budgeting.................................................................................................................................109
3.3.3.6 Budgeting Shortcomings and Possible Developments – Seminal Paper (Hansen, Otley and Van der
Stede, 2003)...........................................................................................................................................113
3.3.3.7 Budgeting Summary..............................................................................................................................116
3.3.4 Change Management...................................................................................................117
3.3.4.1 Change Management in Practice: the Dominant Paradigm....................................................................118
3.3.4.2 Utilisation of Resistance........................................................................................................................120
3.3.4.3 Warnings and Possible Solutions from within the Mainstream Literature—Seminal Papers (Miller et al,
1997; Black and Gregersen, 1997).........................................................................................................120
3.3.4.4 Change Management Summary.............................................................................................................125
3.4 Critique in Summary.............................................................................................126
3.5 Conclusion............................................................................................................130
4 CHAPTER – THEORY OF ORGANIZATIONAL DECISION
ENHANCEMENT (ODE)......................................................................133
4.1 Theory of Organizational Decision Enhancement (ODE)....................................133
4.2 Fitness for Purpose and Fitness of Purpose.........................................................133
4.3 Organizational Decision-Making and ODE Theory.............................................137
4.3.1 Theoretical Elements of ODE Theory.........................................................................140
4.3.1.1 Latour and Actor-Network Theory........................................................................................................140
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4.3.1.2 Peirce and Doubt-Driven Inquiry..........................................................................................................142
4.3.1.3 Habermas and Argument Based Discourse............................................................................................144
4.3.1.4 Complexity Theory and Complex Adaptive Systems............................................................................146
4.3.2 ODE Procedural Methodology....................................................................................152
4.3.2.1 ODE Procedural Stages.........................................................................................................................154
4.3.2.2 Additional ODE Procedural Elements...................................................................................................159
4.3.2.3 Constructive Conflict (CC)....................................................................................................................161
4.3.2.4 Continuous Conscious Collaborative Adaptation (CCCA)....................................................................163
4.3.2.5 Decision Evolution and Appreciative Inquiry (AI)................................................................................165
4.3.3 Problems with Group Decision-Making......................................................................167
4.3.3.1 Alpha Argument Dominance.................................................................................................................167
4.3.3.2 Acceptance of Group Decisions............................................................................................................168
4.3.3.3 Inauthentic Group Interaction................................................................................................................169
4.3.4 Effective Groups..........................................................................................................170
4.3.5 ODE Summary.............................................................................................................172
4.4 Conclusion............................................................................................................173
5 CHAPTER – IMPLICATIONS OF ODE FOR ORGANIZATIONS
AND MANAGERIAL DECISION-MAKING – REFRAMING
CULTURE, LEADERSHIP, MANAGERSHIP AND
FOLLOWERSHIP..................................................................................175
5.1 Introduction...........................................................................................................175
5.2 The Dilemma of Participative Decision-Making..................................................177
5.2.1 A Positive Proposition.................................................................................................177
5.2.2 Note of Caution............................................................................................................180
5.3 Reframing Culture.................................................................................................185
5.3.1 Organizational Culture.................................................................................................186
5.3.2 Tertiary Institution Participant Perceptions and Reflections.......................................189
5.4 Reframing Leadership and Managership.............................................................192
5.4.1 Contemporary Leadership............................................................................................194
5.4.1.1 Tertiary Institution Participant Perceptions and Reflections..................................................................197
5.4.2 Reframing Management - Constructing Managership.................................................199
5.4.2.1 Machiavellianism, Workplace Bullying and Corporate Psychopaths....................................................205
5.4.2.2 Tertiary Institution Participant Perceptions and Reflections..................................................................208
5.5 Reframing Followership.......................................................................................211
5.5.1 Tertiary Institution Participant Perceptions and Reflections.......................................214
5.6 Reframing Power and Empowerment...................................................................216
5.7 Ownership and Corporate Performance...............................................................222
5.8 Corporate Governance Implications....................................................................224
5.8.1 Governing Bodies and a Team Culture........................................................................224
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5.9 Implications for Strategic Planning and the Practice of Budgeting.....................227
5.10 Implications for Change Management Processes.................................................229
5.10.1 Case Study: The Creation of the Murdoch Business School—the Recasting of a
Negative Story.............................................................................................................230
5.10.1.1 Site and Background..............................................................................................................................230
5.10.1.2 Development of Despair........................................................................................................................231
5.10.1.3 Renaissance...........................................................................................................................................234
5.10.1.4 Hope......................................................................................................................................................235
5.10.1.5 Case Study Summary.............................................................................................................................235
5.11 Chapter Conclusion..............................................................................................235
6 CHAPTER – TERTIARY INSTITUTION STRATEGIC PLANNING:
MANAGERIALISM AND CORPORATISATION OF
UNIVERSITIES......................................................................................238
6.1 Introduction...........................................................................................................238
6.2 Australian University Sector – Current Scenario.................................................239
6.2.1 Public Funding Crisis and the Rise of Market Forces Pressures.................................240
6.2.2 The Rise of Managerialism: Dilemma at the Crossroads?...........................................242
6.3 Tertiary Institution – The Site...............................................................................244
6.3.1 Tertiary Institution Strategic Planning – Procedural Steps..........................................245
6.3.2 Planning Process..........................................................................................................246
6.3.3 Planning Outcomes......................................................................................................249
6.3.4 Strategic Planning – Tertiary Institution Participant Perceptions and Reflections......251
6.3.5 Reality or Rhetoric – An Autoethnographic Critique..................................................258
6.3.6 Strategic Planning Summary........................................................................................261
6.4 Chapter Conclusion..............................................................................................262
7 CHAPTER – TERTIARY INSTITUTION LEADERSHIP;
MANAGEMENT; FOLLOWERSHIP AND CULTURE: CASE
STUDY ANALYSIS................................................................................264
7.1 Introduction: Tertiary Institution – Leadership, Managership and Followership264
7.1.1 TI Leadership/Managership.........................................................................................265
7.1.2 TI Followership............................................................................................................269
7.1.2.1 Administrative Responses—Passive and Active Followership..............................................................270
7.1.2.2 Academic/Student Responses—Passive and Active Followership........................................................272
7.2 Organizational Culture – Breaking the Mould of ‘Top-Down’ Managerialism?.273
7.3 Chapter Conclusion..............................................................................................282
8 CHAPTER – CONCLUSION: THESIS CONTRIBUTION,
LIMITATIONS AND FURTHER RESEARCH .................................284
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8.1 Introduction...........................................................................................................284
8.2 Primary Aim..........................................................................................................284
8.3 Contribution..........................................................................................................287
8.4 Limitations............................................................................................................291
8.5 Further Research..................................................................................................293
8.6 Concluding comment.............................................................................................295

LIST OF FIGURES AND TABLES
FIGURE 2.1 THEORETICAL APPROACHES – SOCIAL SCIENCES ........................31
FIGURE 4.1 ODE PRPCEDURAL METHODOLOGY...........................................153
TABLE 5.1 LEADERSHIP MATRIX.....................................................................193
TABLE 5.2 MANAGEMENT/MANAGERSHIP MATRIX.......................................201
TABLE 5.3 FOLLOWERSHIP MATRIX...............................................................212

APPENDICES
APPENDIX 1 PROPOSED SEMI-STRUCTURED QUESTIONNAIRE......................297
APPENDIX 2 RESEARCH ETHICS CORRESPONDENCE.....................................300
APPENDIX 3 RESEARCH ETHICS CLEARANCE................................................301
APPENDIX 4 TERTIARY INSITUTION MISSION STATEMENT .........................303
APPENDIX 5 DELPHI STUDY FIRST ROUND RESULTS....................................305
APPENDIX 6 TI LEADERSHIP/MANAGEMENT PARTICIPANT RESPONSES .....306
APPENDIX 7 TI FOLLOWERSHIP PARTICIPANT RESPONSES..........................311
Administrative Responses—Passive and Active Followership................................311
Academic/Student Responses—Passive and Active Followership...........................313
APPENDIX 8 LIST OF TI INTERVIEWEES.........................................................315
REFERENCES....................................................................................................316

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