Market Competition, Decentralization And The Broad Scope Of Management Accounting Information

January29,2014, Ministry of Finance issued an exposure draft, which is the Programme of Action on China’s management accounting reform. The move is aimed to guide and promote the reform and development of management accounting work, establish management accounting system which adapts to our socialist market economic.Enterprises as the main body of the market economy, aims to maximize enterprise value by optimizing the allocation of resources."The focus of management is operation, and the focus of operation is decision." Management control system is important mechanism for efficient and accurate decision-making. Management control system is mechanism which managers influence other members within the organization in order to strategy implementation, including responsibility center, internal transfer prices, budgeting, performance evaluation, and incentive mechanism and so on. The fundamental factor of making management control system take effect is up to its integration condition, providing relevant, comprehensive, quantitative and timely information for decision-makers, which services for enterprise operation and management to improve the management efficiency and effectiveness. Chenhall&Morris(1986) found that the effects of contextual variables and organizational structure on the perceived usefulness of the MAS information characteristics, including scope, aggregation, integration and timeliness. The scope of an information system refers to the dimensions of focus, quantification, and time horizon. The difficulties caused by perceived environmental uncertainty to both planning and control may be alleviated by provision of broad scope information, which helps managers make scientific and operational strategies and operational decisions, therefore improve corporate performance to achieve corporate goals. Based on the broad scope of management accounting information, this paper is focused on discussing the factors to the broad scope.The conventional crude management mode of our enterprise is no longer adapted to the new economic environment. Therefore, in the highly competitive market environment, our enterprise must be transformed from the traditional low-efficient and crude management mode to high-efficient and refined management mode. The focus of corporate competition has shifted to information, knowledge and technology from resources, and extended from the domestic to abroad. In a word, enterprise survival of the market environment has undergone earth-shaking changes. The impact of economic globalization has greatly extended the business scope, broadening the radius of the enterprise management control; Upgrade innovative of financial instruments increased business risk and difficulty of the enterprise management control; Enterprises value chain longitudinal extension blurs the organizational boundary, expanding the scope of the framework of management control. As management control system products, management accounting information should be how to meet the challenges of an increasingly intense competitive environment brought about by the enterprise? Namely, intense market competition how to impact on management accounting information characteristic of scope?According to the contingency theory, the change of the external environment will lead to organizational change. With the expansion of the scope of the market, the involvement of new suppliers, new customers and new competitors, dynamic environment forces firms to organization change which is named creative destruction. Appropriate structural response for organizations facing uncertainty is to encourage managers to "differentiate" their segments with respect to their sub-unit’s environment. As sub-units become more decentralized, what are the requirements for their managers on the management accounting information characteristic of scope in order to achieve their operation objectives? Whether decentralization plays a role in the conduction between market competition and management accounting information characteristic of scope?In order to study these issues, this paper includes six chapters in total; the specific arrangement is as follows:Chapter One:Introduction. Based on the Chinese special transition period, by analyzing the competitive market environment which enterprises are facing, the research questions are introduced, and the theoretical and practical contribution have also been introduced. In the meanwhile, the research framework of "environment—organization structure—management accounting information characteristic of scope" has been constructed, and clears about the main research methods and the possible innovation point of this paper.Chapter Two:Literature review. This chapter arranges the literatures at home and abroad comprehensively from four aspects:management control system and management accounting information, market competition and management accounting information characteristic of scope, market competition and decentralization, decentralization and management accounting information characteristic of scope, and makes a brief assessment.Chapter Three:Theoretical analysis and research hypothesis. Based on the contingency theory and decentralization theory, this chapter determines the relationship among market competition, decentralization and management accounting information characteristic of scope, and presents the research hypotheses.Chapter Four:Research design. In this paper, the questionnaire survey is used to hypothesis testing. In this chapter, first, introduces the design process of questionnaires, the distribution and the callback of questionnaires; secondly, describes basic characteristics of sample data; thirdly, makes a brief introduction of data analyzing method.Chapter Five:Research findings and analysis. This chapter uses statistical analysis tools stata12.1to analyze questionnaire data, including reliability and validity test, factor analysis, relative analysis, structural equation modeling analysis and path analysis. In the end, report empirical result and get the research conclusions.Chapter Six:Research conclusions and future research. On the basis of empirical research, this chapter concludes the main study conclusion of this paper, finds the intrinsic relationship among market competition, decentralization and management accounting information characteristic of scope, provides specific suggestions of Chinese enterprises, in the meanwhile, analyzes the shortage existed in the study design, and further presents the direction worthy of studying in the field of management accounting information. According to the test of questionnaire investigation data, the conclusions of this dissertation are as follows:(1) The higher the degree of market competition faced by enterprises, the more need to the broad scope in sub-units. Today’s world, enterprises are faced with a dynamic and complex environment, to meet the demand of decentralized sub-units’ managers and gain competitive advantage, the more we need to collect, process, organize a variety of information on decision-making related, including financial and non-financial, quantity and quality, economic and non-economic, internal and external, past and future management accounting information, which helps managers make scientific and operational strategies and operational decisions, therefore improve corporate performance to achieve corporate goals.(2) The higher the degree of market competition faced by enterprises, the more decentralized of the organization, In today’s world, competitive involves the cost, quality, time, service and other aspects, not entirely from the hierarchical structure which brings the efficiency of conventional organizational activities. Decentralized organization not only changes their internal structure to adapt to changes in the external environment, showing strong resilience, but also provides space and support conditions for the self-improvement and development of the membership. Decentralized organization can better meet the requirements of the humanistic management, which has become the major trends in today’s management organization model.(3) As sub-units become more decentralized, it is more likely that the broad scope will expand. Decentralized organization promotes the integration of the functional business departments, and decentralized managers have more resources, authority and responsibility than ever before. How to allocate these resources efficiently to achieve organizational goals has become a problem to be solved. Therefore, the broad scope of management accounting information which includes internal and external, quantity and quality, past and future management accounting information with respect to budgeting, cost, main competitors, would assist managers’ decision-making.(4) Decentralization partially mediated the influence of market competition on management accounting information characteristic of scope. This conclusion is further revealed the mechanism which market competition impacts on management accounting information characteristic of scope. Namely, there is a direct relationship between market competition and management accounting information characteristic of scope, and the former on the scope, in part, due to the indirect path through decentralization.The contributions of this dissertation are as follows:Firstly, researches on management control system, the domestic scholars have accumulated a series of research achievements of rich implications. However, the research of management accounting information is relatively scarce, which is focused on the normative description of the characteristic of management accounting information lack of empirical research. Therefore, this article attempts to view the influence factors of management accounting information using empirical research method.Secondly, under the background of China’s special transformation, enterprises are facing increasingly brutal competition in the market. On the basis of the related literature at home and abroad, this paper presents research hypothesis in line with our economic characteristics, examines the relationship among market competition, decentralization and management accounting information characteristic of scope.Thirdly, according to the questionnaire investigation data, this article adopts structural equation modeling analysis method, examines the relationship among market competition, decentralization and management accounting information characteristic of scope.This research framework is further revealed the mechanism which market competition impacts on management accounting information characteristic of scope. Namely, there is a direct relationship between market competition and management accounting information characteristic of scope, and the former on the scope, in part, due to the indirect path through decentralization.