The Key Drivers of Diffusion in Management Accounting

Drawing on empirical evidence, key influences include performance aspirations, problem-solving needs, and institutional forces. Firstly, the desire to boost performance can motivate adoption. For example, Kholeif et al. (2007) found that performance goals were a key driver in Egyptian firms’ adoption of new accounting techniques. Seeking enhanced decision-making, operational improvements, and competitive advantage prompts interest in innovation. Secondly, specific organizational problems and needs often spur adoption. For instance, Hoque (2011) showed how difficulties measuring performance in a diverse firm prompted greater use of the balanced scorecard. Innovations are sought out when current practices no longer suffice. Thirdly, institutional factors like norms, fashions, and peer usage firmly shape diffusion (Ax & Greve, 2017). Firms mimic practices successful peers use to gain legitimacy and avoid perceived risks. Consulting firms and business media also drive fads and fashions.

Moreover, Shields (1995) found cost pressures, competitive necessities, process flaws, and performance gaps most strongly drove accounting innovation decisions in American firms, a pattern corroborated by studies of UK organizations (Ax & Greve, 2017). Scandinavian and Australian surveys reveal problems in extant systems, pursuits of strategic priorities, performance frustrations, and perceived innovation benefits as recurring adoption rationales. According to Malmi (199), this affirms the conclusion that institutional influences accelerate diffusion but are rarely the main motivations.

Challenges and Barriers to Diffusion

While drivers facilitate diffusion, various barriers can hinder or prevent adoption. Lack of knowledge is a crucial obstacle mitigated by change agents spreading information (Ax & Greve, 2017). Compatibility issues arise where innovations conflict with existing routines, systems, or cultural norms. Complexity prevents adoption if perceived as too difficult. Financial costs can also impact diffusion, though improved cost-benefit calculations may overcome this. Also, Libby and Waterhouse (1996) noted that resistance to change hamper diffusion.

Recommendations for overcoming challenges and barriers to the diffusion of management accounting innovations

While many management accounting innovations offer performance advantages, their widespread adoption and implementation face multiple impediments ranging from limited change agent capabilities to financial constraints and cultural mismatches. Targeted strategies are imperative to spur the penetration of productivity-enhancing accounting practices. A coordinated policy approach is necessary to elevate innovation evangelization programs run by associations and consultants from superficial fad promotion efforts lacking nuanced translation, configurability and integration support post-adoption. Subsidies and tax incentives can motivate external experts to provide customization assistance and implementation advice attuned to adopters’ operational contexts. Specific funding pools for small and medium firms can broaden access to consulting capabilities, overcoming financial barriers. Sponsoring intermediary positions within government agencies or industry bodies facilitates sustained, context-sensitive translation services, enabling both source and adopter to understand innovation possibilities within existing constraints.

Strategies like training, pilot projects, incentives, and management support help address barriers. Training programs help build the knowledge and skills required to implement innovations successfully. Lack of expertise is a crucial barrier, so developing internal capabilities through training enables adopting and effectively using new techniques. For example, extensive training at Oticon Inc. encouraged the adoption of activity-based management, which entailed significant process changes (Larsen, 2002).

Pilot projects allow small-scale testing of innovations to evaluate fit, identify adaptation needs, and reduce complexity perceptions. Limited pilots can provide proof of concept and refine approaches before a broader rollout. Besides, incentives help motivate engagement with innovations that may meet resistance or scepticism. Rewards for participation and achievement of targets related to the innovation can drive buy-in and overcome organizational inertia. Also, management support signals leadership commitment and priority, encouraging employees to dedicate time and resources.

Additional diffusion methods include shared cost-funding schemes with government agencies that subsidize setup expenses to attract small firm participation (Ax & Greve, 2017). Revenue-sharing agreements with consultants also incentivize external experts to pursue widening implementation. Expert intermediaries working