Is there anything more practical than a good theory?

Article Type: Commentary From: Qualitative Research in Accounting & Management, Volume 9, Issue 3

European Accounting Review is a generalist journal. We are open to articles that address any pertinent question(s) in any accounting area, drawing on any paradigm, or employing any research methodology. From the journal’s perspective, analytical and/or empirical papers are acceptable. However, the focus of the remainder of this commentary is on manuscripts that are empirical in nature (for analytical research, see Christensen, 2011).

At the core, the fundamental guiding principle of the European Accounting Review is the pursuit of “the advancement of accounting knowledge”. In this regard, qualitative and/or quantitative papers are welcome. We believe that both qualitative and quantitative research add to accounting knowledge. Qualitative research advances our understanding about why and howorganizational processes are being performed in firms. In such a setting, the investigator becomes a research instrument and, as such, s/he gathers data through observation, interviews, examination of archival documents, or active participation. Quantitative research helps to advance our understanding with regards to what is going-on in the practice and, eventually, enable the generalizability of the results.

The acceptance of an article for publication is through a double-blind review process. This process aims to provide the authors with constructive feedback,which in-turn should facilitate further development and refinement of their manuscripts. Ultimately, the editorial decision is based on the extent to which a study adds to the prior research in its area. From the contributions viewpoint, a paper can be positioned as descriptive, theoretical or a combination of the two.

Descriptive positioning can be thought of as manuscripts that provide detailed descriptions of management accounting practices. The unit of analysis for such studies could be the individual firms, groups of firms, or industry sectors. Furthermore, data could be from one or multiple countries. Even though research of this nature is valuable, such investigations will not have an easy review process. The main reason being that replications of prior studies and papers, which just describe the actual practices, raise the question of “so what?” Since such studies do not really extend the existing knowledge, they would hardly survive the review process of European Accounting Review.

Theoretical submissions draw on an existing theoretical-framework (e.g. old institutional economics, stakeholder theory, contingency theory) to guide their analyses. However, rather than relying on a theoretical framework to enhance understanding about the phenomenon under investigation, some of these manuscripts just produce what could be thought of as celebration of the theory. That is, the narrative just focuses on the extent to which the accounting data corroborates the theoretical predictions. This is indeed valuable but, again, it does not help much to advance accounting knowledge. Ultimately, the theoretical predictions are already there and merely illustrating how accounting data conform to them would not add much to accounting knowledge.

As per the aims and scope of European Accounting Review, the journal’s goal is to publish management accounting research that is not only theoretically guided but also is relevant for actual practice. In fact, from the journal’s perspective, these two aspects are considered complementary in nature. Embedding the findings within a theoretical framework will not only result in a stronger manuscript but will enhance its practical implications as well. In other words,an investigation may draw on a theoretical framework to explain accounting practices and highlight unobserved phenomena. In this manner, the accounting knowledge may help to expand the guiding theoretical framework and benefit the practice at the same time.

I will draw on two recently published papers in European Accounting Review to underscore the alignment between theory and practice. In doing so, I would also like to highlight the fact that trying to achieve such a goal is irrespective of the qualitative or quantitative nature of these manuscripts.

Ostergren and Stensaker (2011) conducted a field-study investigation to examine the early attempts of a large multinational to move beyond budgeting. Rather than just describing such early attempts, Ostergren and Stensaker rely on a thought-provoking combination of agency theory and resource dependence theory to explain their results and advance understanding in beyond budgeting research. In this respect, they suggest that three new rules of action would emerge in the absence of budgets:

• 1.

  targets would become more strategic and based on high ambitions;

• 2.

  as the game budget was eliminated, a greater focus on the big picture became increasingly important; and

• 3.

  the enforcement of a dynamic resource allocation in the absence of budgets would bring about increasing emphasis on possibilities and flexibility.

Furthermore, Ostergren and Stensaker operationalize these patterns of action through a four-tier typology of interactions. As we see, Ostergren and Stensaker’s study does not merely describe existing practices in their focal firm but it is theoretically grounded and does not rely on a single theory. Rather than providing a celebration of the theory, it draws on an interesting combination of two theories that complement each other quite well and that ultimately enable the prediction of three courses of action and the establishment of four forms of interaction. Therefore, this qualitative study adds to extant research and provides helpful suggestions for practice.

Henri (2010) examines the dynamism of performance measurement systems; that is, the organizational propensity to revise performance indicators to ensure their relevance and appropriateness. To examine this widely neglected topic in the performance measurement literature, Henri draws on contingency theory as a main framework but also discusses insights taken from economic theory and the resource based view framework. Empirical support for this investigation is taken from the survey administered to a target population of 1,692 manufacturing firms, which resulted in a usable response rate of approximately 24 per cent(383 questionnaires). The findings of this study suggest that even though the current business environment features rapid changes, firms do not appear to revise their performance measurement systems to a great extent. Furthermore,even though periodical revisions are beneficial, these revisions may not be appropriate at all times and in all circumstances; the results of the investigation suggest that such revisions should be motivated by the degree of organizational change, both internally and externally. Finally, the results suggest that an absence of dynamic performance measurement systems may be more harmful in a context of higher levels of change than to have dynamic performance measurement systems even if they are not required.

Taken together, the studies by Ostergren and Stensaker (2011) and Henri(2010) illustrate some of the salient features of sound research: theoretical embeddedness, good research design, and appropriate analysis/results, thereby providing not only a contribution to extant research but underscoring the implications for current practice. Overall, I believe that the journal’s philosophy can succinctly be summed by Lewin’s (1952, p. 169) dictum:“there is nothing more practical than a good theory”.

Acknowledgements

I am most grateful to Tashfeen Sohail for his insightful comments and suggestions.

Salvador Carmona