Managerial Accounting as a Tool for Corporate Strategy: Synergy Creation and Anergy Inhibition

By Ito, Kazunori; Souissi, Mohsen | Journal of International Business Research, January 2012 | Go to article overview

Managerial Accounting as a Tool for Corporate Strategy: Synergy Creation and Anergy Inhibition


Ito, Kazunori, Souissi, Mohsen, Journal of International Business Research


INTRODUCTION

There is no academic consensus on how managerial accounting can be used as a tool to formulate and implement a corporate strategy. For instance, Anthony (1965) advocates the use of managerial accounting information to implement managerial control systems thereby monitoring whether the company is on track towards achieving its strategic goals. Other scholars, however, have expressed doubts over the usefulness of management accounting tools, such as Activity-based Costing (ABC) and the Balanced Scorecard (BSC), to achieve that purpose (Chapman, 2005, pp. 3-4). Working with many companies throughout the last two decades or so, Kaplan and Norton (1996a, 1996b, 2006, and 2008) argue that the BSC may be used as an effective management control system that enables strategy implementation. Skaerbaek and Truggestad (2010) went further to suggest that accounting tools can even shape the strategic options of the company. Most recently, aligning the corporate strategy with its business units' strategies has increasingly drawn attention among scholars and practitioners alike (Kaplan and Norton, 2006).

Much of the debate over the rationale behind a corporate strategy has been centered on two issues: synergy creation and product portfolio management. For example, Ansoff (1969) maintains that corporate strategy should be devised with synergy creation in mind. Hofer and Schendel (1978) advocate the formulation of corporate strategy while focusing on product portfolio management. Campbell et al (1995) argue that the creation of synergy is only effective when leveraging common practices and processes among related businesses. For Ito (2007), corporate strategy is crucial not only for the creation of synergy but also for corporate level management by ensuring that corporate value is not eroded.

Based on an explorative study of three Japanese companies, this study investigates the effectiveness of the BSC in disseminating the corporate strategy and enhancing the alignment between the corporate level and the business units as advocated by Kaplan and Norton (2006). The alignment is approached with the ultimate objective of creating synergy (1) and/or inhibiting anergy (2).

The paper is organized as follows. The first section is devoted to the survey of the literature. In the second section, the authors illustrate the different types of alignment they encounter through exploration of three Japanese companies. The third section will conclude.

LITERATURE REVIEW

The creation of synergy has sparked a long debate among scholars. Some authors are very skeptical about the effectiveness of the HQ in laying the grounds for synergy creation. They argue that synergy cannot be achieved unless the opportunities on the ground really arise; it should not be imposed by top management. For instance, Goold & Campbell (1998) argue that corporate executives are so obsessed by the potential benefits of synergy that they end up overlooking the downsides. Eisenhart and Galunic (2000) maintain that business units should co-evolve in order to reap the benefits of the opportunities of synergy as they arise. They argue that through frequent meetings and information sharing, business units operating in a dynamic market, rather than the HQ, are in a better position to leverage the opportunities to create value.

Based on their studies of several companies, Kaplan and Norton (2006) argue that the BSC has helped in capturing the benefits of alignment. It did so by translating the corporate strategy into corporate policies administered by business units. Priorities of the corporate strategy are then cascaded down the business units to ensure that the business unit's objectives and measures are synchronized with those of the corporate. They add that an alignment index the extent to which corporate goals are aligned with business unit's goals-will help facilitate the alignment process. Enterprises that successfully align their corporate, business units and operating support strategies are deriving greater financial benefits. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Managerial Accounting as a Tool for Corporate Strategy: Synergy Creation and Anergy Inhibition
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.