During the past two decades, the world has witnessed a technological evolution that has provided a totally new environment for organisations. It has also been argued that the growing level of global competition leads to the adoption of such technological evolution, which may require the adoption of complementary administrative innovation (e.g., Baines & Langfield-Smith 2003). However, studies investigating the diffusion of innovations suggest that administrative innovations lag behind technological innovations (e.g., Chenhall, 2003; Gosselin, 1997).
To facilitate the diffusion of administrative innovations, studies addressing the diffusion of administrative changes suggest further investigation into the level of association between the diffusion of administrative changes and contextual factors (e.g., Chenhall, 2003; Chenhall & Langfield-Smith, 1998; Gosselin, 1997; Lukka & Shields, 1999; Szychta, 2002; Williams & Seaman, 2001). The above provide the motivation for this paper to explore the level importance of contextual factors on decisions(s) to implement (or not) administrative changes, and to examine the level of association between contextual factors and the diffusion of six administrative innovations.
Literature Review and Hypotheses Development
For nearly two decades the literature has argued that administrative changes lag behind technological changes and therefore cannot cope with the requirement of current technological evolution (Innes & Mitchell, 1991; Johnson & Kaplan, 1987; Johnson, 1992, 1993). Unsurprisingly, therefore, there has been a growing interest into the study of the diffusion of administrative changes during the past two decades (e.g., Anderson, 1995; Askarany & Smitha, 2001a; Baines & LangfieldSmith, 2003; Booth & Giacobbe, 1998; Cavalluzzo & Ittner, 2003; Chenhall, 2003; Chenhall & Langfield-Smith, 1998; Gosselin, 1997; Guilding & McManus, 2002; Maiga & Jacobs, 2003; Malmi, 1999; Martinez & Labeaga, 2002; Williams & Seaman, 2001; Yao, Xu, Liu, & Lu, 2003).
However, despite the contribution of these studies, recent survey evidence suggests that the level of adoption of recently developed administrative techniques is lower than those of traditional ones (Baines & Langfield-Smith, 2003; Chenhall & Langfield-Smith, 1998).
Classifying accounting innovations as 'administrative', Gosselin (1997, p.109) supports the argument that "administrative innovations tend to lag behind technical innovations because they are perceived by management as being less closely associated with the profit objectives of manufacturing organisations". Rogers (1995) states that most of the studies on innovation have been devoted to technological innovations rather than administrative ones. Undertaking a historical review of empirical and contingency-based research over the last two decades, Chenhall (2003) observes that there has been very little published contingency work on administrative innovations such as target costing, balanced scorecard and life cycle costing.
Chenhall & Langfield-Smith (1998, p. 1) provide confirmation that administrative innovations tend to lag behind technical innovations, in a survey of Australian manufacturing firms. They find that "overall, the rates of adoption of traditional management accounting practice were higher than recently developed techniques", also noting that even though the evidence from their survey indicated an increase in the application of new cost and management accounting techniques, the level of adoption of most of these new techniques was relatively low compared with the other techniques surveyed. They note that the three most popular 'new' adoptions are of traditional methods: budgeting for planning financial position; capital budgeting; and performance evaluation using return on investment. Confirming previous studies, the findings of Askarany & Smith (2000) indicate that the extent of administrative changes in the Australian Plastics Industry over a ten-year period (1986-1996) had been slower than those of technological changes. …