IDEAS home Printed from https://ideas.repec.org/a/spr/schmbr/v72y2020i2d10.1007_s41464-020-00086-y.html
   My bibliography  Save this article

The Influence of the Organizational Structure, Environment, and Resource Provision on the Use of Accrual Accounting in Municipalities

Author

Listed:
  • Christian Nitzl

    (University of the German Federal Armed Forces Munich)

  • Dennis Hilgers

    (JKU Linz)

  • Bernhard Hirsch

    (University of the German Federal Armed Forces Munich)

  • David Lindermüller

    (University of the German Federal Armed Forces Munich)

Abstract

Despite its benefits, municipalities frequently struggle to take advantage of accrual accounting as a basis for managerial decisions. We assume that the reason for this is that municipalities technically implement accrual accounting but sometimes keep it decoupled from daily decision making. To identify factors that facilitate a more sophisticated usage of accrual accounting in German public administrations, we examined the influence of the municipality’s contextual situation, organizational structure, and resource provision on the degree of sophistication in the use of accrual accounting. We found that the most relevant driver for a more sophisticated use of accrual accounting is the contextual situation in which the municipality is embedded. In our research model, a municipality’s contextual situation consists of fiscal stress, its political competition and culture, and the relevant legal system. Another important factor is the adequate provision of resources, such as an IT system that delivers easily accessible and accurate accounting information. Notably, the specific organizational structure of the municipality, which is often regarded as highly bureaucratic and the main obstruction to reforms, is not significant.

Suggested Citation

  • Christian Nitzl & Dennis Hilgers & Bernhard Hirsch & David Lindermüller, 2020. "The Influence of the Organizational Structure, Environment, and Resource Provision on the Use of Accrual Accounting in Municipalities," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 72(2), pages 271-298, April.
    • Handle: RePEc:spr:schmbr:v:72:y:2020:i:2:d:10.1007_s41464-020-00086-y
    DOI: 10.1007/s41464-020-00086-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s41464-020-00086-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s41464-020-00086-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Noel Hyndman & Mariannunziata Liguori & Renate E. Meyer & Tobias Polzer & Silvia Rota & Johann Seiwald & Ileana Steccolini, 2018. "Legitimating change in the public sector: the introduction of (rational?) accounting practices in the United Kingdom, Italy and Austria," Public Management Review, Taylor & Francis Journals, vol. 20(9), pages 1374-1399, September.
    2. Abernethy, Margaret A. & Stoelwinder, Johannes U., 1991. "Budget use, task uncertainty, system goal orientation and subunit performance: A test of the 'fit' hypothesis in not-for-profit hospitals," Accounting, Organizations and Society, Elsevier, vol. 16(2), pages 105-120.
    3. Sulitzeanu-Kenan, Raanan, 2010. "Reflection in the Shadow of Blame: When Do Politicians Appoint Commissions of Inquiry?," British Journal of Political Science, Cambridge University Press, vol. 40(3), pages 613-634, July.
    4. Sandy Edward Green Jr & Yuan Li, 2011. "Rhetorical Institutionalism: Language, Agency, and Structure in Institutional Theory since Alvesson 1993," Journal of Management Studies, Wiley Blackwell, vol. 48(7), pages 1662-1697, November.
    5. Edward E. Rigdon & Jan-Michael Becker & Arun Rai & Christian M. Ringle & Adamantios Diamantopoulos & Elena Karahanna & Detmar W. Straub & Theo K. Dijkstra, 2014. "Conflating Antecedents and Formative Indicators: A Comment on Aguirre-Urreta and Marakas," Information Systems Research, INFORMS, vol. 25(4), pages 780-784, December.
    6. Hair, Joe F. & Howard, Matt C. & Nitzl, Christian, 2020. "Assessing measurement model quality in PLS-SEM using confirmatory composite analysis," Journal of Business Research, Elsevier, vol. 109(C), pages 101-110.
    7. Gosselin, Maurice, 1997. "The effect of strategy and organizational structure on the adoption and implementation of activity-based costing," Accounting, Organizations and Society, Elsevier, vol. 22(2), pages 105-122, February.
    8. Allan Barton, 2005. "Professional Accounting Standards and the Public Sector—a Mismatch," Abacus, Accounting Foundation, University of Sydney, vol. 41(2), pages 138-158, June.
    9. Gregory G. Dess & Richard B. Robinson, 1984. "Measuring organizational performance in the absence of objective measures: The case of the privately‐held firm and conglomerate business unit," Strategic Management Journal, Wiley Blackwell, vol. 5(3), pages 265-273, July.
    10. Michela Arnaboldi & Irvine Lapsley, 2009. "On the Implementation of Accrual Accounting: A Study of Conflict and Ambiguity," European Accounting Review, Taylor & Francis Journals, vol. 18(4), pages 809-836.
    11. Nitzl, Christian, 2016. "The use of partial least squares structural equation modelling (PLS-SEM) in management accounting research: Directions for future theory development," Journal of Accounting Literature, Elsevier, vol. 37(C), pages 19-35.
    12. Robert M. Bushman & Alina Lerman & X. Frank Zhang, 2016. "The Changing Landscape of Accrual Accounting," Journal of Accounting Research, Wiley Blackwell, vol. 54(1), pages 41-78, March.
    13. Scapens, Robert W., 2006. "Understanding management accounting practices: A personal journey," The British Accounting Review, Elsevier, vol. 38(1), pages 1-30.
    14. Anderson, Shannon W. & Young, S. Mark, 1999. "The impact of contextual and process factors on the evaluation of activity-based costing systems," Accounting, Organizations and Society, Elsevier, vol. 24(7), pages 525-559, October.
    15. Thomas Ahrens, 2018. "Management Controls that Anchor other Organizational Practices," Contemporary Accounting Research, John Wiley & Sons, vol. 35(1), pages 58-86, March.
    16. Diamantopoulos, Adamantios & Riefler, Petra & Roth, Katharina P., 2008. "Advancing formative measurement models," Journal of Business Research, Elsevier, vol. 61(12), pages 1203-1218, December.
    17. Sebastian D. Becker & Tobias Jagalla & Jürgen Weber, 2011. "A taxonomy of the perceived benefits of accrual accounting and budgeting: Evidence from German states," Post-Print hal-00623217, HAL.
    18. Weaver, R. Kent, 1986. "The Politics of Blame Avoidance," Journal of Public Policy, Cambridge University Press, vol. 6(4), pages 371-398, October.
    19. Saliterer, Iris & Korac, Sanja, 2013. "Performance information use by politicians and public managers for internal control and external accountability purposes," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 24(7), pages 502-517.
    20. Becker, Sebastian D. & Jagalla, Tobias & Skærbæk, Peter, 2014. "The translation of accrual accounting and budgeting and the reconfiguration of public sector accountants’ identities," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(4), pages 324-338.
    21. M. N. Ahmed & R. W. Scapens, 2000. "Cost allocation in Britain: towards an institutional analysis," European Accounting Review, Taylor & Francis Journals, vol. 9(2), pages 159-204.
    22. Grabner, Isabella & Moers, Frank, 2013. "Management control as a system or a package? Conceptual and empirical issues," Accounting, Organizations and Society, Elsevier, vol. 38(6), pages 407-419.
    23. Baber, William R. & Sen, Pradyot K., 1984. "The role of generally accepted reporting methods in the public sector: An empirical test," Journal of Accounting and Public Policy, Elsevier, vol. 3(2), pages 91-106.
    24. Davide Giacomini & Mariafrancesca Sicilia & Ileana Steccolini, 2016. "Contextualizing politicians’ uses of accounting information: reassurance and ammunition," Public Money & Management, Taylor & Francis Journals, vol. 36(7), pages 483-490, November.
    25. Jan van Helden, 2016. "Literature review and challenging research agenda on politicians’ use of accounting information," Public Money & Management, Taylor & Francis Journals, vol. 36(7), pages 531-538, November.
    26. Vicente Pina & Lourdes Torres & Ana Yetano, 2009. "Accrual Accounting in EU Local Governments: One Method, Several Approaches," European Accounting Review, Taylor & Francis Journals, vol. 18(4), pages 765-807.
    27. Hans-Gerd Ridder & Hans-Jürgen Bruns & Fabian Spier, 2006. "Managing implementation processes," Public Management Review, Taylor & Francis Journals, vol. 8(1), pages 87-118, March.
    28. Van der Stede, Wim A. & Young, S. Mark & Chen, Clara Xiaoling, 2005. "Assessing the quality of evidence in empirical management accounting research: The case of survey studies," Accounting, Organizations and Society, Elsevier, vol. 30(7-8), pages 655-684.
    29. Evans, Jh & Patton, Jm, 1987. "Signaling And Monitoring In Public-Sector Accounting," Journal of Accounting Research, Wiley Blackwell, vol. 25, pages 130-164.
    30. Irvine Lapsley & Riccardo Mussari & Gert Paulsson, 2009. "On the Adoption of Accrual Accounting in the Public Sector: A Self-Evident and Problematic Reform," European Accounting Review, Taylor & Francis Journals, vol. 18(4), pages 719-723.
    31. Margaret A. Abernethy & Wai Fong Chua, 1996. "A Field Study of Control System “Redesign†: The Impact of Institutional Processes on Strategic Choice," Contemporary Accounting Research, John Wiley & Sons, vol. 13(2), pages 569-606, September.
    32. Pollitt, Christopher & Bouckaert, Geert, 2004. "Public Management Reform: A Comparative Analysis," OUP Catalogue, Oxford University Press, edition 2, number 9780199268498.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bernhard Hirsch & Fabienne-Sophie Schäfer & Aleksander Aristovnik & Polonca Kovač & Dejan Ravšelj, 2023. "The impact of Digitalized Communication on the effectiveness of Local Administrative Authorities – Findings from Central European Countries in the COVID-19 Crisis," Journal of Business Economics, Springer, vol. 93(1), pages 173-192, January.
    2. Patricio Valdivieso & Pablo Neudorfer & Krister P. Andersson, 2021. "Causes and Consequences of Local Government Efforts to Reduce Risk and Adapt to Extreme Weather Events: Municipal Organizational Robustness," Sustainability, MDPI, vol. 13(14), pages 1-43, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bernhard Hirsch & Fabienne-Sophie Schäfer & Aleksander Aristovnik & Polonca Kovač & Dejan Ravšelj, 2023. "The impact of Digitalized Communication on the effectiveness of Local Administrative Authorities – Findings from Central European Countries in the COVID-19 Crisis," Journal of Business Economics, Springer, vol. 93(1), pages 173-192, January.
    2. Oulasvirta, Lasse, 2014. "The reluctance of a developed country to choose International Public Sector Accounting Standards of the IFAC. A critical case study," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(3), pages 272-285.
    3. Adhikari, Pawan & Kuruppu, Chamara & Matilal, Sumohon, 2013. "Dissemination and institutionalization of public sector accounting reforms in less developed countries: A comparative study of the Nepalese and Sri Lankan central governments," Accounting forum, Elsevier, vol. 37(3), pages 213-230.
    4. Bruns, Hans-Jürgen, 2014. "Accounting change and value creation in public services—Do relational archetypes make a difference in improving public service performance?," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(4), pages 339-367.
    5. Zubir Azhar & Ervina Alfan & Krishnen Kishan & Nurul Husna Assanah, 2022. "Accrual Accounting at Different Levels of the Public Sector: A Systematic Literature Review," Australian Accounting Review, CPA Australia, vol. 32(1), pages 36-62, March.
    6. Minerva Martínez Avila & Juan José García-Machado & Eréndira Fierro Moreno, 2021. "A Multiple Full Mediating Effect in a PLS Hierarchical Component Model: Application to the Collaborative Public Management," Mathematics, MDPI, vol. 9(16), pages 1-19, August.
    7. Ferry, Laurence & Zakaria, Zamzulaila & Zakaria, Zarina & Slack, Richard, 2018. "Framing public governance in Malaysia: Rhetorical appeals through accrual accounting," Accounting forum, Elsevier, vol. 42(2), pages 170-183.
    8. Thi Cam Tu Luong & Ann Jorissen & Ine Paeleman, 2019. "Performance Measurement for Sustainability: Does Firm Ownership Matter," Sustainability, MDPI, vol. 11(16), pages 1-35, August.
    9. King, Robyn & Clarkson, Peter, 2015. "Management control system design, ownership, and performance in professional service organisations," Accounting, Organizations and Society, Elsevier, vol. 45(C), pages 24-39.
    10. Thomas Gackstatter & Benedikt Müller-Stewens & Klaus Möller, 2019. "Effective accounting processes: the role of formal and informal controls," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 30(2), pages 131-152, July.
    11. Mari Kobayashi & Kiyoshi Yamamoto & Keiko Ishikawa, 2016. "The Usefulness of Accrual Information in Non‐mandatory Environments: The Case of Japanese Local Government," Australian Accounting Review, CPA Australia, vol. 26(2), pages 153-161, June.
    12. Oulasvirta Lasse Olavi, 2014. "Governmental Financial Accounting and European Harmonisation: Case Study of Finland," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 4(3), pages 237-263, December.
    13. Bernhard Hirsch & Christian Nitzl & Stefan Reemts, 2018. "The neglected mediating role of self-efficacy in the goal setting process in local public administrations," Journal of Business Economics, Springer, vol. 88(1), pages 41-63, January.
    14. Grzegorz Bucior & Aleksandra Zurawik, 2022. "The Autonomy of Public Sector Units in the Process of Formulating Accounting Policy – Evidence from Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 555-581.
    15. Changwony, Frederick Kibon & Paterson, Audrey S., 2019. "Accounting practice, fiscal decentralization and corruption," The British Accounting Review, Elsevier, vol. 51(5).
    16. Maran, Laura & Bracci, Enrico & Inglis, Robert, 2018. "Performance management systems' stability: Unfolding the human factor – A case from the Italian public sector," The British Accounting Review, Elsevier, vol. 50(3), pages 324-339.
    17. Ching Leong & Michael Howlett, 2017. "On credit and blame: disentangling the motivations of public policy decision-making behaviour," Policy Sciences, Springer;Society of Policy Sciences, vol. 50(4), pages 599-618, December.
    18. Luft, Joan & Shields, Michael D., 2003. "Mapping management accounting: graphics and guidelines for theory-consistent empirical research," Accounting, Organizations and Society, Elsevier, vol. 28(2-3), pages 169-249.
    19. Marco Morelli & Francesca Lecci, 2014. "Management control systems (MCS) change and the impact of top management characteristics: the case of healthcare organisations," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 24(3), pages 267-298, January.
    20. Heggen, Campbell, 2019. "The role of value systems in translating environmental planning into performance," The British Accounting Review, Elsevier, vol. 51(2), pages 130-147.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:schmbr:v:72:y:2020:i:2:d:10.1007_s41464-020-00086-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.