Strategic Choices: The Case Of Management Accounting System

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Muhammad H. AL-Hazmi


Management Accounting, Cost Management, Strategic Management Accounting, Accounting Practices


While the popularity of strategic management accounting (SMA) has been growing over the last decade, there is still not an extensive literature, which directly addresses the relationship between management accounting system and strategy. The Management Accounting Research (MAR) constructed a special issue on SMA and concluded that (1) there were less than 20 key articles on this subject in the mainstream academic journals; (2) there was a lack of  comprehensive conceptual framework for SMA; and (3) there was limited empirical evidence. To explore this and related issues, a study of the relative significance of the use of cost information for strategic considerations in relation to two levels of competitive analysis - corporate competitive intelligent information, and business competitive intelligent information - was undertaken. The findings of the study relate managers’ perceptions of two dimensions of their environmental changes (stability and certainty) to the two levels of competitive analysis. In order to gain a wider understanding of this relationship, a random sample of 110 large Saudi companies were selected and data collected from senior managers. The results showed that (1) the perceptions of managers differ between their environmental certainty and stability; (2) the relative significance accorded to business competitive intelligent information was positively associated with rising instability; (3) the use of corporate competitive intelligent information was a common practice. An interpretation of the results is that market instability stimulates strategic movement and cost information is being used in management thinking to support strategic development in meeting competitive pressures and in restructuring and reconfiguration of business strategy.


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