Abstract

http://ssrn.com/abstract=1659386
 
 

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Accounting for a Lean Environment


Frances A. Kennedy


Clemson University - School of Accountancy & Legal Studies

Sally K. Widener


Clemson University

Rosemary Fullerton


Utah State University - School of Accountancy

August 15, 2010

AAA 2011 Management Accounting Section (MAS) Meeting Paper

Abstract:     
Lean thinking is rapidly becoming the dominant paradigm in manufacturing. Kennedy and Widener (2008) use a case study to develop a lean environment model that illustrates the importance of lean accounting practices. We build on this work using a congruence model of organizational design (Nadler & Tushman, 1992, 1997) to shed more in-depth insights on the role of value stream costing (VSC) and lean accounting practices that exist in a cross-section of manufacturing firms. Using data from 244 U.S. companies that have implemented lean principles, we test a structural equation model that examines the role VSC plays in the lean environment. We hypothesize and find that top management support is associated with lean manufacturing practices, which in turn are associated with a decreased emphasis on traditional management accounting practices and an increase in the lean accounting concepts of simplified accounting practices and VSC. We also find that VSC is associated with employee empowerment and the use of visual performance measures. We find the existence of a second, better fitting model that confirms the importance of VSC as a critical element in the lean environment. However, the alternative model supports VSC as the final outcome in the lean process, rather than an intermediate step, suggesting that in a cross-section of firms, lean accounting may be the laggard in the implementation of lean principles. This study provides evidence on the internal alignment of a firm’s manufacturing, accounting, and control environments in a lean context.

Number of Pages in PDF File: 52

Keywords: Lean Accounting, Value Stream Costing, Lean Manufacturing, Management Control, Survey Analysis, Structural Equation Modeling

JEL Classification: M41

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Date posted: August 15, 2010  

Suggested Citation

Kennedy, Frances A. and Widener, Sally K. and Fullerton, Rosemary, Accounting for a Lean Environment (August 15, 2010). AAA 2011 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: http://ssrn.com/abstract=1659386 or http://dx.doi.org/10.2139/ssrn.1659386

Contact Information

Frances A. Kennedy
Clemson University - School of Accountancy & Legal Studies ( email )
Clemson, SC 29634
United States
Sally K. Widener
Clemson University ( email )
Clemson, SC 29634
United States
Rosemary Fullerton (Contact Author)
Utah State University - School of Accountancy ( email )
Jon M. Huntsman School of Business
Logan, UT 84322-3540
United States
435-797-2332 (Phone)
435-797-1475 (Fax)
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