the adoption of western management accounting practices in vietnamese enterprises during ...

268 Pages·2012·1.15 MB·English

THE ADOPTION OF WESTERN MANAGEMENT
ACCOUNTING PRACTICES IN VIETNAMESE
ENTERPRISES DURING ECONOMIC TRANSITION

DOAN Ngoc Phi Anh
B. (Acc), MBA

Department of Accounting, Finance and Economics
Griffith Business School
Griffith University

Submitted in fulfillment of the requirements for the degree of
Doctor of Philosophy

March, 2012
ABSTRACT
Following Vietnam’s re-unification in 1975, accounting practices and systems
throughout the country were similar to those adopted by the Soviet Union and China. Since
the late 1980s, however, Vietnam has been in the process of transforming itself from a
centrally planned economy to a market-oriented one, as a result of which the business
environment has become much more competitive. The orientation of the accounting system
has changed from one that served only the needs of state tax authorities to one that could also
serve the needs of management. In turn, these changes have created a need for management
accounting in Vietnamese enterprises. Despite such far-reaching changes, there is a lack of
systematic knowledge about the current state of management accounting practices (MAPs) in
Vietnam. This situation is consistent with a general lack of detailed information and
understanding of MAPs in developing and/or transitional economies.
This study seeks to help fill an important gap in the literature by investigating past and
current MAPs in Vietnamese enterprises, factors that may have facilitated the adoption of
western MAPs in such enterprises, and the costs and benefits of such adoption. In so doing,
the study will add to management accounting literature by contributing supplementary
information relating to an Asian perspective of MAPs.
Data was collected using a multi-method approach including a questionnaire survey
and interviews. Data for the study were collected from 220 accouting heads and vice heads of
medium-to-large enterprises. Follow-up interviews were conducted with 20 accounting
heads/vice heads to obtain further information and clarifications. The quantitative data
collected was analyzed using both descriptive and inferential statistics (including t-tests,
i i
ANOVA, and structural equation modeling), while the qualitative data was used to shed
further light on the various relationships described by the quantitative analysis.
There are five key findings. Two of these findings support results which have been
reported previously for other countries: (1) adoption rates for “traditional” western MAPs are
higher than for “contemporary” ones, and (2) state-owned enterprises tend to exhibit lower
adoption rates than other enterprises. A third key finding represents new insight, but it may be
applicable to only Vietnam (and possibly a limited number of other transition economies).
This third finding arises from our identification of a group of western MAPs which closely
resemble the type of accounting and planning activities routinely undertaken under the former
central planning (CP) system. These CP-compatible MAPs are adopted far more widely (even
at present) than are other MAPs. Overall, the findings are broadly consistent with the theory of
innovation diffusion. The fourth key finding is that both decentralization and competition have
a positive, significant influence on the use of Non-CP-compatible MAPs (but not on CP-
compatible ones). Fifthly, the results indicate that the use of MAPs has a positive, significant
influence on enterprise performance.
An implication of the above findings is that, where possible, policy makers should
foster greater competition and decentralization if they wish to encourage greater use of
innovative (e.g., non-CP-compatible) MA practices and, through them, achieve greater
economic efficiency and growth. Overall, the study contributes both to the relatively sparse
international literature on MA in Vietnam, and to the wider literatures on the diffusion of MA
innovations and on the application of contingency theory to MA adoption.

i i i
STATEMENT OF ORIGINALITY

This work has not previously been submitted for a degree or diploma in any university. To the
best of my knowledge and belief, the thesis contains no material previously published or
written by another person except where due reference is made in the thesis itself.

……………………………………………….
Doan Ngoc Phi Anh
2012

i v
TABLE OF CONTENTS
ABSTRACT ............................................................................................................... ii
STATEMENT OF ORIGINALITY ........................................................................... iv
TABLE OF CONTENTS................................................................................................v
LIST OF ABBREVIATIONS ......................................................................................x
LIST OF TABLES .................................................................................................... xi
LIST OF FIGURES ................................................................................................. xiii
ACKNOWLEDGEMENT ......................................................................................... xv
CHAPTER 1. INTRODUCTION ..............................................................................1
1.1. RESEARCH PROBLEM AND SIGNIFICANCE OF RESEARCH AREA...........1
1.2. RESEARCH OBJECTIVES .................................................................................4
1.3. SCOPE OF RESEARCH ......................................................................................5
1.4. RESEARCH METHODS .....................................................................................5
1.4.1. Lists of MAPs considered ..................................................................................5
1.4.2. The sample ........................................................................................................6
1.4.3. Data analysis......................................................................................................7
1.5. STRUCTURE OF THESIS ...................................................................................7
1.6. CHAPTER SUMMARY .......................................................................................9
CHAPTER 2. BACKGROUND AND PREVIOUS RESEARCH .......................... 10
2.1. MANAGEMENT ACCOUNTING, DIFFUSION THEORY AND
CONTINGENCY THEORY ..................................................................................... 10
2.1.1. Management accounting .................................................................................. 10
2.1.2. The theory of innovation diffusion and MA ..................................................... 16
2.1.3. The contingency theory and MA ...................................................................... 18
2.2. ADOPTION OF MAPs IN DEVELOPED COUNTRIES.................................... 19
2.2.1. Which MAPs Were Adopted in Developed Countries? .................................... 19
v
2.2.2. Determinants of Changes and Adoption of MAPs in Developed Countries ......... 22
2.2.3. How Beneficial Were MAPs in Developed Countries? ....................................... 26
2.2.4. MA and performance in developed countries ..................................................... 27
2.3. ADOPTION OF WESTERN MAPs IN DEVELOPING AND TRANSITIONAL
COUNTRIES .............................................................................................................. 29
2.3.1. Brief Overview of Context ................................................................................. 29
2.3.2. Which MAPs Were Adopted in Developing and Transitional Countries? ........... 31
2.3.3. Determinants of Adoption of MAPs in Developing and Transitional Countries .. 35
2.3.4. How Beneficial Were MAPs in Developing and Transitional
Countries?..............................................................................................................40
2.3.5. MA and performance in developing countries .................................................... 42
2.4. CHAPTER SUMMARY ....................................................................................... 42
CHAPTER 3. VIETNAM’S ECONOMY, ENTERPRISE REFORM AND
MANAGEMENT ACCOUNTING ................................................................................. 44
3.1. BACKGROUND .................................................................................................. 44
3.2 VIETNAMESE ENTERPRISE REFORM ............................................................. 48
3.3. MANAGEMENT ACCOUNTING IN VIETNAM ............................................... 51
3.3.1. Overview of Vietnamese accounting systems ..................................................... 51
3.3.2. Previous research on management accounting in Vietnam.................................. 57
3.4. KEY GAPS IN RELEVANT FIELD .................................................................... 60
3.5. CHAPTER SUMMARY ....................................................................................... 62
CHAPTER 4. RESEARCH METHODOLOGY ............................................................ 64
4.1. OVERALL RESEARCH DESIGN ....................................................................... 64
4.2. RESEARCH QUESTIONS, HYPOTHESES AND PRIOR EXPECTATIONS ..... 66
4.2.1. Research question (RQ) 1. How prevalent has the adoption of Western MAPs
been among Vietnamese enterprises? ........................................................................... 67
v i
4.2.2. RQ 2. Which MAP attributes and enterprise attributes significantly affect MAP
adoption? ................................................................................................................... 70
4.2.3. RQ3. How beneficial, relative to the costs involved, has the adoption of Western
MAPs been in Vietnam? ............................................................................................ 75
4.2.4. RQ 4. Which contextual attributes affect the use of Western MAPs, and what
effect do Western MAPs have on enterprise performance? ........................................ 76
4.3. ETHICAL APPROVAL ..................................................................................... 96
4.4. DATA COLLECTION ....................................................................................... 97
4.5. SURVEY AND INTERVIEW ............................................................................ 98
4.5.1. Questionnaire design ........................................................................................ 98
4.5.2. Questionnaire pre-test .................................................................................... 100
4.5.3. Survey administration .................................................................................... 101
4.5.4. Follow-up interview ....................................................................................... 103
4.6. CHAPTER SUMMARY ................................................................................... 105
CHAPTER 5. THE ADOPTION AND BENEFITS OF WESTERN MANAGEMENT
ACCOUNTING PRACTICES IN VIETNAM ........................................................... 106
5.1. RATE OF MAP ADOPTION ........................................................................... 106
5.1.1. MAPs that are frequently not adopted ............................................................ 106
5.1.2. Adoption rates of MAPs that are considered reasonably familiar .................... 109
5.1.3. Adoption rates of contrasting MAP types ....................................................... 113
5.1.4. Differences in adoption rates across and within functional groups .................. 117
5.1.5. Adoption rates and enterprise attributes ......................................................... 120
5.2. INTENSITY OF MAP APPLICATION ............................................................ 123
5.3. THE BENEFITS AND COSTS OF MAP ADOPTION ..................................... 126
5.4. CHAPTER SUMMARY ................................................................................... 133
CHAPTER 6. THE DETERMINANTS OF ADOPTION OF MANAGEMENT
ACCOU TING PRACTICES IN VIETNAM ............................................................. 134
v i i
6.1. MEASUREMENT MODELS ........................................................................... 135
6.1.1. Latent variable: Competition .......................................................................... 136
6.1.2. Latent variable: Decentralization.................................................................... 139
6.1.3. Latent variable: MAPs ................................................................................... 141
6.1.4. Latent variable: CPC MAP ............................................................................ 143
6.1.5. Latent variable: non-CPC MAPs .................................................................... 145
6.1.6. Latent variable: Performance ......................................................................... 148
6.1.7. Reliability and validity of individual constructs ............................................. 149
6.1.8. The final measurement model ........................................................................ 152
6.2. STRUCTURAL MODEL ................................................................................. 157
6.2.1. Full structural equation model ........................................................................ 157
6.2.2. Hypothesis testing .......................................................................................... 161
6.3. THE EFFECT OF MODERATORS ................................................................. 167
6.3.1. Enterprise size as a possible moderator .......................................................... 168
6.3.2. Enterprise age as a possible moderator ........................................................... 172
6.3.3. Market orientation as a possible moderator .................................................... 176
6.3.4. Field of operation as a possible moderator ..................................................... 181
6.3.5. Ownership as a possible moderator ................................................................ 182
6.4. CHAPTER SUMMARY ................................................................................... 182
CHAPTER 7. CONCLUSION ............................................................................... 187
7.1. SUMMARY AND DISCUSSION OF MAIN FINDINGS ................................ 187
7.1.1. RQ1: How prevalent has the adoption of Western MAPs been among
Vietnamese enterprises? .......................................................................................... 187
7.1.2. RQ2: Which MAP attributes and enterprise attributes significantly affect MAP
adoption? ................................................................................................................. 189
7.1.3. RQ3: How beneficial, relative to the costs involved, has the adoption of Western
MAPs been in Vietnam? .......................................................................................... 196
v i i i
7.1.4. RQ4: What contextual factors affect the use of Western MAPs, and with what
effect on enterprise performance? ............................................................................ 198
7.2. IMPLICATIONS AND CONTRIBUTIONS ..................................................... 204
7.3. LIMITATIONS AND FURTHER RESEARCH ............................................... 206
Appendices ........................................................................................................................ 208
References ......................................................................................................................... 235

i x
LIST OF ABBREVIATIONS
ABC Activity based costing
AFTA ASEAN Free Trade Area
AVE Average variance extracted
BSC Balanced scorecard
CFA Confirmatory factor analysis
CFI Comparative Fit index
CPC Central planning compatible
CR Construct reliability
df Degree of freedom
FDI Foreign direct investment
GFI Goodness-of-fit index
GDP Gross domestic production
H Hypothesis
JV Joint venture
JIT Just in time
MA Management accounting
MAP Management accounting practice
MAS Management accounting system
MGA Multiple group analysis
NPV Net present value
RMSEA Root mean square error of approximation
ROI Return on investment
RQ Research question
SOE State-owned enterprise
SEM Structural equation model
SRW Standardized regression weight
TLI Tucker-Lewis index
TQM Total quality management
WTO World Trade Organization

x