Effects of IT-Enabled Management Accounting Systems on Interorganizational Performance

Acknowledgments: The author acknowledges valuable and constructive comments received on earlier versions of this manuscript from Professors Abstract The advent of modern technologies for information collection, dissemination and monitoring allows organizations to efficiently transact in interorganizational markets. The success of such relationships as strategic alliances and joint ventures often depends on the availability of information to mitigate the threat of opportunism or to improve coordination and cooperation. Enterprise resource planning systems are modern types of information systems which support collaborative capabilities in interorganizational settings and enable the exercise of interorganizational information sharing and control activities. A firm's management accounting system serves the dual role of decision management and decision control, while it encompasses activities that are both enabled by modern information technology and are critical for monitoring stability in interorganizational relations and for assessing attainment of relational exchange partner performance objectives. This study examines the role of IT-enabled management accounting systems in an inter-organizational exchange environment. The main objective of the study is to examine the degree of complementarity between decision management and decision control activities in a collaborative, interorganizational business environment. Identified complementarities between decision management and control activities help balance the need for control over an exchange partner and the desire to share information and rely on the other partner not to act in an opportunistic manner. As a result, this study also examines whether the constructs of inter-organizational partner trust and risk sharing mediate the effects of IT-enabled management accounting systems design on relational performance. A field survey is used to measure model constructs and empirically test research hypotheses. The study results demonstrate that information technology-enabled capabilities facilitate the complementary use of decision management and decision control activities in inter-organizational relationships, while the constructs of inter-organizational partner trust and risk sharing mediate the effects of complementary decision management and decision control capabilities on inter-organizational performance. The study presents contributions in that it demonstrates boundaries in management accounting systems design which ensure that a certain degree of fit is achieved in making choices regarding inter-organizational decision control and decision management. Keywords: Management accounting systems, integrated information systems, inter-organizational decision control and decision management, inter-organizational trust, risk sharing, inter-organizational performance. The advent of modern technologies for information collection, dissemination and monitoring allows organizations to efficiently transact in interorganizational (I-O) markets. The success of I-O relationships such as strategic alliances and joint ventures often depends on the availability of information …