Revolutionary, not evolutionary, management accounting change: a grounded theory study of Saudi Telecom Company (STC)

Abstract

This research investigates the change in the management accounting systems and practices in the context of Saudi Arabia as a developing country. It seeks to understand how change occurs in management accounting systems and practices in an organisational setting, particularly in the context of developing countries, which has not been paid enough attention by scholars. This research is a thorough study that investigates the factors that influence change of management accounting systems or practices, that explores how the change processes take place by identifying the main factors that drive change, and that illustrates the influence of change on perceived organisational performance.
The research is based on a single case as a longitudinal study to allow for in-depth investigation. Hence, this research applies an interpretive approach to gain a deep understanding and clear explanation of the accounting systems and practices in the organisation setting. Grounded theory was employed in this research to allow new interesting issues to emerge and develop a theory systematically from raw data. The data were collected using triangulated methods - semi-structured interviews, documents and observation. As this research follows Strauss and Corbin’s style, the three coding processes – open, axial and selective coding – were utilised to analyse the data.
The result of the analysis identified the central phenomenon of this research as ‘transforming a company’s culture to facilitate revolutionary changes in management accounting’. It explains the role of changing the organisational culture, which can be achieved through renovation and rehabilitation, by facilitating and accelerating the change of management accounting systems and practices in the company. In order to reach this result, this research utilised more than one theory: contingency theory, new institutional sociology and old institutional economic. Whereas old institutional
economic is considered the dominant theory in this research, the other theories were essential to understand the phenomenon and to identify the information revealed by the old institutional economic.
The formal theory of this research was drawn from old institutional economic, and the framework of Burns and Scapens, which explained the role of renovation and rehabilitation in changing the organisational culture and ways of thinking through rules and routines. Renovation and rehabilitation played a main role in reducing and eliminating resistance to change to the rules and routines within the company, which, in turn, changes the culture. Moreover, the new culture with renovation and rehabilitation played a main role in changing the rules and routines, which resulted in the successful change of the management accounting systems and practices in a short period of time. Finally, this research refined the Burns and Scapens framework, where the timeline in the institutional realm was condensed, which represents the process of institutionalising the new rules and routines.

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