Management Accounting Research, 1998, 9, 50 1-5 13 Article No.

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Management accounting practices in Europe: a perspective from the States

Michael D. Shields*

I provide a perspective from the States on four questions primarily based on information in Management Accounting: European Perspectives edited by A1 Bhimani (1996). First, seven factors are identified as having shaped management accounting practices in European nations-academics, education, government, professional assciations, consultants, technology, and the inter-nation transfer of information. Second, evidence supports the view that, across European nations, more changes are occurring in management accounting practice terminology and techniques than in the purposes and styles of using management accounting techniques. Third, evidence indicates that there is convergence across European nations in management accounting practices, especially in terminology and techniques, but less convergence in the purposes and styles of using techniques. Fourth, management accounting practices in European nations, particularly terminology and techniques, is converging on a global management accounting practice model. I propose that management accounting practices-particularly terminology and techniques-is converging across nations (at least for those firms that are affected by the global economy) and diverging across 0 1998 Academic Press industries both within and between nations.
Key words: convergence; globalism; management accounting; management accounting in European nations.

1. Introduction
During the 1980s a n d 1990s there has been a lot of talk i n the practice a n d scholarly literatures in the U.S. about how management accounting practices (e.g. cost accounting systems, performance measurement systems) are ineffective in the contemporary business environment. T h e r e has concurrently been change in the contents of many cost a n d management accounting textbooks a n d teaching cases that highlight t h e alleged deficiencies of, a n d proposed improvements to these practices. T h e r e also have been actions b y management accounting professional organizations (e.g. IMA), industry groups (e.g. CAM-I), education associations (e.g. management accounting section of the AAA), a n d consultants both to spread the view that manage-

* Eli

Broad Graduate School of Management, Michigan State University, East Lansing, MI, 48824, U.S.A. Accepted 12 May 1998. 1044-5005/98/040501+13 $30.00/0

01998 Academic Press

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ment accounting practices are ineffective and to propose new and improved practices. Despite these efforts to call attention to alleged problems with and solutions to management accounting practices) not much evidence exists that most businesses in the U.S. are making major changes to their management accounting practices. There is more evidence of changes in the terminology (e.g. cost driver, value chain) and techniques (e.g. activity-based costing (ABC)) of management accounting practices than in their purposes (e.g. strategic management) operational control, product costing, process improvement) investment justification) and styles of use (e.g. flexibility in application, time horizon emphasized) centralization) integration with other organizational processes and information). The contemporary condition of management accounting practices in other nations, particularly nations in which English is not the official language) however, are not as apparent to me for at least two reasons. One is my limited ability to read about management accounting in languages other than English. The other reason is the dearth of such published information) in English or other languages. The lack of information about the current condition and trends in management accounting practices in other countries is unfortunate because it limits (at least my) opportunity to learn the extent to which management accounting practices are a local versus global phenomenon. It also hinders understanding of whether any changes that are occurring in a nation's management accounting practices are caused by factors particular to that nation or are consistent with changes, and the forces for change, that are present in other nations. There also is a lack of information about the extent of changes in management accounting practice terminology) techniques) purposes of techniques) and styles of how techniques are used. I have historically had difficulty finding information about historical and contemporary management accounting practices in European nations, differences in management accounting practices across European nations and the factors that created these differences) and what, if any, changes in management accounting practices are occurring in these nations. Fortunately) the publication of Management Accounting: European Perspectives (1996) edited by A1 Bhimani provides much of this missing information. This publication makes an excellent contribution to the management accounting practice and scholarly literatures by providing) for each of 11 European nations, a description of each country's historical development of management accounting practices) education) and research) the institutional forces that have shaped management accounting) trends in practice) and a discussion of emerging developments. I will use information in Bhimani (1996) to provide a perspective from the States on four questions:' 1. What factors have shaped, and currently influence) management accounting practices in Europe? 2. What, if any, changes are occurring in management accounting practices in Europe? 3. Are management accounting practices converging or diverging across European nations?
'1 do not address the more fundamental questions of what, if any, is the relationship between management accounting practices and business success and whether this relationship varies across European nations because the chapters in Bhimani (1996) d o not provide evidence on them.

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Are management accounting practices in European nations converging with management accounting practices in other nations?

In addition to information in Bhimani (1996)) my perspective on these four questions is coloured by my prior knowledge of management accounting in European nations and in other countries. I acquired this knowledge from teaching, researching, and consulting in Europe, attending research and practice conferences in Europe, and reading about management accounting in Europe in English-language publications. Caveat emptor: I am not an expert on management accounting in European nations. My perspective on these questions should be empirically tested. 2. Management accounting: European perspectives
Management Accounting: European Perspectives (Bhimani, 1996) significantly increased my knowledge of management accounting practice, education, and research in 11 European nations. These countries are Belgium, Denmark, Finland, France, Germany, Greece, Italy, Netherlands, Spain, Sweden, and the United Kingdom. Each chapter author was asked, to provide a historical perspective on management accounting research and practice in their country, complemented by a discussion of salient raisons d 2tres for the present practice and thought in the field (Bhimani, 1996, p. xx). An initial concern in organizing this book was the use of the term management accounting since it is not used in all European nations. Each chapter author provided information on what can be considered in his or her country to be the nature and scope of management accounting even if that term per se is not used. Beyond this terminology issue and the related issue of whether management accounting is performed by management accountants or others, management accounting in European nations, as represented by the chapters on these 11 countries, includes product costing, responsibility accounting, budgeting, and financial and non-financial performance measurement. I found this book to be very informative about the historical development and institutional forces that have shaped management accounting practices, education, and research, and the contemporary status of management accounting in these countries. Each chapter identifies unique events, circumstances, and patterns in the evolution of management accounting in a country. While each chapter has its own style and theme, there was much consistency among them. These chapters accomplish their purpose of describing the historical development, institutional context, and contemporary condition of management accounting in a particular country. This book has an interesting Forward by Anthony Hopwood in which he provides a brief perspective on the historical development of management accounting across European nations and notes the lack of comparative evidence on European, as opposed to national management accounting practices. I found developing a perspective on management accounting practices in Europe challenging because of the multitude of facts and views contained in the chapters as well as variation across chapters stemming from differences across the countries and the chapter authors. While reading this book, I took notes with the idea that I would subject them to an intuitive factor analysis or cluster analysis to identify common themes that would provide perspective on the four questions.

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3. What factors have shaped, and currently influence, management accounting practices in Europe?

The chapters in Bhimani (1996) identify seven factors that have shaped, and currently influence, management accounting practices in European nations. These factors are: 1. academics whose writings influence debate and practice (e.g. whether full or variable costing should be used, relevant costs for decisions) and, in some countries, champion particular practices; 2. education of students and employees to particular views about management accounting, including the influence some textbooks and teaching cases have on the development and diffusion of management accounting practices; 3. government intervention and regulation to control cost-based pricing and profits to ensure a desired type and level of competition (particularly when there were supply-demand imbalances in a national economy) and, during WWI and WWII, to ration resources and reduce war profiteering; 4. professional associations which advocate particular management accounting practices; 5. consultants who advocate particular management accounting practices and/or help firms design and implement practices; 6. technology, in particular the computerization of accounting systems, which allows more information to be collected, processed, and communicated cheaper and quicker; and 7. transfer of management accounting ideas and practices across national boundaries by academics, education, consultants, and multi-national businesses. There clearly is variation in the nature, timing, and potency of these factors across nations in explaining the development of, or changes in management accounting within a nation. However, while there are differences across nations in management accounting, I am struck by the similarities-in many, if not most of these 11 countries, most of these seven factors played a role in shaping management accounting. Some of these similarities stem from the historical transfer of management accounting across national boundaries. Examples include the influence of German management accounting on Scandinavian and Dutch management accounting before World War I1 and the influence of U.S. management accounting education and literature on Belgian, Italian, Dutch, and Scandinavian management accounting after World War 11.

4. What, if any, changes are occurring in management accounting practices in European nations?
Almost all of the chapters in Bhimani (1996) provide anecdotal and/or survey evidence which supports the view that, across Europe, businesses are changing their
Consistent with the general orientation of related literature on management accounting, the chapters in Bhimani (1996) provide much more evidence on the determinants of management accounting, in contrast to the effects of management accounting, for example, on individuals, organizations, or nations.

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management accounting practices-especially terminology and techniques, with apparently less change in the purposes and styles of using techniques. The center of discussion in most chapters is the emergence of ABC. Most chapters provide a discussion of how ABC terminology and ABC as a technique are trickling into practice, but there is less discussion of the purposes of ABC and styles of how it is used. The anecdotal and survey evidence presented indicates that many firms in many countries are making changes to their management accounting practices by implementing new terminology and techniques. This evidence, however, provides less insight into whether changes are occurring in the purpose of management accounting techniques and how they are used. The evidence presented also does not provide much insight into whether the techniques that are changing have the same content (e.g. components, relationships among components). For example, when surveys indicate that ABC exists, it is unclear whether ABC across firms has similar elements and architecture (e.g. definition of activity cost pools and cost drivers, hierarchy of cost drivers, allocation stages), extent of diffusion (e.g. percentage of overhead costs accounted for with ABC), and effects (e.g. decisions, performance). The survey evidence presented also does not provide much insight into whether these reported changes in techniques are in fact changes in substance or rhetoric. Surveys of practice would be more valuable if they are designed to provide evidence on explicit aspects of management accounting practices-in particular, terminology, techniques (and their contents), purposes of techniques, and styles of using techniques. Such evidence would provide insight into what about management accounting practice is changing and whether changes are changes in substance or merely rhetoric (e.g. socially desirable response, impression management, bandwagon effect). The overall implication I derive from these chapters is that while evidence of changes in management accounting practices-terminology and techniques in particular-exists, the scope, depth, and content of these changes possibly are limited-particularly for the purposes and styles of using techniques. Change in management accounting practices appears to be primarily limited to the introduction of new terminology and techniques in a small per cent of firms in a country and, in many firms, change is limited to selected management accounting techniques (e.g. ABC) applied to selected products and organizational units.

5. Are management accounting practices converging or diverging across European nations?

As national barriers in Europe decrease, the question of what is common ground and what are significant differences in management accounting practices across Europe needs to be investigated seriously-instead of just taking answers for granted. An example of this need for a comparative investigation is the continued potency of national culture in influencing variation in management accounting practices across Europe. In several chapters in Bhimani (1996)) assertions are made that management accounting practices in a particular country are idiosyncratic, stemming from that countrys unique culture (e.g. customs, education, history, laws). Yet, for the most part, these chapters offer little, if any evidence about how the unique aspects of a

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countrys culture are related to (i.e. cause) unique aspects of its management accounting practices. I have had a similar experience in which the role of national culture is privileged in explaining management accounting practices in Europe. Several management accounting professors employed at European universities have told me that management accounting practices differ significantly across European countries because of variation in national cultures. I am sometimes left with the feeling that this cultural explanation is supposed to be self-evidently true since little, if any, evidence is offered to support these assertion^.^
Convergence in terminology and techniques In considering whether there is convergence in management accounting practices in Europe, I distinguish between convergence in terminology and techniques and convergence in the purpose and use of techniques. Evidence in Bhimani (1996) is sufficient to support the interpretation that there historically have been inter-nation differences in terminology and techniques. Turning to contemporary practice, however, a different interpretation follows from the evidence presented. The survey evidence in these chapters describes the extent to which management accounting terminology and techniques have existed and currently exist in each nation. These surveys almost exclusively provide evidence on the number and percentage of firms that report having various techniques, cost accounting in particular, from national samples that vary in randomness and size. These surveys report quantitative differences in the extent to which various management accounting techniques exist in the 11 countries. My overall qualitative interpretation of this survey evidence, however, is that there increasingly is more similarity than difference in management accounting terminology and techniques across European nations. Most chapters present evidence on the extent of diffusion of the New Costing terminology and techniques such as ABC, ABM, cost of quality, life-cycle costing, etc. The interpretation I derive from this evidence is that in most European countries there is a slow, but increasing trickle of similar terminology and techniques into practice. For example, in Norway, a country not included in Bhimani (1996)) ABC also is alive as the survey of Bjornenak (1 997) of 75 Norwegian manufacturing firms indicates that 53 have knowledge of ABC and 30 are adopters of ABC. Evidence in Bhimani (1 996) supports the interpretation that the historically significant differences in management accounting terminology and techniques across European nations is diminishing. The direction of change today seems to be convergence on similar terminology and techniques. Many firms in several European countries-particularly those that significantly participate in the global economy-increasingly have similar management accounting terminology (e.g. cost driver, cost of quality) and techniques (e.g. cost accounting systems, responsibility accounting, budgets, performance measures). The similarities in this terminology and the design of these techniques across nations are increasingly outweighing the differences.
3My experience is that national cultures within Western Europe differ but these differences are small compared to differences between the cultures of Asia and Europe. Indeed, most of the national culturebased research in management accounting has investigated differences between Anglo-American and Asian cultures and many predicted differences were not detected and many detected differences were not predicted (Chow et al., in press, Harrison and McKinnon, in press). The possibility exists, however, that the results of these studies are an artifact of almost complete reliance on the theoretical model of Hofstede (1980, 1991) of work-related national culture. This extant research and my own experience leaves me wondering about the nature and relevance of the relationship between national culture and management accounting practices.

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Less convergence in the purposes and styles of using techniques Most chapters in Bhimani (1996) do not provide much evidence on the purposes of management accounting techniques or styles of how these techniques are used. I conjecture that there is less convergence in the purposes of management accounting techniques and how they are used than there is in management accounting terminology and techniques. Whether differences in the purposes and styles of using techniques stems from variation in national culture, capital structure, organizational design, organizational size, technology, education systems, senior management leadership style, regulations, uncertainty, competition, or other differences is an open question deserving of an answer. My search of the literature did not find much direct contemporary evidence on the extent of inter-nation variation in the purposes or styles of using management accounting techniques. Ahrens (1 996, 1997) provides a detailed analysis of how the style of using management accounting for accountability purposes has historically differed between Germany (with an operations style) and the U.K. (with a financial and marketing style). Why and how these two nations developed historically different styles of using management accounting techniques, however, is not fully explicated. Ahrens (1 996) speculates that historically different styles of using management accounting for accountability purposes between British and German firms might be narrowing-a converging of styles-because of their binational operations and the adoption of global practices. Sheridan (1 995) argues that while British- and Continental- based global corporations historically have had relatively similar management accounting techniques, there has been more divergence in their purpose and how they are used. However, consistent with Ahrens (1 996)) Sheridan argues that common forces (i.e. market and technology changes, cost and performance pressures, enterprise information systems, coordination of global operations) currently are driving these firms to converge not only on the same management accounting techniques, but also on increasingly similar ways in which these techniques are used. There is a dearth of evidence available on the rate and level of convergence across European nations concerning the purpose and style of using management accounting techniques. Comparative studies which focus not only on management accounting terminology and techniques, but also on the purpose and style of use of these techniques would be valuable. Comparative surveys would be more valuable if they provide evidence on how terminology, techniques, purpose, and style relate to organizational context, design, processes, and performance. Surveys focused on techniques could provide comparative evidence on the extent to which selected techniques are used (e.g. per cent of total cost that is processed by a cost system), the nature of their architecture (e.g. for cost accounting systems, evidence on the boundaries and types of cost pools, number and types of allocation bases, and number of cost allocation stages), evidence that the various terms used in a survey have common meaning to all respondents, and the purposes and styles of using techniques. Comparative evidence on the determinants and effects of management accounting practices would also be valuable.

6. Are management accounting practices in European nations converging or diverging with management accounting practices in other nations?

The weight of the evidence supports the view that management accounting practices

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-especially terminology and techniques-in European nations is converging with management accounting practices in other nations, at least for those firms that are affected by the global economy. In the ensuing subsections, I will discuss forces creating national convergence and the nature of this global management accounting practice. The perspective presented is that while there is national convergence on global management accounting practices (i.e. national differences are diminishing), there will be divergence in management accounting practices across industries both within and between nations. The joint effect of national convergence and industry divergence increasingly is more similarity in management accounting practices within industries across nations than in management accounting practices across industries within nations.
Evidence o f national convergence The idea of national convergence in management accounting practices is not new. Historical examples include the adoption by Japanese firms before WWII of German cost accounting techniques, to be overlaid by American practices after WWII; and now the reverse flow of Japanese target costing to America and Germany. The influence of American costing techniques in France and Germany in the 1920s) in response to Fordism and Taylorism (Locke, 1984)) is somewhat similar to the adoption of ABC today by French and German firms. As previously noted, within Europe there were cross-border influences on management accounting practices. For example, there was the influence of German costing accounting on Dutch and Scandinavian costing before WWII, which was replaced by U.S. influence after WWII. The most direct contemporary evidence on national convergence supplied by the chapters in Bhimani (1 996) is their discussion of the New Costing of ABC, etc. An interesting part of many chapters is a discussion of the extent to which the New Costing terminology and techniques are emerging in these countries. In general, these chapters provide evidence that firms are beginning to experiment (or at least talk about experimenting) with these techniques, although there is little evidence of their substantive or widespread implementation and sustained use. Some chapters contain a discussion of how these new techniques, ABC in particular, are-in hindsight at least-parts of the management accounting techniques that have existed for a long time in a particular country. While it may be, for example, that the cost systems in some countries had some of the same technical details as does ABC, the important point is that the emergence of ABC quickly caused firms around the world to re-evaluate their cost systems, while these previously developed cost systems largely remained national phenomena without a global following. Some chapters imply that there is nothing new in ABC4 except clever packaging by Cooper and Kaplan and dramatic sales pitches by consultants. The important point, however, is that these chapters focus on the emergence of the same new techniques (e.g. ABC from the U.S., target costing from Japan). There is evidence of convergence between European and non-European management accounting practices, typically illuminated by comparisons of management accounting practices-techniques-in the U.S. and in European nations. For exam4What is new about ABC is designs of cost pools based on activities instead of resource inputs (e.g. machines) or service or producing departments, and the extensive use of multiple non-volume cost drivers.

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ple, Yakhou and Dorweiler (1 995) provide evidence on the implementation of several cost management techniques (i.e. ABC, ABM, ABBY target costing, life-cycle costing, value-chain costing, backflush costing, operations costing). Their survey shows that such techniques are more widely implemented in the U.S. than in England or France. However, their evidence also shows that differences in the levels of implementation are a matter of quantitative degree, with all three countries adopting these techniques at a qualitatively similar, albeit low level. Some recent literature compares ABC, as a new American technique, to German cost accounting and concludes that they are similar (and identical in some analyses), both being theoretically sound and appropriate for capacity and product decisions (Scherrer, 1996; Gaiser, 1997; Kloock and Schiller, 1997). A related detailed analysis by Boons et al. (1992) of German and German/Dutch cost-pool costing and ABC identifies some micro differences, but at a macro level, their analysis indicates these techniques are quite similar. They suggest that between-company differences within a nation may be larger than between-nation differences in stylized or textbook descriptions of these three cost accounting techniques. Consistent with this national convergence perspective, Gaiser (1 997a, b ) argues that German firms began in the late-1980s changing their cost management practices to include ABC and ABM from America and target costing from Japan (which is also rapidly spreading in the U.S.) in response to the similar business and competitive environments faced by firms in these three countries. ABC in Germany, however, is modified to fit the full cost systems already in use (e.g. extensive use of cost pools). Gaiser ( 1 9 9 7 ~ ) notes that while the current use of ABC is more widespread in the U.S., its adoption in Germany is accelerating due to the incorporation of ABC into SAP software. Lebas (1996) reports survey evidence that ABC is widely known in France, many firms have implemented or are considering implementing ABC, and there is wide variation across industries in the diffusion of ABC. However, as Lebas notes, there is considerable confusion about the terminology of ABC which creates ambiguity about exactly what these survey results mean. In contrast, Bescos and Mendoza (1995) claim that there is a low level of use of ABC in France because there is a high degree of similarity between the traditional French full-costing technique and ABC, thus firms have little to gain from implementing ABC. These contrasting views highlight the difficulty of sorting out the nature of management accounting practices across nations. Lebas position is that while many firms claim to be aware of or involved with ABC, there is ambiguity about whether these firms are in fact talking about the same techniques (label or content) due to variation in the meaning of terminology across languages.
Forces f o r national convergence Based on the evidence I am aware of, my belief is that management accounting practices in European and other nations that significantly participate in the global economy are converging. Convergence is more advanced for terminology and techniques than for the purposes and styles of using of these techniques. I believe there are six forces for national convergence:

1. The increased levels of competition experienced by many firms around the

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world have increased demand for cost, investment, and revenue information that can improve performance. 2. The availability of similar operating technologies (e.g. JIT, TQM, FMS) and technologies for measuring, processing, communicating, and analysing information (e.g. bar-code scanners, LANs, WANs, expert systems, executive information systems, enterprise information systems, ABC software). 3. Cheap and fast communication and transportation has spurred the diffusion of management accounting techniques and information around the world. 4. The increasing global homogenization of management accounting education. In particular, the Horngren text and Harvard cases are widely used in the Americas, Asia, Europe, and elsewhere. A consequence is that students and employees attending education programs around the world increasingly are learning the same management accounting terminology and techniques. Business schools and their students and curricula also are becoming more global and thus more homogeneous. 5. The rise of global consulting firms that offer a full line of services in accounting, information systems, management, and strategy. These consultants have similar accounting and business education, in-house training, and practice policies and methods. They sell similar products and services (e.g. ABC software, enterprise information systems, process re-engineering, organizational structures and processes, performance measurement, incentive systems, etc.). 6 . Global corporations which have policies of consistent practices and systems in their worldwide operations and imposing those practices and systems on their suppliers and joint-venture partners. These latter three forces-education, consultants, and global corporations-provide easy means for the language of fashions and fads, such as some consider the new management accounting practices, to be quickly diffused around the world. A similar list of forces for global convergence in management accounting practices is provided by Granlund and Lukka (1 998) based on their institutional theory-based analysis. A pertinent question is whether national convergence is rhetoric (i.e. everybody uses the same words and talks about the same changes to their management accounting practices) or action/content (i.e. practices have the same definitions, concepts, and designs, and firms really are implementing the same new practices)? I believe we will see more and quicker national convergence in terminology and techniques-especially rhetoric about having these techniques and using their terms and concepts in conversations-than convergence in the purposes and styles of using these techniques. However, the bottom line is that, across time and space there will be increasing global convergence of management accounting practices-terminology, techniques, purposes, and styles of use-especially for those firms that are affected by the global economy. It is interesting to speculate about the path to convergence. I would argue that the rate of convergence is increasing, but convergence implies neither a single path nor honing in on a fixed target. Instead, management accounting practices are moving targets because of the dynamic forces that determine their equilibriums. The paths to convergence also are not necessarily linear or unidirectional. Rather, I believe we will see waves of movement towards and away from convergence as firms innovate,

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experiment) and imitate with management accounting practices. This creates a time series of waves of innovation) selection) and diffusion of management accounting practices. As various parts of the world experience problems at different times and intensities) there will be a variety of practice innovations springing up in several places around the world. This will temporarily increase diversity in practices until these innovations are subjected to global market forces and the more effective and efficient practices survive and are imitated and diffused.
Globalization of management accounting practices Sheridans (1 995) view is that management accounting practices in European nations are converging on a common model, which he regards as the American model. Likewise) some chapters in Bhimani (1 996) propose an Americanization of management accounting practices in European nations. Some chapters suggest that Americanization started when some European nations changed their focus from unconditional product costing (absolute true cost) to conditional costs for planning and control decisions in the 1960s (i.e. the Horngren text) and has accelerated with the new management accounting beginning in the 1980s popularized by Cooper and Kaplan. Americanization also is suggested to have started in the 1960s when many European academics and managers attended U.S. business schools. I do not believe the core issue is whether management accounting practices in Europe are being Americanized. The more general issue is whether management accounting practices in Europe are becoming part of global management accounting practices. Like Sheridan (1995)) I am willing to believe that as companies in various parts of the world increasingly face similar threats and opportunities (e.g. consumers, technology, uncertainty) regulation) competition)) differences in their organizational design, processes, and practices-including management accounting -will narrow. This globalization will also be encouraged by companies around the world who increasingly rely on the same global consulting firms and hire recent college graduates who have studied similar management accounting terminology and techniques. A consequence is that businesses around the world increasingly are adopting similar management accounting practices-terminology and techniques in particular -in reaction (not usually proaction) to the same forces previously discussed: competition) technology, transportation) communication, education) consulting firms, and global firms. My interpretation is that firms that participate in the global economy are converging on global management accounting practices which are derived from many countries management accounting practices (e.g. ABC from the U.S., non-financial performance measures from France, target costing from Japan). These practices will provide effective and efficient solutions to problems experienced by firms around the world of how to succeed in the global business environment. Interesting) but unanswered questions are whether these emerging global practices are, for example, best practices or lowest-common-denominator practices) what are their effects on business success, and whether such effects on success are universal or contingent. Forces f o r divergence o f global management accounting practices Convergence is a dynamic process that does not necessarily end with identical management accounting practices in all firms. There will be diversity in management accounting practices because of variation in the threats and opportunities confronting

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firms. For example, I expect that while national differences in management accounting practices will narrow, there will be increasing divergence in management accounting practices along industry lines. Industry-based differences will stem from variation among industries in customer demands and preferences) competition) regulation) uncertainty) technology, competitive strategies) and organizational designs. Interestingly) this list of forces for industry divergence is almost the same as the list of forces for national convergence There is increasing variation in management accounting practices between industry groupings and between industries within industry groupings; for example, discrete manufacturing (automobile) aerospace) construction, electronics), process manufacturing (e.g. food, oil, steel), and services (e.g. entertainment) financial services) health care, transportation). Industries vary in several ways that have implications for management accounting practice terminology) techniques) and the purposes and styles of using techniques. These industry differences include the distributions of revenues) costs, and investments over product life cycles, the length of product life cycles, cost structures) product diversity) the distribution of costs over industry value chains, uncertainty) technology) the type and intensity of competition for inputs and outputs, pricing flexibility) competitive strategies) and organizational designs (hierarchy) networks) decentralization). These differences can be expected to affect the demand for and design and use of full versus variable costing, ABC, target costing, product life-cycle accounting) value-chain accounting) responsibility accounting systems, budgeting systems, performance measures) performance-based incentives) and transfer pricing. The implication is that to explain variation in management accounting practices around the world will require using industry characteristics such as the ones identified above as focal independent variables) with the nation assuming the role of a blocking variable to reduce variance not explained by these industry-related factors. National convergence and industry divergence in management accounting practices will result in variation in management accounting practices) even within industries. Because firms within a global industry will experience different problems and opportunities at various times, they will, at least temporarily) have different management accounting practices. Another source of diversity in management accounting practices within industries will be firms propensity to innovate and to imitate, in substance (action, content) and in rhetoric (talk, labels). 7. Conclusion
Management Accounting: European Perspectives edited by Bhimani (1 996) has provided me with a lot of interesting information. I have used the opportunity to learn from this book to provide a perspective from the States on four questions. My overall conclusion is that management accounting in European nations is changing-converging on a global practices model which varies across industries. Such national convergence and industry divergence will be more visible for terminology and techniques and less so for the purposes and styles of using these techniques. I look forward to reading the next edition of this book. I hope that it will provide comparative evidence on management accounting practices) the extent of variation in management accounting practices between and within nations and between and within industries) evidence on levels and rates of national convergence in termi-

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nology, techniques) a n d t h e purposes a n d styles of using these techniques) a n d comparative evidence o n the determinants a n d effects of management accounting practices.
Acknowledgements: I greatly appreciate the comments on an earlier draft of this paper by Thomas Ahrens, A1 Bhimani, Michael Bromwich, David Cooper, Markus Granlund, Sue Haka, Anthony Hopwood, Joan Luft, Michel Lebas, Kari Lukka, and Bob Scapens.

References
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