+ All Categories
Home > Documents > SSRN-id1741923

SSRN-id1741923

Date post: 03-Mar-2016
Category:
Upload: image4all
View: 215 times
Download: 0 times
Share this document with a friend
Description:
ssrn
Popular Tags:

of 45

Transcript
  • A Field Study on the Acceptance and Use of a New Accounting System

    Jamshed J. Mistry Suffolk University

    Ranjani Krishnan

    Michigan State University - Department of Accounting & Information Systems

    V.G. Narayanan Harvard Business School

  • A Field Study on the Acceptance and Use of a New Accounting System

    ______

    We thank our research partners for their participation. We appreciate the comments of

    workshop participants at Michigan State University.

  • 2

  • 3

    Abstract

    This study examines the attitudes, use, and acceptance of a new accounting system in a

    pharmaceutical corporation that switched from an Activity Based Costing System to the

    Theory of Constraints System (TOC). Using structuration theory as a framework, we posit

    that user responses and attitudes towards TOC are influenced not only by the technical

    features of the system and the potential economic benefits, but also by the fit between TOC

    and the existing structures of the users environment. When users interact with TOC on an ongoing basis they form interpretations of the new system and based on such

    interpretations, they exhibit actions with respect to the use of TOC ranging from

    championship to rejection of the system. We explore cross sectional variations in the use of

    the system and link such variations to the practical features of the new system as well as

    the social structures of the users environments.

  • 4

    A Field Study on the Acceptance and Use of a New Accounting System

    1. Introduction

    This study examines the adaptation, acceptance, and use of a new accounting

    system in a firm. It uses structuration theory and a practice lens to posit that organizational

    users responses, attitudes, and use of a new accounting system are driven by the fit

    between the system and the existing structure and agency of the users environment, as

    well as the interactions between the users and the system on an ongoing basis. Such

    interactions in turn are influenced by the users existing knowledge set, prior training,

    professional norms, expectations, and beliefs related to the new system. Based on such

    interactions, users form interpretations of the new system and exhibit a set of actions with

    respect to the system. These actions range from championship of the new system to active

    rejection of the system.

    The practice perspective on structuration examines how people interact with a

    system (such as a new technology or a new accounting system), and in the process of such

    interactions, construct structures that shape their use of the system (Orlikowski 2000). This

    perspective recognizes that it is not just the mere presence of the system (the material),

    or the use of the system by humans (the social) that drives the outcomes from the

    system. Rather it uses the notion of constitutive entanglement, i.e., the social and

    material are inextricably linked. Through repeated interactions, people shape the rules and

    resources, and are in turn shaped by them, which drives the outcomes.

    Our analysis is based on a field study of a leading pharmaceutical company

    headquartered in Asia. This company instituted a TOC system based on the principles of

  • 5

    Goldratt. The TOC system supplanted a standard costing and ABC accounting system and

    was met with mixed response from the managers. The new system changed the focus of

    the organization from cost minimization to a focus on maximizing throughput and

    inventory turns. In addition, at the recommendation of the consultants who marketed the

    new system, the firm also changed its performance measurement and incentive

    compensation system for sales personnel from individual, ABC-based targets to divisional,

    TOC based targets.

    We conducted a series of field visits and interviews with key personnel and elicited

    their views of the new system. There was variation in the responses of managers to the new

    system as well as their use of the system. While some managers enthusiastically embraced

    the new system, others were passive or resistant. We demonstrate that the acceptance and

    use of each manager is based not only on the economic benefits of the new system but also

    on their professional norms, interpretive schemes, and performance measurement systems.

    Over a period of time as people engage in interactions with the TOC system, and as the

    TOC system interacts with the existing accounting and control systems, as well as the

    social norms of the user groups, cross sectional variations occur in the use of the TOC

    system as well as attitudes towards the system.

    We begin by documenting four types of responses to the TOC, i.e., active

    resistance, resistance, acceptance, and championship, as well as identifying the drivers of

    each type of response, and their implications for the acceptance of the TOC system.

    Evidence from structured field interviews suggests that the primary drivers of a positive or

    negative response to the system are changes to the performance measurement and incentive

  • 6

    system, power structure, and the match of the new system to the structure and professional

    norms of each department.

    Finally, we use field evidence to systematically document via empirical

    illustrations that the same system is enacted in different ways in different departments and

    that such differences arise as a result of the interaction between the TOC system with the

    structure and agency of each department, notably, the structural properties of the social

    systems, the facilities, the professional norms, interaction patterns, and codes of conduct,

    and interpretive schemes of managers in the department. For example, the most active

    resistance to the TOC system was exhibited by the HR and sales departments. The roots of

    the resistance were however, different in each department. The resistance of HR arose

    from skepticism about the data and technology driven nature of the TOC. Traditionally,

    the HR department had a people orientation and a qualitative approach to problem solving,

    and this structure emanated from as well as was reinforced by the professional norms of

    the department which included a people based problem resolution, consultative processes,

    and a non-blame culture. In addition, the performance measurement system in the firm

    evaluated HR based on its ability to meet recruitment and retention goals, and the VP of

    HR was concerned that the new culture would alienate people and lead to higher turnover.

    The resistance to TOC in the sales department emerged from a different source, i.e.,

    a change in the performance measurement system from individual bonuses to divisional

    bonuses. This created a dissonance in the department, which had hitherto focused on

    individual goals and targets, and placed pressures on their professional environment which

    had traditionally emphasized goal orientation, individuality, and personal ambition.

  • 7

    In contrast to sales and HR, the TOC system was enthusiastically championed by

    the Supply Chain and IT departments. The TOC system was a perfect fit with the

    information intensive environment and the analysis orientation of the supply chain

    department. In addition, the TOC system brought the performance measures that the

    supply chain department had traditionally focused on, i.e., inventory turnover and

    shortages, to the forefront of the firm. For the IT department, which had a preference for

    objectivity, logic, and speed of information dissemination, the TOC system brought

    perceived clarity in decision making, and emphasized decision making based on objective

    data. Thus, consistent with structuration and practice theory, the acceptance and use of the

    TOC system in each department was a function of three conditions, i.e., conventional

    understandings and shared meanings (interpretive conditions), practical features of the

    system (technological conditions), and social structures and norms (institutional

    conditions).

    This study contributes to the accounting literature by providing a nuanced

    characterization of the factors that drive the acceptance, adoption, and attitudes to a new

    accounting system. It provides field testing of a theory that has been underutilized by

    accounting literature, i.e., structuration and practice theory. Structuration has been used by

    extant research to study technology adoption in firms; its use in the context of an

    accounting system enhances understanding of the agency as well as social factors driving

    accounting system adoption and use.

    The reminder of the paper is organized as follows. Section 2 discusses the theory

    and research questions, and Section 3 describes our research setting and process of study.

    Section 4 provides the insights from our field interviews. Section 5 concludes.

  • 8

    2. Theory and Hypotheses

    Although managerial researchers agree that accounting and control systems have

    technical, economic, behavioral, as well as social implications, there is limited research in

    the extant analytical, archival, and experimental accounting literature of the study of social

    implications. Accounting and control systems such as budgeting, cost allocation,

    performance measurement, and incentive compensation systems have largely been studied

    from a deterministic perspective, whereby it is posited that the economic or technical

    characteristics of accounting systems interact with behavioral factors to cause outcomes. A

    large body of research in this area has explored how accounting and control systems

    should be designed, and how they influence the firm and the people who use them. The

    economic based view considers the design of accounting and control systems so as to

    motivate managers and minimize agency losses from hidden action or hidden information

    (see see Lambert [2001] for a review), whereas the behavioral view focuses on departures

    from the economic optimal arising from judgmental and cognitive limitations of decision

    makers (see Luft and Shields [2003] for a review).

    Recently, the information systems literature has used a structuration perspective

    which examines the interaction between people, structures, and technologies, and

    recommends using a recursive, practice oriented lens (Orlikowski 2000). Initially

    conceptualized by Giddens (1979), structuation is defined as the process by which social

    structures (whatever their source) are produced and reproduced in social life (DeSanctis

    and Poole 1994: 128). Structuration considers human action as an essential element, and

    focus is placed on human actions that embed structures (rules and resources) within a

  • 9

    system (such as a new technology) during the development phase, as well as the actions

    involved in appropriating the structures at the time of the use of the system (Orlikowski

    1992, 2000). The focus of structuration is on gaining a better understanding of the socio-

    political process by which structures are embedded within a system (Giddens (1979, 1984).

    Adaptive Structuration Theory (AST) focuses on the variations that occur when

    advanced systems are used (DeSanctis and Poole 1994). AST examines organizational

    impacts of new systems arising from two sources. The first is the structural potential,

    which in turn has two components, i.e.., structural features and spirit. Structural features

    refer of the type of structures that are provided by the new system such as the specific

    rules, resources, and capabilities. Spirit refers to the users interpretations about the values

    and goals of the new system. The second factor driving variations in outcomes is

    structures that emerge in the course of human interactions with the system. In the process

    of interacting with the system, the users make judgments and decisions regarding the

    extent of use of a system, its interaction with the other systems in place, and the extent to

    which the system is consistently used over time. Desanctis and Poole (1994) refer to the

    process by which a rule or a resource within a system is brought into action as

    appropriation of the structure. These appropriations are not mechanistically chosen, but

    rather selected by users and likely to have cross sectional and temporal variations within

    and across user groups. The factors that influence a user groups appropriation of structures

    include interaction patterns in user groups including leadership styles, the group members

    knowledge and experience with the structure, members beliefs about the knowledge set of

    other users, and the extent of intra-group agreement on how the structures should be

    appropriated. For example, a user group could observe a similarity between a structure of a

  • 10

    new system and other structures of the same system or other pre-existing systems, which

    can evoke positive or negative reactions.

    A modified approach to structuration has been recommended in recent literature

    which considers human actors involvement with a structure not as appropriation but rather

    as enactment. This view, which is termed as the practice lens on structuration considers the

    structures of a system not as embodied within the system but rather as emerging when

    individuals interact with the technology and through such interactions shape and modify

    the technology (Orlokowski 2000, 2002). Thus technology or accounting structures are not

    independent, external, and waiting to be appropriated, but rather are constituted and re-

    constituted via human engagement with the system.

    The practice perspective suggests that when people use a system, the interaction

    between the structure and human agency drive the acceptance and use of the system. The

    structural component of a system includes the properties of the system as developed by the

    designers, and other structures that are enacted in the course of the use of the system via

    interactions. Agency includes users interactions with the material aspects of the new

    system as well as the influence of other existing systems, social norms and codes of

    conduct, and users assumptions and knowledge about the system.

    Structuration theory and accounting

    Structuration theory has been used to examine the context of management

    accounting within the social structures of an organization. Macintosh (1994) argues that

    because the structuration framework relies on social theories that describe, explain, and

    analyze the social world and practices involved in complex management accounting and

    control systems, it enables a better understanding of the social context of management

  • 11

    accounting. A comprehensive understanding of managerial accounting and control systems

    requires us to create a more detailed analysis of such social practices. Structuration

    facilitates such analyses via its incorporation of the social theories of signification and

    communication, domination and power, and legitimacy and morality (Macintosh, 1994).

    In contrast with other social theories, structuration includes both structures and

    agency. Macintosh (1994) posits that by including these two concepts, structuration

    combines the structuralist position (the abstract codes that guide our behavior) and the

    existentialist humanist position (the actions of individuals as they interact with each other

    in organizational settings). The result of this combination is a process where social systems

    sometimes function to almost automatically reproduce the status quo, while at other times

    they undergo radical change. This focus gives credence to the dynamics of history and

    change, and the ability of both to influence social interaction in organizations. Thus, the

    framework provides a more comprehensive analysis of management accounting and

    control systems, and helps explain intricacies that are beyond the scope of most other

    frameworks. The value of structuration goes beyond the financials of a company as it

    enables organizations to not only communicate financial numbers, but also reveals the

    social codes related to power and morality (Macintosh and Scapens (1990).

    In his review of structuration theory and its implications for management

    accounting research, Busco (2009) suggests that the theory conceptualizes a way of

    making sense of social life in an organization. He argues that structuration is useful in

    exploring how management accounting systems can be implicated in processes of learning

    and culture change in an organization. Busco (2009) combines struturation theory with

    Giddens (1991) more recent thoughts on modernity to identify how management

  • 12

    accounting systems can be utilized as socially constructed objects of trust for the

    processes of change. Although such a trust will not guarantee that change will occur or

    occur in some desired direction, it might increase the possibility of replacing trust in the

    predictability of routines with trust in the change process.

    Structuration provides a useful theoretical lens to study the adaptation and use of a

    new accounting system such as TOC. Figure 1 provides a theoretical framework for

    understanding cross sectional variations in the extent of use and the patterns of use of a

    new accounting system such as TOC using a structuration perspective. The structure of

    TOC in practice refers to the enactment of the TOC system to daily managerial activities.

    Structure includes rules, regulations, frequency of use, and patterns of TOC use (or non-

    use) in accomplishing work activities. The overall structure of TOC use is influenced by

    other structural sub-components such as culture, goals, and hierarchies. In enacting TOC

    structures, individuals draw on existing measurement and control system, professional

    norms, routines, and habits in their group or department, and their assumptions and

    knowledge of past actions. We test the framework in figure 1 using field data. The next

    section describes our field research setting.

    3. Research Setting

    The setting for our study is a publicly traded pharmaceutical company (BPharm)

    located in Asia.1 BPharm produces and distributes pharmaceutical and proprietary drugs,

    with 80% of sales generating from outside its home country. It employs over 10,000 staff,

    of which about 20% are scientific staff and hold advanced degrees. In 2007, after a number

    1 The name of the company has been disguised to preserve anonymity.

  • 13

    of years of anemic growth in margins, BPharm employed a consulting group (CG) to assist

    in improving performance.

    After preliminary meetings with the top management, CG recommended two new

    initiatives, one for Operations and the other for Product Development. Both initiatives

    were based on the philosophy of the Theory of Constraints (TOC). The next sub-section

    describes the basic principles of TOC, followed by the process of implementing TOC at

    BPharm.

    3.1 Theory of Constraints

    The Theory of Constraints (TOC) is based on the principle that the strength of any

    chain, process, or system is dependent upon its weakest link Goldratt (1989). TOC

    focuses on three key performance measures: throughput, inventory, and operating expense.

    Unlike traditional accounting systems which focus on production and therefore consider

    inventory to be an asset until sold, TOC emphasizes on the rate at which the firm generates

    income through sales, rather than through production. TOC is a significant departure from

    absorption costing and defines inventory as the money invested in goods that the firm

    intends to sell or material that the firm intends to convert into salable products. TOC does

    not recognize the concept of value-added and overhead. TOC defines operating expense as

    all funds that the firm expends on converting inventory into throughput. It argues that to

    optimize, a company needs to decrease inventory or operating expenses and increase

    throughput. Anything that may hinder a company from accomplishing this goal should be

    considered a constraint.

    A constraint may be external or internal. An internal constraint exists when the

    market is demanding more from the system than it can provide. An external constraint is

  • 14

    evident when the systems supply is more that the market can accommodate. TOC

    recommends that the firm identify the root causes of the constraints and investigate ways

    to remove the constraint.

    3.2 Theory of Constraints at BPharm

    In the spring of 2008, BPharm started implementing the TOC based on Consulting

    Groups recommendations. The first program, i.e., Project Management focused on the

    process of developing a drug and bringing it to market (R&D and New Product

    Development). Senior management divided this process into three stages, i.e., development

    stage, integration stage, and filing stage. The development phase included the development

    of the drug in the lab, the bench scale, and the pilot test of the product. The integration

    phase involved executing the exhibit batches in the manufacturing facility for conducting

    bio-studies. In this stage, the drug was tested further on humans before it could be sent to

    the Food and Drug Administration in the U.S. (for example) for approval. The filing stage

    comprised of three parts: pivotal studies (bio studies on humans), stability studies (in lab)

    and the preparation of the registration documents. The filing phase included the

    preparation of the registration document and ended with the filing of the product with the

    Food and Drug Administration in the U. S. or the European regulatory authorities. Finally,

    in the last stage the drug was sent to the approving authority for approval.

    Initially, the management team determined that the weakest link in the chain (i.e.,

    the constraint) was integration as they had several projects in queue for integration. They

    determined that their capacity was four projects per month or forty eight each year, as this

    was the maximum that the manufacturing team could handle in the integration phase. As

    one product moved out of this phase (leaves integration) another one could be put into the

  • 15

    system (termed as the virtual drum). However, they subsequently found that the primary

    uncertainty was in the development stage as it involved developing the drug prototype and

    it was difficult to predict accurately the amount of time (cycle time) needed to develop a

    new product. The development phase involved multiple loops of the bench scale, lab scale,

    and a pilot bio-study. Each loop was termed an iteration and management determined

    that each process took, on average two and a half iterations or seven and a half months (as

    each iteration took an average of 3 months). Thus, management determined that the release

    of projects should be controlled based on work in process in the development phase as this

    was the weakest link in the chain. Finally, it was also determined that the number of

    iterations that could be completed would determine the number of projects that could be

    worked on in a given year.

    In the area of new product development, CG placed higher emphasis on execution

    as opposed to planning. CG advised BPharm that an emphasis on execution would enable

    the company to finish the project on time, assure a smooth flow projects, reduce

    multitasking, and enable early identification of problems so as to be able to take the

    necessary corrective actions. Multitasking was especially problematic at BPharm; too

    many projects were being executed simultaneously, which placed pressure on people and

    resources. CG also recommended BPharm reduce the number of projects to lead to better

    flow and throughput.

    To manage the project portfolio, three metrics were tracked, Due Date Performance

    (i.e., the project was finished on pre-determined due date), cycle time of projects from start

    to finish, and throughput (i.e., number of projects completed per unit of time). A new

    system was introduced to manage the product development process. This system (The

  • 16

    Critical Chain Project Management or CCPM), managed the distribution of workload and

    set priorities for tasks. No other changes were made to the strategy or the structure of the

    organization.

    Another focus of the TOC was inventory management. Based on CGs

    recommendations the following actions were implemented. First, inventory turns was

    identified as the critical metric to be tracked on a daily basis. Second, the company moved

    from a system of forecast based planning to consumption based planning. Thus, inventory

    was not stocked based on forecasting, but rather based on replenishment, with buffers built

    at various stages of the supply chain. The inventory levels in the buffers were tracked by

    colors to facilitate replenishment. Black indicated zero inventory, red indicated that

    replenishment was immediately required, yellow indicated that replacement would be

    required soon, and green indicated that inventory was at a comfortable level. The inventory

    status was required to be updated on a daily basis. The metrics tracked included Stock-out

    %, Quality of Data Upload, Primary Sales, Secondary Sales, Inventory Turns, and Manual

    Orders. In order to implement this initially, a number of distributors in the domestic

    country were asked to computerize the inventory replenishment cycle by joining the

    companys MYSAP system.

    3.3 Field Data Collection

    The author team conducted a series of structured in-depth interviews with BPharm

    managers during the summer and fall of 2009. An additional set of interviews were

    conducted in the summer of 2010, primary for clarification and collecting additional data

    regarding the TOC program. The interviewees included: the Senior Vice President of

    Human Resources (VP-HR), the Vice President of Information Technology (VP-IT), the

  • 17

    Executive Vice President of R&D and Product Development (VPR&D), the Vice

    President of Supply Chain Management (VP-Supply Chain), the Senior Director of Sales

    (SD Sales), the Managing Director and Chief Operating Officer (MD- COO), and the

    CFO. The objective of the interviews was to obtain information about the dynamics of the

    TOC implementation in each department. We sought to obtain managers involvement in

    the TOC process and their perceptions regarding the implications of the system for the firm

    as well as their individual departments. The interviews, which lasted between 45 minutes

    and two hours per interviewee, were recorded and transcribed by a professional

    transcribing firm.

    4. Evidence and Analyses

    4.1 TOC in BPharm

    Senior management of BPharm had exploratory meetings with Consulting Group in

    early 2008. CG conducted a 10-day workshop the next month in with the senior

    management group. Consistent with the tenets of TOC, Operations and Product

    Development were identified as the critical areas of focus. During the workshops, BPharm

    managers were appraised that TOC represents a significant departure from the existing

    standard costing and conventional overhead allocation system in the firm because it does

    not recognize the concept of overhead. Furthermore, unlike Activity Based Costing, TOC

    does not recognize the importance of classifying costs into value added and non value

    added. For optimal performance, TOC argues that it is critical to decrease inventory or

    operating expenses and increase throughput. Any activity that hinders a company from

    accomplishing this goal is labeled a constraint and the goal is to reduce these constraints.

  • 18

    After an analysis of the existing processes via preliminary group interviews with

    managers, Consulting Group identified inventory turns as the critical performance metric

    to be tracked. Implementation began in early summer 2008, and in addition to inventory

    turns the following performance measures were tracked on a daily basis: Stock-out percent,

    Primary Sales (i.e. sales to stockists or distributors), Secondary Sales (sales by stockists to

    the final customer which may be a hospital or a patient), and manual orders (orders not

    generated by the on-line system designed by Consulting Group). The TOC implementation

    was piloted in one state with 19 distributors (BPharm had a total of over 8,000

    distributors). Over the next few months, the TOC was implemented for 1,100 distributors.

    At the time of the interviews, TOC had been in place for over one year.

    Examination of pre- and post-TOC operational and financial data provided the following

    insights: (1) Number of projects completed increased significantly, (2) Number of days

    sales outstanding decreased from about 200 to about 21, (3) Market share and revenues

    remained relatively constant at about 2.5%, and (4) Profit before extraordinary items

    remained relatively constant at about 20%. Interestingly however, managers had widely

    varying views about the extent to which TOC was being used, the success of the TOC, and

    the future of TOC. Some managers indicated that the TOC had been a success and brought

    a huge improvement to important operational metrics, while other managers had opposite

    views. The following sections analyze the cross sectional variations in how different

    departments in BPharm enacted TOC. We link the differences in TOC practice to the

    differences amongst departments in their structure with respect to rules, authority, and

    orientation, and differences in agency such as performance measurement systems,

    institutional factors such as professional norms, and interpretive schemes such as

  • 19

    assumptions or knowledge that users draw upon when enacting the structures and systems

    in practice.

    4.2 Variations in Enactment of TOC

    Our field interviews indicated mixed reactions to the TOC, with some departments

    unequivocally supporting the system, others actively resisting the system, and some

    departments passively accepting or opposing the system. Through our field interviews, we

    were able to glean information about the drivers of the users attitudes towards the system

    and observe the enacted TOC in practice.

    4.2.1 CEO reactions: TOC as a means for aggressive growth

    Interviews with the CEO demonstrated that he viewed TOC as a vehicle for

    achieving a high level of growth for the firm. The CEO, who had been appointed in 2001,

    was dynamic and goal oriented and his personality matched the lead consultant at CG. The

    CEO was impressed by CGs claim that TOC was the only means of achieving the firms

    growth targets. The strong technical orientation of TOC appealed CEO who had an

    engineering degree and an MBA from premier institutions at the US. Under the CEOs

    leadership BPharm witnessed remarkable growth via mergers, acquisitions, and joint

    ventures, which transformed the company from a mid-sized pharmaceutical to a global

    giant by 2009.

    The CEO actively supported the TOC and agreed with its philosophy:

    The focus is on improving the system as a whole. If you increase throughput

    without increasing your operating expenditures, that will lead to better

    results. TOC recommends that first, you must focus on what is constraining

    the flow. Second, you choke the release of projects, otherwise that will clog

    the system. Third, reduce multi-tasking because efficiency dramatically

    slows down when people multitask.

  • 20

    The CEO viewed the TOC as not only a means of achieving growth, but indeed of being

    the only mechanism that would enable the company to grow. This is evidenced by his

    response to the interviewers question regarding TOC vis a vis ABC:

    I think that it [ABC] will lead to local optimization. If you see the entire

    system as a whole, only then it will work. If you see each activity, cut it,

    chop it, and see it in isolation, you will be misleading. You will be doing

    improvement, no doubt, but you will improve something that will not impact

    your bottom line.

    The CEO viewed road-blocks to growth as constraints. He was of the opinion that any type

    of restriction to growth was to be tackled immediately and aggressively, and as a result the

    TOC system of color coding the inventory levels, and immediate attention to metrics was

    consistent with his vision regarding the means for achieving growth. His focus was on the

    efficiency of the system as a whole. He viewed the TOC as aligned with the organizing

    structure of a growth oriented organization, and as supporting his role as providing the

    essential leadership to enable the growth. He viewed the role of the performance

    measurement and control system as providing an understanding and encouraging employee

    effort towards system efficiency and system growth, rather than efficiency and growth of

    individual areas. Because of his leadership orientation, he had a tournament model of

    competition, where the primary goal was to get ahead.

    In course of his interactions with the TOC several benefits of TOC became

    immediately salient to the CEO. These included, a decrease in stockouts, a reduction in

    project cycle time, and increase in the rate of project completion. As a result, the CEOs

    belief in TOC was strengthened. TOCs highlighting of bottlenecks and focus on

    eliminating constrains appealed to his professional norms and shaped his interpretation of

    the system and his championship of the system (Figure 2).

  • 21

    4.2.2 HR reactions: TOC hampering qualitative and people orientation

    The human resources (HR) department was critical of TOC. Not only did they view

    it as less than useful to their structures and practices in place, but they also regarded it as

    contrary to HRs people orientation. The VP of HR was articulate in his criticism of TOC,

    commenting: I would not have driven the change this way. He viewed the TOC as driven

    by very very hard core logic based approach without an understanding of the qualitative

    factors and the views of the people who use the system and are measured by it. He was

    unimpressed by the lead consultant at CG, who he described as: a bull in a china shop

    personality. His belief in the qualitative orientation of HR was reflected a number of

    instances in his conversation:

    A lot of issues that I seem to be picking up are more from a qualitative

    sense as people talk to me.

    In addition his people orientation was also apparent:

    People are not speaking up when they need to speak up. We are pretending to be the emperors new clothes. If [CEO and COO] are not able to see the body language of people I think we should not call ourselves

    a very perspective organization.

    [During the meetings with the CG, our people were] totally switched off.

    Not a word was said. I see it happening every time and question myself,

    what does this silence mean?

    We are talking about human beings, we are talking about emotions, we are

    talking about vulnerability, sensitivities, and in my view, change is more

    like an emotional process and less like a logical process, at least change of

    the people kind.

    The VP HR believed that CG had bullied the top management to buy into their

    system, without an adequate understanding of its suitability. He sensed a rebellion in the

    ranks however he felt that people would not speak up arising from respect for the CEO

  • 22

    and other top managers. One primary concern he had with the TOC was its focus on hard

    metrics designed by the consultants, instead of more holistic and people-oriented goals

    such as recruitment and retention. The metrics put in place by TOC were completely

    different from his goals as well as his operating style and as a result he was open in his

    rejection of the metrics as: sheer nonsense and absolute drudgery.

    In the course of the implementation of the TOC, the VP HR perceived that TOC

    was hindering his retention goals.

    In doing this we have gone to other extremes almost like a mercenary. For

    example, I have started losing people in my research organization. One

    very senior person who left recently was telling me, and again he was very

    guarded, that my worry is that in this company I think people have enjoyed freedom of speech, I suddenly feel people are not speaking up, which is a

    far more disastrous consequence even beyond just TOC. People are just not wanting to speak up.

    Silence could be acquiescence, silence could be indifference and my worry

    is if this goes on it will be like this guy who left said [omitted name] my fear is you will still lose some more scientists.

    HRs rejection of TOC was not only driven by their disagreement with the goals

    and metrics that were the focus of the system, but also because the process of TOC

    implementation was not based on participation and consultation. Not only was HR not

    involved at any stage in the TOC implementation process, but in the opinion of the VP HR,

    others in the organization were also not involved. Anyone who expressed skepticism was

    not given a careful assessment and instead a few people pushed the system through. The

    VP commented, I dont think you know you can build and institutionalize a change

    process by fatwa.

    In summary, in their practice of TOC, HR people based their non-use on the fact

    that the TOC was ill suited with their qualitative orientation and people orientation, which

  • 23

    were the structures in place in HR. In addition, the metrics proposed by TOC were

    misaligned with HRs metrics of recruitment and retention. As a result, the TOC-based

    metrics were not tracked by HR. Institutionally, TOC was not a fit for the consultative

    norms and practices in place in other HR systems. This lead to the interpretation that TOC

    could change things for the worse and lead to poor buy in of the system (Figure 3).

    4.2.3 Sales Reactions: TOC as shifting the planning and control system

    We interviewed the Vice President in charge of Branded Formulations, the Senior

    Director of Marketing, as well as sales managers from the sales department. Our interviews

    with the Senior Director of Marketing at BPharm revealed that the pharmaceutical industry

    market in Asia where BPharm operated has some unique features. First, the market was

    very fragmented. For example, there was only about a 4% difference in market share of the

    company with the largest market share and the company which was the 15th

    in terms of

    market share. Second, prices were regulated by the government, and as a result the

    pharmaceutical firms competed on discounts provided to stockists. The stockists usually

    waited until the end of the accounting period to place orders because they could negotiate

    large discounts. Finally, a large part of the business was based on the personal relationship

    between the sales representative and the stockist.

    BPharm had a sales force of 2,500, including managers and sales representatives.

    Before the TOC was introduced, the primary roles of the sales department were to generate

    new customer relationships, to generate prescription demand, and stock replenishment. The

    stock replenishment function was based on ex ante planning and forecasting, in which the

    entire sales force participated. Sales representatives had targets for the territories that they

    operated in, and were compensated based on sales relative to individual targets. About

  • 24

    20% of their total compensation was based on individual commissions based on meeting

    territory targets.

    The TOC introduced three significant changes to the sales function. First, the

    incentive structure for the sales representatives was changed from individual incentives to

    divisional incentives. Second, the basis of incentives was changed from primary sales

    (sales to stockists) to secondary sales (sales by stockists). Finally, sales representatives

    were no longer responsible for the stock replenishment function, but only responsible for

    generating sales demand. These changes caused the sales force to react negatively to the

    TOC as discussed below.

    After the TOC, all the sales representatives in a particular division were paid the

    same percentage incentive based on whether the divisional targets were met. Therefore, a

    sales representative could be doing an excellent job managing customer relationships and

    meeting targets, however, the division may be trailing behind and as a result the sales

    representative would not obtain any incentives. The VP HR argued that change in

    incentive system from individual incentives to group incentives was causing a higher

    turnover amongst the sales representatives than earlier.

    The other change to the incentive system i.e., the commission based on secondary

    sales, as opposed to primary sales also caused considerable confusion and a lack of buy-in.

    The Senior Director of Sales remarked on the reactions of the sales representatives:

    So I have my own anxiety whether my prescription is getting sold or not,

    and because of this fellows [stockists] mistake of not providing the material in time and in right quantity, I should not be held responsible for

    falling short of my secondary sales quota.

  • 25

    Our interviews revealed that the sales division was even more skeptical about the

    other change introduced by the TOC whereby the sales representatives were no longer

    responsible for stock procurement but only for prescription generation. Stock procurement

    was fully automated and based on the level of consumption and position of buffer stocks.

    The sales representatives viewed this change as a loss of control over an important aspect

    of their work. This was evidenced several times in the course of our study:

    11 months back a rep was generating prescriptions with his right hand and

    with his left hand he was procuring the stocks for that, so he had control on

    both. Now today youve told him, that you not only have your right hand to generate prescriptions, you now also have your left hand to generate

    prescriptions so please put more effort there and trust somebody else to get

    that. Now it is the trust which is difficult for people to immediately come

    to You have lost control, so youre anxious So currently we are trying to bring down the anxiety level and trying to bring in much more trust

    between the prescription side and the demand fulfillment side. (Senior

    Manager, Global Analytics Team).

    So now were saying that trust somebody else to do that job as well or better than what you used to do, so you put more time and devote more

    attention on prescription generation. That is something youre changing - a habit. Youre changing a habit of focusing only on one side of the job, which is your core job. And youre changing another habit which is trusting somebody else to do a very good job. And unfortunately if you look at the

    history of last 2 3 years, there have been some cases in which supplies have been really messed up. Only a few cases, but unfortunately people tend

    to only remember exceptions (Senior Director, Sales).

    An additional issue that arose after the TOC was implemented was that as a result

    of separating the procurement and the prescription generation function, and tying

    replenishment to consumption, sales representatives were no longer forecasting.

    Previously, forecasting was a means of communication of information from the field up to

    the organizational chain. In addition, a problem was that not all customers could come on

    board with TOC because of lack of IT infrastructure. The Senior Director of Marketing

  • 26

    was of the opinion that the TOC was implemented in a hurry and as a result, a full-

    fledged pilot was not conducted. Such a pilot would have revealed problems in the field

    such as the customers lack of IT infrastructure. Therefore the sales representatives were

    facing a challenge as commented by the Senior Director of Marketing:

    If there are a large number of customers who are not on TOC and if theyre into a forecasting habit, their habits are not changed, theyll continue to place orders at the end of the month.

    Finally, sales representatives were concerned that the TOC was not resulting in an

    increase in sales revenue or margins. The Manager of the Corporate Analytical team

    commented:

    During the initial stages of our project, we had a different expectation. We

    thought that the result would be immediately striking our eyes. Now we

    have such mixed results, like in some pockets we can see very good results,

    and improvements and in some pockets you see downward trend.

    Because we know the outcome is not there, so were trying to redefine what the problem is. Where are we going wrong? CG is trying to tell us where we

    went wrong but sometimes they come up with requirements which I find a

    bit impractical. For example expecting 100% discipline from all

    distributors who are in TOC is very very impractical.

    In summary, the sales department viewed the TOC as introducing a major change

    in the performance measurement and incentive system, as well as reducing the

    controllability of a key aspect of their task. Over time, the TOC did not manifest in an

    improvement to their departments performance because of implementation difficulties. As

    they interacted with the TOC, they perceived problems with it, especially with regard to

    the expectations imposed by TOC over the behavior of their distributors and customers.

    This lead to a resistance of the system, which increased over time as problems emerged in

    the field during implementation (Figure 4).

  • 27

    4.2.4 R&D Reactions: TOC as reducing multitasking and improving completion rates

    The R&D department at BPharm handled the development of new products and

    formulations. There were 4 R&D heads, including one each for North America, Europe,

    the rest of the world, and one for formulation development. Each head managed from 25 to

    40 projects at any point in time. Each project manager was allocated a certain number of

    projects to manage and coordinate with other functional departments. The focus of the

    performance measurement system was on fulfilling process control protocols and

    completing projects. The R&D employees were not compensated based on their individual

    performance, but rather paid a bonus based on the overall performance of the organization.

    The R&D department had a team orientation and a culture of managing issues by debate

    and discussion.

    The R&D department was one of the focus points for the TOC. Because timeliness

    could have a huge impact on the market share of the project, the CCPM that was

    introduced as a part of the TOC was helpful in keeping the momentum of projects moving

    forward. CCPM played three key roles in improving the efficiency of the R&D

    department controlling the release of projects, managing priorities, and timely support

    for issue resolution. The Executive VP of R&D (EVP-R&D) viewed CCPM as very useful

    in improving the completion rates for projects and increasing efficiency of processes by

    reducing multitasking. There was a significant improvement in the rate of project

    completion, measured by the department as due date completion. This was an important

    metric and tracked weekly as well as followed closely by all the employees in the

    department. The EVP-R&D commented that as TOC was implemented, the due date

    completion metric showed steady improvement: a 25% improvement was observed

  • 28

    immediately on implementation, and by the end of the year the improvement in this metric

    was about 55%. He also observed an overall increase in productivity due to reduction of

    multitasking, and as a result of the combination of the two factors, the EVP-R&D

    perceived an increase in employee satisfaction:

    Now that we are controlling the release of the projects, whatever project we

    start, goes through the completion phase much faster. So we are able to see

    the completion of the project much faster in this environment compared to

    the past and that creates better satisfaction.

    At the same time however, the EVP-R&D was cautious about the success of TOC

    and felt that not all the employees had changed their thinking as a result of the TOC:

    There is still lot of work that needs to be done in the implementation. What

    we have implemented is essentially the procedures, but in terms of the

    peoples mindset, a lot of work needs to be done. Habits have to be changed. All of us have the habit that the more things we do, we see

    ourselves as a much better individual than doing one thing at a time. I dont know whether its a habit or a culture all around, we see people preferring to do many things at the same time, rather than trying to focus on one thing

    at a time. So we need to build a culture of avoiding multitasking, working

    really only with the priorities, and in supporting or resolving the issues and

    finding the right solutions to issues that block the flow of the projects. So a

    lot of work needs to be done in terms of people management processes.

    However, the EVP-R&D was clear that the TOC was beneficial for his department

    and confident that the change in mindset would occur and that he would facilitate the

    process.

    In summary, TOC was successfully implemented and enjoyed a high buy-in in the

    R&D department. TOC was a good fit with the quantitative, individualistic, and task

    orientation of the R&D department. Important R&D metrics like due-date completion and

    number of projects completed became salient. In addition, as TOC was implemented and

    users interacted with it, the R&D department was able to observe immediate improvements

  • 29

    to efficiency. Not only were these efficiencies highly visible (such as due date

    performance) but over time as people interacted with the TOC, these efficiencies further

    increased. While on the one hand the TOC improved efficiencies in an important metric,

    on the other hand it did not cause any disruptions to the performance measurement system

    or to the power structure within the department. Because R&D was one of the focus points

    of the TOC, it bought higher visibility to the R&D department from the organization as a

    whole. As a result, R&D was supportive of TOC and was interested in facilitating its

    success (Figure 5).

    4.2.5 Supply Chain Reactions: TOC as reducing improving efficiency and transparency

    Supply chain at BPharm was responsible for planning, sourcing, and logistics.

    Before the TOC was implemented, supply chain used a monthly planning cycle, which

    resulted in a forecast. Stocks were replenished based on the forecasted demand versus

    current stocks. Inventory management had been a huge task for supply chain because some

    areas had inventory shortages (which resulted in lost sales) while other areas had excess

    inventory (and associated carrying costs). Moreover, the production departments also used

    their own forecasting and as a result priorities across departments differed. The supply

    chain department entire focus was on management of inventory and speed of inventory

    turns was an important performance metric. Inaccuracies in demand forecasting were

    manifested in the form of excess inventory or inventory shortages. In addition, supply

    chain had an information intensive orientation and speed of information dissemination was

    of the essence.

    The TOC changed the planning process from production based on forecasted

    demand to production based on consumption. Forecasting was no longer critical; rather

  • 30

    speed of replenishment was of the essence. This removed an important element of

    uncertainty and errors for the supply chain department. In addition, other departments now

    had to align with the supply chain department, which contributed to an increase in the

    power of the supply chain department. The VP of Supply Chain (VP-SC) remarked:

    We used to have our own priorities, every function and department used to

    have their own priorities of production or procurement kind of things.

    Today everything is governed by the consumption so everybody sees the

    same priority.

    The TOC system brought a high level of visibility to the supply chain department. The

    metrics that were routinely tracked by supply chain, i.e., stock movement, sales movement

    etc., were now in the forefront of measurement of performance of the entire firm. VP-SC

    remarked:

    Today you have total visibility end to end of the system if you open the

    system, anybody who is authorized can see the system end-to-end.

    Further, he remarked that inventory performance was now considered a joint

    responsibility, and supply chain was no longer help completely accountable for shortages.

    Production departments now had to look at consumption and plan accordingly:

    When there are issues and when there are shortages there is a law there is a

    faster response, a collective response, where everybody knows that, you

    know, the moment the stock becomes zero it becomes black. So one of the

    objectives what we take is, how to eliminate those blacks from the system.

    So everybody looks at blacks, you know in the chain. Everybody tries to see

    what part, what help he can do. Since it is visible and then it is faster,

    otherwise if it is not visible than people have to push. Somebody some

    planning guy and some supply chain guy has to push somebody to get it

    done. So that became much easier.

    When questioned about the lack of tangible financial results from the TOC system,

    the VP-SC was convinced that the benefits from TOC will eventually accrue for BPharm

    because the focus was now on the important metric, i.e., inventory:

  • 31

    The revenue increase will be so substantial that whatever benefits we used

    to get with activity based costing will be very minimal compared to that.

    You cannot focus on all of the things.

    In summary, TOC increased the visibility of the supply chain department and

    brought the departmental metrics to the forefront of the organization. At the same time it

    diffused the responsibilities of stock outs and excess stocks from the supply chain

    department to the organization as a whole. Finally, TOC system was information intensive

    and as users interacted with it, it increased the speed of information dissemination, which

    was consistent with the culture of the supply chain department. As a result, supply chain

    was highly supportive of the system and championed it in the rest of the organization

    (Figure 6).

    4.2.6 IT: TOC as reducing improving speed and transfer of data

    Obtaining and disseminating demand and supply information from the distributors

    in a timely and efficient manger was one of the primary goals of the IT department at

    BPharm. The IT department had an objective and data-intensive focus, and speed and

    relevance of data transfer was of the essence. The TOC system had two benefits for IT.

    First, it increased the speed of transfer of data, which greatly reduced information

    dissemination lead times. The Executive VP of IT (EVP-IT) remarked:

    The manufacturing constitutes a significant lead time of the total supply

    chain lead time till we sell it to the customers. With [TOC] we know there

    can be tremendous gain in actually shrinking lead times and I am trying to

    put a lot of stress on reducing lead times to some ridiculously low level so

    that its difficult for others to really match the service. Our inventory is in our SAP. So when our [Location Omitted] warehouse sells to the customer,

    it allows for automatic buffer management system. So that integrates with

    SAP. If the buffer is changed, it flows into SAP and generates process

    orders. So the whole drudgery of data processing is out so people have to

    only obey what is coming there. Purchase people have to only open the

  • 32

    computer and see in morning, what orders to place. There is no forecast, no

    hassle. Get the order and get them in the lead time which is promised.

    The second benefit of TOC for the IT department was that it increased the visibility

    of IT performance. As a result, there was clarity and objectivity in decision making, which

    was consistent with the objective mind-set of the IT department. The Vice President of

    Formulations and TechOps remarked:

    You can see the result at the end, you know stock outs have come down,

    visibility has improved. Of course that exposes a lot of things which we

    were not knowing before and it has brought a lot of clarity in decision

    making even on the shop floor as well as even the management of

    operations. Earlier you know many decisions were absolutely subjective,

    you know there is some launch and somebody will say why dont you invest this. There is no commitment from anywhere. With strategist artistry and

    the strong logic build behind is allows us you know in a very transparent

    fashion, take decisions.

    Finally, IT was convinced that the success of the TOC was dependent on the

    expertise of IT. The IT department spent effort on integrating TOC with other systems in

    the organization. As a result, from being a service function, IT became a function which

    was at the forefront of the organization, and the contribution of IT to the success of the

    system became very salient. The Vice President of Formulations and TechOps remarked:

    The IT infrastructure is very critical. [SVP-IT] made that comment right at

    the beginning: no IT without IT. Without IT I dont think we would have been able to implement with the speed with which we did.

    Therefore, the TOC system was highly championed by the IT department because it

    was a good fit to the information intensive and objective orientation of the department, it

    increased the salience of the IT function to the rest of the organization, and it increased the

    speed of response to issues that arose in the field during implementation (Figure 7).

    5.0 Conclusions

  • 33

    A new managerial accounting system that emphasizes a different set of measures

    from the status quo system is a major change for any organization. The managerial

    accounting system can change the way performance is measured and rewarded, it can

    change the manner in which decisions are made, and it can shift the focus of the

    organization to a new direction. As a result of a new managerial accounting system, power

    structures can be altered in the firm, and work processes may change towards greater or

    lower efficiency. In this field study of an Asian pharmaceutical firm, we examine the

    introduction, use and acceptance, of a TOC-based accounting system that replaced an

    Activity Based Costing and Standard Costing system. We use structuration theory to

    demonstrate that employees responses, attitudes, and use of a new accounting system are

    influenced by how the system fits into the users knowledge sets, training, professional

    norms, expectations, and beliefs related to the new system. In addition, as users interact

    with the system they either form new interpretations of the new system or confirm their

    existing beliefs about the system. As a result, users make conclusions regarding their

    acceptance of the system, which can include a high buy-in and championship of the new

    system on the one end, to active rejection of the system on the other end.

    The structuration framework, although relatively underused in accounting, enables

    us to obtain a deeper understanding of management accounting practices (Baxter and Chua

    2003, Coad and Herbert 2009). Structuration recognizes that organizational systems

    (including accounting and control systems) do not just include the material aspects, but

    also include social aspects. Such social systems in turn both enable and constrain human

    agency (Coad and Herbert 2010). The systems that emerge as a result of the interactions

  • 34

    between the social and material aspects can be different from the original and can drive

    users reactions to the system.

    Our field interviews suggest that consistent with the practice perspective on

    structuration, when users interact with an accounting system they construct structures that

    shape their use of the system, which drives the outcomes from the system including usage

    and acceptance of the system. We document variation in users responses to the new

    system as well as their use of the system based not only on the economic benefits of the

    new system but also on users professional norms, interpretive schemes, and existing

    performance measurement systems.

    Like any field study, our study is also subject to problems such as researcher bias

    and generalizability. Regarding researcher bias, it is possible that our interpretation of the

    results was limited, and that we ignored other factors, although this risk is present in all

    types of methods. Although the field environment provides an opportunity to explore

    qualitative and behavioral issues in great depth than other methods, we do not presume that

    our results generalize to other settings. However, by using a field study, we are able to

    provide a richer characterization of the factors that drive the acceptance, adoption, and

    attitudes to a new accounting system. Furthermore, the application of structuration theory

    can generalize to other settings where new accounting system is introduced.

  • 35

    References

    Baxter, J., Chua,W.F. 2003. Alternative management accounting research whence and

    whither. Accounting Organization, and Society 28: 97126.

    Busco, C. 2009. Giddens structuration theory and its implications for management

    accounting research. Journal of Management and Governance 13: 249-260.

    DeSanctis, G., and M. S. Poole. 1994. Capturing the complexity in advanced technology

    use: Adaptive structuration theory. Organization Science 5(2): 121-147.

    Giddens, A. 1979. Central Problems in Social Theory: Action, Structure and Contradiction

    in Social Analysis. Macmillan, London.

    Giddens, A. 1984. The Constitution of Society. Cambridge, Policy Press, London.

    Giddens, A. 1991. Modernity and self identity: Self and society in the late modern age.

    Cambridge: Policy Press, London.

    Goldratt, E. 1989. The Goal: a process of ongoing improvement. 2nd

    Edition: MA: North

    River Press.

    Lambert, R. 2001. Contracting theory and accounting. Journal of Accounting and

    Economics 32: 3-87.

    Luft, J., and M. Shields. 2003. Mapping management accounting: graphics and guidelines

    for theory-consistent empirical research. Accounting, Organizations and Society

    28: 169-249.

    Macintosh, N.B. 1994. Management Accounting and Control Systems An organizational

    and Behavioral approach. New York: John Wiley and Sons.

    Macintosh, N.B. and R. W. Scapens. 1990. Structuration Theory in Management

    Accounting. Accounting, Organizations and Society, 15(5): 455-477.

  • 36

    Orlikowski, W. J. 1992. The duality of technology: Rethinking the concept of technology

    in organizations. Organization Science 3(3): 398-427.

    Orlikowski, W.J. 2000. Using technology and constituting structures: A practice lens for

    studying technology in organizations. Organization Science 11(4): 404-428.

    Orlikowski, W.J.. 2002. Knowing in practice: Enacting a collective capability in

    distributed organizing. Organization Science 13(3): 249-274.

  • 37

    Table 1

    Types of Responses, Drivers, and Implications

    Type of

    Response

    Interest in

    Success of

    the System

    Performance

    Measurement

    and Incentives

    Power

    Structure

    Process

    Consequences

    Structural

    Consequences

    Active

    Resistance

    (HR, Sales)

    None Substantial

    Change

    Substantial

    alteration

    Change in

    emphasis of

    existing

    processes

    Resist change

    Resistance

    (CFO)

    Low Substantial

    change

    Some

    alteration

    Change in

    emphasis of

    existing

    processes

    Do not support

    change

    Acceptance

    (R&D)

    High No Change Some

    alteration

    Increased

    process

    efficiency

    Support

    change

    Champions

    (IT, supply

    chain)

    Very high Some change Substantial

    alteration

    Increased

    process

    efficiency

    Highly support

    change

    CEO Very High Potential for

    change

    Change

    based on

    potential

    outcomes

    None Highly support

    change

  • 38

    Figure 1

    Enactment of TOC in Practice

    TOC in Practice

    S

    t

    r

    u

    c

    t

    u

    r

    e

    A

    g

    e

    n

    c

    y

    Focus of PM and

    Control System

    Professional Norms

    Interpretive Schemes

    Poor buy-in and attempt at understanding system

    TOC in Practice

    S

    t

    r

    u

    c

    t

    u

    r

    e

    Buy-in and understanding of system

    Other structures

    Interacting with

    TOC

  • 39

    Figure 2

    Enactment of TOC in Practice - CEO

    TOC in Practice

    S

    t

    r

    u

    c

    t

    u

    r

    e

    A

    g

    e

    n

    c

    y

    Focus of PM and

    Control System

    - System Efficiency

    - System Growth

    Professional Norms

    - Tournament model

    - Getting ahead

    Interpretive Schemes

    - TOC helps zoom in on bottleneck

    - TOC eliminates

    constraints

    Leadership

    Growth atmosphere

    Poor buy-in and attempt at understanding system

    TOC in Practice

    S

    t

    r

    u

    c

    t

    u

    r

    e

    High championship of system

    Other structures

    Interacting with

    TOC

  • 40

    Figure 3

    Enactment of TOC in Practice HR

    TOC in Practice

    S

    t

    r

    u

    c

    t

    u

    r

    e

    A

    g

    e

    n

    c

    y

    Focus of PM and

    Control System

    - Recruitment goals

    - Retention goals

    Professional Norms

    - People based problem resolution

    - Consultative processes

    - Non-blame culture

    Interpretive Schemes

    - Skepticism toward a single measure

    - System can change things for the

    worse

    People Orientation

    Qualitative Orientation

    Poor buy-in and attempt at understanding system

    TOC in Practice

    S

    t

    r

    u

    c

    t

    u

    r

    e

    People Orientation

    Qualitative Orientation

    Poor buy-in and attempt at understanding system

  • 41

    Figure 4

    Enactment of TOC in Practice Sales

    TOC in Practice

    S

    t

    r

    u

    c

    t

    u

    r

    e

    A

    g

    e

    n

    c

    y

    Individual Orientation

    Target Orientation

    Poor buy-in and attempt at understanding system

    Focus of PM and

    Control System

    - Individual targets - Extensive ex-ante

    planning

    - Control over procurement and

    sales

    Professional Norms

    - Goal orientation - Emphasis on

    Individuality

    - Ambitious culture

    Interpretive Schemes

    - Skepticism toward a group measure

    - Skepticism toward a capped bonus

    - Loss of control on

    key aspect of task

  • 42

    Figure 5

    Enactment of TOC in Practice R&D

    TOC in Practice

    S

    t

    r

    u

    c

    t

    u

    r

    e

    A

    g

    e

    n

    c

    y

    Deadline Orientation

    Task Orientation

    High buy-in and aim to understanding system

    Focus of PM and

    Control System

    - Work-flow controls - Clearly defined

    individual priorities

    Professional Norms

    - Issue based support resolution

    - Single task focus (not

    multi-task)

    Interpretive Schemes

    - TOC viewed as a tool for reducing

    multitasking and

    improving

    completion rates

  • 43

    Figure 6

    Enactment of TOC in Practice Supply Chain

    TOC in Practice

    S

    t

    r

    u

    c

    t

    u

    r

    e

    A

    g

    e

    n

    c

    y

    Planning Orientation

    Information Orientation

    High buy-in and aim to understanding system

    Focus of PM and

    Control System

    - Inventory shortages - Inventory turns

    - Speed

    Professional Norms

    - Information intensive environment

    - Analysis orientation

    Interpretive Schemes

    - TOC viewed as a tool for improving

    efficiency and

    transparency

  • 44

    Figure 7

    Enactment of TOC in Practice IT

    TOC in Practice

    S

    t

    r

    u

    c

    t

    u

    r

    e

    A

    g

    e

    n

    c

    y

    Objective Orientation

    Logic Orientation

    High buy-in and aim to understanding system

    Focus of PM and

    Control System

    - Speed of information

    dissemination

    - Buffer management

    Professional Norms

    - Clarity in decision making

    - Decision making based on objective

    data

    Interpretive Schemes

    - TOC viewed as a tool for improving

    speed and transfer

    of data

    1731923CoverSSRN-id1741923[1]


Recommended