The adoption of western management accounting practices in China and the influences of foreign partnered joint ventures

As an attempt to investigate the adoption, future emphasis and benefits derived from
traditional and contemporary western-orientated management accounting practices in
Chinese organisations, in particular, in state-owned enterprises and foreign joint
ventures located in China, this empirical study was modeled on a similar study
undertaken in Australia (Chenhall and Langfield-Smith 1998). It obtained structured
information and carried out a comparison between a western capitalist developed
country and an eastern socialist developing country (China), which is moving towards
a market economy. The effectiveness of the adoption of management accounting
practices is influenced by complex contextual factors. Based on cultural, economic,
institutional, organisational and innovation theory frameworks established in the
research literature, the study therefore explored a wider range of environmental
factors which determined the extent to which state-owned enterprises and foreign
joint ventures have employed management accounting practices, Thus, the role which
joint ventures have played in the diffusion of management accounting practices in
China has consequently been evaluated.

A cross-sectional survey involving a postal questionnaire method of data collection
was adopted. A total of 179 usable responses were received representing a response
rate of 19%. The study also conducted some interviews.

The results of this research indicated that management accounting practices in
Chinese organisations have made considerable progress in recent years compared to
previous Chinese studies (He 1997; Lin and Wu 1998; Qiao 1997). However, there is
a lower usage of management accounting practices by comparison with western
countries. A number of environmental factors such as external authorities, social
services, advanced production and management techniques, long-standing
traditional practices, the attitude of the leadership, the quality of the accounting
personnel have influenced the adoption of management accounting practices in stateowned
enterprises and joint ventures. This study also confirmed that joint ventures
have played an important role in the diffusion of management accounting practices in
China because they have in general higher adoption rates and place greater emphasis
on recently developed, strategically focused, market oriented and investment appraisal
techniques than state-owned enterprises. In addition, the research has reinforced some
support for the findings from previous studies (Chenhall and Langfield-Smith 1998;
Firth 1996; O'Connor et al. forthcoming). The study also provided some evidence
supporting institutional isomorphism theory; for example, joint ventures have adjusted
the management accounting systems and practices to suit the Chinese management
context.

The distinguishing feature of this study is that it incorporates an empirical
investigation and an exploratory study in order to provide new knowledge relating to
the adoption of western practices. of management accounting in China and the
influence of foreign joint ventures. However, as with other studies, it has a number of
limitations that need to be overcome in the future. Also future research directions are
highlighted.