Digitalization for the better? A case study of the role of MA in a dynamic capabilities process for digital transformation.

Abstract

Dynamic capabilities are the antecedent of organizational and strategic routine by which managers alter their resource base to generate new value which creates strategies. The role of management accounting has largely been overlooked in the sense that previous literature has delineated its capacity to aid with strategic decision-making by moving away from its bean counter stereotype. Studies have shown through dynamic capabilities processes of sensing, seizing & reconfiguring that digital transformation can lead to strategic renewal for the firm which creates value for the firm’s business model. This study aims therefore to explicate the role of management accounting in dynamic capabilities for digital transformation in hopes to contribute towards the strategic management accounting literature. A case study was performed on a shipping firm by investigating two digitalization projects, EDI & API, in order to gain a perspicuous understanding of the dynamic capabilities stages and the pertinence of management accounting techniques, tools & systems (MCS) throughout the stages. The empirical findings from the case studies are congruent with the theoretical framework which implies that management accounting tools do facilitate the integration of different departments and can aid with strategic decision making & objectives. Management accounting alone however is not adequate to contribute towards strategic decisions, the scope of management accounting has been expanded through the implementation of the digitalization projects in order to achieve digital transformation. The case study thus demonstrates the mindset on which management accounting tools & techniques are built on in order to gain a strategic advantage. There is therefore potential to investigate the mindset in order to see how management accounting can differentiate within certain industries.