The adoption of value-based management in large UK companies:a case for diffusion theory

Purpose – In the 1990s, a growing number of companies adopted value-based management (VBM) techniques in the UK. The purpose of this paper is to explore the motivations for the adoption or non-adoption of VBM for managing a business. Design/methodology/approach – An interview-based study of 37 large UK companies. Insights from diffusion theory and institutional theory are utilised to theorise these motivations. Findings – It was found that the rate of adoption of VBM in the sample companies does follow the classical S-shape. It also suggests that the supply-side of the diffusion process, most notably the role played by consultants, was an influence on many companies. This was not, however, a sufficient condition for companies to adopt the technique. The research also finds evidence of relocation diffusion, as several adopters are influenced by new officers, for example chief executive officers and finance directors, importing VBM techniques that they have used in organizations within which they have previously worked. Research limitations/implications – It is quite a small scale study and further work would be needed to develop the findings. Practical implications – Understanding and theorising the adoption of new management techniques will help understand the management of a business. Originality/value – This research adds further evidence to the value of studying management accounting, and more specifically management accounting change, in practice. It shows the developments in the adoption of a new technique and hence how a technique becomes accepted in practice.

Cost-based pricing in the NHS internal market : accounting choices and the achievement of economic efficiency

Since 1988, quasi-markets have been introduced into many areas of social policy in the UK, the NHS internal market is one example. Markets operate by price signals. The NHS Internal Market, if it is to operate efficiently, requires purchasers and providers to respond to price signals. The research hypothesis is - cost accounting methods can be developed to enable healthcare contracts to be priced on a cost-basis in a manner which will facilitate the achievement of economic efficiency in the NHS internal market. Surveys of hospitals in 1991 and 1994 established the cost methods adopted in deriving the prices for healthcare contracts in the first year of the market and three years on. An in-depth view of the costing for pricing process was gained through case studies. Hospitals had inadequate cost information on which to price healthcare contracts at the inception of the internal market: prices did not reflect the relative performance of healthcare providers sufficiently closely to enable the market's espoused efficiency aims to be achieved. Price variations were often due to differing costing approaches rather than efficiency. Furthermore, price comparisons were often meaningless because of inadequate definition of the services (products). In April 1993, the NHS Executive issued guidance on costing for contracting to all NHS providers in an attempt to improve the validity of price comparisons between alternative providers. The case studies and the 1994 survey show that although price comparison has improved, considerable problems remain. Consistency is not assured, and the problem of adequate product definition is still to be solved. Moreover, the case studies clearly highlight the mismatch of rigid, full-cost pricing rules with both the financial management considerations at local level and the emerging internal market(s). Incentives exist to cost-shift, and healthcare prices can easily be manipulated. In the search for a new health policy paradigm to replace traditional bureaucratic provision, cost-based pricing cannot be used to ensure a more efficient allocation of healthcare resources.

Customer value based entry decision in International markets the concept of International Added Customer Equity

Market entry decisions are some of a firm's most important long-term strategic choices. Still, the international marketing literature has not yet fully incorporated the idea of relationship marketing in general, and the customer value concept in particular, as a basis for market entry decisions. This article presents some conceptual ideas about a customer value based market selection model. The metric International Added Customer Equity (IACE), a straightforward decision criterion derived from the customer equity concept is presented as an additional decision criterion for export market selection and ultimately market entry.

Why value based management goes wrong

The authors introduce and describe a relatively new approach to management entitled Value Based Management which is concerned with creating long term value for shareholders by matching or exceeding their expectations. They outline what VBM is and does, describes the typical adopter of the programme and the procedures VBM initiatives take. They list some of the drawbacks including the type of people who champion VBM inside the company (who tend to come from a finance or strategic background), the consultants (who tend to be like-minded), inadequate education programmes and tendency to exclude employees from full participation. The authors conclude that while VBM has been less than spectacularly successful it would be wrong to conclude that it had failed completely. Its biggest contribution has been in reducing the incidence and frequency of reckless, value destroying decisions.

Sharing of value in business relationships:a theoretical model

This paper explores the sharing of value in business transactions. Although there is an increased usage of the terminology of value in marketing (such concepts as value based selling and pricing), as well as in purchasing (value-based purchasing), the definition of the term is still vague. In order to better understand the definition of value, the author’s argue that it is important to understand the sharing of value, in general and the element of power for the sharing of value in particular. The aim of this paper is to add to this debate and this requires us to critique the current models. The key process that the analysis of power will help to explain is the division of the available revenue stream flowing up the chain from the buyer's customers. If the buyer and supplier do not cooperate, then power will be key in the sharing of that money flow. If buyers and suppliers fully cooperate, they may be able to reduce their costs and/or increase the quality of the sales offering the buyer makes to their customer.

Shareholder value application in UK listed companies

This paper is based upon the initial findings of a CIMA research project into the way in which corporate performance measurement systems are influenced by the use of shareholder value management techniques. It compares and contrasts the techniques in use in a sample of 10 companies that either explicitly use shareholder value techniques also known as Value-Based Management (VBM), or explicitly do not use such techniques. The analysis undertaken is based upon the finding of semi-structured interviews with company representatives which formed the first part of the data collection process of the project. The analysis traces the interactions between corporate objectives, decision making criteria, performance measurement systems and executive incentive schemes in order to develop an understanding of the effects of such shareholder value techniques upon corporate behaviour. The literature reviewed suggests that the other aspects of the planning and control system should be aligned with the corporate objectives whether a company has adopted VBM or not. Therefore this research contributes new evidence on the use of VBM techniques in the UK and also more generally on whether VBM and non-VBM companies internal planning and control systems are aligned.

Electronics:a case study of economic value added in target costing

Whilst target costing and strategic management accounting (SMA) continue to be of considerable interest to academic accountants, both suffer from a relative dearth of empirically based research. Simultaneously, the subject of economic value added (EVA) has also been the subject of little research at the level of the individual firm.The aim of this paper is to contribute to both the management accounting and value based management literatures by analysing how one major European based MNC introduced EVA into its target costing system. The case raises important questions about both the feasibility of cascading EVA down to product level and the compatibility of customer facing versus shareholder focused systems of performance management. We provide preliminary evidence that target costing can be used to align both of these perspectives, and when combined with other SMA techniques it can serve as " the bridge connecting strategy formulation with strategy execution and profit generation" ( Ansari et al., 2007, p. 512). © 2012 Elsevier Ltd.

Introduction: special issue on key debates in advertising

Research on advertising has been conducted mainly from within disciplines such as marketing and reception studies. Within translation studies, research has focused more on comparative analysis of language pairs for intersystemic differences, and more recently on intercultural differences in product appeal and cultural values. Advertising as text type was most comprehensively used and developed within Western cultures, then 'exported' to other cultures. Initially the assumption was that the message could be translated and the product would sell on the basis of Western value-based market research, although this is now clearly shown not to be the case, as contributors to this volume all demonstrate through empirical studies. The introduction to this volume offers a comprehensive survey of work done in the field, both within and outside translation studies, outlines the use of semiotics as a suitable framework for research, and summarizes the key issues relating to the global vs. local debate

Shareholder or stakeholder management:strategies for performance optimisation

This paper is based upon the findings of a CIMA research project into the way which corporate performance is affected by the performance measurement system adopted. It compares and contrasts the techniques in use in a sample of large companies that use a variety of techniques. We have classified these techniques into 3 types: • Value based management techniques • Stakeholder management techniques • Traditional accounting techniques. The analysis traces the interactions between corporate objectives, decision making criteria, performance measurement systems, and executive incentive schemes in order to develop an understanding of the effects of such techniques upon corporate performance. This paper seeks to provide some answers to the following two questions: • What approach leads to superior performance for a firm? • What is different between these approaches when they are used in practice, as distinct from theory? In doing so we have drawn upon both contingency theory and sociobiology theory to develop a framework for understanding the relationship between the choke of performance measurement system and the resulting performance.

The role of science in policy making

This thesis aims to consider the role played by science in policy making. Firstly, two decision models are considered, synoptic rationality which depends heavily on formal information and comprehensive planning, and disjointed incrementalism, under which decisions are made in a fragmented and remedial manner via the interaction of interested partisans and with little necessity for formal information. Secondly, different descriptions of scientific activity are discussed and a broadly Kuhnian view of science is supported, with what is regarded as a `fact' being heavily influenced by social factors. It is suggested that scientific controversies are more likely to occur in policy related science but for reasons that are intrinsic to science rather than due to some correctable aberration. A number of case studies, including two `in-depth' studies into maternal deprivation and the relationship between hyperactivity and food additives, support this contention and also show that whilst scientific findings can raise issues they cannot aid in the resolution of these as the synoptic model suggests that they should. Instead information supports and legitimates value based policy views, with actual policy decisions arrived at via negotiation and aiming at a balancing of partisan pressures, as suggested by the incremental model. Not only does information not aid the resolution of policy disputes, it cannot do so. When policy is disputed, scientific findings are also likely to be disputed and further research merely attracts more highly destructive criticism. This is termed the over critical model. When policy is decided then there is reduced impetus to critically test scientific ideas; this is termed the under critical model. Both of these situations act to the detriment of science. The main conclusion drawn is that the belief that science is essential to decision making is misleading and may serve to mask rather than illuminate areas of dispute.

Introduction : special issues on key debates in advertising material

Research on advertising has been conducted mainly from within disciplines such as marketing and reception studies. Within translation studies, research has focused more on comparative analysis of language pairs for intersystemic differences, and more recently on intercultural differences in product appeal and cultural values. Advertising as text type was most comprehensively used and developed within Western cultures, then 'exported' to other cultures. Initially the assumption was that the message could be translated and the product would sell on the basis of Western value-based market research, although this is now clearly shown not to be the case, as contributors to this volume all demonstrate through empirical studies. The introduction to this volume offers a comprehensive survey of work done in the field, both within and outside translation studies, outlines the use of semiotics as a suitable framework for research, and summarizes the key issues relating to the global vs. local debate.

Introduction

Special Issue on key debates in the advertising material. Research on advertising has been conducted mainly from within disciplines such as marketing and reception studies. Within translation studies, research has focused more on comparative analysis of language pairs for intersystemic differences, and more recently on intercultural differences in product appeal and cultural values. Advertising as text type was most comprehensively used and developed within Western cultures, then 'exported' to other cultures. Initially the assumption was that the message could be translated and the product would sell on the basis of Western value-based market research, although this is now clearly shown not to be the case, as contributors to this volume all demonstrate through empirical studies. The introduction to this volume offers a comprehensive survey of work done in the field, both within and outside translation studies, outlines the use of semiotics as a suitable framework for research, and summarizes the key issues relating to the global vs. local debate.