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Abstract
Purpose - The purpose of this research is to investigate the joint influence of early product adoption and bank customer accounting in Hong Kong.
Design/methodology/approach - In-depth interviews at three Hong Kong banks provided the basis for designing a survey instrument, which was used to collect data from 35 local and overseas banks. Performance data were collected from the financial statements published by the banks
Findings - Findings revealed significant interactive influences of early product adoption and customer accounting practices on bank performance. That is, performance would be enhanced if customer accounting practices were used to a greater extent in those banks that were early in adopting a greater range of products. The evidence shows that bank performance in an intensely competitive market such as Hong Kong is driven by the fit between customer accounting practices and early product adoption strategies.
Research limitations/implications - This paper is subject to small sample size and the use of a cross-sectional sample setting.
Originality/value - The evidence that is provided in this study adds to the understanding of the relationship between management accounting and organisational strategy. The topic is of interest given the recent deregulation of the banking industry in Hong Kong and the expansion of products that have been offered by banks during the last five years.
Keywords Accounting, Banking, Banks, Business performance, Hong Kong
Paper type Research paper
Introduction and overview
An important question that has emerged in current research is whether managers need to modify their control systems to suit the strategic information needs of new product development initiatives. The results to date suggest that the answer is yes. Such research was preceded by appeals to the uncertainty-reducing role of management controls (Khandwalla, 1972) and testing for the contingent effects of specific product development strategies on control system types and organisational performance (Abernethy and Brownell, 1999; Davila, 2000). The basic intuition from these results was that management control systems had a broader role than had been characterised by previous research. Traditionally, management control systems have been viewed as control tools that reduce goal divergence rather than as information tools that deal with uncertainty (Rockness and Shields, 1988; Abernethy and Brownell, 1997; Nixon, 1998). Moreover, control systems that help managers to reduce uncertainty...