The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1832-5912.htm
JAOC
9,1
50
Received 6 August 2011
Revised 11 November 2011
Accepted 23 January 2012
Journal of Accounting &
Organizational Change
Vol. 9 No. 1, 2013
pp. 50-73
q Emerald Group Publishing Limited
1832-5912
DOI 10.1108/18325911311307203
Management accounting change
in an Egyptian organization:
an institutional analysis
Mayada A. Youssef
Department of Accounting, Faculty of Business and Economics,
UAE University, Al-Ain, United Arab Emirates
Abstract
Purpose – The purpose of this paper is to investigate the process of management accounting change
within an Egyptian organization that implemented an extranet.
Design/methodology/approach – Old institutional economic (OIE) theory and Hardy’s model of
power mobilisation are chosen as a theoretical framework to inform the analysis of the case.
Findings – The results show that the extranet facilitated changes in information availability and
business process re-design. The findings confirm that management accounting practices have
changed in the case under study and show how management accountants have become more involved
in planning and control. The case highlighted some factors that facilitate the natural processes of
routinisation and institutionalisation over time.
Research limitations/implications – It could be argued that one limitation of this research is
related to the gap between the change in leadership in TexCo (1993) and the timing of the visits (2001,
2002, 2003 and 2005). However, this problem has been minimized by crosschecking memories of events
through interviews. Another limitation of this study is that the author was not allowed to review some
of the financial documents in TexCo. However, the author tried to verify the financial figures given by
them through inter-subject checking.
Originality/value – This paper fills a gap in the literature as it focuses on the process of
management accounting change associated with the implementation of business-to-business (B-to-B)
e-commerce. The findings, indicate that the B-to-B e-commerce has facilitated the change in the
management accounting practices towards decision support and control. Implementing the B-to-B
e-commerce system in TexCo facilitated greater control over inventory and invoicing. It improved the
planning process through providing the accountants with accurate and real time information about
sales, receivables, cash collection and inventory turnover. The system also facilitated the settlement
process, the performance evaluation of TexCo’s exhibitions; and saved the time and effort of the
accountants during the stocktaking process. The case suggested that there are some factors that may
facilitate the processes of routinisation and institutionalisation.
Keywords Management accounting change processes, Institutional theory,
Management accounting practices, Organizational change, Management accounting, Egypt
Paper type Research paper
1. Introduction
This research stems from an interest in the process of management accounting change
associated with the implementation of business-to-business (B-to-B) e-commerce. The
changing nature of management accounting and the implications of information
technology (IT) for management accounting has become a topic of much debate. On the
one hand, some researchers (Coates and Longden, 1989; Johnson and Kaplan, 1987; Lyne and
Friedman, 1997) claim that management accounting has not changed but has remained a
centralised function exercising formal controls dominated by external reporting. On the
other hand, other researchers (Burns and Baldvinsdottir, 2005; Burns et al., 1999; Caglio, Management
2003; Granlund and Malmi, 2002; Innes and Mitchell, 1989; Joseph et al., 1996; Loft, 1995; accounting
Lukka, 2007; Newman et al., 2000; Scapens, 2006; Scapens and Jazayeri, 2003) argue that the
management accounting practices have changed from “bean-counting” towards “business change
orientation” and data analysis.
Following Burns and Scapens’ (2000a, b) various studies have made several
important observations about management accounting change. One observation is that 51
deep insights on what really happens in an organization are required in order to decide
if and in what way management accounting has changed (Siti-Nabiha and Scapens,
2005). Another observation is that the implementation of new accounting rules is
facilitated if the change agent controls resources, decision making and meanings, but
this may be insufficient to handle “the power of the system” (Burns, 2000; Ribeiro and
Scapens, 2006; Yazdifar et al., 2008).
The advent of the internet and e-commerce is bringing dramatic changes to
management accounting. It allows management accountants to track performance
information that goes beyond the cost-based information of historic general ledger
systems. Kogan et al. (1997) argue that electronic commerce will have a profound effect
on the role of management accounting in decision support and control. However, there
is little research (Berry et al., 1997; Cullen et al., 1999; Seal et al., 1999, 2004) that studies
management accounting and electronic commerce. These studies focus on the
management accounting techniques that could be used by management accountants in
inter-firm supply chain development and management. At this juncture, yet more case
studies need to be undertaken in studying intra-organizational processes of change
within individual organizations which have implemented B-to-B e-commerce. Deep
insights on what really happens in organizations that implemented e-commerce are
required in order to decide if and in what way management accounting practices have
changed in such organizations. The demand for research into these issues is urgent
since e-commerce technology is spreading rapidly.
To fill in this gap, this paper focuses on the change process of management
accounting practices within an Egyptian textile company (TexCo [1]) that implemented
B-to-B e-commerce. Egypt has witnessed recently a notable growth in e-commerce
development. Some significant achievements include financial institutions’ web sites,
online banking, e-retailers, e-procurement, purchasing portals, and others. Also, Egypt,
as a developing country, provides an interesting setting as management accounting
change has often been investigated in Western developed countries. Hopper (2000)
argued that management accounting practices are not universally uniform and cannot
be understood without reference to the importance of cultural and economic factors in
countries. Egypt has specific economic and social conditions that help us in
understanding the change in management accounting practices within Egyptian
organizations. These conditions include the limited number of job opportunities, the
spread of unemployment, the large number of qualified accountants, the unavailability
of unemployment benefits and the extensive use of power.
Old institutional economic (OIE) theory (Burns, 2000; Burns and Scapens, 2000a, b;
Burns et al., 2003) and Hardy’s (1996) model of power mobilisation are chosen as a
theoretical framework to inform the analysis of the case. The OIE theory emphasises
the importance of organizational routines and institutions in shaping the process of
management accounting change (Burns and Scapens, 2000a, b). It also demonstrates the
JAOC role of external shocks (such as change in leadership) in challenging the organizational
9,1 taken-for-granted ways of thinking and doing (Burns et al., 2003). OIE theory attempts
to explain phenomena in “processual” terms, teasing out how and why things become what
they are, or are not, over time. The concept of power mobilisation (Hardy, 1996), however,
provides means to illuminate the dynamics of how and why new accounting routines
evolve in the case; also revealing unforeseen problems encountered in the change process.
52 Power is also an integral part of OIE core methodological underpinnings (Burns, 2000).
We believe that the OIE theory, especially the contribution of Burns and Scapens
(2000a, b) and Burns et al. (2003), could be used in this study to explain how the
implementation of B-to-B application, with its new embedded rules and routines, could
affect and be affected by both existing organizational rules and routines, including
management accounting practices, in addition to the action of organizational agents.
On this interplay, between the existing rules and routines and those embedded in the
B-to-B system, where power acts as facilitator or barrier to change, depends the
institutionalisation of new rules and routines, which will then shape the future action of
organizational agents including management accountants.
To summarize, the aim of the current study is to provide contextual explanation of
the change process of management accounting practices within an Egyptian
organization that implemented B-to-B e-commerce. This aim requires us to look beyond
merely the outcomes of implementing B-to-B e-commerce taking into account the
complexities of what drives and shapes the cumulative processes of change such as,
habitual behaviour, power, technology and institutions. This paper is structured in six
main sections. The next section presents the literature review. Section 3 focuses on the
theoretical framework. Section 4 presents the research methods. Section 5 concentrates
on explaining the case study (TexCo). This is followed by a discussion of the findings
and presentation of some concluding remarks.

2. Management accounting change and B-to-B e-commerce

2.1 Management accounting change
As suggested by Burns et al. (2003), the debate over the changing nature of management
accounting has been supported by a wide array of contradictory research. In a study of
firms characterised by new technologies and high growth rates, Coates and Longden (1989)
noted considerable difficulty in the introduction of even modest changes to long established
management accounting practices. This seemed to confirm Johnson and Kaplan’s claims
(1987) that accounting within firms has fallen behind in its relevance. In their study of
exploring the implementation and use of an ERP system in an Egyptian organization
Jack and Kholeif (2008) concluded that the management accounting practices became
compressed to cost information collection and provision. Also, Triest and Elshahaat (2007)
concluded that cost accounting is still very much in a developing phase in Egypt as costing
information is used mainly for pricing purposes than for internal purposes.
In contrast to these arguments, a number of other studies (Innes and Mitchell, 1989;
Christiansen and Mouritsen, 1995; Joseph et al., 1996; Mathews, 1998; Wright, 1996;
Hrisak, 1996; Partridge and Perren, 1997; Sheridan, 1998) have demonstrated that
management accounting is changing due to IT implementation. Joseph et al. (1996)
indicated that the emphasis of management accounting is more on supporting managers
and controlling business operations through the provision of accounting information
along with non-financial performance indicators.
 Currently, a quite extensive and growing literature exists on the drivers of Management
management accounting change, change processes, resistance, and the consequences accounting
of change (Granlund and Lukka, 1997; Burns and Vaivio, 2001). Drivers of management
accounting change would frequently include: changing business market conditions, change
organizational re-design, new managerial philosophies, increased business complexity,
systems development, management technique innovations, human resource
developments, champions of change and even myths created about the benefits of 53
change. Other studies of management accounting change analyse organizational
tensions, conflicts, and resistance toward change endeavours, or failures of change
(Scapens and Roberts, 1993; Malmi, 1997; Granlund, 2001).
Many of the management accounting change studies examine change as a
process. However, there is scant attention given to studying management accounting
change process following the introduction of the electronic commerce. In a research
reporting on the influence of IT on management accounting change, Voon (2001, p. 99)
concluded that:
The current lack of literature on e-commerce makes it difficult to draw out any implications
for how electronic commerce and EDI[2] impact on management accounting practices and the
change debate.

2.2 B-to-B e-commerce

E-commerce is defined as “the sharing of business information, maintaining business
relationships, and conducting business transactions by means of telecommunications
networks” (Zwass, 2003, p. 8). For web-based B-to-B e-commerce, companies can sell to
other businesses using their own web sites, net marketplaces or extranets. The extranet,
permits the firm and its designated suppliers, distributors, and other business partners
to share production scheduling, inventory management, and unstructured
communication, including graphics and e-mail.
A considerable amount has been written about B-to-B e-commerce in the information
systems (IS) and marketing literature. However, scant attention has been given to this
phenomenon in accounting literature. Having a deterministic stance, some studies
(Bergeron and Raymond, 1997; Lee et al., 1999; Jelassi and Figon, 1994) considered
inter-organizational systems (IOS), particularly EDI, to have an independent influence
on organizations, exerting unidirectional causal effects over them. For example, Bergeron
and Raymond (1997) found that EDI improved information quality and operations
management. In another study Lee et al. (1999) found that EDI enabled adopters to
increase inventory turns while reducing stock-outs. Also Jelassi and Figon (1994)
reported that EDI usage shortened lead-time.
The above studies, although this was not their main aim, have their implications for
management accounting practices. They proved that B-to-B e-commerce improved
information quality and inventory management which, we argue, will affect the
management accounting practices in planning, control and decision making. However,
the above studies disregard the actions of people, including management accountants,
in developing, appropriating, and changing ITs. This introduces a need for a processual
approach in theorising management accounting change associated with B-to-B
e-commerce implementation.
There is some research (Berry et al., 1997; Cullen et al., 1999; Seal et al., 1999) that
consider the role that might be played by management accounting in inter-firm supply
JAOC chain management. These studies focus on the management accounting techniques
9,1 that could be used by management accountants in inter-firm supply chain development
and management. In their study Cullen et al. (1999) stated that accounting has a
constitutional role to play in the establishment and management of trusting and
collaborative business relationships based upon openness of books, profits and losses,
and shared and common programmes of cost management. They added that the role
54 of accounting shifts from separation to shared practices as the relationship changes
from autonomy, to mutuality or partnership via the stages of serial and reciprocal
dependence. Cullen et al. (1999) also assured that, in the cases they studied,
management accountants are becoming involved in cost management for efficiency,
for effectiveness and in strategic issues through their involvement in multifunctional
teams which look at processes across organizational boundaries.
The above studies consider the inter-organizational management accounting change
associated with B-to-B e-commerce; however, it is argued here that intra-organizational
processes also need to be investigated. Further case studies need to be undertaken in
studying intra-organizational processes of management accounting change within
individual organizations that have implemented B-to-B e-commerce. Management
accounting change is complex, and not something that can be studied in isolation to its
organizational, economic, social, and institutional context. There is a need for temporal
analysis into when, why and how management accounting practices are (or not?)
changing within organizations that implemented B-to-B e-commerce. The current paper
will complement the above studies in investigating the intra-organizational change
process of management accounting practices within an Egyptian organization that has
implemented B-to-B e-commerce. Both the inner and the outer contexts will be considered
in the analysis.

3. Theoretical framework
3.1 OIE theory
The institutionalists accept the centrality of power and conflict between individuals and
institutions (Burns, 2000; Burns and Scapens, 2000a, b). They see conflict and the exercise
of power as inevitable, as conflicts are the result of technological change and “ceremonial”
institutions (Wisman and Rosansky, 1991). Essentially, the OIE line is that explanation
of how choices or decisions are made, thus processes shaped, must consider the influence
that institutional factors have on moulding such choice. Institutional factors include
habits, rules, routines, institutions, norms and conventions.
Burns and Scapens (2000a, b) have applied OIE theory to conceptualise management
accounting change. They aim to interpret how accounting practices have the potential,
although not in all situations, to become “routinised” in firms. More specifically, how such
routines can over time begin to underpin a firm’s taken-for-granted assumptions and
beliefs (institutions). In this sense, accounting practices are said to be institutionalised
when they become widely accepted within an organization to the extent that they are an
unquestionable form of management control. However, such institutionalization may not
always be achieved, because of the conflict and resistance which may arise over new
rules, particularly if they challenge existing meanings and values.
Burns and Scapens (2000a, b) describe three dichotomies found in OIE writings
which they believe could provide ways of classifying and distinguishing between
different types of change processes:
 (1) formal versus informal change; Management
(2) revolutionary versus evolutionary change; and accounting
(3) regressive versus progressive change. change
According to Burns and Scapens (2000a, b), formal change occurs by conscious design,
usually through the introduction of new rules and/or through the actions of a powerful
individual or group. Informal change, however, occurs at a more tacit level; for example, 55
as new routines adapt over time to changing operating conditions. Burns and Scapens
(2000a, b) expect that formal management accounting change will be more
straightforward than attempting to change the ways of thinking which are embedded
in existing management accounting routines. However, the successful implementation of
a formal change may require new ways of thinking. They argue that if the processes of
informal change lag behind the formal change processes, tensions may be introduced in
the form of anxiety and resistance, possibly leading to the failure of the implementation.
However, if those responsible for implementing the new accounting system possess
sufficient power, they may still be able to impose change (possibly with some difficulty).
According to Burns and Scapens (2000a, b), revolutionary change involves a
fundamental disruption to existing routines and institutions. However, evolutionary
change is incremental with only minor disruption to existing routines and institutions.
In this sense, the term revolutionary is not related to the particular content of the
change (i.e. the particular techniques, systems, etc.) being introduced, but rather to its
potential impact on existing institutions. They argue that it is likely to be much easier
to introduce changes, which do not challenge existing routines and institutions,
i.e. where the change can be accommodated within the existing ways of thinking and
norms of behaviour. Nonetheless, change which conflicts with existing routines and
institutions is likely to be much more difficult to implement. Especially in the absence
of external changes, such as advances in technology, take-over, etc. there is unlikely to
be a reopening of previously agreed arrangements and therefore routines may become
somewhat resistant to change.
The dichotomy of regressive and progressive institutional change offers further
insight into processes of management accounting change. Regressive change describes
behaviour which reinforces ceremonial dominance, thereby restricting institutional
change; and progressive change describes the displacement of ceremonial behaviour by
instrumental behaviour[3]. Such progressive change can take place, even where there is
ceremonial dominance, because new technology can incite questioning of previously
dominant, ceremonial values. Burns and Scapens (2000a, b) argue that researchers can
begin to question whether an organization’s management accounting routines are
largely ceremonial, and thereby preserve the powers of particular vested interests and
potentially hinder the development of new organizational activities; including the
introduction of new technology, the application of new production techniques and the
undertaking of research and development. This ceremonial-instrumental dichotomy
offers a conceptual starting point for researching the institutionalized nature of
management accounting within organizations, and the embodiment of dimensions of
power in change processes.
Burns et al. (2003) consider the role of external/internal shocks in “unfreezing”[4] the
existing routines. In case of external/internal “shocks”, such as ownership change and
internal turnaround, Burns et al. (2003) argue that there is a possibility of a reopening
JAOC of previously agreed arrangements and therefore routines may change. Burns et al. (2003)
9,1 used the expression of “bursting the bubble” to indicate that the company’s institutions
are questioned and, as such, they can no longer be said to be taken-for-granted.
Nevertheless, they state that the response to such major events is likely to be determined
largely by the current context of the organization; including its routines and institutions.
Thus, it is important to recognize the role of power in the process of change.
56
3.2 Hardy’s model of power mobilisation
Hardy’s (1996) model illustrates the multifaceted way in which power works. In her
model, Hardy categorises power into four dimensions. The first dimension, power over
resources, depicts actors deploying (or restricting) key resources (e.g. information,
expertise, political access, credibility, stature, prestige, control of money, rewards and
sanctions) to modify the behaviour of others. It tends to be task-oriented and involves
persuasion and/or coercion. Second, power over decision making is exerting influence
over subordinates’ participation in decision – making processes. Such power
mobilisation can occur “from behind the scenes” and work both towards increasing
and/or decreasing such participation. Power in this view is used through preventing or
extending access to the decision-making arena and hence ensures compliance.
Third, power over meaning is influencing actors’ perceptions, cognitions and/or
preferences in order that they accept the status quo (for example, failing to recognise
alternatives) or, rather, become convinced that change is “desirable”, “rational” and/or
“legitimate”. Fourth, power of the system, which Hardy (1996) argues is often beyond
the reach of tampering by individual organizational actors. It lies in the unconscious
acceptance of the values, traditions, cultures and structures of a given organization or
society and it captures all organizational actors in its web. Hence, it mirrors the notion
of “institutions” (Burns and Scapens, 2000a, b) adopted in this study. Hardy argues
that since this dimension is vested in the status quo, it is unlikely to lead to change in
the absence of the other three countervailing dimensions of power. The first and third
dimensions of Hardy’s model (power over resources and meanings) are based on Lukes
(1974) work who related those dimensions to community and societal mechanisms.
Accordingly, Hardy’s model could be applied on both the organizational and societal
levels to explain power mobilization inside and outside the organization.
In his study to explain the process of management accounting change in a UK
chemicals company, Burns (2000) used a theoretical framework that comprises the OIE
theory and Hardy’s model of power mobilisation. The framework facilitated his
investigation into the inter-play of new accounting practices, routines, institutions,
power and politics. As a means of extending Burns’ (2000) work this paper will consider
the role of external shocks (appointing a new chief executive officer (CEO)) in unfreezing
the existing routines (Burns et al., 2003), and the role of the B-to-B systems as carriers
of new rules to its users.
The focus of this study is to explain the process of management accounting change
associated with the implementation of B-to-B e-commerce. Therefore, there is a need for
using a processual framework that takes into account the complexities of change. The
OIE theory is deemed suitable since it takes into consideration the complexities of the
process of change. In this paper B-to-B technology is posited as the carrier of new rules
and routines. It is seen as having a dual nature, being both constructed and enacted by
human agents, as well a material force that shapes human action and social practices.
Accordingly, the OIE theory is used in this study to explain how the implementation of Management
the B-to-B system, with its new embedded rules and routines, could affect and be affected accounting
by both existing organizational rules and routines besides the action of organizational
agents. On this interplay between the existing rules and routines and those embedded change
in the B-to-B system, where power acts as facilitator or barrier to change, depends the
institutionalisation of new rules and routines. The new institutions will then shape
the future action of organizational agents including management accountants. Hence, 57
the framework includes the use of OIE theory together with Hardy’s conception of power
mobilisation to explain “why” and “how” the process of accounting change in TexCo
unfolded through time as it did. That is, the author will utilise OIE theory as a tool to
explain the process of management accounting change in TexCo, as well as Hardy’s
(1996) model to explain how the different power dimensions are used to catalyse the
change process. This melding helps enrich the analysis.

4. Research methods
In order to explain the process of management accounting change associated with the
implementation of B-to-B e-commerce and its long term consequences it is necessary to
examine this process over a sufficiently long period of time. Furthermore, a processual
approach needs to explore both the historical and organizational contexts. Thus,
a longitudinal, explanatory case study of TexCo was undertaken. The focus of the
research is on the specific case. The role of theory is to understand and explain the
specific rather than to produce generalizations (Scapens, 1990).
During the pilot study (July-August 2001) Egypt was in the incipient stages of applying
B-to-B e-commerce. The author despatched approximately 80 e-mails to the managing
directors of companies working in the IS field in Egypt asking for names of companies
that had implemented B-to-B e-commerce. Some 20 of them e-mailed in reply and the
author succeeded in securing the names and contact information for five companies that
had implemented B-to-B in Egypt. Letters were sent to each company describing the nature
and context of the research and its objectives. The letters also included the research
time frame and the proposed nature of the interviewees’ role. TexCo, an Egyptian textile
organization, subsequently agreed to participate in the study.
The author gathered the data, over a period of four years (July-August 2001,
July-August 2002, May 2003, and September 2005). This was accomplished through
on-site observation of users while dealing with the B-to-B application; documentary
review; and a series of semi-structured interviews. 25 semi-structured interviews were
conducted, in the Arabic language, inside and outside the organization with a typical
length of 1.5-2 h (see list of interviews in Table I). The interviews were tape-recorded,
transcribed and translated into English by the author directly after the interviews. The
interviewees included the management accountants, CEO, senior managers, IT
manager, and some of the users of the B-to-B application inside and outside the
organization[5] as well as the developers of the extranet (NetCo)[6].
Prior to site visits, the author outlined the criteria underpinning the data collection.
This included data confidentiality; objectivity in data collection and analysis; data
relevance to the research aim; and data accuracy and reliability through triangulation.
Then, the author outlined the list of materials to be collected as well as questions for
interviews and plans for direct observation of users while dealing with the system. The
author set questions about the history of the company, it is culture, the reasons for
JAOC
Number of Total number
9,1 Position(s) interviewees of interviews Issues discussed

CEO 1 3 The history of the company, its culture, reasons for

implementing the B-to-B system, the problems
raised during the implementation of the system and
58 the ways of sorting such problems
Accountants 3 8 The nature of management accounting practices
(routines) both before and after the system’s
implementation. Whether (or not) and why the
management accountants accepted the new
management accounting practices
Outlets’ dep. 1 5 Reasons for implementing the B-to-B system, the
manager problems that were raised during the
(ex-IT implementation of the system, the ways of sorting
manager) such problems and the implications of the system
for the outlets’ department
Production 1 3 TexCo’s culture before and after the system’s
manager implementation. The implication of the system for
the production department
Managing 1 2 The problems that were raised during the B-to-B
director system design and implementation phases, how
of NetCo they are resolved, as well as the characteristics of
the reporting facilities of the system
Outlets’ 2 2 Problems that were raised during system
bookkeepers implementation, their training on using the system,
(later became and the implications of the system for their daily
cashiers) practices
Table I. One of the 1 2 How the system was introduced to the distributors
The list of interviews distributors by TexCo, reasons for accepting it and its
in TexCo implications on their profitability

implementing the B-to-B system, the problems raised during the implementation of the
system (e.g. resistance to change) and the ways of sorting such problems (e.g. the use of
power). Proposed questions also included the nature of management accounting
practices (routines) both before and after the system’s implementation. Whether (or not)
and why the management accountants accepted the new management accounting
practices was also considered. E-mails were sent to the interviewees asking them for the
best timing of the visits to avoid absence or holidays. The author also stated the length
of time required and sent interviewees a list of points to be covered in the interview.
The goals of this forward planning were to ensure good coverage of the research aim
and optimum use of time spent on-site.
Based on exploratory interviews (July August 2001), a short list was prepared
containing relevant persons who could be approached for participation in the research.
That phase was characterized by very open enquiry and the interviewees were
encouraged to “do all the talking”. The second, third and fourth series of interviews
were follow up interviews to ask further questions on the basis of the material analysis,
and to inquire about recent implications of the system.
Observation of users while dealing with the system revealed the new practices
following the system’s implementation. It also provided the author with the opportunity
to explore the reporting facilities offered by the new system and how it influenced the Management
management accounting practices in TexCo. Further, access was permitted to some accounting
documents including a number of formal reports, minutes of meetings, memoranda and
personal notes. change

5. The organization in focus

TexCo is a third generation family business. Established in 1950, by the grandfather of 59
the present CEO, TexCo soon become one of the four leading companies operating in
textile manufacture in Egypt. It is primarily engaged in dyeing, printing and finishing
textiles[7]. TexCo’s products are characterized by both high quality and high price.
Consequently, most of its customers are from the elite of the Egyptian society. The
company sells its products through its outlets[8] as well as the outlets of its distributors
in Egypt, the Middle East and Europe.
We can infer that TexCo had a “production oriented” culture. There were shared
assumptions, within the company, about the importance and priority of production
quality. Although TexCo was profitable, this was due in the main to its excellent products
and production systems, rather than to its management and accounting controls. The
accounting in TexCo during this period was not an integral part of the management
process. The previous CEO used to determine the production quantities depending on his
experience. The accounting reports were only used for the preparation of financial
statements. Cost accounting information was available in TexCo at a basic level and was
used for pricing purposes rather than for decision making. The production manager
explained:
[. . .] The previous CEO used to determine the production quantity based on his personal
experience. He was very concerned with production quality, but he didn’t give much interest
to using accounting figures in production planning [. . .].
TexCo used to sell its products on consignment basis, where a large stock of its textile
collection was left in its distributors’ outlets as well as its outlets. At the end of each
week the outlets used to send the invoices to the outlets’ department, in TexCo, where
four accountants entered the invoices to a simple locally produced accounting
information system (AIS). The accountants in the outlets’ department[9] were relegated
to a record-keeping role. Their routine was concentrated on collecting cash and
preparing reports. At the end of each month the accountants made the settlements, by
comparing their records with the records of the outlets, and collect the cash. They also
prepare accounting reports, about the balances of stock, sales and cash collections and
sent them to the CEO and the general accounting department on a monthly basis.

5.1 “Bursting the bubble” and the decision to go with B-to-B e-commerce
In 1993 the previous CEO gave his son all the authorities and responsibilities to manage
the company. The new CEO, in his thirties at that time and very ambitious, appointed an
IT manager[10] and started introducing computers in all the departments. Being a
business school graduate with a limited experience the new CEO started using the
accounting reports in the decision-making process, especially in production planning.
However, the outlets’ department used to send him late accounting reports. An
accountant[11] explained that they were busy during that time in data entry and
stocktaking.
JAOC Through analysing the accounting reports, the CEO also realised that TexCo was
9,1 facing some problems in inventory control. The accountants explained to him that the
control over the huge stock that was kept in the distributors’ outlets was very weak
and susceptible to theft and wastage. The CEO remarked that the stock balance was
about 100-150 million L.E. and the wastage was around 7-8 per cent of this value.
Furthermore, through one of the meetings with the accountants of the outlets’
60 department, the CEO found out that TexCo was facing some invoicing control
problems. This is due to the fact that the invoicing mistakes made by the bookkeepers
in the outlets were not usually detected. The deficit was usually recorded as wastage.
An accountant explained:
[. . .] We used to find deficiencies during stocktaking of the outlets. This could be the result of
theft, wastage or even bookkeepers’ mistakes in recording the transactions. But we couldn’t
know what the real reason was, and we couldn’t determine which transaction was mistakenly
recorded [. . .] (Accountant 3).
We can state that the change in leadership at TexCo had created a general recognition
that “things would change”. Questioning of the company’s traditional ways of doing
things (institutions) began, and it was acknowledged that the new CEO would
inevitably make changes. This process, of questioning the taken-for-granted ways of
thinking, is what Burns et al. (2003) called “bursting the bubble”. In other words the
company’s institutions were questioned and, as such, they could no longer be said to be
taken-for-granted.
To deal with TexCo’s problems the CEO thought of keeping the stock in the factory
under TexCo’s control and sending the textile to the distributors on order. To lead the
Egyptian market in applying the B-to-B application[12] the CEO, in 1996, decided to
use an extranet that links the factory in Cairo with their distributors and outlets
worldwide. The global competition was another reason for TexCo’s change. The CEO
expected that by the application of the General Agreement on Trade and Tariffs
(GAAT) in 2005 TexCo, as well as other Egyptian textile companies, would face a
fierce competition from abroad. The CEO remarked:
We have a lot of competitors inside Egypt and after applying the GAAT agreement in 2005
we will face competition from outsiders as well, so we have to be ready for that. IT is not a
luxury; it is a prerequisite to competition and survival.

5.2 Power mobilisation

In TexCo, at the end of 1996, The CEO organised a meeting with the IT manager and
the accountants in the outlets’ department. He discussed with them the problems that
TexCo was facing. His discussion and comments made the accountants think more
seriously of TexCo’s problems. In the meeting he suggested using a B-to-B application,
the extranet, to solve such problems. He aimed at clarifying to them that the adoption
of the B-to-B application was a highly desirable choice as well as the best solution for
TexCo’s problems. The IT manager was very positive towards that choice and started
explaining how the new system would streamline complex processes and improve the
reporting facilities. The accountants, while being aware of TexCo’s problems and
becoming convinced that the B-to-B system might solve such problems, were anxious
that the system would face them with new challenges. However, their anxiety was not
reflected in any kind of overt resistance. An accountant explained:
 We didn’t make any objections [. . .] The CEO was supporting the change, so we could both Management
accept it and develop our skills, or we could look for a job in another place [. . .] (Accountant 1).
accounting
We can justify the accountants’ inaction by the use of both resources and legitimate change
power. The CEO’s status acted as a resources (hierarchical) power that prevented
conflict from emerging in the first instance. Whilst he made no correlation between their
acceptance of the system and retaining their positions, the accountants nevertheless
believed that they could lose their jobs if they reacted negatively. His support to the 61
system forced them to accept the change because they saw no alternative to it (power over
meaning). Therefore, despite their anxiety, they acquiesced the CEO’s suggestion
regarding extranet implementation.
To appreciate the accountants’ situation we must consider certain features that
characterise the Egyptian labour market (outer context). These features include the
limited number of job opportunities, the spread of unemployment[13], the large number
of qualified accountants[14], and the unavailability of unemployment benefits. The
accountants believed that resistance was an option they could ill afford. For them, it
meant that TexCo could swiftly find a qualified replacement for them, and they could
remain unemployed for an indefinite period without recourse to any form of income.
Accordingly, their anxiety was not manifested in overt conflict.
The more pressing problem that faced TexCo was to convince the distributors to
adopt the new system. At the outset the distributors refused this, as they would have to
bear some expenses associated with its usage. One of the distributors mentioned that
these expenses included purchasing desktop computers; modifying their outlets’
decorations to include samples and catalogues rather than textile rolls; and increasing
the number of cashiers staffing their outlets. They were not convinced that there was
any advantage to using the system and yet they would be expected to cover additional
costs. At the same time they were not confronting any visible challenge that could
oblige them to adapt their ways of working.
The CEO and the IT manager negotiated the issue of change with the distributors in a
meeting. They attempted to motivate the distributors through explaining the benefits that
they would enjoy by using the system. To facilitate matters for them, the CEO suggested
effecting the change gradually over two years. But when persuasion was not enough to
unfreeze their behaviour coercion was used. The CEO informed them, unequivocally, that
TexCo was committed to using the system in its own outlets anyway and those who
wished to continue to deal with TexCo had, therefore, to follow suit. The CEO added:
[. . .] Our distributors were looking for any reason for not implementing the system. So, we
had to face those problems firmly [. . .].
The CEO’s latter action can be interpreted in terms of the use of power over both
meaning and resources. He employed TexCo’s market status and prestige to influence
the behaviour of the distributors coercively. The CEO knew as well as they did that
TexCo’s leading position in the Egyptian textile market meant that the distributors
had little choice but to deal with them. It was widely acknowledged that the clients
purchasing TexCo’s products belonged to Egyptian society’s elite, those able to afford
premium rates to obtain their high quality products.
By the end of the meeting the CEO succeeded in gaining the acceptance of
approximately 20 per cent of the distributors to use the new system because they saw
JAOC no alternative to it. This percentage had reached 80 within the first year of using the
9,1 system. One of the distributors explained:
[. . .] We achieved a lot of profit through working with TexCo. I used their extranet as I didn’t
want to lose my customers [. . .].

62 5.3 The new rules and power mobilisation

In 1997, the CEO, the accountants and the IT manager commenced analysis of the
system. They concurred that it should have extensive inventory control, invoicing
control and reporting facilities. As a result, new “control oriented” assumptions started
to emerge at TexCo. By mid-1999[15], NetCo took around six months to tailor the
B-to-B system in line with TexCo’s specifications. The outlets’ department manager,
then, organised a free training course for the distributors’ bookkeepers; along with the
accountants in the outlets’ department. The training course took one day. It proved not
to be onerous for any of the participants to comprehend. One of the bookkeepers
explained that the outlets’ department manager and the accountants were offering
them help during the early phase of implementing the system.
As a tailored system, the new B-to-B application included all the reports previously
prepared by the accountants using Excel, plus others that they had insufficient time to
cater for. In other words, the accountants drew upon the existing ways of doing things
to determine the reporting needs of the new system. The new “control oriented” rules
were embedded in the new system; however, the process of change was built upon the
existing routines. An accountant remarked:
[. . .] When we designed the B-to-B system we included the same reports that we were preparing,
for ex. the balances of stock, net sales and cash collections, in addition to other reports that we
didn’t have time to prepare like for ex. sales by product; sales returns by product; stock turnover
of each product; pending invoices; the best ten outlets in sales and their locations; the least ten
outlets in sales; which outlets return most and the best areas in sales [. . .] (Accountant 2).
The B-to-B application assisted TexCo to maintain the stock in its stores, and dispatch
the products to distributors on order. Thus, instead of having immense stocks of textiles
in their outlets, the distributors had a catalogue and textile samples. Each sample had
a special card that included its code, specifications and price, which permitted the
prospective customers all the requisite information concerning the samples.
Implementing the B-to-B e-commerce in TexCo was accompanied by redesigning the
business process. The new business process can be summarised as follows. Once the
customer has selected the desired product in the outlet, the cashier checked stock
availability and sent the order to the outlets’ department via the extranet. In TexCo,
an accountant of the outlets’ department received the order and sent it to the stores.
There the workers prepared all the orders and forwarded them to the outlets by the
following day, if it was in Egypt, or within two weeks, if it was overseas. The accountant
tracked the order to ensure that it was sent on time.
The order was rechecked in the outlet before the customer received it. The recheck
was made to ascertain that it was the same quantity, quality and degree of colour that
was originally ordered. The accountant then entered the transaction on to the AIS. At the
close of each week another accountant made the settlements with the distributors, using
the systems’ reporting facilities, and collected the receivables through either cheques or
bank deposits. Each month end involved the CEO, the outlets’ department manager and
one of his accountants in scrutinising accurate and timely reports, retrieved from the Management
system, for decision making. Additionally, some of these reports were then sent to the accounting
general accounting department for budgetary and financial statements’ preparation.
In that stage of the change process, the CEO delegated the authority of the outlets’ change
department to the IT manager[16], and gave him the responsibility of determining
the production orders. Supervising all TexCo’s outlets was a reward to the IT manager
for his efforts in implementing the system. Another reason for that was his technical 63
ability to deal with the system and sort any problems that could rise by the system’s
users. The outlets’ department manager, in turn, asked one of the accountants to support
him in determining production orders. In doing so they drew on the reporting facilities
provided by the new system. Another accountant became responsible for following up
the orders sent through the extranet, sending a copy to the stores, entering them to the
AIS and giving feedback to the production department in case of sales returns. A third
accountant became responsible for making the settlements with the outlets and following
up the cash collection. In other words, the accountants in the outlets’ department have
become more involved in the day-to-day running of the business.
At that situation the CEO was using more than one of Hardy’s power dimensions.
He offered the accountants a role in the decision-making process (decision-making
power) to ensure their compliance and mobilize their meanings (legitimate power) in a
manner that convinced them that change is “desirable”. Such empowerment imbued
the accountants with feelings of capability.

5.4 The emergence of new routines and the process of institutionalisation

Over the three-month enactment of the new rules, the repeated behaviour of the
accountants led to reproduction of new routines. This reproduction involved conscious
change, which occurred when the accountants began questioning the existing rules and
routines that were embedded in the B-to-B system. The accountants realised that they
needed more reports to undertake their new role than what was already provided by the
system. This process of enactment resulted from reflexive monitoring and the application
of tacit knowledge about “how things were done”. Responding to their needs, the outlets’
department manager asked NetCo to modify the system to embody the necessary reports.
This event revealed the interaction between the users and the system and how the users
affected (modified) the system. The managing director of NetCo explained:
[. . .] There were a lot of modifications made in the first three months of implementing the
system. They needed extra reports which we designed. Now the system includes a reporting
tool to create the needed reports [. . .].
Over time routinisation of the new imposed accounting practices occurred at TexCo.
Using the new system, especially its reporting facilities, soon became a “programmatic”
activity for the accountants. Through observation the author concluded that first,
the B-to-B system became the sole tool to be used by the accountants to deal with their
distributors. The author could find no evidence of “work arounds”. Second, the reporting
facilities produced by the system became the key tool used in decision making. These
reporting facilities provided timely information about sales of each outlet; sales from
each product; sales returns; stock turnover of each product; cash collections; pending
invoices; the best ten outlets in sales and their locations; the least ten outlets in sales;
which outlets return most and the best areas in sales. The system was explicitly
JAOC interpreted by the accountants as a substantial advantage for them. It help them in
9,1 taking a lot of decisions related to sales, production, purchases, cash flow management
and the determination of the most suitable area for opening new outlets. It also facilitated
the accurate and timely preparation of financial statements and budgets within the
general accounting department.
An accountant confirmed that the invoicing control problem came to an end.
64 According to his words, he can now detect any recording error by the end of the day;
through comparing the orders entered to the extranet by the bookkeepers with the
invoices entered to the AIS by him. Also, if there is any error made by the bookkeeper in
entering the order it is detected by the next day on delivery. Moreover, having the
stock in the factory resulted in saving the time and effort of the accountants during the
stock taking process. Finally, the new reporting facilities offer the accountants and
the outlets’ department manager the necessary tools for evaluating the performance of
the company’s own outlets and controlling them. An accountant mentioned an
interesting metaphor of the B-to-B application:
[. . .] It’s like the camera. It gives me a view of what is going on in the outlets. I can view each
invoice on the monitor at the same moment of recording it [. . .] (Accountant 2).
In effect, by implementing the B-to-B in TexCo, the management accounting practices
have diversified from “bean-counting” towards “business orientation”. All the while,
the introduced routines in TexCo were the enactment of the rules established by the new
CEO. Gradually, the routines were self-reinforcing, as the re-enactment and reflexive
monitoring contributed to a burgeoning tacit knowledge for the accountants. The author
can see a further use of power by the end of the first year of using the system. The CEO
developed a team-based evaluation system, replacing a traditional reward system based
on individual performance, to monitor the execution of the new routines. Under this
system, the departmental managers became responsible for monitoring the execution of
the introduced routines and the employees were rewarded for working as a team. These
group-based rewards included salary increases, promotions and bonuses. That is to
say, the resources were again used to manage the meanings. They were used to manage
the cross-functional groups’ meanings towards operating as a team. It seems that
the team-based evaluation system was constructive in “controlling” the execution of the
new routines.
Over time the accountants became very satisfied with the system, and it seems that
they accepted the changes and the additional commensurate responsibilities. They
remarked that the system developed their skills, saved their time and gave them more
time to analyse the reports and interpret the data. It can be stated here that the new
“control oriented” assumptions became widely accepted in the company and they could
be regarded as new institutions. An accountant remarked:
[. . .] Now I believe that the system developed my skills [. . .] It saves my time and effort and
give me more time to analyse the reports and interpret the data [. . .] (Accountant 2).

6. Discussion and conclusions

The findings, indicate that the B-to-B e-commerce has facilitated the change in the
management accounting practices towards decision support and control, which supports
the Kogan et al. (1997) claim. The management accountants in TexCo are becoming
involved in multifunctional teams which look at processes across organizational Management
boundaries which confirm the findings of Cullen et al. (1999). More specifically, our accounting
findings indicate that implementing the extranet in TexCo facilitated greater control over
inventory and invoicing. It improved the planning process through providing the change
accountants with accurate and real time information about sales, sales returns,
receivables, cash collection and inventory turnover. The system facilitated the settlement
process, the performance evaluation of TexCo’s outlets; and saved the time and effort 65
of the accountants during the stocktaking process. It also provided real time information
for the preparation of budgets and financial statements within the general accounting
department.
The OIE theory offers a particular “way of seeing” the management accounting
change in TexCo. Based on Burns and Scapens (2000a, b) three dichotomies of
classifying change processes, the management accounting change in TexCo could be
classified as formal, revolutionary and progressive in nature. It is formal as it occurred
by conscious design through the introduction of new “control oriented” rules and
through the actions of a “powerful” individual (new CEO) who was able to impose the
change. It is revolutionary as it involved a fundamental disruption to existing routines
and institutions. It is also progressive as it displaced “ceremonial” behaviour by
“instrumental” behaviour through the use of the reporting facilities of the B-to-B
technology in production planning and control.
Burns et al. (2003) argue that in the case of external/internal “shocks”, such as
ownership change and internal turnaround, there is a possibility of reopening
previously agreed arrangements and thereby routines may change. However, they
claim that the response to such external “shocks” is influenced by the current context of
the organization. The current study shows that external shocks, in terms of replacement
of TexCo’s CEO, inaugurated a process of questioning the traditional ways of doing
things. The new CEO soon realised the tardy and inaccurate reporting in the outlets’
department and the weak control over both stock and invoices in the outlets. The
traditional ways of doing things in the company were challenged and could no longer be
said to be taken-for-granted.
In addition to leadership change and internal problems, other drivers for change in
TexCo included the expected global competition by the application of the GAAT
agreement and the recession that the Egyptian market was undergoing at that
juncture. Taking the outer context into consideration is vital in understanding the role
played by external factors in questioning the taken-for-granted ways of thinking and
doing in the company and challenging them.
The OIE researchers proposed that newly introduced changes that clash with the
prevailing institutions are likely to be resisted. In a prior study, Burns (2000) explains how
new accounting practices were imposed on the research and development department in a
UK company – namely through the mobilisation of power over resources,
decision-making processes and meanings. The imposed accounting change failed to
achieve its champion’s original aims of instilling a “financially-oriented way of thinking”
amongst staff in this research department. Although new “mechanical” routines of
accounting emerged over time, Burns claimed that these new ways of thinking never
materialised because they were unable to “replace” the existing institutions of chemistry
in the department in question. In TexCo, however, the author noted the difficulties
involved when imposing change on settings where existing production-oriented
JAOC institutions were not congruent with new routines and intended control-based ways of
9,1 thinking. Despite such obstacles, change did occur in the case. The interesting issue
at stake here is how and why the change occurred in the case with such a contradiction
between the old and new institutions.
There was a reluctance to change in TexCo. That was revealed in the form of the
accountants’ anxiety vis-à-vis the new system. Their concern was due to “mental
66 allegiance” to established ways of thinking and doing embodied in existing routines
and institutions (Burns and Scapens, 2000a, b), which mirrors Hardy’s (1996) concept of
“system’s power”. Implementing the B-to-B e-commerce system was accompanied by
their belief that such systems might result in changing their behaviour and facing them
with daunting new challenges. Hardy argues that system’s power is often beyond the
reach of tampering by individual organizational actors. It lies in the unconscious
acceptance of the values, traditions, cultures and structures of a given organization or
society and it is unlikely to lead to change in the absence of any countervailing power.
The mobilisation of power over meanings, decision making and resources were all
described as having a major influence on the process of accounting change in TexCo.
The use of resources power, in terms of using the CEO’s status and support, succeeded
in mobilising the accountants’ meanings and obliging them to accept the change
despite their expressions of anxiety (legitimate power). Also, offering a role in the
decision-making process to the accountants (decision-making power) was beneficial in
ensuring their compliance and mobilising their meanings (legitimate power) in a
manner that convinced him that change, after all, was “desirable”. Such empowerment
proved to be of great assistance in increasing their commitment to the change process,
which was demonstrated through use of the new system, their acceptance of the new
routines, and their belief that the system developed their skills.
Hardy and Leiba-O’Sullivan (1998) argued that both resources and decision-making
powers are premised on the existence of conflict and opposition. However, the previously
stated situations at TexCo reveal the issue that both powers are sometimes, in fact, not
premised on the existence of conflict and opposition. The author remarked in TexCo how
the two power dimensions were wielded to prevent conflict from arising originally.
Moreover, it is sometimes difficult in practice to “isolate” different dimensions of the
phenomenon of power. In TexCo power over resources and meanings were used
simultaneously to ameliorate the distributors’ formal and overt resistance. Their
resistance was due to competing interests. Implementing the system was associated
with the distributors incurring some of the related expenses. The CEO succeeded in
employing TexCo’s market status and prestige (resources) to influence their behaviour
and to mobilise their meanings (power over meanings) coercively. By restricting
dealing with TexCo to implementing the system, the CEO left the distributors with no
option but to implement the system. They had to accept using the system to retain their
customers, which, naturally, they did.
Scapens (1994) maintains that the external environment in which the firm operates can
influence how the organizational actors view the world, and make sense of their activities.
In TexCo the accountants, despite their qualms related to the system’s implementation,
did not resist the change. Taking the external environment into consideration was
important to comprehend how social and economic factors (the limited number of job
opportunities, the spread of unemployment, the large number of qualified accountants,
and the unavailability of unemployment benefits) acted as a catalyst in unfreezing the
accountants’ behaviour. It assists us in understanding and explaining why top Management
management’s support of the new system succeeded in mobilising the accountants’ accounting
meanings and forcing them into inaction.
Changing existing routines and institutions requires that deeply rooted assumptions change
and beliefs be questioned. However, because institutions always exist prior to any
attempt by actors to introduce change, they will themselves shape such processes of change
(Burns and Scapens, 2000a, b). Busco et al. (2006) studied the acquisition of an Italian 67
company, by the US multinational, General Electric (GE). The acquisition is followed by the
introduction of Six Sigma; a quality improvement programme. Their case illustrated that
revolutionary change in practices was possible as it was based on the prevailing ways of
thinking and doing (i.e. the prevailing institutions). Also, in TexCo the revolutionary
change in management accounting practices was possible as it was constructed upon the
existing ways of thinking. Although new rules were introduced, accountants could still
draw on their existing ways of doing things to design the new system.
Burns and Scapens (2000a, b) state that repeated behaviour leads to reproduction of
routines, which may involve either conscious or unconscious change. In TexCo the
repeated behaviour of the accountants resulted in a conscious change to the system
(modification) within three months of its first usage to feature more reporting facilities
about the stock turnover of each product. Through the processes of change in TexCo
there were interactions between the accountants (users) and the systems with their
embedded rules. On the one hand, the accountants affected the systems through being
involved in its design and modification. On the other hand, the new system, with its
embedded rules, facilitated changing the routines and responsibilities of the
accountants. We observed that the management accounting practices in TexCo have
modified from “bean-counting” to a greater degree of business orientation. The system
offered the accountants the necessary reporting facilities to perform their new
responsibilities in supporting managers in planning and control.
Over time routinisation of the new imposed practices did occur in TexCo. The
B-to-B system became the only tool used to deal with TexCo’s outlets and its
distributors. Furthermore, the reporting facilities produced by the system became the
main instrument utilised by the accountants in the case. The OIE authors (Burns and
Scapens, 2000a, b) typically associate the recurrent following of certain rules with the
natural processes of routinisation and institutionalisation over time. However, TexCo
case suggested that there are other factors facilitated such processes of routinisation
and institutionalisation. These factors are the participation of the accountants in the
design and modification of the new system, the systems’ simplicity; the users’
satisfaction with their new embedded rules, monitoring the implementation of the new
routines and resolving the problems which TexCo was encountering.
In a study of a large public Portuguese company that was introducing an enterprise
resource planning (ERP) system, Ribeiro and Scapens (2006) illustrated how rules and
routines can be kept in place by the explicit use of power, as well as by taken-for-granted
assumptions. Although, power mobilization was an important factor in implementing
accounting change in TexCo, the author argues that the use of power solely would neither
ensure the routinisation of the new practices nor the institutionalisation of the new
routines. Unless the users are satisfied with using the new system, with its embedded
rules, and incur benefits by using it; new routines may not emerge and not be
taken-for-granted (institutionalised).
JAOC Although the accountants in TexCo were anxious about the process of the system’s
9,1 implementation and were forced into inaction, their anxiety was only ameliorated by
involving them in the design and implementation of the systems as well as awarding
them a role in the decision-making process. Indeed, they were kept thoroughly involved
in the change process, which meant that they gained the opportunity to design the new
rules, modify them and thereby take advantage of the reporting facilities that were
68 embedded in the new system.
In TexCo there was sufficient monitoring to ensure that use of the system was in
accordance with the manner in which it was intended to be used. The author observed
that monitoring the execution of the new routines by the outlets’ department manager
and the new team-based evaluation system facilitated the process of changing the
accountants’ routines over time. Although the resources (for example, salary increases,
promotions and bonuses) were used again to manage the meanings of the accountants,
monitoring the execution of the new routines was strategic in facilitating such a
process of routinisation.
The simplicity of the new routines that were embedded in the B-to-B systems and
the users’ satisfaction were other factors that facilitated the process of change. In TexCo
the accountants, whilst uneasy about using the systems at the outset of the change
process, were ultimately satisfied after a relatively short period of use. They ascribed
their satisfaction to the systems’ simplicity and user-friendliness. The simplicity of the
systems was reflected in the brief period of training required. The accountants were
familiar with the tools associated with the internet and web; consequently, they did not
require special training to be familiarised with the extranet’s interface.
Moreover, the new rules that were embedded in the system played a significant role
in resolving the problems which TexCo was encountering. The author observed how the
system improved the timeliness and accuracy of information and settled the difficulties
of stock control and misunderstandings which arose with their distributors through the
settlement process. Accordingly, the simplicity of the rules that were embedded in
the system and their role in solving TexCo’s problems facilitated the routinisation of the
new practices and institutionalisation of new routines.
A significant implication for researchers studying management accounting change
is to consider the institutional setting in which the organization is located. This implies
taking into consideration the complexity of factors that may hinder or act as a barrier
to change. On certain occasions, successful change will demand “bursting the bubble”
of the company’s taken-for-granted assumptions. Another important implication is to
consider the outer context in which the organization operates. Taking the external
environment (outer context) into consideration in TexCo’s case was fundamental to
understanding the role played by external factors in challenging the taken-for granted
ways of thinking and doing in TexCo.
It could be argued that one limitation of this research is related to the gap between
the change in leadership in TexCo (1993) and the timing of the visits (2001-2003 and
2005). However, this problem has been minimized by crosschecking memories of
events through interviews. Another limitation of this study is that the author was not
allowed to review some of the financial documents in TexCo. However, the author tried
to verify the financial figures given by them through inter-subject checking.
In this study, we explored the management accounting change associated with the
implementation of an extranet. It will be interesting to explore in future research the
change in management accounting associated with the implementation of other Management
segments of B-to-B e-commerce such as Net marketplaces. A priori the author expects accounting
that participating in such marketplaces may furnish new opportunities for management
accountants. It may facilitate changes in accounting practices surrounding the change
decision-making processes of buying and selling in addition to credit collection and
cash flow.
In TexCo the B-to-B system was linked with the AIS of the outlets’ department, 69
however, the company was using disparate IS in its various departments. Consequently,
most of the opportunities of the B-to-B system were offered to the accountants of the
outlets’ department. It would be insightful to study in future research management
accounting change in organizations that implemented B-to-B e-commerce and linked
it with its integrated systems. The author expects that the B-to-B e-commerce systems
will provide many opportunities for the management accountants in the diverse
departments in such organizations.
This paper fills a gap in the current knowledge as it refers to a developing country
and the literature in this domain is poorer. Whilst the results have provided
preliminary findings on management accounting change associated with successful
implementation of B-to-B e-commerce systems in Egypt, still more case studies,
particularly longitudinal ones, are required to complete our understanding of this novel
subject. But rather than inquiring what impact B-to-B e-commerce systems have on
management accounting, we should seek to explore how and why existing accounting
practices are challenged and changed. Research in this area is greatly needed.

Notes
1. We hide its real name for confidentiality reasons.
2. EDI means “electronic data interchange”.
3. According to Tool (1993) ceremonial behaviour emerges from a value system which
discriminates between human beings and preserves existing power structures; whereas
instrumental behaviour emerges from a value system which applies the best available
knowledge and technology to problems and seeks to enhance relationships.
4. Schein (2002) describes the “unfreezing” as the creation of a motivation to change.
5. The users of the extranet inside the organization are the accountants in the outlets’ department.
However, the users outside the organization are the outlets’ bookkeepers (cashiers).
6. It is an Egyptian corporation that started working in the IS market in 1998. The author hides
its real name for confidentiality reasons.
7. The textile sector in Egypt consists of over 3,000, public and private sector, companies. 77 of
these are engaged in dyeing, printing and finishing textile.
8. TexCo has its own retail outlets operated by its own employees in addition to a network of
independently owned distributors who sell products through their own retail outlets. Most of
the distributors deal only with TexCo, however, some of them deal with other textile
companies as well.
9. In TexCo the outlets’ department is responsible for the sales to the outlets.
10. The IT manager, who later became the outlets’ department manager, graduated in 1993.
Being a computer science major, he worked in the company as an IT manager soon after his
graduation. He was one of the project (extranet implementation) leaders.
JAOC 11. He is one of the four accountants working in the outlets department. He obtained a Bachelor
of Commerce degree in 1993, and worked in TexCo soon after his graduation.
9,1
12. TexCo was the first textile company that implemented B-to-B e-commerce in Egypt.
13. According to the Central Agency for Public Mobilization and Statistics (CAPMAS) the
unemployment rates in Egypt in 1996-1998 (when the change in TexCo took place) was
ranging between 7.9 and 8.2 per cent.
70 14. Due to free post-secondary education in Egypt, a large number of accounting major students
(around 15,000) are graduated each year from the Egyptian universities.
15. TexCo took some time (1997 to mid-1999) to sell all the stock in the outlets and redecorate them.
16. At that time the IT manager was still in charge of the IT department as well. But after one
year from implementing the system a new IT manager was appointed for the IT
department.

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73
Corresponding author
Mayada A. Youssef can be contacted at: mayada_youssef@uaeu.ac.ae

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