Accounting Employees’ Behavioral Variables and Firm Performance

Accounting Employees’ Behavioral Variables and Firm Performance

Yayla, Hilmi Erdogan, Kirkbir, Fazil and Cengiz, Ekrem

UNSPECIFIED

Abstract

The purpose of this paper is to analyze interpersonal relationships of accounting employees affecting the effectiveness of firms’ performance. For this purpose, a structural equation model was adopted from Kang et al. (2004) and was tested. A questionnary was distributed to 187 companies’ accounting departments from Blacksea region of Turkiye which are choosen with arbitrary sampling method from the lists of related region’s Chambers of Commerce and Industry. We find that, although no significant relation between balanced power and confidence, there are significant relationships between conflict and confidence, shared values and confidence, conflict and collaboration, shared values and collaboration, balanced power and collaboration, communication and collaboration. Overall our findings indicate that confidence and collaboration among the accounting department employees have direct influence on the firm performance.

Keywords: Accounting departments, departmental behaviors, firm performance.

 

 Research Assistant of Accounting, University of Giresun, Faculty of Economic and Administrative Sciences. h_yayla@hotmail.com

^∗∗ Research Assistant of Marketing, Karadeniz Technical University, Faculty of Economic and Administrative Sciences.

fazil41@yahoo.com

^∗∗∗ Research Assistant of Marketing, University of Giresun, Faculty of Economic and Administrative Sciences.

ekremcen@ktu.edu.tr

1.     Introduction

A number of surveys suggest that the organization of work changed dramatically in the 1980s and 1990s (Snower,1999; Godard and Delaney, 2000; Ichniowski et al.,2000). Increased global competition and the rapid developments in information technology induced managers to rethink the way work usually has been organized, leading to an increasing adoption of socalled “innovative”, “highperformance”, “new”, or “flexible” workplace organizations (Bauer,2004:1).

In other words, today’s companies operate in a demanding environment: competition is intensifying with globalisation and the deepening of the Global Single Market, the pace of technological change is fast and consumers are increasingly demanding. Success in this environment requires a sustained effort by those who work, manage and invest in business to offer consumers value for-money goods and services. The tools for success are innovation, investment, good business practices, a skilled and motivated workforce and an ability to draw on a flexible and fair labour market (Hewitt,2002:8).

In order to take up these challenges, managers in all sectors of society need to gain a clearer understanding of the characteristics of the newcomers and their expectations toward work and employment. Also, they need to understand the different interests and factors which attract individuals to their organization, incite them to make their contribution to organizational performance and encourage them to be committed to the organization (Morin and Morin,2006:2).

Because of the primacy of financial success and QWL program costs, many managers tend to believe that it is quite difficult to achieve a high organizational performance while providing employees with a high quality of work life. May et al. (1999) examined 146 American enterprises during five years and found that, quite contrary to the layman’s opinion, companies that have a high quality of work life achieved beter profitability and growth than those that did not. In their longitudinal study, they also found that high QWL companies tend to attract highly talented employees and to become highly competitive (Morin and Morin,2006:3).

In that external and internal organizational enviroment, while the departmantal work place understanding is coming very important, accounting employees play a crucial role on the organizational work, competitive position and high performance of the firms as the other functional departments such as merketing, product, sales and etc. Beside, accounting employees contribute this desired outcomes not only as a skilled and/or motivated workforce but also with their behavioral existence. This paper suggests that accounting employees’ behavioral variables have an important influence on doing best practice of business.

The paper is structured as follows. A brief discussion of theoretical arguments on the link between research variables (conflict, shared values, balanced power, communication, confidence and collaboration) and firm performance in the next section. Section 3 presents the research study and the empirical results on the accounting department’s employees. Section 4 provides a detailed conclusion of the paper. 

2.     Theoretical Framework

In last decade the potential role played by accounting departments and accounting systems in influencing firm’s business performance examined by a significant level of researchers in the accounting literature (Abernethy and Brownell, 1999; Brooks et.al, 2001; Chenhall and Smith, 1998; Choe, 2004; Ismail and King, 2005; Fowler, 1999; Flamholtz, 2005; Ogden and Anderson, 1999; Williams and Seaman, 2002). In common, although this literature mainly motivates on  accounting information systems, control enviroment, quality mangement and  budgetary, there is no signifiant study bases on behavioural variables of the departmental accounting employees. Beside, recently in management, production and marketing literatures there are studies in a significant level indicate the relationship between departmental dynamics of behaviour and firm performance (Lascu et.al, 2006; Guenzi and Troilo, 2006; DeGroot and Brownlee, 2006; Spillan and Parnell, 2006).   

In their explanatory and emprical work, Kang et al. (2004) states the departmental behavioral factors of employees which generate the firm performance. These are conflict, shared values, balanced power, communication, trust (confidence) and collaboration. As Kang et al. (2004) predicts in their structural model that these 7 factors have direct and indirect influences on firm performance (airline services).     

Conflict

Identifying workplace conflict is not always as easy as one might think. Conflict is regularly associated with acute and isolated incidents such as outbursts, arguments, or verbal/physical altercations (Rashkis,2004). Conflict may be defined as a struggle or contest between people with opposing needs, ideas, beliefs, values, or goals (FC,2006:1). According to Gattlin et al. (2002) when conflict occurs in the workplace, it can reduce morale, lower work productivity, increase absenteeism, and cause large-scale confrontations that can lead to serious and violent crimes. Reynolds and Kalish (2002), organizational consultants in mediation, collaboration and conflict resolution, note that managers spend at least 25 percent of their time resolving workplace conflicts (Gattlin et al.,2002).

Shared values

Human values constitute the most abstract level of cognition, not specific in relation to situations or objects, but influencing the perception and evaluation of these. Values are thus thought to be the criteria people use as guidelines for evaluating stimuli, i.e. situations, persons and objects. In general it is assumed that values are universal in the sense that individuals pursue the same values around the world—but that the relative importance attached to different values varies (Brunsø et al., 2004:195). In addition, the theory of basic human values (Schwartz, 1992) identifies 10 motivationally distinct types of values that are likely to be recognized within and across cultures and to be shared among the people: power, achievement, hedonism, stimulation, self-direction, universalism, benevolence, tradition, conformity, and security (Schwartz and Boehnke, 2004:231). Shared values is a critical factor affecting the relationships among organizational members performing common organizational activities. This represents the extent to which partners have beliefs in common about what behaviors, goals, and policies are important or unimportant, appropriate or inappropriate, and right or wrong (Kang et al., 2004:548).

Balanced power

Definitions of power vary in the social psychological literature and include broader and narrower conceptions (see Turner, 2005). Although many researchers view power as a recognizable and important aspect of organizations, these researchers have had difficulty defining and measuring the theoretical construct. Further, while power has long been considered endemic to organizational practice, power is a messy, elusive concept that not only has surface or visible characteristics, but also hidden characteristics that are difficult to define and grasp (Jasperson et al.,2002:398). According to a widely-cited definition, in their classic article, French and Raven (1959) understand power broadly as the potential to influence other to believe, behave or to attitude as those in power desire them to or to strengthen, validate, or confirm present beliefs, behaviors, or attitudes (Hersey et al.,1996:229; Hatch,1997:282; Lieberman,2001:3; Wenzel and Jobling,2005:2). Although power is a slippery concept, it has been also defined as the “production of intended effects,” triumph over others despite opposition, and control over outcomes (Overbeck, et al.,2006:480).

Communication

Employee communication is “the communication transactions between individuals and/or groups at various levels and in different areas of specialization that are intended to design and redesign organizations, to implement designs and to coordinate day-to-day activities” (Frank and Brownell, 1989: 5-6). Greenbaum et al. (1988) conclude that although the different audits have used different sets of items and dimensions, three important elements seem to occur in all instruments: (1) items related to communication flow and structure, (2) items related to communication climate, and (3) items related to communication content. “Flow” refers to the amount of information that is disseminated through the different channels within the organization. “Structure” refers to which channels are used to disseminate information (cf. D. Fisher, 1993). Although flow and structure are theoretically distinct concepts, they seem to be practically the same when looking at their impact on evaluations of employee communication. Together, they refer to how much information is communicated by different sources. “Content” refers to what is being communicated. Finally, “communication climate” is defined as “those molar factors, objective and/or perceived, which affect the message sending and receiving process of members within a given organizational group” (Cees et.al., 2005:4-5).

Confidence(trust)

Webster's Online Dictionary (2006) defines confidence as a relation of trust or intimacy (3) and/or a communication made in confidence (4). As Jong et al. (2006) noted with their abstract, the increasing implementation of self-managing teams (SMTs) in service delivery suggests the importance of developing confidence beliefs about a team's collective competence. This research examined causality in the linkage between employee confidence beliefs and performance for boundary-spanning SMTs delivering financial services. The authors distinguish between task-specific (i.e., team efficacy) and generalized (i.e., group potency) employee confidence, as well as between customer-based (i.e., customer-perceived service quality) and financial (i.e., service revenues) performance. They analyzed employee and customer survey data as well as financial performance data from 51 SMTs at two points in time using lagged analyses. The findings reveal divergent results for team efficacy and group potency, suggesting that team efficacy has reciprocal, causal relationships with service revenues and customerperceived service quality. In contrast, group potency has no causal relationship with service revenues. Finally, customer-perceived service quality predicts group potency, whereas no evidence for the reverse effect is provided.

Collaboration (cooperation)

Collaboration is simply people working together to try to get something done. There’s no one “right” way to collaborate (Daly,2006:1), but effective collaborations incorporate the favourable organizational key ingredients like effectiveness, efficiency and achievement the goals. Although collaboration is at the heart of modern business process, most companies are stil in the dark about how to manage it. Linear, process-based tools such as activity-based costing, business process reengineering, and total quality management have long been effective at measuring and improving the efficiency of people and organizations in accomplishing individual tasks (Cross et al.,2006:29).

 

Firm Performance

There is a considerable volume of research investigating the benefits of good human resource management, seeking to explain the link between employee commitment and commercial success. The PricewaterhouseCoopers (PwC) Global Human Capital Survey 2002/3 sets out evidence that good people management has a positive effect on a range of issues, from increasing employee productivity and reducing absenteeism through to improving profitability. The survey of over 1,000 organisations in 47 countries finds that companies who have a documented HR strategy have higher revenues by up to 35 percent. Further investigation suggests that the most effective strategies are those that focus on lining up individual motivation with business objectives, and those that incorporate ways of measuring the return of investments in employees (Tuffrey, 2006:7).

Summary and Research Questions

According to the model set by Kang et al. (2004) the relations to be explored in this study are summarized in Figure-1. The model states that conflict, shared values, balanced power and communication among the employee of departments have a direct relationship with confidence and collaboration. Beside, as related to one-way relation with confidence and collaboration, these two variables have impacts on firm performance. 

H1: Conflict among the accounting department employee has an unfavorable impact on confidence

H2: Shared values among the accounting department employee has a favorable impact on confidence

H3: Balanced power among the accounting department employee has a favorable impact on confidence

H4: Communication among the accounting department employee has a favorable impact on confidence

H5: Conflict among the accounting department employee has an unfavorable impact on collaboration

H6: Shared values among the accounting department employee has a favorable impact on collaboration

H7: Balanced power among the accounting department employee has a favorable impact on collaboration

H8: Communication among the accounting department employee has a favorable impact on collaboration

H9: Confidence among the accounting department employee has a favorable impact on collaboration

H10: Confidence among the accounting department employee has a favorable impact on firm peformance

H11: Collaboration among the accounting department employee has a favorable impact on firm peformance

Table-1: Measured Variables

Conflict Huffiness  Disappointment  Hostility	Shared values Opinion Values  Knowledge	Balanced power Power Ascendance
Communication Sincerity  Conformity	Confidence Fairness  Persuasion  Significancy	Collaboration Flexibility Information flow  Problem Solving
Firm Performance Efficiency Common missions

3.     The Research Study

 After the pre-experiment (in the group condition of doctoral students of Blacksea Technical University) of the study a survey which is adapted from Ustaömeroğlu et.al. (2007) was distributed to 187 companies’ accounting department from Blacksea region of Turkiye (from provinces of Giresun, Trabzon, Rize, Gümüşhane, Ordu, Samsun, Artvin). A total of 101 questionnaires (86 usable) were returned providing an overall response rate of 52% and providing all provinces of Blacksea region. The questionnaire was administered in Turkish and we followed the back-translation procedure. Survey items were measured using fivepoint Likert-scales with semantic anchors on both ends. All items were converted such that scores of 1=strongly disagree and 5= strongly agree. All variables were assessed using two or three items. Reliability estimates for two-item measures were obtained using Pearson's product moment correlation (r), and reliability estimates for three item measures were obtained using Cronbach's alpha (α).

In this study, the structural equation modelling was designed to test the research model’s relations as specified in Figure-1. We used SPSS 13 to define the descriptive statistics and AMOS 4 to estimate the standardized path coefficients, the associated standard errors and to provide an assessment of the fit of the model to the sample data. We then examined the modification indices (diagnostics) to determine if the fit of the model could be improved. Confirmatory factor analysis applied to the testing model and thus the model adjusted according to low level of indices and residuals (X²=2891,342, X²/df=8,453, GFI=0,503, IFI= 0,749, NFI=0,764, RFI=0,688). After new covariance setting and elimination of the defective variables the fit statistics indicated that our data fit the model well (X²=331,601, P=0.000, X²/df=3,313, GFI=0,883, IFI= 0,995, NFI=0,982, RFI=0,981).

Table- 2: Results of Repaired Model

Variables	MLE	t	FRC
Conflict
Huffiness	0,954	73,673	0,939
Disappointment	0,911	-
Hostility	0,904	77,395
Shared values
Opinion	0,896	65,418	0,944
Values	0,921	82,561
Knowledge	0,918	-
Balanced power
Power	0,876	79,366	0,912
Ascendance	0,917	-
Communication
Sincerity	0,953	-	0,962
Conformity	0,941	83,580
Confidence
Fairness	0,898	56,882	0,951
Persuasion	0,902	-
Significancy	0,962	35,761
Collaboration
Flexibility	0,941	64,962	0,974
Information flow	0,937	-
Problem Solving	0,988	-
Firm Performance
Efficiency	0,963	73,749	0,956
Common missions	0,917	61,403

  

Table-3: Fit Statistics

X2 (Chi Square)	331,601
P	0.000
X2/df	3,313
Goodness of fit index	0,883
Incremental fit index	0,995
Normed fit index	0,982
Relative fit index	0,981

The results of our model support our expectations. Hypothesis one (H1) predicts that, conflict among the accounting department employee has an unfavorable impact on confidence. Results shown in Table-4 and Figure-2 support H1. Hypothesis H2 suggests that shared values among the accounting department employee has a favorable impact on confidence. Results shown in Table-4 and Figure-2 support this proposition. In addition, there is, however no significant relation between the balanced power and confidence (H3), and communication and confidence (H4). As shown in Figure-2, the two relationships are all close to 0.00 and non-significant. On the other hand, results shown in Table-4 supports the idea of hypothesis five (H5) that, conflict among the accounting department employee has an unfavorable impact on collaboration. The next four hypotheses predict that the shared values (H6), balanced power (H7), communication (H8), and confidence (H9) among the accounting department employee will be significantly has a favorable impact on collaboration. There are supports together for the tenth and eleventh hypothesis of “confidence among the accounting department employee has a favorable impact on firm peformance” (0,335) and “collaboration among the accounting department employee has a favorable impact on firm peformance” (0,218).

  

Table-4: Test results of Hypothesis

		T	SH	estimation
H1	significant	-9,142	0,091	-0,832
H2	significant	3,747	0,099	0,371
H3	non-significant	0,529	0,034	0,018
H4	non-significant	0,192	0,109	0,021
H5	significant	-6.873	0,095	-0,653
H6	significant	6.196	0,051	0,316
H7	significant	3.501	0,064	0,224
H8	significant	3.480	0,052	0,181
H9	significant	15.586	0,029	0,452
H10	significant	3.602	0,093	0,335
H11	significant	2.505	0,087	0,218

4.     Conclusion 

This is an emprical study designed to assess how behavioral variables of accounting employees which are conflict, shared values, balanced power, communication, confidence and collaboration influence the firm performance. 

Research findings indicates that there is a strong relationship between accounting employees conflict behaviours and confidence, and strong relationship between accounting employees shared values and confidence. Reverse, no significant relationship detected between balanced power and confidence, and communication behaviors and confidence. The current research also offers some findings for influencing factors on collaborative motivations of accounting employees. As it is emprically found that there are significant relationships between conflict and collaboration, shared values and collaboration, balanced power and collaboration,  communication and collaboration. Furthermore, the results provide that confidence and collaboration influence the firm performance where confidence significantly shapes collaboration.

Without generalizing the research’s emprical results for all conditions (results may differ by time, place, and business sector), Turkish Blacksea region companies’ managers should be more careful on conflict relations and shared values among the accounting employees in the departmental level. These two critical latents have an significant influence on both confidence and collaboration. Secondly, it is seen that accounting employees can become positively valueadded players for their organizations with their high potential of collabrative and confidential behavioural directions. Overall, we can conclude that, accounting employees’ behavioral variables should be taken into consideration in all kind of information system designings. This would expand the quality of process of the systems in integible dimensions.

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