The Integration Between Academic Research and Practices: My Experience

1. The Integration Between Academic Research and Practices: My Experience Anne Wu National Chengchi University March 25, 2014

2. Presentation Outline • The Value Chain of Academic Research, Teaching, and Practices • The Blueprint of Managerial Accounting Research--My Experience • The AcademicValue Chain of Integrative Strategic Value Management System (ISVMS) • Field Empirical Research: Balanced Scorecard and Compensation Management as an Examples • Field Empirical Research: ABC as an Example • Conclusions • Q&A

3. The Value Chain of Academic Research, Teaching, and Practices

4. The Blueprint of Future Research The First Stage: Master Thesis Testing The Third Stage: Multiple-Period NSC Projects The Second Stage: Ph D. Dissertation Testing Research Results International Journals International Conferences Academic Research: Managerial Accounting EMBA Students: Practical Implementation Models Teaching:Managerial Accounting Practices: Implementation Figure 1: The Value Chain of Academic Research, Teaching, and Practices

5. The Blueprint of Managerial Accounting Research--My Experience

6. 5.Strategy Value Creation System Firm Vision and Goals 1.Strategy System Strategic Intellectual Capital: SWOT Scorecard Customer Capital Process Innovation Capital Human, IT and Organizational Capital Strategy Balanced Scorecard 2.Strategy Implementation System Financial Perspective Customer Perspective Internal Process Perspective Learning and Growth Perspective Value Chain 3.Fundamental System: Activity- Oriented R&D Design Production Marketing and Distribution Customer Services Process Analysis Activity Management and Analysis 4.Strategic Value Management System Strategic Value Management Information Strategic Value Management Techniques Patent: 2010 IT system: 2007 Figure 2: The Blueprint of Managerial Accounting Research(The Integrative Stage): Integrative Strategic Value Management System (including 5 sub-systems) IT system: 2014

7. The AcademicValue Chain of Integrative Strategic Value Management System(ISVMS) (Trademark: Taiwan, China, and U.S.A)

8. Integrative Strategic Value Management System (Brand) 1. Field Empirical Study: Academic Research 2. Field Study: Practical Papers 3. Case Study: Harvard and Ivey Teaching Cases 4. IT System for Implementation 5. Books Product 3 Product 1 Product 4 Product 5 Product 2 Figure 3: The Academic Value Chain of Integrative Strategic Value Management System

9. Practices Academic Research Finding “Research Issues” AsianCases Strengthening “Research Method” Teaching Figure 4: The Integration of Academic Research, Practices, and Teaching: Case Focus

10. 10. Doing Case Teaching 1. Doing Case and Field Research 2. Doing Field Empirical Research 9. Helping Industrial Policy Making Case Platform 3. Establishing Research Database 8. Enhancing International Academic and Industrial Cooperation 4. Developing Empirical Research Hypotheses 7. Doing Industry Analyses 6. Conducting Industrial Analyses and Sharing Knowledge 5. Finding Research Issues Figure 5: The Framework of Multi-Purpose Case-Focused Research

11. Industries Electronic Banking Others Managerial Accounting Techniques ABC BSC IC ISVMS Case, Field, or Field Empirical Studies Figure 6: The Life Time Planning of Academic Career

12. Case, Field, Field Empirical Studies Unique Phenomenon & Story Unique Institutional or Governance Features Large Scale Empirical Studies Key issues What are the theoretical foundations? Figure 7: Doing Managerial Accounting Research in Asian Countries

13. Field Empirical Research: Balanced Scorecard and Compensation Management as an Examples

14. K. Book(Product 5) H. Kuang Chuan: Teaching Case (TMCC) (Product 3) J. BSC: IT System (Product 4) G. Mitsubishi Motors: Teaching Case (TMCC) (Product 3) BSC Theoretical Development I. 3L Electronic Corp: Teaching Case (Ivey) (Product 3) Strategy Theme (ST) Financial Perspective (FP) Strategy Goal (SG) Strategy Measurement (SM) Strategy Theme (ST) Strategy Theme (ST) Strategy Goal (SG) Strategy Goal (SG) Customer Perspective (CP) ST SG SM Strategy ST ST SG SG Organization Vision & Goal Internal Process Perspective (IPP) ST SG SM ST ST SG SG Profit Organization Non-Profit Organization Growth and Learning Perspective (GLP) ST SM SG Organizational Performance Information Usefulness Figure 8: The Formation of BSC Research Framework

15. E. Kelly: Teaching Case (TMCC) (Product 3) Rewarding Users: Managers and Employees Strategy A. Ho, Lee and Wu Paper (Product 1) F. Fortune Motors: Teaching Case (Ivey) (Product 3) B. Ho, Wu and Wu Paper (Product 1) BSC Performance Evaluation Common Measurement Financial Measurement FP SM C. Chang, Kuo and Wu Paper (Product 2) SM CP D. Chang, Kuo and Wu Paper (Product 2) Non-Financial Measurement IPP SM Firm MarketValue GLP SM Figure 9: The Formation of BSC, Performance Evaluation, and Rewarding Research Framework

16. A: Product 1 How Changes in Compensation Plans Affect Employee Performance, Recruitment and Retention and Firm Performance-An Empirical Study of A Car Dealership Joanna Ho University of California , U.S.A Ling-Chu Lee National Pingtung Institute of Commerce, Taiwan Anne Wu National Chengchi University, Taiwan (Contemporary Accounting Research, 2009)

17. Practice: Labor Law Changes • The Taiwanese Labor Law • Objective: protect workers’ interests and rights. • Requirement: base salary. • Deadline: Dec. 31th, 1998. Improvement of Low performance Plan Before Change After Change Base Salary + Commission Scheme Commission- Based Scheme July 1st, 1998

18. Practice: Research Site • The largest car dealership in Taiwan. • 18 percent of the market share over the past five years. • Changed the compensation scheme in July 1998.

19. Research Issues: From Practice • The possible impact of a switch to a less performance-sensitive incentive scheme on individual productivity and on company performance. • How the plan change affects overall employee retention and recruiting.

20. Practice: Data • Data covered by the 56-month period from January 1996 to April 2001. • Individual Level --97,541 person-months of data. • Branch Level --5,121 branch-months of data.

21. Research: Research Results Average compensation per salesman Before After

22. The Implications of the Research Results to Practices • A switch to a less performance-sensitive compensation scheme hurts employees individual sales productivity. • The research results make implications to teaching and practices. • The study suggested the company to handle the side effect of compensation change. • The company took our suggestion to change the compensation system from individual-based to team-based and high performance-sensitive schemes.

23. B: Product 1 Performance Measures, Consensus on Strategy Implementation, and Performance: Evidence from the Operational-level of Organizations Joanna Ho University of California, U.S.A Anne Wu National Chengchi University, Taiwan Steve Wu The University of Hong Kong, Hong Kong (Accounting, Organizations and Society, 2014)

24. A Taiwanese financial service company currently have 49 branches serving 530,000 customers. The company stresses high quality service and high customer satisfaction as its strategy. Sales people’s formula bonus is mainly based on their annual revenue generation. Yet, the branch manager has discretion to adjust bonus or decide promotion candidates based on non-financial and/or subjective measures. • Practice: Research Site

25. Practice: SPMS Implementation Strategy Strategic Implementation • Organizational Level • CEO • Branches • Departments • Employees • Customers 2. Six Drivers • Reasonable price • Professional services • Profitable investment advice • Friendly service attitude • Complete product line • Convenient location

26. Research Issues: From Practice • How does strategic consensus at the operational level influence strategic performance in employees’ performance evaluation? • How does strategic consensus influence the incentive effect of strategic measures on strategic performance?

27. The study worked with the top management team, including the CEO, CFO, CIO, Chief Strategy Officer, and VP-Sales to conduct a large-scale customer satisfaction survey of approximately 7,000 customers. The study interviewed the top managers to understand the customer-oriented strategy and six customer value drivers for the company. The study then developed the survey questions in accordance with the interview information. The study formed survey sample, each branch contacted at least 10 of its top 50 customers and randomly chose frequent customers. The study sample consists of responses from 1,395 customers, 395 salespeople and 40 branch managers. • Practice: Data

28. Strategic consensus at lower level managers/employees has significant impact on the implementation of strategy and the performance of an organization. The important insights to practitioners who are using the Balanced Scorecard or other SPMSs. The study suggests the company to improve the SPMSs only consider controllable factors but not uncontrollable factors (such as location, and price). • The Implication of the Research Results to Practices

29. C: Product 2 Strategy Alignment and Performance Evaluation for Shared Service Centers: A Longitudinal Study on the Role of Balanced Scorecard. Janie Chang San Diego State University, U.S.A Tsuilin Kuo Fu-Jen Catholic University, Taiwan Anne Wu National Chengchi University, Taiwan (Working Paper)

30. Research Issues: From Practice This study aims to explore how an organization could make existing SSCs more successful in serving both internal and external customers. We investigate two issues: • Whether using BSC can assist the employees of SSCs to better understand and achieve the strategies of other operating units and those of the headquarters (i.e. serving internal customers)? • Whether using BSC can better measure the performance of SSCs and reveal the value of SSCs (when serving both internal and external customers)?

31. The Implication of the Research Results to Practices The implementation of the BSC is a lengthy process, especially for SSCs. This study provides illustrations of the implementation and impact of BSC on SSCs from 2002 until 2011. The findings of this study strongly support the notion that using BSC will align strategies. Most employees in SSCs can sense the effects and changes BSC brings to them, especially in the areas of understanding towards organization’s strategies, making contributions to the organization, and providing high value service to business units. Although adopting a scorecard system can help SSCs to transform into a strategic unit and facilitate SSCs to create benefits, SSC employees are not in agreement with the developed measurement for performance.

32. D: Product 2 The Successes in Long-Term Implementation of Balanced Scorecard: A Healthcare Organization Study Wen-Cheng Chang Taiwan Buddhist Tzu Chi Foundation, Taiwan Tsuilin Kuo Fu-Jen Catholic University, Taiwan Anne Wu National Chengchi University, Taiwan (Working Paper)

33. Research Issues: From Practice • This study examines the question of how to reflect the successive phases in the evolution of BSC implementation. • This study illustrations on how a healthcare organization can successfully undertake BSC scorecard development and implementation process. • The case has three phases in implementing the BSC from 2001 to 2008 which are: planning and designing stage, weighting and evaluation stage, and alignment stge.

34. The Implication of the Research Results to Practices • We illustrate how to overcome key challenges faced by the healthcare organization and how to maximize chances of achieving longitudinal success from BSC. • This study elaborates of monitoring and guiding organizational success toward a long-term realization of the BSC, while exploring managerial guidance for similar implementations. • We suggest that the BSC framework be designed to help organizations to constantly examine themselves and improve for continuing success in the long-run.

35. E: Product 3 Teaching Case：Kelly (TMCC) To fill a void in the existing teaching case of Balanced Scorecard (BSC) Strategy Kelly Compensation Plan (Rewarding) BSC Employees：Salesperson Figure 10：The Framework of Teaching Case The issues of teaching case (恆光企業)

36. F: Product 3 Teaching Case：Fortune Motors (Ivey) Using Balanced Scorecard to implement new innovationstrategy. BSC New Innovation Strategy Figure 11：The Framework of Teaching Case

37. G: Product 3 Teaching Case：Mitsubishi Motors (TMCC) BSC: SSU SBU 6 Steps: • The matching for demand and supply. • Service agreement. • SSU BSC. • The transfer pricing for SBU and SSU. • Income statement for SSU. • The feedback from SBU to SSU in the end of the year.

38. H: Product 3 Teaching Case：Kuang Chuan (TMCC) • The issues of teaching case • The reasons of the implement Balanced Scorecard. • The processes of the implement Balanced Scorecard. • The problems of the implement Balanced Scorecard.

39. E: Product 3 Teaching Case：3L Electronic Corp (Ivey) The strategic reward system has been an integral part of the implementation of scorecards, andwhyit has not been influencing the behavior of people at 3L. Strategy Strategic Reward System BSC Figure 12：The Framework of Teaching Case

40. J:Product4 BSC：IT System (Cooperation with Data Systems Company)

41. K:Product5 BSCBook (WorkingProcess)

42. Field Empirical Research: ABC as an Example

43. Management Uses Users Strategic Decision Makings Operational Decision Makings Q. HTC: Teaching Case (ACRC) (Product 3) N. Gupta, Randall and Wu Paper (Product 1) S. ABC: IT System(Product4) T. Book(Product 5) ABC R. PQI: Teaching Case (ACRC) (Product 3) ABM Manufacturing Efficiency Resources ABC Information (4) Resources Drivers Government Regulation (1) (5) Activity or Activity Center Cost Drivers (11) (10) (2) Activities Drivers Environmental Factors Cost Object: Product, and Customers (3) (13) (12) Success or Failure (6) Cost O. O'Connor, Kacobs and Wu (Product 1) (9) (7) (8) L. Eldenburg, Soderstrom, Willis and Wu Paper (Product 1) M. Yu and Wu Paper (Product 1) Customers Shareholders P. O'Connor, Wu and Anderson (Product 1) Figure 13: The Formation of ABC & ABM Research Framework

44. L:Product1 Leslie Eldenburg University of Arizona, U.S.A Naomi Soderstrom University of Colorado at Boulder, U.S.A Veronda Willis University of Colorado at Boulder, U.S.A Anne Wu National Chengchi University, Taiwan (Accounting, Organizations and Society, 2010) Behavioral Changes Following the Collaborative Development of anAccounting Information System

45. Practice: Research Site The largest hospitals in Taiwan provide monthly department-level income statements or cost reports (primarily for cost centers) to department heads. The hospital provides salaries for its physicians, with bonuses based on total charges incurred by their patients. That works well under a cost based system, but is not efficient under a flat-fee per diagnosis system. Physicians could increase their bonuses by increasing the treatment provided, thus increasing gross charges per patient, but at some point, the hospital would begin to lose money as physicians over-used resources.

46. Before Implementation After Implementation ABCM Comparing the Before and After ABCM Implementation • Practice: ABC Implementation Figure 14：The ComparingBeforeandAfterABCMImplementation

47. Practice: ABC Implementation The Impact After Implementing ABCM Impact Physicians’ Behavior Impact Organizational Performance Figure 15：The ImpactBeforeandAfterABCMImplementation

48. Whether non-accountant participation in the development of the information system influences the participants’ resource allocation decisions after system implementation. Accounting information (such as ABC) tends to be ignored by decision makers as non-accountant allocate resources. • Research Issues: From Practice

49. Sample selection One of the largest hospitals in Taiwan which implemented ABC in the Ophthalmology department in January 2001. Patient-level data for inpatients and outpatients being treated for cataracts from July 1, 2000 to August 30, 2001. Include information on severity of illness, gender, age, procedures employed, disease codes, charges, and hospital reimbursement. Patient Charges and Use of Resources For patient billing, hospital accountants assign a specific charge for each resource used by individual patients based on guidelines provided by the Federal government. Charges increase as the use of resources increase. Hence, we use hospital charges as a proxy for resources used. • Practice: Data

50. After implementation of ABC, physicians reduce resource utilization for inpatients and perform more procedures on an outpatient basis. It has improved financial performance after implementation through both increased revenues and decreased costs. We provide the evidence that participation in developing an ABC information system results in post-implementation improvement in resource utilization. The hospital takes the research results as the direction for implementing ABC in different departments. • The Implication of the Research Results to Practices