Preface
Adhering to the beliefs that “knowledge and action should go hand in hand” and that “theory must be put into practice,” Chair Professor Anne Wu constructed the Integrative Strategic Value Management System (iSVMS) and Activity Value Management (AVM). To this present day, she has published 75 research papers in Chinese and English academic journals, 185 practical articles, 6 books, and 8 teaching cases. She is also the owner of 6 trademarks and patents along with 11 information technology (IT) products. Furthermore, she has also served as an editorial-board member for 7 issues of international periodicals. Many of her papers have been published in top international journals such as The Accounting Review (TAR), Strategic Management Journal (SMJ), and Information Systems Research (ISR). Her research results have been very fruitful.
Chair Professor Wu’s academic research results have had far-reaching impacts on the development of management accounting and have made significant contributions to the practical field. In this regard, she has won three great awards from the American Accounting Association (AAA): the 50th “Outstanding Accounting Educator Award” in the field of accounting, the 20th “Lifetime Contribution to Management Accounting Award” in the field of management accounting, as well as winning the 32nd “Outstanding International Accounting Educator Award” in the field of international accounting. Most commendable of all, Chair Professor Wu has become the only scholar in the world to have won all three of these honors, exhibiting the fruits of her hard work over 36 years. Ranked among the top 100 scholars, how did this management accounting elite enter the highest realm of management accounting?
The Particularity of Management Accounting and the Serendipity of Her Dedication to It
Chair Professor Wu herself sums up the definition of management accounting: “It is exactly management and accounting.” What makes it different from general management is that the latter emphasizes management, but management accounting integrates management with accounting. After decades of devotion to this area, Chair Professor Wu found that the most significant feature of management accounting resides in the integration of management information, like R&D management information, and accounting information. She further explains that accounting is information about “effects”, whereas management is information about “causes”.
For example, during the process of R&D management there will be a lot of “cause information” such as that about “R&D development time” and information about “the qualities of R&D”. If we integrate R&D management with accounting, then we can integrate the “cause information” of R&D with the “effect information” of R&D, including information about “revenues”, “costs”, “profits”, and even the long term “values” created.. In short, the feature of management accounting rests in the integration of all the information about the inputs, operations, results, and values of “the entire value chain management”.
Talking about her encounter with management accounting, Chair Professor Wu says that her academic destiny could be traced back to her childhood, as growing up in the mountains she even then had come to know the importance of “costs”. At the tender age of seven, she even took a part-time job in a plum garden. The plum garden was no less than a micro-enterprise, with the husband and wife being the entrepreneur and the corporate member, who needed to invest capital to hire workers to pick plums and export them to Japan. The workers were many, and the wages required to be paid were huge. Young as she was, she could not help worrying about whether the garden owner would make any money. Starting then, the conceptual seeds of “costs” and “profits” quietly sprouted in her mind.
Why She is Devoted to Management Accounting Research
During her college years, Chair Professor Wu majored in economics and learned some basic lessons on “productivity”, which involves the relationship between inputs and outputs in economics. Working part-time in her spare time, she gained a better understanding of micro-enterprises and found that its entrepreneur often demanded employees do various jobs. Taking her own work experience for example, Chair Professor Wu explains, “At that time I had two jobs: One was to do the accounts, and the other was to keep the cash.” She found that the cash for the shipment has not been received yet, but sales revenue must be recorded in the account, which leads to the inconsistency between the "cash book" and the "accounting book".
While Chair Professor Wu was studying at the Graduate Institute of Business Management in National Sun Yat-sen University, she realized that the five-fold management concepts in the academic management field - namely, marketing management, production and operations management, human resources management, financial management, and research and development management - are incomplete without management accounting. Only by making use of management accounting can an enterprise integrate “inputs, operations, and outputs” with “revenue, costs, profits, and values”.
Therefore, she made up her mind to devote herself to management accounting research and started to extensively read literature relevant to the topic. When she was studying for a doctorate in the U.S. in 1986, she found that the analytical model dominant in management, which was similar to what she had been taught by Professor and President Victor W. Liu in the Institute of Business Management at National Sun Yat-Sen University. From then on, she began to seek ways to make a breakthrough and constantly strived to conduct research exploring new directions.
As her work experiences in childhood and college years triggered her interest in the issue of “costs and profits”, she endeavored to study relevant fields. Her interest was heightened when she came across the Activity-Based Costing Management (ABCM) developed by Professors Kaplan and Cooper, which focuses upon the issue of “costs and profits”.
Essentially, ABCM considers “activities” to be cells and integrates the information of “cost drivers” with the information of “costs and profits” through activities. Henceforth, Chair Professor Wu decided to write a doctoral dissertation that was relevant to management accounting. The problem back then was that no universities in the United States had any management accounting database yet. Accordingly, she could only revise and choose a dissertation topic somewhat relevant to management accounting, Management Forecast, which includes sales and costs forecasting.
In 1990 Professor Wu finished her studies and returned to Taiwan, taking up a teaching position at National Chengchi University. Upholding those beliefs that “knowledge and action should go hand in hand” and that “theory must be put into practice,” Chair Professor Wu actively promoted effective “industry and academia collaboration”, hoping to progressively establish a management accounting database through helping businesses to generate benefits and produce data. What is worth explaining here is that, in order to introduce ABCM into industry, Chair Professor Wu volunteered to customize it for every enterprise in order to do field research; in return the partner enterprise was expected to provide some data for her academic research.
Her Conviction That Taiwan’s Management Accounting Could Be Spread to Academic and Business Circles Worldwide
Chair Professor Wu states that two separate beliefs kept propelling her to march forward courageously. First, it was those religious beliefs that she had committed herself to for a long time – because religious beliefs are without borders; people around the world can benefit themselves and others due to their religious beliefs. Second was the direction that her master’s thesis advisor, President Liu, had pointed out for her.. The instant she returned to Taiwan, Chair Professor Wu sought advice from then-University President Liu about career planning and scholar cultivation. President Liu advised her with great wisdom and told her to focus on two things.
First, she should devote herself to research. Second, she should have a sense of mission as a research university scholar and be determined to impact the world through her research. How might she carry out these two things?President Liu suggested that the most important things were to “internationalize” and “differentiate” herself, taking an academic path different from those followed by scholars from the U.S. and from other countries.
Because management accounting data were nowhere to be found at that time, it occurred to Professor Wu that she might as well establish a database on her own. Although she got off to a difficult start, her tireless efforts enabled her to access many enterprises. For example, more than twenty years ago she helped Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC) to adopt ABCM and facilitated the company’s growth in business performance. This successful partnering with TSMC gave her much confidence, believing as long as she kept using management accounting to make contributions to Taiwan’s industries and using the data accumulated by the enterprises to do her academic research that the whole world would not only see the results of Taiwan’s management accounting field, but also adopt Taiwan’s techniques in management accounting.
Striving forward in this way, Chair Professor Wu accumulated data in management accounting through the application of ABCM and the balanced scorecard (BSC) approach. During her work, it was inevitable that some project leaders to walk away immediately as the project closed, leaving no data behind. Even so, she still took these setbacks positively and was grateful to those enterprises whose willingness to adopt the ABCM enabled her to accumulate experiences, learn from them, and grow. From this, she realized how to improve so as to be more effective. As she notes, “Only by seeing your blind spots and change yourself accordingly can you move on toward a better and more appropriate direction.”
Reflecting on her years of studying abroad in the U.S., Chair Professor Wu remembers that she had faced countless challenges, yet realizes profoundly that a person would end up a failure without growing if all he did was to complain.
Indeed, Chair Professor Wu offers firmly, “Now that I had made up my mind to see to it that Taiwan’s management accounting entered the international or world arena, I had no ground for complaint, but to move on and encourage myself, ‘Never give up.’”
The Tree-Planting Principle Deeply Rooted in Management Accounting
In many international conferences, Chair Professor Wu often talked about her own ‘tree-planting’ principle regarding Taiwan’s management accounting. What is meant here by tree-planting? It is utilizing those techniques researched and developed by herself in helping enterprises. For example, in the early stage of promoting ABCM, she would take students with her to visit the enterprises and helped the enterprises design their ABCMs.
This was no less than planting the seedlings of ABCM in the enterprises. After careful irrigation, the seedlings would grow up little by little and eventually become big trees. During this process of planting, Chair Professor Wu would use her expertise to help the enterprises by, in effect, acting as the gardener - helping with watering, adding fertilizers to the soil, or firming the trees up when they bent or tilted over - so that the trees might take deep root, stand firm, and bear abundant fruits.
Chair Professor Wu encourages all-out efforts to help enterprises implement management accounting, and so the enterprises often asked her what price they would have to pay. Chair Professor Wu always replies with a smile, “The only price that you have to pay is to provide your data for academic research.” Nowadays, under her diligent cultivation, hundreds of trees have grown into woods, and the fruits are bountiful and all over the place.
The Development Direction of Management Accounting System and Research
As Chair Professor Wu points out, the biggest difficulty in management accounting was the lack of data, and thus the best principle was to find a way to build up a database. Helping enterprises to “plant trees” is the top way to get the necessary data. As long as the enterprises keep expanding, more and more data will be accumulated. With the accumulation of data over time, Chair Professor thought of further ideas. Being a management accounting researcher, she still had to establish a “management accounting system” and then own its intellectual property right in order to push Taiwan’s management accounting onto the international stage and enable it to take a respectable place in the world.
As a matter of fact, ever since she studied business management at National Sun Yat-sen University, she had been looking for a system of management accounting, but all that she had come into contact with were its technical dimensions, such as the budget system and the standard costing system, which were independent and unintegrated. As to the potentials of “system integration”, different researchers often had varying opinions. She realized that if Taiwan's management accounting was to be spread throughout the world and make an impact, the establishment of a "system" is the most important thing, which must not only be useful to the academia, but also to the practitioners.
Therefore, she began to conceive of the system when studying for her PhD. After thirty-plus years of hard work and the evidence of successful applications in many Taiwanese cases, the Integrative Strategic Value Management System (iSVMS) was finally established.
Whilst constructing the iSVMS system, when applying BSC, she found that management accounting cannot be without a clear integrative "strategy". As she puts it, “If we compare an organization to a human body, then strategies must be the brain, determining the action plan.” Hence, she made “strategy” the primary technique in the iSVMS system. With the swift advancement of technology, she sensed that Taiwan’s small-medium-sized enterprises (SMEs) were facing unprecedented harsh trials and that nothing but “innovation” could help them to operate successfully in a competitive environment long term. Henceforward, she developed the SO scorecard to help enterprises find their “innovative strategies”.
However, those “innovative strategies” needed BSC to be implemented. The information within the BSC relied on ABCM to be produced, and in turn BSC would lead to the formation and accumulation of “strategic intellectual capital”. The five subsystems of iSVMS were finally integrated together as a whole. With the help of this system, every case company is able to run smoothly every day, build up its own strength, find an innovative way forward, and create excellent performance in “sustainable operations”.
Chair Professor Wu renewed the ABCM developed in the United States to cover 7 great innovations, such as the five activity attributes innovations, including quality, production capacity, added value, customer service, and ESG attributes. Indigenous AVM came out as the first fruit of thirty-plus years of research, revision, and breakthrough. Sensing the challenging advent of the digital era, Chair Professor Wu has held fast to the spirit of innovation, cooperated with information experts to create an information technology (IT) system relevant to AVM, and introduced the IT system into her teaching, so that students could practice on-line right away after learning the theory of AVM.
In this way, her teaching purpose of enabling students to act appropriately on their knowledge is achieved. Since the theory of AVM and advanced IT systems are applicable to industry requirements, Chair Professor Wu expected and believed that the two would wield power in both international academic and business circles in the future.
Because AVM integrates a lot of “cause information” with “effect information”, the IT system is able to execute at least 20 kinds of “management decision” analyses. These management decision analyses, including the “strategic dimension”, “operational dimension”, and “political dimension”, enable enterprises to make “precise” analyses and better decisions, resulting in much better performance. Chair Professor Wu suggests that integrated cause-effect information is applicable for research in every field. For example, integrated cause-effect information of R&D could be used for studies of R&D management. Likewise, smart-manufactured AVM could produce a lot of smart-manufactured data, which could be used for research about supply chain management and manufacturing management. AVM information of the sales department could be used for research about marketing management and CRM.
Aside from the IT system for AVM, Chair Professor Wu also developed an IT system for the SO scorecard and BSC to help with her university teaching and entrepreneurs’ information accumulation allowing more qualitative information to be captured. Integrating the quantitative information of AVM with qualitative information brings many benefits to academic research. Generally speaking, companies do not keep data for a long time; only by enabling them to use the IT system could scholars gather cause-effect information and conduct long-term sustainable “academic research” based on the data accumulated.
The Application Sequence of iSVMS
Every year the iSVMS research center under Chair Professor Wu’s leadership holds an AVM experience camp for corporate circles. At the end of every AVM experience camp, the center offers a one-hour diagnostic service to ascertain the most serious problem that the enterprise is facing. For example, a newly established company would not immediately encounter cost and profit issues; “strategy” is the primary issue, and so the entrepreneur would be asked to adopt the SO scorecard and BSC first. As for manufacturing enterprises, they often have problems with “costs” such as work order costs, product costs, and customer costs. In such cases, they would be asked to first implement AVM.
The AVM IT system offers different versions. The first version is “educational” and offered to academia. The second version is “large-sized” and offered to both listed and unlisted companies. The third version is “medium-sized” and offered to SMEs or larger non-profit organizations. The fourth version is “smart-manufactured” and offered to small or micro-manufacturers to help them quickly enter the field of smart manufacturing. The fifth version is dubbed “short-sized smart knives” and come in three modules (modules 1, 3, and 4), capable of quickly figuring out whether a micro-enterprise like a noodle stand has made some earnings. It is her hope to help small-holder farmers, small shops, and even young people across the country to return home to start a business. She offers them two kinds of assistance. One is the use of the SO scorecard for those who have problems with “innovative strategies”.
The other is the use of AVM smart knives for those who have problems with “costs and profits”. The iSVMS approach is beneficial to almost all industries to date, and enterprises of all sizes have been able to achieve the goal of “digital transformation” by implementing it. To sum up, iSVMS is an integrative system with logical analysis structures and is applicable to enterprises of different scales, whilst university teachers may also use iSVMS to carry out a “knowledge-and-action united” way of instructing that consists of the SO scorecard, BSC, and AVM, thus cultivating new talent to enhance industry performance.
Suggestions to Management Accounting Research
Chair Professor Wu’s studies have been accepted by many top international journals. One special feature of them is the close connection between “practice” and “research”, which enables her to make contributions to both academia and the practical field. If she had studied only the latter, leaving out the academic research dimension, then her findings would only make contributions to practice and not academia, and vice versa. Since a university professor ultimately focuses on “academic research”, she always looks for “research-worthy topics” during her site visits.
However, how does one discover a research-worthy topic from practice? Professor Wu believes the key is in discovering the sore points of the practical field in the process of introducing the SO scorecard, BSC, and AVM. Taking her first case for example, after helping the company implement BSC and AVM, she observed that the company’s performance could have been better if the employees across all levels “had reached a consensus on strategy implementation”.
Therefore, she co-authored with international collaborators a research paper about “the degree of consensus on strategy implementation” from the academic perspective. Later on, this case was published by a top international accounting journal. Another example is that after she designed BSC for a company, she discovered from “performance evaluation” and “Remuneration management” that the company had kept data of penalties and rewards. Such a phenomenon was non-existent in other countries and made for an interesting research topic. Thus, she worked with international collaborators to study the combination of penalty and reward and published their joint research results in a tier-one international accounting journal, The Accounting Review (TAR), which also attracted a lot of attention.
With respect to transforming a practical phenomenon into an academic research topic, Chair Professor Wu is of the opinion that only an “interesting” and “relevant” topic is a good one. Researchers need to evaluate and discern whether the practical phenomenon they see is both “interesting” and “relevant” to academic research. If researchers do not think deeply enough, then the topics would not be sufficiently differentiated and specialized. Once researchers ascertain the interestingness and relevance of a topic, they must then read considerable relevant literature and find out what theoretical foundations can be used and discussed. In the case of the first example just mentioned, “the consensus on strategy implementation” was an interesting and relevant topic, but rarely discussed, because most prior literature had only talked about top-level managers’ “consensus on strategy” instead of the “consensus on strategy implementation” for managers across all levels; therefore, this topic was extremely relevant to academic research.
Likewise, with the second example, the co-existence of penalty and reward was an interesting and relevant topic, because for years no researchers had used any data to prove the significant effect of this co-existence; all that they did was discussing theoretically based on the analytical model.
Practitioners typically do not speak the academic language; they only care about practical matters and phenomena. Accordingly, researchers need to both understand this practical language and also have an academic brain. Chair Professor Wu exemplifies this combination. She has helped businesses implement a management accounting system with her expertise, discerned the main points for a possible research topic, and knitted together phenomena and academic research, eventually contributing to both academia and the practical fields.
Chair Professor Wu has developed excellent research into “performance evaluation”, “ reward mechanism”, and even “intellectual capital”. She notes that these areas are highly correlated. In fact, AVM is meant to help researchers obtain research information about these three areas. Inside iSVMS are strategic and integral performance evaluation data (financial, non-financial, subjective, or objective).
After these systems are implemented in an enterprise, the data thus derived can be incorporated by researchers into a wide range of areas. Compared with researchers who use the same database to do financial accounting studies year after year, researchers who dedicate themselves to the practical field are capable of doing “differentiated” studies, accentuating the “innovativeness” and “particularity” of their investigation. As to research about intellectual capital, it also needs data produced from practice for innovation.
Both “IT capital” and the “innovation capital” are important to intellectual capital, and “social capital” is also very interesting, because there is a myriad of unformal “social relationships” inside and outside a company. Moreover, from the database of ABCM can be derived information about “customer capital” and “profit capital”. Accumulated over the long term, such data could enable the researcher to work on significant topics related to “the customer lifetime value”.
In practice, when she considers a research topic, Professor Wu contemplates it with differentiated systems of iSVMS in mind and envisages which corporate data could be integrated together, so that she is able to do something meaningful and creative. For this purpose, she has constructed a data collection platform for iSVMS to do interdisciplinary research and invited scholars with international influence from Taiwan, Asia, and all over the world to use the special data for differentiated academic research. Since the world still lacks management accounting data, Chair Professor Wu believes in “the common good” and is willing to offer her results accumulated over the years to more people for more “valuable” and “meaningful” management accounting research - thereby boosting the advancement of international management accounting.
Suggestions for Management Accounting Scholars
Chair Professor Wu advises young scholars to seek three stages of training:
1) understand a practical language;
2) transform that practical language into academic language
and 3) judge whether the particularity of a practical phenomenon is academically research-worthy.
Chair Professor Wu has observed that academia seldom provides the first two kinds of training and thus there is a deficiency in the practical field. That is why she always encourages PhD students and graduate students to be dedicated to field case studies, to learn a practical language, to understand the logical thinking and theoretical foundations behind management accounting, and to construct a solid basis for management accounting research.
Chair Professor Wu knows that a management accounting research project entails deep plowing, solid building, and constant innovation for a long time. Some key issues such as performance evaluation and reward mechanism have existed for more than a hundred years, but each era could have different “innovation issues”. Thus, long-term foundations for academic research in this area need to be built up step by step. We have seen how management accounting has been interdisciplinary; it can be integrated with R&D management, with supply chain management, with ESG, with marketing management, or with AI. All of these fields can be innovated directions for future research.
Finally, Chair Professor Wu would like to offer scholars of management accounting a few suggestions as follows.
First, be familiar with practice, read as many newspapers and business magazines as possible, and delve into the success and failure factors regarding certain enterprises.
Second, construct an original research system; the sooner the better.
Third, set up higher standards and aim for famous international journals.
Fourth, adhere to 3 principles when faced with difficulties during the processes of submitting and revising research papers. No. 1, “Never ever give up”. No. 2, “Never ever complain”, because complaints make you want to give up. No. 3, “Think positively”, because researchers cannot afford to think negatively. These three are helpful attitudes that scholars who are determined to dive headfirst long term into the field of management accounting must have.
Fifth, rather than study behind closed doors, try to participate in international academic research communities, such as the Management Accounting Section Midyear Meeting in the U.S. and the management accounting academic research communities in Europe and Asia. Try to contact and consult foreign veteran researchers so as not to easily fail in the early stage of research. Once the academic research topic and the direction are right, this will work as a positive virtuous cycle, understanding what to do from what not to do and knowing how to make a wise trade-off. Doing management accounting research is just like cultivating a victorious lifestyle - a victorious equation will come out of it in the long run.
In her concluding remarks, Chair Professor Wu adds in earnest that researchers should keep to the “right path” doing research. This means there should never be a shortcut, but rather a continual deep plowing and moving forward. The moment the general direction is ascertained, you should move on with undivided attention, trying your best to make a breakthrough. For example, once you are sure that you want to study the integration of management accounting and R&D, you should go ahead and do it whole-heartedly. Since practice makes perfect, before long you will find yourself doing it out of pure instinct and thus have greater confidence in yourself. As your heart and mind become inclined to learn more in that direction, eventually you will become an expert and authority in this field. Because human capacities originate from learning and training, a research style originates from careful cultivation. Although your hard work may not pay off in the beginning, as you patiently persist in taking the right course of tree planting, you will sooner or later appreciate the beauty of the tree blooming and bearing fruit.
Conclusion
Chair Professor Wu is undoubtedly a long-term cultivator. She has sown the seeds in the practical field unflinchingly, endured cold winters and chilly winds, watered the seeds diligently, and fought on despite repeated setbacks, never losing heart or giving up. As winter faded away and spring arrived, tender shoots have sprouted out of the ground and grown up full of strength. Today, the trees have become forests with flowers blossoming everywhere.
Drawing on her own experience to encourage young scholars, Chair Professor Wu indicates how “academic theories” and “practical application” are interdependent; as long as you find the connection between them, you will walk on the right path of academic research. You may conduct “differentiated” and “internationally competitive” research as academic theories interact with practice - giving each other feedback. Overall, Chair Professor Wu has done so much for so long to closely integrate “academic research” with “practical application” that she not only has facilitated the development of “intellectual property rights”, but also owns 3 patent rights and 11 IT systems. Right now, there are still some more patent rights and IT systems in the process of application or development.
In summation. Chair Professor Wu’s ability to unite “academic research”, “practical application”, and “intellectual property rights” as a closely-knit whole makes her stand out in the world of management accounting. As a result, she has gained the unique achievement of winning three great awards in one year from the American Accounting Association and has become the only accounting scholar in the world to ever receive three great awards. Chair Professor Wu humbly admits that she has fulfilled her wish she made 37 years ago upon returning to Taiwan from overseas studies: that is to make Taiwan’s management accounting “important” and “crucial” to the world.