The importance of strategic confederation is hard to undervalue. The figure of such organisations increased significantly in the past old ages. Harmonizing to Dyer, Kale and Singh ( 2001 ) , “ estimations are that top 500 planetary concerns have an norm of 60 major strategic confederations ” ( as cited by Adobor, 2002, p.71 ) . The information flows in such confederations are highly complicated ; hence, it is necessary to look on basic rules of constructing up accounting information system of strategic confederation and its participants in order to happen how it can assist accomplish ends of confederation.
It is necessary to happen replies on following research inquiries:
How should be defined strategic confederations and its accounting and information system? What are the chief categorizations of SAs?
What are the chief parts of accounting information system of SA?
What are the chief features of AIS with regard to different types of SA?
In the first of this paper, it is necessary to specify used term of “ strategic confederation ” , its chief aims and rules of formation. Besides, categorizations of SA should be presented because it will assist to understand maps should accounting information system execute in regard to SA. The following measure is to understand the construction and chief maps of AIS ; its profile and quality of its operation. In 3rd portion, chief differentiations of AIS and its construction for different sorts of SA are presented ; some specific studies and enrollment signifiers are described.
Consequently, it is possible to explicate thesis statement in the following manner:
“ The AIS of SA should be designed based on the ends of SA ; it should make fiscal studies in order to back up the lessening of costs or accomplishment of synergistic consequence ”
Sebahatin Demirkan ( 2007 ) in his thesis presents several definitions of strategic confederations. For case, he mentions that, harmonizing to Digman ( 1999 ) , a strategic confederation is an understanding where two or more houses pool resources to organize a new, reciprocally good concern agreement to carry through preset aims. Then, Demirkan shows categorization of strategic confederations on joint ventures ( where separate company is established ) and contractual confederations ( where merely sharing of resources and assets exists ) . Besides, the writer maintains that informational flows for these two types differs to a great extent.
Henry Adobor ( 2002 ) reveals the influence on constitution of accounting and information system in confederations. He maintains that the effectivity of confederation ‘s AIS is based on trust and communicating among spouses. Furthermore, in his sentiment, communicational substructure, organisational leaning to swear, the dominant internal mentality and the dominant structural type of organisation significantly influence on the behaviour of spouse in confederation. Murali Sambasivan ( 2011 ) takes the instance of more specified confederation, precisely, supply concatenation confederation, and supposes that common mutuality of spouses leads to creative activity of relationship capital ( based on committedness, trust and communicating ) . However, it is necessary to detect that writers apply these happening to all sorts of confederations ; whereas, revealed forms might change significantly.
Jaloni Pansiri ( 2005 ) supports the thought of significance of immaterial affairs on strategic confederation. Harmonizing to him, pick of strategic spouses and possible confederation construction and range are based on the single perceptual experiences of CEO of spouses. However, the writer does non advert the importance of more formal perceptual experience of concern – company ‘s mission.
Siamak Nejadhosseini Soudani ( 2012 ) connects design of the strategic confederation ‘s AIS and factual public presentation of spouses and confederation. He maintains that there is positive connexion between organisational public presentation and grade of amplification of confederation ‘s AIS. He supports his thoughts with statistical analysis of questionnaires.
Wai Fong Chua ( 2010 ) accentuates her attending on accounting controls as a necessary portion of AIS. During her probe, she finds that investings and effectivity of internal controls are non strongly correlated. What matters much more is symmetricalness of design of AIS ; it is important that all spouses should be in the same conditions.
The kernels of strategic confederations
Strategic confederations are “ voluntarily initiated concerted understandings between houses, which involve interchanging, sharing and developing resources ” ( in Gulati ( 1995 ) , as cited by Demirkan, 2009, p. 7 ) .
The function of concern synergism in strategic confederations
The chief point of making concern signifiers of coaction is to accomplish alleged synergism consequence – when co-work of two powers gives more than merely sum of two powers. In general, this regulation normally presents in the following equation: “ 2+2=5 ” .
The application of synergy consequence on human scientific disciplines is researched in the model of synergetics ; in economic scientific disciplines, this term was introduced, in lineation, by Ansoff in his book “ Corporate Synergy ” .
Harmonizing to Ansoff ( 1965 ) , there are three chief sorts of concern synergism – collusive, operational, and fiscal. Ansoff ( 1965 ) define synergism as follows – “ synergy refers to the thought that houses must seek product-market position with a combined public presentation that is greater than the amount of its parts ” ( as cited by Potocan and Kuralt, 2007, p. 200 )
Future researches explained the usage of synergism construct to formation of confederations and showed that “ horizontal amalgamations are aimed at conniving synergism ( market power ) ; related or perpendicular amalgamations seeks operational synergism ( production of administrative effectivity ) , and unrelated amalgamations hope to derive fiscal synergisms ( by cut downing the cost of capital ) ” ( Potocan and Kuralt, 2007, p. 200 ) .
Furthermore, the writers of this research suggest the division on two parts of benefits from the integrating – rationalisation consequence that leads entities to their optimal consequence and synergistic consequence that shows difference between effects of incorporate system and optimal effects of separate entities.
The theory of dealing costs in regard to strategic confederation
It is necessary to look on this inquiry in the lodgers of institutional theory, which chief point is being of dealing costs. These costs are connected to the flows of information among contractors, the uncertainness of contractor ‘s behaviour and market ‘s alterations, the protection of company ‘s information and engineerings. The Godhead of this theory was Ronald Coase, who wrote his celebrated work “ The Nature of Firm ” in 1937 and developed these thoughts in essay “ The Problem of Social Costs ” in 1960.
Harmonizing to idea of R. Coase in “ The Nature of Firm ” , creative activity of a house was the most of import signifier of version to the being of dealing costs. The market monetary value mechanism is replaced by administrative mechanism within the boundary lines of an organisation ( worker completes his undertaking non because of supply-demand equilibrium but because he was told to make so ) . Administrative mechanism reduces dealing costs.
Rationalization consequence can be connected to the construct of dealing costs. Coase theorem, created by G. Stigler ( 1966 ) , based on Coase ‘s researches, sounds as follows – “ every bit long as private belongings rights are good defined under zero dealing cost, exchange will extinguish divergency and lead to efficient usage of resources or highest valued usage of resources ” ( p. 119 ) . By other words, with these requirements, optimal consequence of concern system will be achieved.
Therefore, it is possible to analyze strategic confederation as farther development of a house in footings of diminishing dealing costs. Let us see the following state of affairs – there are maker and its traders, all separate entities. They have several options – to do deals on the juncture, with the usage of monetary value mechanism ( unseeable manus of market ) or to reason a strategic pact where footings of future deals are stated. In the first instance, sum of dealing costs would be great because it is necessary to look for of import information each clip deal is made. In the 2nd instance, one time the footings of partnership are stated ( confederation is formed ) , there is no demand for future hunt of information. Therefore, confederations decrease dealing costs.
Therefore, it can be maintained that one of the chief aims of making a strategic confederation is lessening of dealing costs.
The construct of company ‘s nucleus competences
The each spouse of strategic confederation has its nucleus competence. This term can be defined as “ particular abilities of company to make extra value based on harmonisation of complex flows of information, stuffs and assets and human activities ” ( Chernoguzov, 2011, p. 112 ) . By other words, it is the ground why company is able to make net income. The nucleus competence is the base for the remainder of concern – all extra operations are created to back up the development its nucleus competence. The nucleus competences are laid in the base of making organisation schemes. Therefore, sensing and development of nucleus competences may be used as tool for forming interfirm relationships in strategic confederations. Maximum synergy consequence, in this instance, may be achieved due to coherence of nucleus competences of spouses.
Methodology of making strategic confederations based on the coherency of spouses ‘ nucleus competences can be divided on two different stairss. First one is conceptual and analytical when spouses, particularly, instigator of making the strategic confederation, have to analyse the construction of interrelatednesss and connexions within its ain flows of information, stuffs and assets to observe and concretize the nucleus competence that can be developed farther in strategic confederations. Second measure is the creative activity of construct of strategic confederation where the nucleus competences of spouses are put into hierarchy and rigorous construction. Merely so, strategic confederation can work efficaciously.
Therefore, while interaction of nucleus competences of spouses in some signifier of strategic confederation, synergy effects are created.
Contractual confederations and joint ventures
There are assorted signifiers of implementing strategic confederation. However, harmonizing to Demirkan ( 2007 ) , it is possible to separate merely two major groups – contractual confederations and joint companies. In the first group, there is no common direction over shared stuffs and assets. In the 2nd group, frailty versa, there is joint direction over assets.
The contractual confederations are based on the certain contracts where all sorts of coaction and coordination are specified. Therefore, it is more dependable and certain sort of confederation because hazards and dealing costs are minimized. However, the interaction of nucleus competences of spouses does non work at full strength because contracts are non flexible. Harmonizing to Potocan and Kuralt ( 2007 ) , “ this invention [ synergistic operation ] requires more openness and cooperation from BS [ concern system ] members ” ( p.200 ) . To increase the effectivity of contractual confederation it is necessary to reexamine contracts ‘ footings in order to better interaction and to reflect the alterations on the market. System of changeless reviewing will let adding some flexibleness to confederation.
The joint ventures are much more hazardous and hard in direction. Because there are at least two groups of involvement, some direction struggles are anticipated in joint companies. Because assets are shared into a much greater grade than in contractual confederations, losingss might be more painful for spouses. However, nucleus competences interact stronger because there are no lodgers for operations of joint ventures. To extinguish negative facets of joint companies it is necessary to plan direction system and decision-making procedure every bit exhaustively as possible.
Therefore, it is possible to show this categorization diagrammatically in the following manner:
Figure 1. Categorization of strategic confederations
On this figure, the country A is considered to be “ ideal state of affairs ” when synergy consequence is maximized and dealing costs are minimized, that is alliance plants at full strength. Area B is non desirable but still can be used as tool for acquiring extra competitory competences ; nevertheless, this country
Accounting information system
In the modern economic sciences, the complex system of interactions among counteragents is necessary in order to bring forth goods and services. For pull offing these interactions, it is necessary to construct up effectual system of assemblage and analyzing of relevant information. In economic scientific disciplines, this system is called fiscal information system. However, it is necessary to detect that there is no unite attack toward the definition of this term.
It is important to give definitions for information system and fiscal system. Harmonizing to Bidgoli ( 2011 ) , direction information system is “ organized integrating of hardware, package, engineerings, informations, procedures, and human elements designed to bring forth seasonably, integrated, relevant, accrual and utile information for a decision-making procedure ” ( p. 4 ) .
Structure of AIS
Although there is no individual well-established definition of fiscal information system, many research workers point out operations of assemblage, enrollment, analysis and control of relevant information in the lodgers of AIS. Every of these subsystems have its ain intents, inputs and end products.
A batch of surveies represent enrollment subsystem as cardinal for AIS. Accountancy makes the enrollment of occurred procedures in the organisation and creates generalized figures and sum-ups. The chief intent of accounting is the creative activity of information mold of organisation ‘s operation, that is, with the usage of enrollment of procedures and events, accounting creates information images ( manners ) of stuff and fiscal flows within an organisation. By other words, every entry in accounting books nowadayss and symbolizes the existent flow or motion of stuffs, goods, services, or financess.
It is necessary to detect that accounting subsystem corresponds with environment in really limited manner. Formation of organisation ‘s accounting is based on the jurisprudence system ; nevertheless, once it is settled, in the procedure of operation, the influence of environment of organisation accounting is limited and rare ( for case, it can go on in instance of important alterations in Accounting Principles of state ) . Management accounting is based on internal demands of organisation.
The consequence of enrollment subsystem – information theoretical account of organisation – is used as footing for other subsystem, analytical. This subsystem makes the qualitative and quantitative appraisal of those alterations that took topographic point in organisation in the class of accounting period. Analysis is made on the footing of comparing of program and fact figures, disclosure of divergences and account of its grounds. Sometimes, in order to supply users with equal appraisal, it is necessary to utilize external information ( political, societal, market factors and etc. ) . Here, close interaction of analytical subsystem with external information takes topographic point ; relevant information about challengers, general market state of affairs, and authorities ordinances is accumulated. The consequence of analytical subsystem is optimum ( sufficient ) information proviso for decision-making procedure and rectification of program figures on the following accounting period.
The subsystem of audit and control creates warrant of executing of direction determinations and convey information theoretical account closer to world. It checks the theoretical account on the frauds, important mistakes, “ bottle cervixs ” and etc. Some organisations have to take external audit ( it depends on forum jurisprudence system ) , some organisations take these action on the voluntary footing. The subsystem of audit and control needs changeless rectification harmonizing to volumes and complexness of organisation ‘s operations and external state of affairs on the market. Thereby, this subsystem checks correspondence between internal demands of organisation and its information theoretical account and besides provides with ways of bettering other subsystems.
Registration subsystemIn order to show AIS more clearly, it is utile to utilize three-dimensional theoretical account, proposed by Popova L.V. ( 2003 ) , the professor and physician of economic scientific disciplines:
Figure 2. three-dimensional profile of AIS
In this three-dimensional co-ordinate system, z-axis shows the quality of enrollment subsystem, x-axis shows the quality of the subsystem of audit and control, y-axis – the quality of analytical subsystem. It is necessary to detect that the z-axis is divided into compulsory, mandatory accounting that is required by the authorities and enterprise, direction accounting that is made on footing on internal demands.
Quality of AIS
It is necessary to supply with extra account to term of “ quality of subsystem ” . The chief consequence of operation of any subsystem is information in some sort ; hence, it is just to link the quality of subsystem with the quality of information it provides. Harmonizing to Chenhall and Morris ( 1986 ) , there are 4 chief features of information – range, seasonableness, integrating and collection.
Scope means the degree of usage of internal and external information, chance character of information ( its orientation on the hereafter ) . Timeliness is based on the frequence and velocity of creative activity of theoretical accounts and studies. Integration is implied as creative activity of information about internal interaction among organisation ‘s assorted sections, coordination of sections within an organisation. Aggregation is referred to the usage of analytical and direction theoretical accounts based on the information that is aggregated by the functional standards ( f.e. , gross revenues, production and etc. ) .
Consequently, the gray surface on the Figure 2 represents the AIS profile for organisation. This theoretical account can be compared with the human ability to see – the higher adult male stands ( the better quality of enrollment subsystem ) , the bigger country he can detect ( correspondingly, the quality of other subsystems ) . However, his ability to see is limited by nature, that is, he is non able to detect long distances while being on the land ( it is impossible to supply qualitative analysis and audit with low-quality accounting ) .
Accounting information system of companies within strategic confederation
The accounting information system of companies that enter to strategic confederation should be based on the overall strategic end for this confederation. Different profiles of AIS refer to different types of SA.
Features of AIS in contractual confederations
Contractual confederations require edifice in the study signifier in enrollment and analytical subsystem that shows the lessening in dealing costs. For the first clip, this study compares costs before come ining to confederation and after in order to happen out material difference. After some clip of working within confederation, study should compare existent consequences with options. The chief end of this betterment of enrollment and analytical subsystem is consideration of profitableness engagement in confederation. Once this coaction makes more costs than it would go on without confederation, it is necessary to alter integrating signifier or even to extinguish it.
It is necessary to detect that this study is complicated fiscal instrument and should be based on several enrollment signifiers of internal and external nature. For case, allow us see supply concatenation direction and strategic confederation between maker and provider. The coaction of these market histrions is good described by W.F. Chua ( 2007 ) . It is contractual type of confederation because there is no sharing and exchange of assets between spouses. The chief end is to diminish dealing costs – before come ining to alliance, supplier and maker have to finish whole dialogue procedure based on market monetary values. Making confederation creates mechanism for automatic designation of chief footings of coaction.
First clip, when this confederation is in procedure of constructing up, it is important for provider to compare costs without and with partnership ( costs of higher degree – making and pull offing confederation plus possible loss of net income ; and costs of lower degree – dialogue procedure with maker and other market histrions ) . Obviously, if this comparing shows net income for provider, he makes all necessary attempts to reason confederation. The same method plants for maker.
But one time confederation is set up, original comparing should be changed – it is necessary to compare existent costs and alternate ways of operation, for case, coaction with other makers. Of class, it is impossible to reexamine all possibilities and options ; hence, this new sort of comparing should go on sporadically and should touch the most possible options.
The audit and control subsystem, in instance of contractual type of confederation, does non undergo serious alterations.
Therefore, contractual confederation creates alterations in enrollment system, particularly at initial phases, creates a serious continual load on analytical subsystem and does non significantly touches the audit and control subsystem.
Features of AIS in “ joint ventures ” confederations
Joint ventures are separate entities with its ain accounting information system that has connexions to its female parent organisations. Therefore, it is possible to propose that this type of integrating leads to high costs of puting up AIS. As it was revealed earlier, the chief aim of joint ventures is close coaction of nucleus competences of spouses. Therefore, it is necessary to understand what economic figures and indexs reflect the development of nucleus competence. For case, if concern considers its core competency as ability to make alone merchandise, indexs would be gross revenues, clients ‘ satisfaction, market portion, and etc.
It is necessary to construct in these indexs into enrollment subsystem in order to make sufficient studies in analytical subsystem. Again, it would effectual to make mechanisms of comparing of existent consequences with alternate ways.
Particular attending should be paid for audit and control system. Many GAAPs ( Generally Accepted Accounting Principles ) demand revelation of all material dealing among joint ventures and its female parent companies in order to forestall frauds and illegal actions, such as transportation pricing. For case, SOX ( Sarbanes-Oxley Act, United States Federal Law ) demands creative activity of internal audit policy for corporation in order to supply fiscal studies with extra assurance. Therefore, in instance of joint ventures, audit and control subsystem should be changed in important manner as for joint venture by itself and for female parent companies.
Consequently, it is possible to keep that joint ventures cause important and material alterations in AIS of spouse. The creative activity of new separate entity leads to formation of new AIS and material rectification in enrollment, analytical and audit-control subsystems of AIS.
Strategic confederations are of import portion of modern economic sciences worldwide. In order to keep effectual operations for these economic organic structures, it is necessary to supply equal flow of information among spouses. This undertaking is fulfilled by accounting information system of histrions. AIS should be based on chief and strategic ends of spouses and whole confederation.
The chief intents of strategic confederations are minimisation of dealing costs for spouses and accomplishing and maximization of synergistic consequence. The coaction within confederation should be based on the construct of nucleus competences of concern. There are two chief types of strategic confederation based on relationship to sharing and exchange of assets – contractual confederations and joint ventures.
It is necessary to detect that AIS is really complex and complicated term that includes assorted parts and elements with its ain distinctive features of operation, inputs and end products. However, it is possible to tag out three chief subsystems – enrollment, analytical, audit and control. The combination of these parts creates certain profile of AIS.
In regard to contractual confederations, enrollment and analytical subsystems should be changed in important manner in order to supply necessary information for doing determination about profitableness of confederation. Joint ventures demand much more attempts for puting accounting information system, particularly on initial phases. However, important synergistic consequence of that sort of coaction may overlap costs for puting AIS.
Therefore, AIS is complex portion of endeavor that subordinates to strategic concern ends and back up the lessening of costs and accomplishment of synergistic consequence.