The Cost Drivers, Revenue Drivers, and Value Chain Analysis in Strategic Management Accounting

Strategic management accounting provides financial information and analysis regarding product markets, competitors' costs, cost structures, and monitoring of firm strategy and competitor strategy (Bromwich, 1990). It assists the management team with better strategic decisions and organizational effectiveness by identifying, gathering, choosing and analyzing accounting data (Hoque, 2002). The role of accountants in strategic decision-making is crucial for the sustainability of corporate strategy, and accountants should consider the cost structure of both their own firm and competitors (including existing competitors and potential entrants). Moreover, instead of focusing on cost information only, accountants must adopt a holistic view of strategic information. Since many cost and other market characteristics of product attributes are intertwining, accountants need to incorporate all these characteristics into strategic management accounting consideration (Bromwich, 1990). In this paper, I empirically investigate the following two research questions. First, what are the essential dimensions of cost drivers and revenue drivers in strategic management accounting systems? Second, is the performance of strategic management accounting contingent on a balance between cost drivers and revenue drivers (including relevant costing, operating, R&D, and marketing activities) in value chain analysis?