Management Accounting and Stakeholder Capitalism The Case of Target Costing

Purpose: This paper explores how to change traditional management accounting to support stakeholder capitalism. It extends a popular management accounting model – target costing - to illustrate how to implement stakeholder capitalism in the very practical setting of cost management. Design/methodology/approach: The paper extends the results from an action-based research study of target costing to show how to incorporate different stakeholder interests in management accounting. Findings: The paper contributes toward enacting a more inclusive view of traditional management accounting models by showing how these technologies, such as of target costing, may look like when considering a multi-stakeholder perspective. The paper proposes a six-step model that builds upon the traditional target costing process to accommodate the interests of diverse stakeholders. Capturing the action verbs that describe the six steps, we call the model REDEEM to highlight the need for management accounting to redeem itself from its exclusive focus on shareholder value. Originality: This is the first paper that addresses the need and opportunities for reshaping management accounting practice around target costing in a more inclusive world. Unlike papers that focus on supplementary disclosures or financial reporting, this paper looks at how to endogenly incorporate a multi-stakeholder perspective into the very core calculus of decision making.