Management Accounting Section Midyear Meeting

Regulatory Drivers of Employee Learning and their Effects on Cost Behavior

• In Event: Hospitals

Abstract

We examine the influence of disclosure regulation on employee learning. Learning theory posits that autonomous learning (learning by doing) by employees can benefit organizations by reducing unit costs. Using data from clinical laboratories, we find theory-consistent evidence of autonomous employee learning in the form of a non-linear reduction of technical hours, labor cost, and direct cost per unit with an increase in cumulative volume. We also show that mandatory quality disclosure regulation disrupts autonomous learning. Disclosure regulation and the attendant increase in focus towards quality diverts employee attention from learning about cost to managing quality outcomes. We find that disruptions in learning are not present in clinical labs that belong to high-quality hospitals. This suggests that labs that incorporated a quality culture into their operations are in a better position to reap the benefits from autonomous learning even when confronted with disruptive changes. Our study contributes to the understanding of how employee learning can influence cost behavior.

Authors

• Ranjani Krishnan, Michigan State University

• Hariharan Ramasubramanian, Michigan State University