Revenue growth in not-for-profit organisations: The effects of interactive and diagnostic controls and organisational culture

Using survey and archival data for 180 not-for-profit aged care organisations, we find that interactive use of performance measurement systems positively affects the organisations’ revenue growth, while the diagnostic use negatively affects revenue growth. We also find that organisational culture, specifically attention to detail, innovation and respect for people, moderates these effects. Our findings have implications for the literature in terms of understanding the combinatorial effects of formal management control and culture on organisational performance. The findings also have practical implications for designing performance measurement systems and developing organisational cultures, to create an internal environment effective in enabling revenue growth.     

Measuring the performance of IT services: An assessment of SERVQUAL

As many organisations search for ways to compete more effectively in today's ever-growing markets, information technology (IT) has become quite critical in organisational control due to the enormous size of its expenditure. As a result, managers have faced growing pressure to measure the performance of IT departments. However, the applicability of traditional performance measures in an IT setting is at best questionable and, thus, there is an urgent need for alternative measurement systems. One such measure is service quality as perceived by customers of IT service. This study develops a conceptual “gaps model” of IT service quality, which identifies seven gaps between customers and suppliers of IT service. Furthermore, the study examines the applicability of SERVQUAL, perhaps the most popular standardised survey instrument designed to measure service quality, as the measure of IT service quality.     

Organisational change, outsourcing and the impact on management accounting

New empirical evidence is presented on organisational change, outsourcing and the impact on management accounting in three types of organisations: private sector companies, the National Health Service and Local Authorities. Spearman rank correlations are used to examine three propositions: that (i) change in organisational form exists and may be related to an increased use of outsourcing or subcontracting; (ii) outsourcing is expected to improve organisational flexibility and/or the service of an activity, to lead to cost savings, or to allow the organisation to focus more clearly on its core business; and (iii) outsourcing promotes change in management accounting. Statistical support is found for each of our three propositions. This is further supported by reference to three illustrative case studies. Overall, we conclude that organisational change, as effected by the use of outsourcing, is related to specific changes in the organisations' management accounting systems.     

Management accounting as practice

In this paper we outline a distinctive practice theory approach to considering the role of management accounting in the constitution of organizations. Building on [Schatzki, T.R. (2002). The site of the social: a philosophical account of the constitution of social life and change. University Park, PA: Pennsylvania State University Press] notion of arrays of activity we emphasise the ways in which organisational members actively reconstitute their management control systems by drawing on them as a shared resource. By tracing the skilful practices through which social actors in a restaurant chain understand and mobilise accounting to contribute in specific ways to what they regard as the objectives of their organisational units, we develop a notion of situated functionality. Situating the interrelationships between technical and interpretive accounting processes in the wider field of organisational practices we elaborate the ways in which management control systems as structures of intentionality both shape and are shaped by shared norms and understandings.     

The Implementation and Adaptation of the Balanced Scorecard in a Government Agency

Despite considerable progress in understanding the adoption and practice of the Balanced Scorecard (BSC) as a performance management tool in government organisations, how a well‐designed BSC can become a sustainable organisational practice remains under explored and of central importance. Through a qualitative field study carried out within a government agency (Alpha), this paper demonstrates that Alpha's senior management implemented a BSC framework because they believed it would benefit the agency to realise its broader organisational and socio‐economic goals, namely sustainable organisational efficiency and social status. We conclude that an organisation's performance management systems can travel across internal organisational boundaries over time and could be assimilated by organisational actors to become a sustained internal control mechanism in a complex socio‐political setting.     

Do accountabilities change when public organisations transform to service systems: A new conceptual approach

In this conceptual paper, we discuss from the service systems perspective how accountabilities differ from a hierarchic and organisational perspective within the domain of New Public Management, looking to shed new light upon accountability as a research topic. The concept of service systems and their accountabilities are scrutinised and the role of integrated social and health care services is discussed in particular. The main argument in the text is the changing nature of accountabilities as the public organisations are being transformed into service systems. To date, the understanding of accountability has remained structural by nature – such is the case also for productivity measurement – but the shift from organisations towards services systems means that accountability ought to be considered as processual by nature. By processual it is meant that accountability should be considered as flows within systems – that is: flows between agents the content of which we argue includes not only knowledge on the outputs of public services, but also values, empathy and thus multi‐layered understanding of accountability. The paper concludes with practical insights for managerial purposes on the basis for this accountability shift.     

The control dynamics of outsourcing involving an early-stage firm

Firms in the early stage of their organisational lifecycle experience challenges that shape the adoption of management controls. They are also recognised for their use of outsourcing. However, the accounting research has provided limited insight on how these control challenges and inter-organisational control concerns interact to influence the adoption of specific controls within an outsourcing relationship involving an early-stage firm. Exploration of this gap provides a key motivation for this paper. Contrary to existing management control and organisational science literature, we find a strong preference for new or enhanced action controls. Conversely, we find low levels of interest in result controls by managers within the buyer but not the supplier firm. These preferences influence inter-organisational control adoption within the frame of an incomplete outsourcing contract that emphasises flexibility in terms of relationship exit. Within the limits of a case study methodology, we argue that adoption of inter-organisational controls is shaped by tensions between the control challenges of early-stage firms, the control preferences of managers within these firms and inter-organisational control concerns. These findings have theoretical implications, expanding the Davila et al. [2009. Reasons for management control systems adoption: insights from product development systems choice by early-stage entrepreneurial companies. Accounting, Organizations and Society, 34 (3–4), 322–347] framework and the Merchant [1985. Control in Business Organizations. Boston, MA: Pitman] control typology into an ESF inter-organisational control context.     

A contingency theory perspective on the risk management control system within Birmingham City Council

In recent years the topic of risk management has moved up the agenda of both government and industry, and private sector initiatives to improve risk and internal control systems have been mirrored by similar promptings for change in the public sector. Both regulators and practitioners now view risk management as an integral part of the process of corporate governance, and an aid to the achievement of strategic objectives.The paper uses case study material on the risk management control system at Birmingham City Council to extend existing theory by developing a contingency theory for the public sector. The case demonstrates that whilst the structure of the control system fits a generic model, the operational details indicate that controls are contingent upon three core variables—central government policies, information and communication technology and organisational size. All three contingent variables are suitable for testing the theory across the broader public sector arena.     

Conscious practices and purposive action: A qualitative study of accounting and social change

The paper develops a methodology of accounting practices as conscious representations of purposive action, which seeks to build broader insights from qualitative research into the social aspects of accounting change, and how these relate to wider organisational and social transformations. The paper constructs the methodology by linking together and developing interpretive and labour process perspectives through an analysis of ethnographic material drawn from an extensive field study of the empresas recuperadas – cooperatives formed by workers during economic and political crisis in Argentina in 2001. The analysis traces the involvement of accounting practices within collaborative dynamics that transformed a hierarchical organisational structure, embedded within accountability systems that manifest prevailing notions of identity and collectivism, into a decentralised organisation that established relations with grass roots societal groups informed by new purposes and values. This perspective develops into a concept of the differentiated and contradictory social aspects of profitability, and highlights a range of potential relations between representations and realities. The final part conceptualises the collective and nuanced conditions through which accounting practices represented individual needs more effectively. The paper concludes by highlighting how its methodology and findings help to understand the conscious, collaborative involvement of accounting practices within social life.     

Not because they are new: Developing the contribution of enterprise resource planning systems to management control research

Enterprise Resource Planning systems are fundamentally bound up with the work of accounting, and have been seen to have transformative implications for the nature of organisational integration and control. This introductory essay briefly outlines the nature of Enterprise Resource Planning systems, noting the main lines of argument in their treatment in the accounting literature so far. It goes on to set the scene for the distinctive contribution of the two papers that follow, exphasising the way in which they offer a basis for re-evaluating our understanding of organisational integration and control through their detailed field work.     

Productivity and Performance Indicators in Enterprise Agreements

The design and implementation of performance measurement systems is a major interest of management accountants. In recent years many organisations have made enterprise agreements with their employees, often specijjing performance indicators on which to base wage increases. This paper explains how performance indicators are used in enterprise agreements and considers alternative definitions of indicators and their limitations. It argues that performance indicators in enterprise agreements should be consistent with wider organisational performance measurement systems, particularly those having a strategic focus.     

Knowing stories that matter: learning for effective safety decision-making

Ongoing safe operation of hazardous industries such as hydrocarbon production and transportation, air traffic control and nuclear power generation depends on effective decision-making by those in key positions. Safety studies often focus on the extent to which actions of operational personnel in particular are dictated by procedures or rules and hence reinforce the need for compliance to ensure the best outcomes. This article directs attention to a different area – the judgements made by experts in the cases that are not covered by rules and, in particular, the key role of stories and storytelling. This ethnographic research draws on literature related to high-reliability theory, organisational learning and naturalistic decision-making to examine how experts working in diverse critical contexts use stories to share and make sense of their experiences. It argues that such stories are vital to effective decision-making as a result of both the general and specific lessons that they embody. Our analysis shows that experts use stories as parables to nurture their ability to imagine possible outcomes and maintain a safety imagination. Stories are also embedded in work practices to support decision-making in the moment. Finally, stories are strongly linked to organisational learning for experts as a group and in mentoring less-experienced colleagues. We argue that the increased focus on incident reporting systems in hazardous industries, which is driven at least in part by a consideration of organisational learning, is failing in this regard because such systems do not facilitate story-based learning. We appeal to organisations to support story-based learning with as much vigour as formal systems for professional development and reporting.     

Failures to enact the future—A social practice perspective

To be successful, organisational foresight requires a multitude of perspectives and faculties. We have adopted a social practice perspective, which we base within an interpretative world view, to better understand how organisational foresight is enacted. This offers a reading of the phenomena, of which the essential contribution is that organisational foresight is more than an organisational property; it is something that reflective people do as they engage with various inputs from the outside and as a result of the continuous interaction between activity systems and their constituting elements. A longitudinal case study illustrates the importance of understanding the construction of collective and individual meaning in working with organisational foresight. The study shows how the inherent rigidity of the existing activity system and the weak ties between these diverse subsets of the organisation may block the interaction between emerging social practices and organisational intentions resulting in ongoing failures of understanding and enactment. A model is developed to include these parameters in an augmented activity systems model. Based on this we have identified the linking of organisational levels as one of the key dimensions to be considered for which the social practice perspective holds significant explanatory strength.     

Organisational control as cultural practice—A shop floor ethnography of a Sheffield steel mill

Field studies of management control and accounting have tended to study organisational meaning through practices. We identify three strands of practice research on organisational control (viz., governmentality, actor network theory, and accountability) and propose a forth: cultural practice. The study of control as cultural practice is grounded in observation because it conceives of cultural knowledge as practical and largely extra-linguistic. It conceptualises organisational control as an effect of the actions and ideas of organisational members beyond the ranks of management, thus widening the field of empirical inquiry. It also makes studies of steady state organisations more attractive thereby opening the possibility that the assemblages of people, purposes, and technologies, which give rise to specific forms of organisational control, may be understood as less ephemeral than, particularly, studies of governmentality and actor network theory have suggested. Our ethnography of a steel mill in Sheffield is based on 11 months of participant observation on the shop floors of the hot and cold departments. We argue that the subcultures of different shop floors were constituted in practices of control which enabled organisational members to pursue diverse objectives that were related to their various wider cultural aspirations. Organisational control practices relied on diverse accountings and accounts of organisational actions and purposes. Whilst we found considerable diversity between subcultures, we also found that individual subcultures, and the tensions and contradictions within them, exhibited much continuity. The ability of studies of organisational subcultures to bring out the diversity as well as continuity of practices holds considerable potential for our understanding of organisational control.     

The role of organisational concern for workplace fairness in the choice of a performance measurement system

Prior studies linking performance management systems (PMS) and organisational justice have examined how PMS influence procedural fairness. Our investigation differs from these studies. First, it examines fairness as an antecedent (instead of as a consequence) of the choice of PMS. Second, instead of conceptualising organisational fairness as procedural fairness, it relies on the impression management interpretation of organisational fairness. Hence, the study investigates how the need of senior managers to cultivate an impression of being fair is related to the choice of PMS systems and employee outcomes. Based on a sample of 276 employees, the results indicate that the need of senior management to cultivate an impression of being fair is associated with employee performance. They also indicate that a substantial component of these effects is indirect through the choice of comprehensive performance measures (CPM) and employee job satisfaction. These findings highlight the importance of organisational concern for workplace fairness as an antecedent of choice of CPM. From a theoretical perspective, the adoption of the impression management interpretation of organisational fairness contributes by providing new insights into the relationship between fairness and choice of PMS from a perspective that is different from those used in prior management accounting research.     

Local Government Audit Committees: A Behaviour Framework for Effective Audit Committee Performance

Stakeholders will always be more receptive to the creation of structured and credible systems that pull participants towards good governance outcomes which serve to remove temptation rather than systems that attempt to push or otherwise coerce people into a state of compliance. This paper uses behavioural theory as an interpretative lens to explain the actions and effectiveness of public sector audit committees. Financial probity, independence to avoid conflicts of interest and conformance to ethical practices are the tenets of effective governance. Audit committees can be one of the mechanisms to monitor the risks of the public sector and the executive management team especially where ‘self‐interest’ conflicts with the governance requirements of legislation, societal norms and community expectations. An effective audit committee can provide behavioural oversight of governance processes, although one cannot legislate for integrity and honesty. The presence of an effective and contributing audit committee in local government negates a councillor from listening or subverting positive actions and provides a signal to external stakeholders of organisational risks.     

Organisational Culture and Budgetary Control in a UK Local Government Organisation

This paper is an attempt to explore the possibilities of working within the functional paradigm to understand the relationship between organisational culture and financial control. More specifically, the research is an empirical study informed by contingency theory. The research uses canonical correlation analysis to investigate the complex contingent relationship, as suggested by Williams, Mcintosh and Moore (1990). The research was carried out within a local government organisation in the UK, and used a questionnaire to determine managers' perceptions of organisational culture and budget-related behaviour. A correlation was found between organisational culture and budget-related behaviour, particularly with respect to budgetary participation and the usefulness of budgets to support the managerial role. However, the relationship was not straightforward, and the analysis indicated some tension between culture and the financial control system in operation.     

Control and change—Analysing the process of institutionalisation

This paper studies the process by which a change in the institutional logic of an organisational field diffuses through the management control system of a firm. The theoretical framework proposed by Hasselbladh and Kallinikos (2000. The project of rationalization: a critique and reappraisal of neo-institutionalism in organization studies. Organization Studies, 21, 697–720) enables us to describe the institutionalisation process of management control systems in more detail by observing how ideals are translated into discourses and control techniques. We argue that both the process by which institutional changes are implemented inside organisations and the process of decoupling are two aspects of the same issue. Revisiting core notions of new-institutional theory such as internalisation and decoupling, our findings question the systematic as well as the linear nature of the institutionalisation process. Empirical findings, based on a field study conducted in the French subsidiary of a pharmaceutical laboratory, highlight how the discourses of organisational actors contradict new ideals and control techniques. More particularly, it appears that, when a discourse cannot be heard, it can be partly bypassed using techniques. It is also argued that intra-organisational change builds on stable discourses and ambivalent technology, which foster insidious dissemination of the new institutional logics when “what can be done cannot be said”.     

Disruption and transformation: The organisational evolution of an NGO

This paper explores how and why Non-Governmental Organisation (NGO) governance was disrupted by changes in an organisation's internal and external environment. A detailed single case study of a large NGO operating in Sri Lanka is conducted. Data collection consists of semi-structured interviews, document analysis and participant and non-participant observation. Laughlin’s (1991) model of organisational change provides the theoretical foundation on which changes in the case NGO's interpretive schemes, design archetypes and organisational sub-systems are discussed. The changing of interpretive schemes and organisational sub-systems, in our case, was easier than changing design archetypes. Consequently, our paper introduces ‘protective reconfiguration’ as a new change pathway to Laughlin's (1991) model of organisational change. The findings suggest that the NGO's governance systems and processes are being moulded in ways that may not achieve the overall purpose of these organisations. Greater attention to evolving design archetypes is necessary in order to create more deliberative, fluid and less organisation-centric governance structures for NGOs operating in the policy-advocacy space.