Environmental management control systems: The role of contextual and strategic factors

This study examines the role of contextual and strategic factors in the development of environmental management control systems in manufacturing companies. In particular, the authors test the roles of perceived ecological environmental uncertainty, perceived stakeholder pressures, and the degree of corporate environmental proactivity on the development of environmental management control systems. The main results from a survey of 256 manufacturing companies suggest that companies that perceive greater ecological environmental uncertainty are less inclined to develop a proactive environmental strategy, environmental information system, or formal environmental management control system. Market, community, and organizational stakeholders motivate environmental proactivity, as well as the development of different environmental management control systems. Regulatory stakeholders only encourage the development of an environmental information system.     

The illusion of no control: management control systems facilitating autonomous motivation in university research

Autonomous motivation, a fundamental factor influencing research success, can be undermined when people feel pressured, managed or controlled. So how do universities – which are under increasing external pressure to manage research activities to produce outcomes – exert management control without threatening the autonomous motivation of their researchers? We address this question through an exploratory case study of the management control systems used in two university faculties. Our results confirm the importance of autonomous motivation in driving researchers’ activity and show how incentives, performance evaluation and cultural–administrative structures can be designed to not only preserve, but also enhance and leverage this motivation.     

Casemix Management in a New Zealand Hospital: Rationalisation and Resistance

This paper discusses the use of a 'casemix' information system to rationalise and scrutinise clinical activity in a corporatised New Zealand hospital. The implementation of the casemix system was part of a management strategy to influence clinician behaviour by making visible the financial implications of clinical decisions. Clinicians were able to resist the application of this comparative surveillance system by challenging or diverting the information produced.     

Management control in contemporary organizations: towards a wider framework

This paper argues that the traditional definition of the scope and practice of management control which was developed in the mid 1960s is now too restrictive as it is based on a context of large, hierarchically structured organizations which are now in relative decline. This decline has been caused by changes in the business and social environment which are reflected in the terminology of current management ideas such as 'de-layering', 'right-sizing', 'business process re-engineering', 'out-sourcing' and 'value chain analysis'. The traditional definition has also led to an emphasis on accounting-based controls which are becoming increasingly peripheral to fundamental needs of contemporary organizations. Organizations still need systems of management control but it is likely that they will be very different to those found suitable in the past. Some tentative suggestions are made as to the type of changes that are needed, but it is also necessary for empirical studies to be undertaken to codify and conceptualize what is already happening in practice. The lag before practice is incorporated into theory has created a major opportunity for researchers in management control.     

Budgetary Stewardship,Innovation and Working Culture: Identifying the Missing Ingredient in English and Welsh Local Authorities’ Recipes for Austerity Management

Drawing on fieldwork with 70 local authorities in England and Wales, this paper builds on previous studies of austerity management by highlighting the importance of organisational cultures to achieving strategic objectives. It finds that, in line with their prevailing ‘belief system’ of budgetary stewardship, local authorities in both countries are holding down input costs to deal with austerity. However, the scale of funding cuts means that this strategy is unlikely to be successful over the longer term. Instead, they need greater freedom to generate revenue, in order to facilitate innovation and develop more sustainable business practices and service models.     

How control systems influence product innovation processes: examining the role of entrepreneurial orientation

This paper yields insights into the channels through which management accounting and control systems (MACS) exert an influence on product innovation by examining the extent to which different forms of control (i.e. value systems (VS), diagnostic control systems and interactive control systems (ICS)) are directly associated with the distinct phases of innovation processes. Using survey data collected from 118 medium and large Spanish companies, we find that (1) VS and ICS have significant main effects on the creativity, co-ordination and knowledge integration, and filtering (sub-)phases of innovation processes and (2) the significance and direction of these influences vary depending on the entrepreneurial orientation (EO) of firms. By highlighting the relevance of EO in shaping the influence of MACS on product innovation processes, this study calls for caution in generalising the expected effects of MACS on innovation.     

Performance management: a framework for management control systems research

This paper proposes a framework for analysing the operation of management control systems structured around five central issues. These issues relate to objectives, strategies and plans for their attainment, target-setting, incentive and reward structures and information feedback loops. Their central focus is on the management of organizational performance. Because the framework has been inductively developed, its application is `tested' against three major systems of organizational control, namely budgeting, economic value added and the balanced scorecard. In each case, neglected areas of development are exposed and fruitful topics for research identified. It is believed that the framework can usefully be developed further by its use in analysing other instances of management control systems practice, and that case-based, longitudinal studies provide the best route to this end.     

Management control systems as inter-organizational trust builders in evolving relationships: Evidence from a longitudinal case study

Research on inter-organizational relationships argues that at mature stages, when trust has reached a high level, it will be damaged by new management control systems (MCSs). This longitudinal case study provides evidence to the contrary: in an open-ended and evolving relationship, even when trust is well established, MCSs can build it. High trust provides a platform where success encourages the partners to cooperate further, demanding, in turn, more MCSs and greater levels of trust to support cooperation. By providing evidence with a greater appearance of objectivity than informal controls can yield, action and result controls improve partners’ perception of each other’s trustworthiness, and build competence and goodwill-based trust. MCSs are used not only to supervise but also to coordinate, and this second, more salient function avoids possible suspicions that could damage trust.     

Management control packages: a literature review and guidelines for public sector research

ABSTRACT

The effectiveness of a management control (MC) element, such as performance measurement, may depend on other MC elements, such as organizational values and training activities. This is why MC elements should be studied ‘as a package’, instead of as isolated elements. Although examining MC elements as a package has the potential to make significant contributions to ongoing debates, this approach is largely absent in the academic public sector management literature. This paper reviews the MC package literature, examines its implications for public sector research and practice, and aids future research by discussing research design choices and research directions.     

Managing different types of innovation: mutually reinforcing management control systems and the generation of dynamic tension

Using a single case study of a highly innovative medical device company engaged in two types of innovation (technological and customer-oriented), this paper examines the nature of the relationship between mutually reinforcing management control systems (MCSs) and the generation of dynamic tension between the different types of innovation. Findings show how mutually reinforcing MCSs create a push for consistency but fail to generate a dynamic tension between different types of innovation, thus crowding out one type of innovation. While the literature to date has been unclear on how mutual reinforcement and the generation of dynamic tension are related, this study makes a distinction between mutually reinforcing control systems that support each other in driving momentum around a particular strategic objective (consistent reinforcement), and control systems which are reinforcing in creating dynamic tension, thus reducing momentum in one particular direction (countervailing reinforcement). It also contributes to the literature by highlighting the protective role that MCSs can play in the management of innovation. Feedback and measurement systems reduce the vulnerability of resources to diversion to other areas by stimulating action on projects, driving accountability around the use of the resources, and commanding management attention.     

Tax strategy control: The case of transfer pricing tax risk management

This paper examines how a functional tax strategy impacts the management control system (MCS) in a multinational enterprise (MNE) facing transfer pricing tax risks. Based on case study findings it is argued that the MCS in a multinational setting is contingent upon the MNE's response to its tax environment. Moreover, the paper extends existing contingency-based theory on MCS by illustrating the role of inter-organisational network collaboration across MNE transfer pricing tax experts. This collaboration, caused by a widely dispersed tax knowledge base, fuels the formal interactive control system and reduces tax uncertainty. The paper adopts an interdisciplinary approach for explaining findings, using contingency-based theory and network theory at the inter-organisational level.     

Management Control Systems in NPOs: An Italian Survey

This paper tries to point out the role and the characteristics of management control systems (MCS) in organisations whose main goal is not for profit (NPO). Are MCS a necessary or (at least) a useful tool to manage these organisations? How have they to fit the typical nature of NPOs? Are the traditional control processes (planning, programming, budgeting, reporting) effective in NPOs? What kind of information do they use? What is the 'state of the art' and the degree of sophistication of MCS in NPOs? To address these issues, a survey has been conducted among 76 Italian NPO top managers, and the results are reported in this paper.     

The use of management control systems to manage CSR strategy: A levers of control perspective

Little is known about the role of management control systems (MCS) in managing the strategic processes that underpin Corporate Social Responsibility (CSR). To enhance our understanding of this phenomenon, this study employs Simons’ (1995) levers of control framework to explore how organizations leverage MCS in different ways in order to drive strategic renewal and trigger organizational change while simultaneously supporting society's broader sustainability agenda. Drawing on data gathered from France's largest listed companies – members of the CAC 40 – we provide insights into the structures and processes that companies employ to design, implement and monitor their CSR strategy. In doing so, we provide evidence of the way that organizations seek to attain their CSR objectives, and of the relationship between the management of CSR and other business processes. Of particular interest is the role of the levers of control in enabling managers to identify and manage threats and opportunities associated with CSR strategy, thus forming risk management processes that support organizations in their attainment of strategic objectives. Furthermore, the study provides evidence suggesting the use of MCS has the potential to contribute to society's broader sustainability agenda through processes that enable innovation, communication, reporting, and the identification of threats and opportunities.     

Accounting and the Development of Management Control in the Cultural Sphere: The Case of the Venice Biennale

The Venice Biennale, founded in 1893, is situated within the cultural sphere, covering work ranging from art, architecture, dance, music and theatre to cinema (the world-known 'Venice Film Festival'). Throughout its life, the Biennale has experienced very troubled times, being involved in controversy, as well as undergoing significant legal and organisational changes, in particular, the transition from a public body to private one at the end of the 1990s. Dramatic changes have also affected the accounting data collection system utilised by the Biennale, which has developed from a system concerned with providing information for fulfilling specific legal provisions to one comprising a subsystem which has progressively evolved to aid the corporate strategic decision-making process.

This paper critically and systematically reviews the evolution of the accounting system and management control within the Biennale. It will examine how new information requirements over the years have driven the information-accounting system to change and, in turn, how the system has been influenced by the historical setting within which the decisions were made. We also provide some thoughts regarding the future development of such systems.     

Management control and performance management: whence and whither?

This paper is a personal account of the author's involvement with management control research over the past 35 years. The development of management control as a research area is briefly reviewed, culminating with its transition into performance management. However, the basic issues involved have remained remarkably unchanged over this period, as is illustrated by a number of anecdotes and examples. Some suggestions are made concerning potential topics for future research, together with some final comments on appropriate research methods.     

How information systems influence user decisions: a research framework and literature review

Technology has created new information alternatives that may influence the way information system users make decisions. This paper proposes a research framework for examining how features of an information system affect the decision-making process. The framework is synthesized by merging frameworks from the accounting information systems (AIS) literature and the human information processing (HIP) literature. The framework is then used to organize a literature review of 15 journals from 1987 through mid-1999, which identified 57 decision-making studies. Findings indicate that a wide range of opportunities is available for information systems research on issues of contemporary importance. This discussion includes changes in the decision process initiated by implementing enterprise resource planning (ERP) systems, data warehouses, electronic commerce, virtual organizations, on-line financial reporting, and disaggregated financial statement information.     

Responsibility cost control system in China: a case of management accounting application

This paper introduces the responsibility cost control system installed at Han Dan Iron and Steel Company in the People’s Republic of China. The Company has adopted a series of management accounting techniques or procedures in its cost control system, including target costing, responsibility accounting, standard costing, flexible budgeting, internal transfer pricing, behavior motivation, performance evaluation, variance analysis, and so on. In particular, the system has integrated responsibility accounting and cost control by introducing market mechanisms to substantially reduce production costs and raise profitability. The successful experiment reveals that the responsibility cost control system is an effective tool for cost control under the changing Chinese business environment. The Han Dan experience demonstrates that management accounting can play a positive role in improving business management and profitability in China or other developing countries. In addition, this study casts light on effective diffusion of management accounting practices under different social and economic systems.     

Performance measurement systems in higher education: How levers of control reveal the ambiguities of reforms

This paper focuses on the introduction of new performance measurement system (PMS) for measuring teaching performance in Universities. The adoption of such PMS should prompt significant changes in existing control processes, but the goals of reform do not automatically translate into the desired organisational responses. Given the impact of PMS on management controls, the nature of such ambiguities may be better investigated using a framework that allows management control systems (MCS) to be taken in account. This paper investigates key actors' perceptions regarding the introduction of PMS through the lens of the levers of control (Simons, 1995, 2000). A qualitative analysis is conducted on interviews held with Italian university teaching managers and heads of programmes to examine the ambiguities arising from the implementation of a PMS.Several ambiguities emerge, both within and between the levers analysed, suggesting some reasons for the (partial) ineffectiveness of PMS reforms. In particular, the belief systems lever is crucial in making reforms acceptable, bureaucratic procedures are important in the diagnostic control systems lever, and performance indicators operate as a boundary system lever. Our findings show that administrative and academic actors perceive the interactive control capacity of PMS differently.     

Performance effects of multiple control forms in a Lean organization: A quantitative case study in a systems fit approach

The primary objective of this paper is to research and test how control forms function and perform in a Lean organization. In the present quantitative case study, we provide statistical support that Lean is a set of multiple control forms (output, behavioral, and social controls) that complement each other to enhance performance, i.e., it is a control package. Therefore, performance is increased if the average level of control forms is increased, and performance is further increased if the control forms are balanced at the same level representing a complementary effect between them. Moreover, we provide a refinement to the statistical approach in testing systems fit models like ours by supplementing the Euclidian distance with the city-block distance. In this way, we are able to show that the control forms in Lean have a balanced complementary effect on performance, which is distinct from a solely additive effect or no effect. The refined understanding of complementary effect between control forms, the notion of balance, in a Lean organization can be utilized in understanding and testing more general control package theory in other contexts. Our data are archival data spanning multiple years in a dedicated Lean organization. This Scandinavian organization has around 2000 employees and produces small electronic components that are sold to business customers.     

Dimensions of strategic intervention for risk reduction and mitigation: a case study of the MV Sewol incident

Organizations in disaster management system should learn from previous experience and strategically use their lesson for the refinement of a system’s competencies for risk management. However, the MV Sewol incident revealed the absence of the organizational learning in the Korean disaster management system. With mixed methods of content analysis, in-depth interview, and social network analysis, this study identified key failure factors in response to the incident and categorized them by managerial, structural, and institutional domains. While the Korean government took bold steps to rebuild its risk management system, those efforts were biased to structural reforms and lacked fundamental changes in human and informational resources management. Based on the findings, this study suggests the balanced efforts for system refinement for effective risk management.