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The role of innovation in the evolution of management accounting and its integration into management control
Abstract
This paper aims to show how the design of management control systems (MCS) has developed in response to the need for organizations to address the challenges of operating in uncertain settings by embracing innovation. We examine how management accounting has evolved from a traditional, cybernetic approach to control operating within a closed system with little attention to adaptive processes into MCS that encompass a more dynamic, complex, open approach to management control that has provided a basis to facilitate innovation. We examine how the design and use of these MCS, that incorporate traditional and new practices, have evolved in ways that can support innovation where this is critical to survival. Accounting Organizations and Society (AOS) has been quite instrumental in pioneering many developments in this field. We draw on AOS, and other publications, to identify significant contributions that have been efficacious in theorizing changes in MCS with a particular concern for the context of innovation within which this takes place.
... The management accounting literature has already investigated the interplay between innovation and control. Chenhall et al. (2011) observed that product differentiation is associated with innovation and that the former is linked with each dimension of the management control system; Bedford (2015) focused on the relation between the use of management control systems and innovation and the effects on firm performance; Chenhall and Moers (2015) identified how the design and use of management control systems evolved in order to support innovation; Pan Fagerlin and Lövstål (2020) studied the use of formal and informal controls in product innovation processes; Taylor et al. (2019) investigated how different organisations use management controls to achieve innovation; Ditillo and Caglio (2018) analysed the control mechanisms adopted in inter-organisational settings aimed at innovation from a theoretical point of view. ...
... This study makes several contributions. First, we contribute to the understanding of how innovation impacts management controls (Chenhall & Moers, 2015) in the context of interorganisational relationships. In particular, as we consider the multifaceted nature of innovation (Davila et al., 2009), we enrich the existing literature on the relationship between innovation and controls by distinguishing between the effects of product and process innovation on management controls. ...
... Firstly, while previous research has studied the relation between innovation and controls (Abernethy & Brownell, 1997;Bedford, 2015;Chenhall & Moers, 2015;Chenhall et al., 2011;Davila, 2000, among others), there is a lack of knowledge on buyer-supplier relationships aimed at innovation. The distinction between contract completeness, the inclusion of control specifications in the contract and the use of non-contractual controls, allows us to investigate the triadic relationship between innovation, controls, and interorganisational relationships that has never been studied before. ...
This paper addresses a gap in the management accounting literature by examining the relationship between innovation, contract completeness, and the use of management controls in buyer–supplier relationships. Early evidence shows that uncertainty significantly affects contracts and controls, reducing both contract completeness and the inclusion of control specifications in contracts. However, little is known about the role of innovation in shaping inter-organisational relationships. Our study leverages survey evidence collected in the fashion industry, where innovation is both a source of competitive advantage and an intrinsic feature of the production process. Results indicate that process innovation has a negative relationship with contract completeness and reduces the formalisation of controls in contracts, while product innovation has no significant association. This study highlights the importance of designing contracts that balance completeness and flexibility in innovation activities, and the crucial role that trust plays, as a substitute for contractual control mechanisms, in improving buyer–supplier relationships.
... Innovation that will remain one of the keys to success in organizational adaptation and dynamic business development requires an appropriate management control system (MCS) design to be able to deal with uncertainties in the business environment while continuing to innovate (Chenhall & Moers, 2015;T. Davila, 2000). ...
... Second, this study explores the measures of innovation in research and identifies the situations in which MCS plays a role. Chenhall & Moers (2015) emphasize that innovation has become a key variable, motivating a more complex understanding of control. Innovation directly impacts by producing new products, services, and processes. ...
... Management control systems (MCS) are defined as formal and information-based routines and procedures that managers use to maintain or change patterns in organizational activities (Simons, 1995). Chenhall & Moers (2015) describe MCS as a combination of formal and informal control over inputs, processes, and outputs used by management to achieve goals. Similarly, Kennedy & Widener (2019) define MCS as a mechanism for communicating organizational goals, motivating individuals within the organization to achieve these goals, ...
The purpose of this study is to examine through a systematic review the management accounting research that focuses on the role of management control systems (MCS) in enhancing innovation within organizations. For that purpose, a total of 19 articles from publications spanning from 2000 to 2022 were selected using the keywords of management control system and innovation. The findings indicate that the Levers of Control (LoC) is the most widely studied topic. The next popular topic being examined is formal and informal control mechanisms. The aspect of innovation in that literature mainly focuses on product innovation, management and organizational innovation, and environmental innovation and sustainability. Future research can explore more the role of the MCS in the combined mechanism of LoC to encourage innovation. This paper contributes to the MCS literature by examining the suitable mechanisms affecting the success of innovation in a rapidly changing environment. Keywords:Management Control System, Innovation, Review Literature, Levers Of Control, New Product Development
... It is also important to highlight and contextualize the issue of change in management accounting. Some works have explored how accountants and accounting can impact innovative sustainability practices (Chenhall and Moers, 2015;Egan, 2018;Ferreira et al., 2010;Schaltegger et al., 2015). According to Chenhall and Moers (2015), the BSC had a significant impact on how the accounting profession conceived the relationship between MCS and innovation strategy, based on "extended control notions" (Chenhall and Moers, 2015, p. 6). ...
... Some works have explored how accountants and accounting can impact innovative sustainability practices (Chenhall and Moers, 2015;Egan, 2018;Ferreira et al., 2010;Schaltegger et al., 2015). According to Chenhall and Moers (2015), the BSC had a significant impact on how the accounting profession conceived the relationship between MCS and innovation strategy, based on "extended control notions" (Chenhall and Moers, 2015, p. 6). Connected to this concept, conceptual innovations related to the use of the BSC can assume a relevant role for entities in scenarios that require the establishment of links between economic and social objectives (Windrum, 2008). ...
... This role leads to the construction of knowledge, by letting users question the strategic themes as well as the objectives and indicators. So, we are, in the present case, dealing with the need for a complex MCS (Chenhall and Moers, 2015) to engage with multiple interests as part of a water utilities core strategy to attain SGD6. This is represented by engaging with an extended number of different groups of stakeholders (Del Río Castro et al., 2021), with different interests, contributing to the quality of life of humans and non-humans and to the sustainability of the planet. ...
Purpose
The purpose of this paper is to examine the technical, social and moral aspects of accounting through the implementation of a novel balanced scorecard (BSC) that addresses the United Nations Sustainable Development Goal (UN SDG) 6 – Clean Water and Sanitation – within the Portuguese water utilities sector.
Design/methodology/approach
A novel research design is adopted, using actor network theory (ANT) as a broad approach to frame the study. ANT emphasizes the importance of ever-evolving networks of relationships and how concepts such as the BSC are just as important in structuring social practice. A set of expert interviews was conducted with stakeholders in the water utilities sector in Portugal, which led to the iterative development of a context-relevant BSC proposal and associated indicators.
Findings
A novel BSC architecture to achieve UN SDG 6 is proposed through a unique engagement between professionals and academics. The BSC, and the specific definition of indicators for an entire sector (water), contribute to bridging business processes with the common good to improve life and planetary conditions. Ultimately, the study discusses how the technical aspects of accounting can be enhanced to achieve social and moral imperatives. The paper also reflects on the limitations of broadening existing technical practices.
Originality/value
There is a burgeoning literature on how organizations are engaging with the UN SDG agenda. However, there is a dearth of studies on how management control systems are currently addressing, or can potentially contribute to measuring and managing specific UN SDGs such as Clean Water and Sanitation. This study makes a unique contribution to the literature by developing a novel BSC solution to SDG 6 measurement and management using a novel practitioner-led approach. Ultimately, our study highlights how accounting can be broadened to enhance technical practices while also serving a moral and social purpose.
... A large body of literature linking management control systems (MCS) and innovation has been developed in recent years (Bedford, 2015;Chenhall and Moers, 2015;Gomez-Conde et al., 2019;Miller et al., 2022;Müller-Stewens et al., 2020). The main arguments behind this evidence refer to coordination routines. ...
... Our paper makes three main contributions to the literature. First, most prior research consistently documented the positive effects among MCS and innovation (Bedford, 2015;Chenhall & Moers, 2015;Gomez-Conde et al., 2019;Miller et al., 2022;Müller-Stewens et al., 2020). We add to this literature by providing evidence that these regulatory-driven EMCS might not foster environmental innovation immediately, which has been proved relevant for improving corporate performance and its impact on society (Eiadat et al., 2008;Journeault et al., 2016). ...
... Extant prior work provides evidence of the positive relationship between MCS and innovations (Bedford, 2015;Bisbe and Malagueño, 2015;Cardinal, 2001;Chenhall and Moers, 2015;Malagueño et al., 2018;Miller et al., 2022;Müller-Stewens et al., 2020), such as product developments (Chenhall, 2005;Guilding, 1999, Nixon, 1998. The arguments behind this evidence refer to coordination routines. ...
We examine the effect of regulatory-driven environmental management control systems (EMCS) on environmental innovation by exploiting the non-financial reporting Directive 2014/95/EU as a quasi-natural experiment. One explicit aim of this directive is to improve the measuring, monitoring, and managing of undertakings' performance and their impact on society. A regulated context may compel managers to prioritize external regulatory requirements over their specific organizational contingencies. This shift could lead to a decrease in flexibility, which is needed to effectively accelerate environmental innovation, arguably one of the corporate flagships for enhancing environmental performance. We perform a difference-indifferences design using the EU directive as a plausible exogenous shock to EMCS and environmental innovation. Our results suggest that: (i) the directive under study increases the adoption of EMCS, (ii) non-regulated EMCS foster environmental innovation and, even more importantly, (iii) regulatory-driven EMCS have a short-term (temporary) lessening effect on environmental innovation. In further analysis we find that this lessening effect reverses from t+1 onwards, once internal frictions are overcome, with the effect being positive in the long run.
... The lean concept emerged from WCM and was subsequently considered in process research (Kennedy and Widener, 2008). Later, horizontal organization (HO), an integrative approach (Chenhall and Moers, 2015), and the more general term "process orientation" (Kohlbacher, 2010) were introduced. We will use the term process orientation in this literature review. ...
... The relationship between process orientation and MC has been analyzed in management accounting research (Arai, 2021;Donnelly et al., 2021;Grasso and Tyson, 2021;Chenhall and Moers, 2015;Fullerton et al., 2013;Ferreira and Otley, 2009;Berry et al., 2009;Chenhall, 2008). Publications in disciplines such as operations (Bellisario and Pavlov, 2018;Fullerton et al., 2014), quality management (Eldridge et al., 2014) and business process management (BPM) (Abeygunasekera et al., 2018) also address this topic. ...
... Calls for further research highlight the limitations of previous work (Ferreira and Otley, 2009). These calls also emphasize the importance of further research on MCS in horizontal organizational settings (Chenhall and Moers, 2015). The current literature confirms important fields in need of further research within the MCS for process context (Pan Fagerlin and Lövstål, 2020;Arai, 2021) and also more general within the organizational context (Merchant and Otley, 2020). ...
Purpose
Process orientation is important for improving organizational performance. The process view is considered a key enabler of digital transformation, and thus management control systems (MCS) are expected to incorporate this view. However, the existing body of knowledge is fragmented, as different process approaches are often considered independently following a reductionist view of control practices. This paper aims to provide recommendations for further research as well as guidance for practice by a systematic review of the state of research of MC for process orientation. It is based on both a comprehensive view to MC using an MCS package approach and a comprehensive view of process orientation.
Design/methodology/approach
A systematic literature review addressing major types of process orientation approaches was performed by applying the comprehensive MC framework of Malmi and Brown. The results were synthesized and propositions were developed.
Findings
All components of the MC framework, as well as MCS packages, are highly relevant for process orientation. Propositions regarding configurations of MC for process orientation show directions for future research. However, comprehensive considerations of packages and of individual components, especially cultural controls, remain scarce in the literature.
Originality/value
To the best of the authors‘ knowledge, this paper is the first of its kind to provide a comprehensive, structured overview of MC for process orientation, applying a nonreductionist view, based on an MCS Package approach, and consolidating the so far fragmented view of different process approaches.
... A tecnologia aliada à inovação nos processos tornar-se dominante, em situações de processos disruptivos necessários (Chenhall;Moers, 2015). Dessa forma, é salutar que a escolha pela integração de dados seja proveniente de planejamento e orçamento viável de implantação de ferramental, pois a empresa vai romper com uma velha cultura retrógrada e embarcar na inovação dos processos. ...
... A tecnologia aliada à inovação nos processos tornar-se dominante, em situações de processos disruptivos necessários (Chenhall;Moers, 2015). Dessa forma, é salutar que a escolha pela integração de dados seja proveniente de planejamento e orçamento viável de implantação de ferramental, pois a empresa vai romper com uma velha cultura retrógrada e embarcar na inovação dos processos. ...
Este artigo busca, a partir das fragilidades nos controles internos de uma instituição de ensino superior, de pequeno porte, da iniciativa privada, produzir um diagnóstico e sugerir soluções viáveis de suporte à decisão por meio da controladoria com o apoio de recursos tecnológicos como Sistema de Informação Gerencial (SIG) e Business Intelligence (BI). O estudo apontou os processos que vigoravam na instituição, identificando, através de diagnóstico, as fragilidades na execução dos controles internos. Neste sentido, percebeu-se a presença de controles fragmentados e informações inconsistentes, que não auxiliavam nas decisões da gestão além de desacordo das gestões nas decisões. Isso levou à necessidade de inovação nos processos, conforme orientação do consultor designado pela empresa, responsável pelo diagnóstico com a atualização do SIG e Website e orientação para futura adesão do recurso de BI, com a finalidade de melhorar o suporte ao processo decisório através da integração dos dados. A contribuição deste artigo mostrou que é possível melhorar o desempenho gerencial com um investimento viável para a categoria de MPE.
... Core practices include budgeting, forecasting, performance evaluation, and cost management. However, the evolving business landscape and rapid technological advancements are driving significant changes in these practices, necessitating a shift towards more agile and technologyenhanced approaches (Chenhall & Moers, 2015). ...
... Accountants and managers use various tools and techniques, such as variance analysis, cost-volume-profit analysis, and budgeting, to derive insights and make decisions. However, these methods have limitations due to their dependency on historical data, manual processing, and inability to handle complex business environments effectively (Chenhall & Moers, 2015). ...
Background and Aim: This study investigates the transformative impact of artificial intelligence (AI) on traditional management accounting practices, focusing on predictive analytics, automated reporting, and decision-making processes. The aim is to investigate how AI enhances the efficiency and accuracy of management accounting, as well as its strategic capabilities. Scope: The research is limited to AI applications within management accounting, examining current practices and the extent of AI integration. Methods: A mixed-methods approach combines an analysis of literature with available case studies. Results: The findings reveal that AI greatly enhances predictive analytics by boosting model accuracy and swiftly processing large datasets. AI-powered automated reporting improves efficiency and minimizes errors, while AI-based decision support systems deliver real-time insights and detect complex patterns, resulting in more effective strategic decisions. The study concludes that AI has the potential to revolutionize management accounting by enhancing predictive accuracy, operational efficiency, and strategic decision-making. However, successful implementation must address challenges related to data quality, system integration, and regulatory compliance. Originality: This paper contributes novel insights into how AI technologies can effectively integrate into accounting practices. Practical Implications: The findings are helpful for accounting professionals and business managers seeking to leverage AI to enhance their accounting practices, providing valuable recommendations for implementation and addressing potential challenges.
... MAS also serves as the backbone of strategic and operational decision making in various businesses, including MSMEs (Zuhroh et al., 2024). For example, Chenhall and Moers (2015) emphasized the importance of MAS if appropriately applied as a means to improve decision accuracy and strengthen business strategy implementation. Empirical research by Singh et al. (2018) demonstrates that an effective adoption of MAS would help small and micro enterprises to overcome the challenge of limited resources and uncertainty in the business environment. ...
... The statistics represent the socio-economic reality in Malang, which shows that women are actively involved in the MSME area. Most research has found that informal education has a significant effect on MAS implementation in MSMEs (Anggraini and Thorp, 2020;Chenhall and Moers, 2015). One of the key factors contributing to MSME actors' success in business funding management is training and the courses they have attended. ...
This study analyzes the effectiveness of sharing economy platforms and management accounting systems (MAS) on the financial performance of Micro, Small, and Medium Enterprises (MSMEs) in Malang City, Indonesia, by considering the moderating effect of demographic factors such as gender, age, and business tenure. The investigation also examines the impact of formal and informal education on financial performance, positing that practical training yields greater financial improvement than theoretical schooling. This research examines 234 MSMEs using structural equation modeling (SEM) with SmartPLS and employs path analysis to investigate the impact of sharing economy platforms on MAS, as well as its consequences for financial performance. The results indicate that sharing economy platforms and MAS have a significant effect on financial performance. Informal education has a significant effect on sharing economy platforms and MAS, whereas formal education has a negative effect on financial performance. Demographic factors were observed to have a significant moderating effect on the path from MAS to financial performance. This study introduces the Adaptive Financial Capability Model (AFCM), a novel framework that uniquely integrates adaptive learning derived from informal education with demographic factors. By bridging practical training with contextual variables, such as gender, age, and business tenure, the AFCM provides an original perspective on enhancing financial management and technology adoption within MSMEs.
... In particular, the resourcebased approach has been used extensively to investigate innovation within SMEs. This approach underscores the significance of internal factors, such as patents, skills, knowledge, and brands, and emphasises how they can be integrated through effective managerial capabilities (Abdul-Halim et al., 2019;Belton, 2017;Chenhall & Moers, 2015). By leveraging these resources, SMEs can drive innovation and gain a competitive advantage in their respective industries (Prahalad & Hamel, 2009;Rodil et al., 2016). ...
... Furthermore, the Resource-Based View (RBV) theory is associated with intangible assets and core competencies management. A prior study demonstrated that effective AIS performance can aid a business (Chenhall & Moers, 2015). AIS performance is characterised by its complexity and distinctiveness, which creates data's competitive advantages (Chapman, 2016;Hagiu & Wright, 2020;Torres & Sidorova, 2019). ...
Competitive advantages and Accounting Information System (AIS) are progressively gaining the attention of management accounting practitioners, managers, and academics due to their significant influence on performance, profit, stainable growth, and growing acceptance by SMEs. This study aims to investigate the connections between these two large fields and offer suggestions for their joint consideration. The main objectives are to: (1) Review the relevant literature of both frameworks, (2) identify the benefits of their concurrent application, and (3) develop a theoretical framework model that integrates their separate concepts. The results contribute to proposing new ways of enhancing AIS performance. Furthermore, these managing approaches are compatible with complementary and their combined execution could assist SMEs in improving their overall performance and enhancing their competitive advantages. Their combined use could also facilitate the dissemination of Accounting Information System and strategic management accounting approaches for SMEs.
... Insert figure 1 here 2. Theoretical background 2.1. Innovation in the accounting profession Professional accountants have to adapt and to thrive in an evolving landscape by embracing creativity and innovation (Abdolmohammadi et al., 2004;Bryant et al., 2011;Carter and Spence, 2014;Chenhall and Moers, 2015). Innovation, as defined by Amabile et al. (1996), is ...
... Similarly, resources like saved energy and time in a telework setting can be redirected towards enhancing and developing new skills necessary for generating creative ideas, promoting structural JC. This is particularly crucial for professional accountants who must remain innovative (Bryant et al., 2011;Chenhall and Moers, 2015). To meet the need for autonomy, accountants can leverage communication technology to serve clients in different time zones and adjust their work hours (Biron et al., 2023). ...
Purpose
Scholars highlight the lack of research that explains the mechanisms leading to knowledge sharing, which appears complex and involves many variables. The primary aim of this study is to investigate the direct effect of organizational support for innovation on job crafting behaviors and knowledge sharing. The second objective is to assess the mediating role of job crafting in the relationship between organizational support for innovation and knowledge sharing. The third aim is to compare the direct effects of organizational support for innovation on job crafting behaviors and knowledge sharing between teleworkers and office workers.
Design/methodology/approach
Based on an empirical study involving 193 teleworkers and 191 office workers, the structural equation modeling method was employed to examine the direct and indirect effects of organizational support for innovation on knowledge sharing via job crafting behaviors. The comparison between teleworkers and office workers was investigated using a multigroup approach in AMOS software. This research is grounded in the conservation of resources theory and social exchange theory to elucidate these relationships.
Findings
The results indicate that organizational support for innovation has a positive influence on job crafting activities, manifested by the increase in structural and social resources, as well as the amplification of work-related challenges. The results also indicate that organizational support for innovation directly promotes knowledge sharing behavior and indirectly through job crafting. Furthermore, the findings reveal that these effects on job crafting and knowledge sharing are stronger among teleworkers compared to office workers.
Research limitations/implications
The study has limitations. Its cross-sectional design does not establish causality, potentially leading to common method variance. However, after implementing many procedural and performing statistical tests, common method variance was not significant in this research. Replicating the study longitudinally would be valuable. Additionally, considering personality traits and technology characteristics in job crafting behaviors would be beneficial. Lastly, the study focuses only on accountants and predates COVID-19, which may impact its findings and generalizability.
Practical implications
The study’s findings underscore the practical significance of supporting innovation and fostering job crafting to enhance knowledge sharing, particularly for remote workers. It highlights that the extent of employees’ engagement in job crafting depends on the level of innovation support provided in their workplace. To mitigate potential negative outcomes such as increased absenteeism, reduced productivity and retention challenges, organizations could benefit from training supervisors to prioritize and encourage job crafting and knowledge sharing behaviors among employees, especially in telework settings. Ensuring alignment between organizational messaging and managerial attitudes is crucial. Without autonomy or flexibility for job crafting, the positive effects of organizational innovation support may be limited.
Originality/value
This study contributes to the literature by demonstrating that job crafting behaviors serves as mechanisms between organizational support for innovation and knowledge sharing. The findings further advance the literature by revealing three psychological and motivational processes that may explain this relationship, particularly when comparing teleworkers to office workers. Our results reveal that the effect of organizational support for innovation on job crafting and knowledge sharing is stronger among workers who telework compared to office workers. This advances the theory of conservation of resources, especially the significance of resource gains, particularly in contexts where employees need resources, such as in telework.
... Depending on the complexity of its control environment, the level of comprehensiveness of control mechanisms used may vary in an organisation. A higher level of complexity in its control environment necessitates an organisation to adopt more comprehensive controls (Chenhall, 2003;Chenhall & Moers, 2015). In traditional private equity, the goal is to maximise financial returns upon exit (e.g., Bedford & Ditillo, 2022;Cumming & MacIntosh, 2003;Nama & Lowe, 2014). ...
... This can be manifested by impact investors adopting thoughtful impact-oriented controls in addition to financial controls as well as introducing new (rather than continuing the same) impact-oriented controls in different investment stages. This echoes the prior accounting literature on controls | 21 (for a review, see Chenhall, 2003;Chenhall & Moers, 2015), which highlights the importance of adopting more comprehensive controls in an organisation when facing a higher degree of complexity and uncertainty. ...
Traditional private equity firms aim to maximise their financial returns when exiting an investment. In contrast, a major consideration for impact private equity firms is to ensure an impactful exit from their investments-increasing the chance of impact continuity in portfolio companies post exit. However, impactful exits may not be realised due to ownership-, management-, and operations-related threats. Drawing on data from 45 impact private equity firms, we identify the control strategies that impact investors use throughout the investment lifecycle to manage impactful exits from investment. We also highlight how control-related issues differ between traditional and impact private equity firms.
... Simons (1995) recognises the importance of Management Control Systems (MCS) in managing strategic uncertainties and obtaining competitive advantages. The author presents a structure with four types of control (beliefs, limits, diagnostic, and interactive), which fit the existing complexity in innovation contexts (Chenhall and Moers, 2015;Lill et al., 2020), highlighting the uses of diagnostic and interactive controls (Mundy, 2010). ...
... Encouraging innovation in organizations intensifies the power of control as a resource to drive and motivate innovative efforts (Chenhall and Moers, 2015). In this sense, innovation can also indirectly influence control instruments such as the budget and organizational performance. ...
This study examined the effect of diagnostic and interactive use of budget on organizational performance mediated by innovation orientation. This was a quantitative and descriptive research in which a survey was carried out with managers of Information and Communication Technology companies. According to the results, the use of the budget does not seem to have a direct relationship with organizational performance, as the relationship was no non-significant. Furthermore, the results suggest that innovation orientation has a positive impact on organizational performance and intervenes positively in the relationship between the interactive use of the budget and organizational performance. The work contributes to budgetary research and innovation, fostering an organizational culture that values both efficiency and the capacity for adaptation and renewal, in addition to guiding managers in the search for best management practices to deal with the dynamism present in the innovative environment.
... The topic of developing innovative techniques in management accounting is not new, it was also discussed by Zawawi & Hoque (2010) arguing that the new economic environment forces companies to adopt innovative techniques of management accounting (Management Accounting Innovation-MAI), which should be further investigated. Chenhall & Moers (2015) also argued that management control systems should incorporate innovations in management accounting, in order to cope with the uncertainty of the external environment and make management control more effective. In their work, Petera & Šoljaková (2020) conducted research in which they proved that companies consider SMA techniques useful and want to implement them more in the future. ...
... The Balanced Scorecard (BSC) has a higher rate of adoption and use, compared to other innovative management accounting tools. Statistical analysis showed that business units usually adopt more than one MAI, which confirms the findings of Chenhall and Moers (2015), who believe that management control systems include innovative tools in management accounting, which results in providing more complex control of business activities. The analysis of the data also showed that those business units that were most affected by the crisis had a harder time adopting and using MAI, compared to those companies that were less affected by it. ...
Management accounting has a wide set of various techniques for the purpose of decision-making, planning, coordination, control and motivation through performance measurement, budgeting, responsibility centers, transfer pricing, costing and cost allocation. Over the past two decades, the need to explain the mechanisms of business decision-making by expanding the focus from the internal environment to factors of the external environment such as exchange rate fluctuations, inflation, slowing down of economic activity, volatility of the stock market and others has been clearly manifested. The strategic aspect and non-financial information, as important aspects of decision-making in crisis conditions, influenced the development of new and improvement of existing management accounting techniques. In the post-corona era, the central focus of management accounting tools and techniques becomes sustainability and accelerated technology adoption, so management accounting practices must be adapted accordingly. The intention of the work is twofold. First, the work tries to point out the environmental factors and influences that are the impetus for necessary changes and adaptability of the management accounting technique in the crisis circumstances. Second, the aim of the paper is a critical review of the current literature on the issue of the use of management accounting techniques in conditions of crisis and unpredictability in various types of entities and industry sectors. Finally, the aim of the paper is to consider whether new and proactive management accounting techniques are applied in crisis conditions or whether the management's focus is on the short-term realization of income and profit.
... However, the study did not explore the green context; it examined "out-the-door" innovation, i.e., product innovation. New evidence is necessary besides recognizing the relevance of informal controls for innovative companies (Chenhall & Moers, 2015) like startups . Given the above, we explore the role of informal controls to orchestrate GPI, i.e., innovation "from the door in" AgTechs. ...
... Despite the importance of informal controls in innovative environments (Chenhall & Moers, 2015;Rosa et al., 2023), evidence is limited in startups. Startups often emphasize informal controls Taylor et al., 2019) because they are usually the first to be adopted (Akroyd & Kober, 2020;Akroyd et al., 2019). ...
Agriculture technology startups (AgTechs) must align innovation interests with green sustainability, amplifying managerial challenges. Therefore, this study aims to examine the role of informal controls, green learning, and green creativity in green process innovation of AgTechs. Data from 82 Brazilian AgTechs are analyzed by partial least squares-structural equation modeling (PLS-SEM) and fuzzy-set qualitative comparative analysis (fsQCA). The results show that informal controls are directly and indirectly (mediated by green learning and green creativity) associated with green process innovation. Thus, green learning and green creativity mediate to facilitate that informal controls orchestrate green process innovation. Furthermore, two causal solutions lead AgTechs to high green process innovation. This study contributes by exploring the roles of informal controls, learning, creativity, and innovation in the green innovative setting of AgTechs. The findings are relevant for founders, managers, and stakeholders to promote the green sustainability of AgTechs. Agribusiness is one of the primary sectors of the Brazilian economy. Therefore, AgTechs have a broad field to offer technological solutions for agribusiness. Consequently, understanding how these startups align innovation and sustainability to generate cleaner and sustainable production is relevant to stakeholders and society.
... This is called traditional MCS (Davila et al., 2009;Sacramento et al., 2006). Linked with innovation process, this traditional control system hinders innovation due to its nature of trial and error beforehand (Chenhall and Moers, 2015;Davila et al., 2009;Sacramento et al., 2006). ...
... The existence of an economic shift in the last two decades, namely the transition from a production-based economy to a knowledge-based economy, has influenced the study of control in organizations, especially in terms of its contribution to providing solutions to a dynamic business environment (Chenhall and Moers, 2015;Davila et al., 2009;Martyn, Sweeney, and Curtis, 2016;Viveros et al., 2017). Maintaining an optimal balance between stability and flexibility through control is very important and has always been a major challenge for any organization (Herath, 2007). ...
... Several studies have shown that implementing innovation and sustainability performance benefits the firm's overall value. According to Chenhall and Moers (2015), innovation refers to the act of creating and implementing new goods, services, and processes that lead to substantial improvements in outcomes. They argue that creativity is the first step in the process of innovation. ...
This paper examines the impact of integrating sustainability performance with innovation performance on value creation in developing countries. The study employs content analysis to assess the levels of sustainability performance and innovation performance in 21 companies listed on the Iraqi Stock Exchange from 2011 to 2022. To test the proposed hypotheses, the study utilizes pooled Ordinary Least Squares (ols) and panel analysis. The findings reveal that sustainability performance and innovation performance positively influence company value, both independently and jointly. Furthermore, the results underscore the importance of investing in innovation processes to achieve a competitive advantage that fosters value creation. The study also highlights the critical balance between the increasing adoption of sustainable technologies in manufacturing and the effective application of diverse innovative technologies across production, operations, marketing, and organizational strategies as integral components of new product development. These findings hold significant implications for strategic decision-making, suggesting that companies in developing nations should pursue sustainable innovation pathways by adopting appropriate technologies and ensuring their long-term viability amid rapid technological advancements.
... The contingency theory of management, which originated in the mid-20th century, suggests that organizational practices, including MCS, must be aligned with specific contextual factors to enhance effectiveness. Key among these factors are company size, environmental uncertainty, technological sophistication, and organizational structure, each of which has been shown to influence MCS design and implementation [2]. For instance, larger companies with complex hierarchies and operations often require more sophisticated MCS, while firms operating in highly dynamic environments benefit from control systems that support agility and rapid decision making [3]. ...
This study investigates how organizational contingency factors, namely company size, environmental uncertainty, technological capacity, and organizational structure, affect the design and effectiveness of management control systems (MCS) in Moroccan industrial companies. Drawing on contingency theory, which emphasizes the alignment of organizational systems with contextual factors, this research applies quantitative methods to a sample of 190 industrial firms in Morocco, achieving a 76% response rate to the distributed surveys. The data are analyzed using correlation and linear regression techniques to explore these relationships. The findings reveal that larger firms, those operating in dynamic and uncertain environments, and those with advanced technological systems tend to implement more sophisticated, integrated, and participative MCS. Furthermore, flexible and decentralized organizational structures significantly enhance the adoption of adaptive control systems. These results underscore the importance of tailoring MCS to organizational characteristics and environmental conditions, particularly in emerging market contexts. This study's novel contribution lies in its application of contingency theory to a non-Western industrial context, addressing a gap in the literature by demonstrating how specific regional factors influence MCS practices. This research offers practical insights for Moroccan industrial firms seeking to improve their operational efficiency, adaptability, and strategic decision making in volatile markets.
... In this line of research, however, some scholars conversely emphasize the possible negative effects of the progressive digitalisation of performance measurement practices. The more advanced the technology becomes, the more complex it is to use, and this could reduce the ability and propensity to measure performance (Chenhall & Moers, 2015). Furthermore, the digitalization of measurement and control practices can lead managers never to question the data provided by the machine and this can undermine the maieutic function of accounting systems, leading managers to make wrong decisions faster (Quattrone,8 Copyright © FrancoAngeli. ...
The current uncertain and emergency environment is challenging business management like never before. Companies are called to face many complex and wicked problems affecting society on a global scale. Climate change, global pandemics, social inequalities, war conflicts, digital transformation, and energy supply shortages are only a few of the critical issues companies must deal with daily. Performance measurement systems and management control practices can have a key role in addressing such a turbulent environment. Accordingly, the literature has recently started investigating their role in supporting companies facing societal "Grand Challenges". The scientific debate on this topic is intense but still in its infancy leaving open wide research areas that need to be further explored and investigated.
... Wade and Hulland (2004) found a strong correlation between AIS usage and company performance in uncertain environments, in an agreement with Song et al. (2022). The evidence suggests that these economic developments necessitate new crisis management strategies (Chenhall and Moers, 2015). The scenario's elements may affect performance measurement system installation (Zawawi and Hoque, 2010). ...
Purpose
As organisations rely more on systems to protect their accounting data, it is critical to investigate whether cutting-edge “Accounting Information Systems (AIS)” technologies increase “Accounting Information Quality (AIQ)” in post-Covid-19 era.
Design/methodology/approach
The current study examined how Covid-19 modified the expected links between AIS implementation and AIQ factors. To make the “structural model”, a “web-based survey” was used. A “Multi-group Analysis” (MGA) with “AMOS.26” was employed to test the regulating effect. To look at their regression values, the 412 participants from “Family Small- and Medium-sized Enterprises FSMEs” in Jordan who took part in the MGA were split into two groups: those who had a high experience of Covid-19 impact ( N = 143) and those who had a low experience of Covid-19 impact ( N = 269). The study of 412 completed surveys shows that MGA uses a modified t -test to determine the significant difference between regression coefficients.
Findings
The results of the moderation effect confirm that Covid-19 has a substantial effect on AIS adoption and AIQ. All hypotheses about how AIS implementation affects AIQ in post-Covid-19 era were approved. The study finds that adopting AIS is critical for enterprises to maintain successful operations and efficiency.
Practical implications
This model may assist businesses in comprehending the relationship between AIS and AIQ, how it affects it in the current technological adoption phase under extremely unpredictable economic conditions and what characteristics support its widespread usage. This research offered the theoretical underpinning for examining AIS’s ability to improve AIQ among Jordanian family firms. The results can also be applied to other Middle Eastern countries and AIQ, how it affects this relationship during this period of technological adoption under extraordinarily unpredictable economic conditions and what factors support its widespread use. Practitioners and scholars must recognise how AIS can develop organisational values and impacts as the AIS environment grows. This study recommends a holistic AIS-implementation methodology and evaluates organisational implications to address this empirical challenge.
Originality/value
This study investigates whether adopting AIS results in significantly higher AIQ in the post-Covid-19 era. To the best of the author’s knowledge, there have been a few attempts to investigate how AIS influences data quality. Still, there is little evidence of how this relationship has evolved in the aftermath of the Covid-19 tragedy. As a result, much work remains to be done, particularly in analytical decision-making culture, which is critical to the development of the growing economies of the Middle East and Jordan. To address this knowledge gap, the Covid-19 and AIQ criteria were incorporated into the model utilised in this study. This research adds to existing knowledge and may be valuable in areas with low AIS framework frequency.
... Following the framework of control levers, several studies have examined a more active role of MCS in the formulation of strategy and the implementation of strategic change. MCS can provide plenty of information from various sources, therefore facilitating comprehensive decision-making for promoting innovation (Chenhall & Moers, 2015;Henri & Wouters, 2020;Lill et al., 2021;Nani & Safitri, 2021;Santos et al., 2022). Therefore, we argue that MCS provides levers or mechanisms that managers can use to enable dynamic capabilities in this paper. ...
Drawing on the resource-based view and dynamic-capability view, this study examines the relationship between the interactive use of management control systems, dynamic capabilities, and firm performance in the Vietnamese information and communication technology industry. The research model and hypotheses have been tested by partial least squares-structural equation modelling (PLS-SEM) with 240 survey samples obtained from managers working in Vietnamese information and communication technology firms. The results indicate that the interactive use of management control systems has a positive effect on dynamic capabilities. Additionally, both the interactive use of management control systems and dynamic capabilities have direct positive effects on firm performance. The results reveal that dynamic capabilities complementary mediate the relationships between the interactive use of management control systems and firm performance. This study provides theoretical and managerial implications for Vietnamese information and communication technology firms that are striving to develop management control systems and dynamic capabilities for enhancing firm performance.
... The systems emphasize the function of control systems as strategic management tools. Management utilizes levers of control to comprehend the connection between strategy and control in dealing with organizational behavior issues and strategic uncertainties (Chenhall & Moers, 2015). The framework consists of the beliefs control systems to deploy the organization's core values, the boundaries control systems to restrain negative work behaviors, the interactive control systems to focus attention on and handle the organization's strategic uncertainties, and the diagnostic control systems to ensure the accomplishment of the organization's critical success factors (Simons, 1995;Widener, 2007). ...
The low academic ranking compared to academicians in other disciplines is a work performance issue encountered by accounting academics, particularly in developing countries such as Indonesia. Besides, executing performance systems as a control mechanism mandated by the government also affected academic counterproductive work behavior (CWB) and performance. However, there is a dearth of empirical verification concerning the connection of control systems to the CWB and the performance of accounting academics. Therefore, building upon the job demands-resources theory, this study examines the association among levers of control as institutional performance mechanisms, CWB, and the work performance of academics. A self-administered online survey was conducted on 238 Indonesian accounting academics. Partial least squares structural equation modeling (PLS-SEM) was utilized to run the analyses. This study’s crucial findings depicted the boundaries and interactive control systems as substantial factors to mitigate the tendency of academics to engage in CWB and revealed evidence concerning the negative effect of CWB on work performance. Subsequently, CWB plays a critical role in mediating the positive relationship between those two control systems and performance. The boundaries and interactive levers of control boost performance due to the systems’ success in mitigating academics’ involvement in CWB. The findings are relevant to higher education top management in aligning management control systems with the proper code of conduct and designing performance systems that enable academic freedom, collegial culture, autonomy, and participation to escalate performance. Shifting the control systems’ paradigm toward these characteristics will mitigate academics’ CWB and improve their performance.
... Pourtant, cette question du contrôle mérite d'être posée tant les approches restent souvent centrées sur l'organisé en s'attachant avant tout à représenter ex ante l'activité pour pouvoir la contrôler. La littérature met en évidence les effets délétères du contrôle sur le travail et les travailleurs (Chenhall & Moers, 2015) sans toutefois critiquer le paradigme du contrôle lui-même, celui-ci étant généralement vu comme un mal nécessaire et aménageable : « Un élément central de l'organisation est le contrôle et sans une forme ou une autre de contrôle organiser n'est pas possible. » (Delbridge & Ezzamel, 2005, p. 603, notre traduction). ...
... Many researchers have explored the evolving roles and responsibilities of management accountants (Chenhall and Moers, 2015;Dahal, 2019;Odia, 2019;Varaniūtė et al., 2022). In a systematic literature review, supported by Pasch (2019) and Wolf et al. (2020) find that accountants are increasingly expected to act as strategic partners and assume more prominent roles in decision-making processes. ...
This research investigates how accountants in Thailand are adapting to changes driven by advances in digital technology, environmental issues, and professional accounting organizations. The study identifies key factors influencing these shifts and assesses their impact on the accounting field. A survey of accountants from large manufacturing firms in Thailand was conducted, examining internal, external, and personal factors affecting their roles and responsibilities. The study uses Structural Equation Modeling (SEM) to analyze data from 174 respondents, identifying leadership and digital technology readiness as internal factors; sustainability force, professional entity, and digital technology force as external factors; and competency skills and attitude as personal factors. The fit indices collectively suggest that the model has a good fit to the data, demonstrated by Comparative Fit Index (CFI) value (0.91), Tucker-Lewis Index (TLI) (0.891), Root Mean Squared Error of Approximation (RMSEA) (0.067), and chi-square/degree of freedom model (1.776). The combination of the indices supports the conclusion that the model is robust and well-aligned with the observed data, and importantly capturing the relationships between the constructs under the study. Results reveal a significant transformation in the professional identity of Thai accountants, primarily driven by their positive attitude towards changes. Notably, professional accounting bodies and educational institutions appear to hinder this evolution. The findings emphasize the need for professional organizations to realign their strategies to better support the evolving roles of accountants.
... A inovação é compatível com a cultura organizacional quando os valores e crenças, que são normativamente desejáveis para o uso eficaz da prática, coincidem com os valores e crenças dos participantes (Ax & Greve, 2017). Desse modo, a inovação atua indiretamente nos resultados organizacionais, agindo no trato com o ambiente externo da organização, sua estratégia, tecnologia e estrutura (Chenhall & Moers, 2015). ...
Este estudo tem por objetivo analisar a influência das práticas de controle de gestão na capacidade de inovação de startups no Rio Grande do Sul. Para tanto, propõe-se: identificar as práticas de controle de gestão utilizadas pelos empreendedores e identificar a influência das práticas de controle de gestão na capacidade de inovação das startups do Rio Grande do Sul. Para isso, foi realizado um estudo de abordagem qualitativa, objetivos de forma descritiva, procedimentos de coleta através de um estudo de caso em 3 startups: Empresa A, B e C, por uma triangulação de dados obtidos em entrevistas, aplicação de questionários e coleta de informações nas páginas da internet. A seleção das empresas se deu através de amostragem por julgamento, buscou-se pequenas empresas consideradas inovadoras do setor de serviços, com faturamento acima do esperado, faturamento desejado e sem faturamento, para representação em diferentes situações. Os resultados demonstraram as práticas utilizadas por cada empresa, após, foi identificado a influência das práticas utilizadas na capacidade de inovação baseado na triangulação dos dados obtidos. Sob um aspecto geral, a Empresa B demonstrou uma maior preocupação nas diferentes categorias para controle gerencial, assim como na demonstração da capacidade de inovação diante das afirmativas aplicadas em questionário, apesar de não ter faturamento. Do mesmo modo, a Empresa C demonstrou o menor nível de importância às categorias e também menor capacidade de inovação apesar de ser uma empresa com faturamento satisfatório.
... In this context, management accounting systems (MAS) have undergone substantial changes to adapt to new technological and environmental realities (Chenhall and Moers, 2015) and have become an increasingly valuable instrument to support the managers' decision-making processes (Soobaroyen and Poorundersing, 2008). ...
Top managers have a decisive role in managing business organizations, including linking the effective use of their organizational resources with the corporate strategy. This study aims to analyze the influence of top management support on the utilization of management accounting systems (MAS) in SMEs. For this purpose, we explored the mediating role of four variables related to organizational decision-making orientation and user issues and concerns. The findings of our study suggest that top management can use these variables to improve the utilization of the information provided by MAS in the SMEs' decision processes. They also show the decisive role of user satisfaction and training in improving MAS utilization. We discuss these findings and present theoretical and practical contributions to the management accounting literature.
... Like many recent studies, in this research, we focus on the diagnostic and interactive uses (see, e.g. Chenhall and Moers, 2015;Koufteros et al., 2014;Mura et al., 2021). In particular, the diagnostic use refers to formalized procedures that use information to monitor and understand current patterns in organizational activities (Koufteros et al., 2014). ...
Purpose
This study aims to examine how different uses of performance measurement systems (PMS) enable or hinder organizational ambidexterity (OA), intended as the simultaneous pursuit of exploitation and exploration.
Design/methodology/approach
Following a qualitative research design, we gathered data through semi-structured interviews, observations and reviews of documents at four departments of an automotive firm.
Findings
We contribute to operations management research and practice by demonstrating how PMS, which are typically associated with exploitation, can also foster exploration and enable organizations to become ambidextrous. Specifically, we show how PMS can be structured and used in more agile ways and, in relation to innovation, we identify which PM practices should be introduced and with what effects and those that should be avoided. We also contribute to organization theory by highlighting how a single management tool can promote the achievement of both exploration and exploitation.
Practical implications
In investigating PMS uses and their effects, we identify several positive practices. For example, we show how managers can use PMS more effectively and how targets could be deployed to stimulate creativity and innovation. We also emphasize the need for managers to opt more often for team incentives rather than individual ones to encourage the collaboration needed for OA.
Originality/value
We provide in-depth insight into how PM tools affect an organization’s ability to pursue exploitation and exploration, thus contributing to research in operations, innovation and organization theory.
... Sharing information among partners in the supply chain is essential for fulfilling customer demand (Gunasekaran et al., 2008). MAS information satisfies four criteria-broad scope, timeliness, aggregation, and integration (Chenhall & Morris, 1986), enabling businesses to respond quickly to competitive pressure, enhance product/service quality, and increase customer value (Chenhall & Moers, 2015). Moreover, MAS information for businesses must meet stakeholder requirements regarding reliability and precision (Lassou et al., 2021), with SCI being no exception. ...
We develop and test a moderated mediation model to explain how management accounting systems impact supply chain integration and firm performance, and how perceived environmental uncertainty influences these relationships. Partial least squares structural equation modeling was used to analyze the survey data from 158 supply chain firms in Vietnam. Results indicate that the use of management accounting systems increases the extent of supply chain integration, which in turn enhances firm performance. Furthermore, perceived environmental uncertainty moderates the positive associations between the use of management accounting systems, supply chain integration, and firm performance. This study makes several contributions to existing literature. First, it elucidates the role of supply chain integration in promoting partner integration in the Vietnamese context. Second, it reveals the performance implications of the interaction between management accounting systems and supply chain integration. Our findings have important implications for supply chain management because they emphasize the need to develop effective management accounting systems and supply chain integration strategies in the context of environmental uncertainty.
... In other words, it is important to realise that not only are individuals' interpretations and perceptions of PE systems determining employee attitudes and behaviours (McLean Parks et al., 1998), but also to realise that PE systems are continuously being interpreted and re-interpreted by employees (Ahrens and Chapman, 2004). This leads Chenhall and Moers (2015) to observe that the path to building better management control theories and practices relies on the inclusion of an organisation's context when designing PM systems; an observation that itself leads to this study's first objective, which is to investigate academics' perceptions about their respective institutions' PE foci. ...
This study examines the associations between academics' perceptions of their institutions' performance management systems, and in particular their performance evaluation, and academics' attitudes and behaviours. Responses from over 1000 New Zealand academics reveal that those who perceive their performance evaluation as outcomes‐focused and process‐focused are more likely to exhibit compliance‐based behaviour. In contrast, when performance evaluation is perceived as being values‐driven and supportive of collegiality, the academics exhibit internalised behaviours. This study further shows that academics with internalised attitudes score higher in research assessment exercises than academics with compliance‐based attitudes.
... A criatividade e a inovação possuem conceitos distintos, porém interligados (Chenhall & Moers, 2015;Hong, Hou, Zhu & Marinova, 2018), de modo que sua relação é dada a partir do pressuposto de que só é possível inovar por meio da geração de ideias, flexibilidade, liberdade, experimentação e motivação intrínseca -características que influenciam o processo criativo (Amabile, 1996). Nesse sentido, enquanto a criatividade compõe a fase de criação, a inovação é considerada a fase de implementação de ideias. ...
Objetivo: verificar o efeito moderador das alavancas de controle na criatividade e na inovação em startups. Método: a pesquisa teve como estratégia o levantamento (survey), com coleta de dados por meio da aplicação de questionário e tratamento com o uso de técnicas de estatística descritiva, modelagem de equações estruturais e regressões lineares. A amostra foi composta por empresas cadastradas na base da Associação Brasileira de Startups (ABStartups), nos estágios de ciclo de vida tração, operação e scaleup, e obteve 153 respostas. Resultados: os achados das relações diretas confirmam os resultados de estudos anteriores, enquanto os testes de moderação evidenciam outras formas de interação entre os diferentes tipos de controle gerencial (positivos e negativos), a criatividade e a inovação, o que representa um avanço em relação aos estudos anteriores. Os resultados apontaram que controles de crenças e diagnóstico, apesar de atuarem como forças opostas, na dualidade entre os controles positivos e negativos, apresentaram efeitos moderadores semelhantes (negativos). Os resultados dos testes de hipóteses que foram contrários ao esperado levantam insights sobre diferentes formas de interação entre as alavancas quando se considera não apenas sua existência e seu uso, mas que a intensidade (alta/baixa) do uso pode afetar essas relações. Contribuições: os resultados contribuem para gestores das startups na compreensão de que os controles, quando aplicados de forma conjunta e equilibrada, não inibem a criatividade e a inovação, mas podem ser usados como um meio para potencializá-las, diferindo do que foi apresentado em estudos anteriores.
Purpose
This paper aims to investigate how market and institutional pressures, mediated by organizational support, impact the adoption of management accounting innovations (MAIs) in Egypt, one of the emerging economies.
Design/methodology/approach
The authors collected data using a questionnaire sent to 93 joint venture manufacturing firms in Egypt’s public business sector. To test the theoretical model, partial least squares structural equation modeling (SEM) was performed using the SEMinR package in R.
Findings
The findings reveal that market pressures significantly drive the adoption of MAIs, whereas institutional pressures influence adoption indirectly by shaping organizational strategies and cultural frameworks. Organizational support plays a crucial role, both as a direct factor in adopting MAIs and as a transformative channel that aligns external pressures with organizational capabilities. The external pressures serve as triggers for change, whereas the successful adoption of MAIs depends on robust internal organizational support structures.
Research limitations/implications
The focus on Egypt may limit the applicability of the findings to other emerging economies or developed markets. Future research should conduct comparative studies across different countries or regions to understand context-specific differences in MAI adoption. In addition, this study mainly considers market and institutional pressures along with organizational support, potentially overlooking other influential factors such as industry-specific dynamics, cultural dimensions and leadership styles. Exploring these factors could provide a more comprehensive understanding of the adoption of MAIs.
Practical implications
This study provides actionable insights for organizations aiming to improve their MAS. By aligning management accounting practices with external market dynamics and strong internal capabilities, organizations can better handle rapid market and regulatory changes. Policymakers can use these insights to create supportive frameworks that encourage innovation adoption and sustainable economic development.
Originality/value
This study makes a significant contribution by examining the various pressures and factors that influence the adoption of MAIs in emerging economies, particularly within contexts shaped by unique market-driven and regulatory forces, such as public–private ownership structures. It highlights the dual role of organizational support as both a direct enabler and mediator, transforming external pressures into practical procedures and improvements that drive the adoption of MAIs. Furthermore, it challenges the notion of pressures as mere constraints, illustrating how firms actively absorb and leverage them to drive the adoption of MAIs.
This chapter provides a concise review of the literature on management accounting change, outlining the key frameworks and studies that have shaped the field. Traditionally, research in this area has been rooted in sociological theories, such as institutional theory, and has aimed to explain the dynamics and implications of change. However, this manuscript departs from most approaches by incorporating concepts from change management, specifically from the fields of psychology, organizational theory, and organizational development and change.
This study explores the role of formal controls and organic organizational culture in family CEO-led firms. Drawing on the family business literature, the study theorizes that having a family member as chief executive officer (CEO) would entail preserving family goals in addition to pursuing business goals (i.e., goal diversity). This study emphasizes how the management control system (MCS) is designed and used to resolve goal diversity, and to what extent the interdependence between management control practices can leverage the strategic capabilities in family CEO-led firms. The research model is empirically tested using survey data from 958 family CEO-led firms. Consistent with the hypotheses, the results show a positive relationship between goal diversity and combining the use of formal controls and organic organizational culture. Furthermore, this combination is found to be imbalanced (i.e., the relative magnitude of using the two management control practices). The findings suggest that formal controls and organic culture have a complementary interdependent effect on developing the operational capability, but no effect on human resources capability in family firms. The results also indicate that MCS may indirectly affect family firms’ performance through strategic capabilities.
Purpose
This study aims to explore the evolving relationship between entrepreneurial marketing (EM) processes and control mechanisms across three phases of opportunity development: exploration, evaluation and exploitation. By examining how control mechanisms respond to the uncertainties inherent in each phase, this research illustrates how controls emerge and adapt, enabling entrepreneurs to effectively navigate the challenges specific to each stage of their venture’s growth.
Design/methodology/approach
Using a qualitative, inductive approach, this study uses semistructured interviews with founders of nine high-growth, early-stage startups based in California. The selected ventures vary by industry and business model but share early market traction. The Gioia methodology, a structured inductive approach for theme development, guides data analysis, revealing how control mechanisms evolve to address the challenges of each EM phase.
Findings
Controls adapt across the EM phases, becoming progressively structured to manage uncertainties. In the exploration phase, controls are belief-driven and flexible, guiding resource allocation and framing opportunity spaces. During evaluation, controls become more structured, aligning market feedback with product-market fit. In the exploitation phase, controls focus on scalability and efficiency, supporting alignment between strategic objectives and operational capabilities.
Originality/value
This research provides novel insights by demonstrating that controls do not stifle opportunity development but rather evolve with it. The findings contribute to theory and practice at the marketing/entrepreneurship interface, offering a nuanced understanding of the role of controls in supporting the EM process.
The purpose of this paper is to develop and validate a text‐based measure of innovation using latent Dirichlet allocation on a sample of 45,409 10‐K filings from US listed companies. We expect that the text‐based innovation measure is associated with innovation and can be used to measure innovation for companies without patents or significant research and development expenditures. The empirical results are consistent with these assumptions, but reveal that thorough initial testing is required to ensure robustness. This study extends the research on innovation measurement and company disclosures, and provides a new method for assessing innovation using company disclosures.
Purpose
Drawing on institutional theory analytical perspectives of theorisation and translation, this study aims to explore the institutionalisation of eXtensible Business Reporting Language (XBRL) in Indonesia from a regulatory and filer perspective.
Design/methodology/approach
The Indonesian capital market offers a unique case of the integration of XBRL regulatory reporting between multiple regulators and a transfer from capital market regulation to state-level regulation. This study uses semi-structured interviews with key actors employed with Indonesian XBRL-regulatory bodies and listed companies (filers).
Findings
External pressures, monitoring issues and tensions in the implementation process were instrumental in the theorisation and translation of XBRL in Indonesia. Specifically, the findings show that choices made with respect to XBRL regulation and implementation created tensions between XBRL reporting fulfilling a monitoring purpose and serving stakeholders’ interests. The findings also indicate that the Indonesian approach to XBRL regulation and implementation had distinct characteristics compared to XBRL implementation in other jurisdictions.
Practical implications
This study emphasises the necessity for robust regulatory support and strict enforcement to navigate the complexities and tensions arising from a multi-regulatory approach. Additionally, it stresses the importance of firms’ readiness and expertise in XBRL as more sophisticated implementation strategies are considered.
Originality/value
Using the analytical lens of theorisation and translation, the study provides a deeper understanding of how a globally diffused accounting technology was institutionalised and legitimised in a developing country. Specifically, this study explains why a conversion approach to XBRL implementation was favoured and how XBRL implementation and reporting were managed and coordinated between different Indonesian regulators.
Purpose: Imagine control configurations within SMEs in Cameroon as a vibrant tapestry, intricately woven with various threads of managerial practices and systems. The aim of this work is to unravel this tapestry and shed light on the interconnected elements that constitute control configurations in the context of SMEs in Cameroon. Method: This study is exploratory and thus, follows a qualitative/abduction approach to explore an uncover control practices and contextual variables in SMEs in the Cameroon context and to understand the way they interact in a package. The population of our study is made up of top management team (general managers or chief executive officers, internal and external accountants, management controllers, financial and operational managers) of SMEs in Cameroon. Therefore, semi structured interviews were used on 25 top management teams from 20 SMEs in the cities of Douala, Bafoussam and Bamenda for data collection. Data collected were analysed using the Qualitative Comparative Analysis, a set theoretic method designed to compare multiple cases in terms of complex configurations of attributes and outcomes. NVivo 12 and fsQCA software were used as data analysis tools. Findings: From the analysis, findings revealed six control configurations used by top managers in the Cameroon SMEs labelled as holistic, soft-driven, police-based, semi engaged, mechanistic and formation. Originality: This study is one of the first in the SME context in Africa. This work explores and uncover the configuration of management control systems operating as a package in SME that leads to superior performance.
Purpose
The purpose of this multi-voiced paper is to propose a prosocial paradigm for the field of performance management and management control systems. This new paradigm suggests cultivating prosocial behaviour and prosocial groups in organizations to simultaneously achieve the objectives of economic performance and sustainability.
Design/methodology/approach
The authors share a common concern about the future of humanity and nature. They challenge the influential assumption of economic man from neoclassical economic theory and build on evolutionary science and the core design principles of prosocial groups to develop a prosocial paradigm.
Findings
Findings are based on the premise of the prosocial paradigm that self-interested behaviour may outperform prosocial behaviour within a group but that prosocial groups outperform groups dominated by self-interest. The authors explore various dimensions of performance management from the prosocial perspective in the private and public sectors.
Research limitations/implications
The authors call for theoretical, conceptual and empirical research that explores the prosocial paradigm. They invite any approach, including positivist, interpretive and critical research, as well as those using qualitative, quantitative and interventionist methods.
Practical implications
This paper offers implications from the prosocial paradigm for practitioners, particularly for executives and managers, policymakers and educators.
Originality/value
Adoption of the prosocial paradigm in research and practice shapes what the authors call the prosocial market economy. This is an aspired cultural evolution that functions with market competition yet systematically strengthens prosociality as a cultural norm in organizations, markets and society at large.
This research addresses the convergence of Management Control Systems (MCS) and Environmental Management Control Systems (EMCS), emphasizing their vital significance in encouraging long-term organizational success in Jordan. This study dives into the integration of these systems and their implications for corporate strategy and ethical practices via a thorough assessment of major studies and landmark publications. According to the findings, integrating MCS and EMCS not only improves operational efficiency but also aligns organizational operations with environmental sustainability, which is critical in today’s global corporate context. The research, however, reveals obstacles in the actual use of these integrated systems, particularly in different economic environments such as Jordan, revealing a gap between theoretical frameworks and real-world implementation. The study also emphasizes the relevance of ethical issues in company planning, arguing for a healthy balance between economic objectives and environmental duties. The study’s results add to a better understanding of sustainable business practices, underlining the need for further empirical research in a variety of situations and emphasizing the importance of ethical business behavior in ensuring long-term organizational success. This study offers useful insights for practitioners and scholars alike, underlining the significance of MCS and EMCS in long-term organizational management.
Research conducted in the domain of smart city development reveals that the implementation of smart city initiatives has the propensity to draw individuals residing in the surrounding rural areas, as well as a growing influx of tourists. While numerous smart tourisms' approach primarily emphasise the advancement of technology, individuals, and institutional logic, the entrepreneurial ecosystem approach plays a crucial role in enhancing smart destinations. The objective of the current study is to examine novel initiatives pertaining to the advancement of startups in Eastern India. The study employed an exploratory and descriptive research design. Additionally, specific initiatives in the realm of tourist innovation, particularly those associated with startups, were also discovered. The findings of the study indicate that there exist guidelines associated with startups in the study area. The promotion of tourism can be facilitated through the implementation of several initiatives, which have been identified as contributing factors, including the provision of valuable experiences.
This study draws on archival sources to investigate the ways in which management control may contribute to and support organizational resilience by analyzing crises from the National Aeronautics and Space Administration's (NASA) Apollo (1961–1972) and Space Shuttle (1972–2011) programs. Both programs suffered significant events with tragic consequences. A fire killed three astronauts during a launch rehearsal test of Apollo 1 . During the Space Shuttle program, the Challenger broke apart shortly after launch, and the Columbia disintegrated upon re‐entering Earth's atmosphere; both tragedies resulted in the death of all seven crew members. NASA's recovery from the three disasters and subsequent achievements exemplifies organizational resilience. This study analyzes and discusses how management control contributed to such efforts, which enabled the space programs to rise like a phoenix from the ashes of crises which could have very well led to the abandonment of the United States’ spacefaring endeavours.
An Operations Management Perspective on Design Thinking provides a map of what is known about mechanisms of design thinking when looking through an operations management lens and identifies areas where knowledge gaps still exist. In applying the operations management lens, the author constructs a simple framework for how to assess progress in design thinking activities. To provide improved design thinking progress measures, the author expands this framework by considering multiple dimensions of these measures in greater detail: the outcomes of an operation and its transformation function. Applying the reference set to these multiple dimensions of the expanded framework identifies contributions from other disciplines that can help explain the conditions under which design thinking operations can be managed successfully and pinpoints unexplained gaps that are worthy of future research. The monograph first prepares the methodological ground by putting the attempt to search for better design thinking process measures in the context of existing research approaches. The next section summarizes the origins and characteristics of design thinking and provides an overview of the progress measures that have been proposed for design thinking. The monograph then introduces an operations management perspective for design thinking as an innovation production process. The next section expands this perspective by introducing multiple dimensions and finer grained measures and apply this extended framework to the data set from earlier sections to pull together the current understanding of design thinking and to identify future research opportunities. The monograph concludes with some broader reflections.
This chapter analyzes the empirical research literature on management accounting in the manufacturing sector including the development as well and manufacturing phases of the product lifecycle. As managing product development has gained terrain in companies over the last 15 years, management accounting research has contributed to the advancement of this field of knowledge. Changes in the manufacturing environment, such as significant upfront investments and ongoing overhead costs, demanding performance criteria besides efficiency, or critical linkages across the value chain have contributed to a fruitful research in management accounting in manufacturing. The chapter identifies significant advances in this knowledge base and highlights future research opportunities.
Issues in the area of performance management and management control systems are typically complex and intertwined, but research tends to be based on simplified and partial settings. Simplification has made the work easier to carry out, but it has come at the price of increased ambiguity and conflicting findings from different studies. To help mitigate these issues, this paper puts forward the performance management systems framework as a research tool for describing the structure and operation of performance management systems (PMSs) in a more holistic manner. The framework was developed from the relevant literature and from our observations and experience. In particular, it elaborates the 5 questions of Otley's [Otley, D., 1999. Performance management: a framework for management control systems research. Management Accounting Research 10, 363–382] performance management framework into 12 questions and integrates aspects of Simons’ levers of control framework.Anecdotal evidence suggests that the extended framework provides a useful research tool for those wishing to study the design and operation of performance management systems by providing a template to help describe the key aspects of such systems. It allows an holistic overview to be taken while making this a feasible task. The paper uses material from two field studies to illustrate how the framework can be used to provide an overview of the major performance management issues within an organization.
This paper extends the prior empirical research that explains the perceived use or importance of budget control or both, with organizational context and structure in manufacturing organizations. In this paper, the perceived importance of expenditure budget control in research and development (R&D) work groups is explained empirically by organizational context (R&D work group size, source of R&D funding, and size of R&D budget) and the management control system (steps in the control process, social control). Data obtained from 76 R&D work groups in ten organizations support the five hypotheses. Generally, there is an interaction between the steps in the control process and each of the other independent variables on the perceived importance of expenditure budget control for management control of the R&D work group.
Résumé. Le présent article s'inscrit dans le prolongement des travaux de recherche empiriques précédents visant à expliquer l'utilisation perçue du contrôle budgétaire ou son importance - sinon les deux - dans le contexte et la structure d'organisation des entreprises manufacturières. Dans cet article, l'importance du contrôle du budget des investissements perçue par les groupes de travail en recherche et développement (R & D) s'explique concrètement par le context organisationnel (la taille du groupe de travail en R & D, la source de financement des activités de R & D et l'importance des crédits affectés à ces activités) et par le système de contrôle de gestion (étapes du processus de contrôle, contrôle social). Les données obtenues auprès de 76 groupes de travail en R & D dans dix organisations viennent confirmer les cinq hypothèses des auteurs. L'on relève, de façon générale, une interaction entre, d'une part, les étapes du processus de contrôle et chacune des autres variables indépendantes et, d'autre part, l'importance perçue du contrôle du budget des investissements aux fins du contrôle de gestion du groupe de travail en R & D.
There has been very little explicit theoretical and empirical research on the concept of management control systems (MCS) as a package despite the existence of the idea in management accounting literature for decades. In this editorial we discuss a range of ways researchers have defined MCS and the problems this has created. We provide a new typology for MCS structured around five groups: planning, cybernetic, reward and compensation, administrative and cultural controls. The typology is based on the distinction between decision-making and control and addresses those controls managers use to direct employee behaviour. We discuss the conclusions of the articles included within this special issue and provide ideas for further research.
This study uses insights from agency theory and transaction cost economics to examine inter-firm contracts. Specifically, we posit that uncertainty arising from either the nature of the task or from the demand environment is associated with firms incorporating their intent to collaborate in customer-supplier contracts. Task and demand uncertainty increase the influence of uncontrollable factors on performance, thereby making expected performance difficult to determine. This decreases the ability of firms to use performance measures for control purposes, leading to greater contractual incompleteness and increased risk of opportunistic behavior by the contracting parties. We argue that firms aim to protect themselves from opportunism by making greater use of collaborative contracts. Empirical analyses using data from 87 contracts between a leading supplier of electronics manufacturing services and its customers indicate that both task and demand uncertainty are associated with greater use of collaborative contracts. Our study suggests that task and demand uncertainty have implications for the design of contracts between firms.
Strategic cost management is deliberate decision-making aimed at aligning the firm's cost structure with its strategy and optimizing the enactment of the strategy. Alignment and optimization must comprehend the full value chain and all stakeholders to ensure long run sustainable profits for the firm. Strategic cost management takes two forms: structural cost management, which employs tools of organizational design, product design and process design to build a cost structure that is coherent with strategy; and executional cost management, which employs various measurement and analysis tools (e.g., variance analysis, analysis of cost drivers) to evaluate cost performance. In this chapter I develop a model that relates strategic cost management to strategy development and performance evaluation. I argue that although management accounting research has advanced our understanding of executional cost management, other management fields have done more to advance our understanding of structural cost management. I review research in a variety of management fields to illustrate this point. I conclude by proposing that management accounting researchers are uniquely qualified to create a body of strategic cost management knowledge that unifies structural and executional cost management.
This chapter examines how management accounting responds to the challenges that operations management poses in research and practice today. It asks how management accounting practices are made sense of in operations management research and management accounting research in relation to the central proposition made in operations management literature, namely the introduction of modern manufacturing systems typically under the auspices of lean manufacturing. The chapter focuses on what operations management and management accounting say about the sources of performance, and then looks at interorganizational control. Through these two debates, it is possible to develop a new appreciation of control in modern manufacturing environments: informational and physical/ technological carriers of control can form a trading zone where they can stand in for each other.
Transaction cost economics (TCE) theory is widely used to study the governance and management control practices used to mitigate interfirm alliance risk. Following Williamson (1985, 1991), empirical studies typically measure transaction characteristics that proxy for risk in alliances (e.g., asset specificity), and test for a relation between these measures and alliance management control choices. A common criticism of studies in this literature is that they typically focus on a narrow set of governance decisions (e.g., make versus buy) or control practices (e.g., specific contract terms). We posit that an equally limiting aspect of this literature is its reliance on risk proxies measured at the level of the individual transaction. These proxies fail to explicate specific alliance risks and, coupled with an undue focus on transactions rather than the totality of interfirm relationships, limit our understanding of how risks give rise to management controls more broadly defined. In this study we use field-based research and survey methods to develop a comprehensive inventory of the specific risks that managers anticipate and to provide insight regarding their prevalence across different types of interfirm alliances. Our analysis of the data supports an extant classification scheme that dichotomizes alliance risk as relational risk or performance risk (Das and Teng 1996, 2001). However, our analysis reveals another distinct risk category- compliance and regulatory risk-that figures prominently in accounting risk frameworks (i.e., COSO). Our exploratory analysis of correlation in the use of management controls, including contracts as well as pre- and post-contractual control processes, reveals six sets of alliance control practices. Relating these to risks, we find that performance risk is associated primarily with careful partner selection and contractual outcome agreements; relational risk is associated primarily with explicit exit agreements; and, compliance and regulatory risk is associated primarily with informal controls. In addition, we find that as compared to contractual alliances, alliances with shared ownership (i.e., joint ventures) make greater use of financial controls and informal controls. By identifying specific risks and controls used in practice and providing preliminary evidence of their relationships, this study provides a reference for future researchers seeking to provide more meaningful insight into the relationship between interfirm alliance risk environment and control systems.
A Standardizing AmbitionDiscounting the FutureConclusion
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In spite of the widespread use of budgets for control of organization activities, relatively little is known about how budgets influence behavior. Furthermore, the interaction of budgets with other means of influencing human behavior has remained largely unexplored. This research explores the interaction and relationships of one source of control, organization structure, with another source of control, budgets. Data gathered from twenty-five organizations are analyzed to explore some of the interrelationships between organization structure and the use of budgets by managers. Data collected by mailed questionnaires were factor analyzed to provide measures of budget-related behavior that could be related to measures of organization structure and context that were collected in field interviews. The analysis of these data indicates clear relationships between organization structure and the use and effects of budgets and provides insight into several complex relationships suggested by other field and a priori research on control in organizations. The findings of this study are consistent with those organizational studies which have concluded that the structure of organizations can be viewed as contingent upon environment and organization characteristics such as size, technology, and dependence (the extent to which an organization is autonomous in relationships with other organizations) (see Woodward [1965], Burns and Stalker [1961], Lawrence and Lorsch [1967], and Pugh, Hickson, Hinings, and Turner [1969]). Budget-related behavior is found to be contingent upon various aspects of organization structure such as centraliza
Research summaryOne novel implication of the Open Innovation paradigm is that inflows and outflows of knowledge are complementary. We argue that engaging simultaneously in buying and selling knowledge should allow firms to increase innovation outcomes. At the same time, we identify some of the relevant costs (cognitive, transaction, and organizational costs) that “open” firms can reduce by combining knowledge inflows and outflows. Empirically, however, we find no evidence for such complementarity in a sample of Belgian manufacturing firms. Firms buying and selling knowledge do increase their sales of new products, but at the same time their R&D costs increase more than proportionally. Our findings, therefore, indicate the need for research into a better understanding of the drivers of actual costs of organizing for Open Innovation.Managerial summaryThe Open Innovation paradigm has generated tremendous interest from practitioners as it provides an insightful framework to structure the different internal and external innovation activities of firms. At the same time, the actual novel theoretical contributions offered by this paradigm are less clear. In this article we argue that one novel implication of the Open Innovation paradigm is that engaging simultaneously in buying and selling knowledge should allow firms to increase innovation performance. Empirically, however, we find that firms buying and selling knowledge do increase their sales of new products, but at the same time their R&D costs increase more than proportionally. Our findings, therefore, indicate that firms need a better understanding of the actual costs of organizing for Open Innovation.
I empirically investigate the impact of an organization’s creativity dependency on the design of its incentive system. In firms for which the primary source of value creation is the creativity of core employees, the designs of incentive systems are particularly challenging. The nature of creative work constrains the feasibility of extrinsic incentives but at the same time creates a need for them. Accordingly, there is concern that the use of incentives renders people not creative enough, but a lack of incentives makes employees “too creative.” I argue that a solution to this dilemma is the acknowledgment that the decision to use performance-based pay is not made in isolation, but as part of a set of complementary choices. I theoretically argue and empirically show that subjective evaluations of non-task-related performance and performance-based pay are complements in a creativity-dependent setting. I further argue that the intense use of both control mechanisms is the incentive system that best accommodates the control requirements of creativity-dependent firms and show that the likelihood of choosing this system increases with the creativity dependency.
Kaplan and Anderson (2004, 2007) developed time-driven activity-based costing (TDABC) to provide a costing system that is easier to update than activity-based costing (ABC). The relationship between ABC and TDABC, however, has not been systematically investigated. We compare the accuracy of the two systems in two complementary ways: analytically and via a numerical experiment. Our analytical comparison generates formulas that describe how each system maps resources to activities and finally to products. We demonstrate that ABC aggregates resource-to-activity information by activities, while TDABC aggregates by resources. Our numerical experiment shows that TDABC performs better than ABC when resources are more traceable to activities. ABC performs better than TDABC when activities are more traceable to products or when both resources and activities are more traceable to activities and products, respectively. If each type of traceability is equally likely, then ABC may be the more robust approach. Finally, we examine the ease of updating the systems and find that TDABC data collection costs will be prohibitive if the firm must collect information about each product’s use of subtasks.
Many firms that compete based on the development of new and innovative products have begun to adopt concurrent new product development (NPD) processes in which product design phases occur in a non-linear and iterative manner. While concurrent NPD processes increase flexibility and reduce time-to-market as compared to traditional sequential processes, concurrency increases task uncertainty since the product design process begins before all important product features and specifications have been established. Such changes can result in costly redesign and rework. Prior research suggests target costing, where product design teams are assigned specific cost goals, is an effective method of controlling costs in sequential NPD. Even so, it is unclear whether target costing will improve cost reduction performance when combined with a concurrent NPD process due to increased task uncertainty. We examine experimentally the ability of product design groups to achieve specific or general cost reduction goals under simulated sequential or concurrent NPD. We predict and find that the nature of the NPD process moderates the effect of specific cost reduction goals on actual cost reduction performance. While specific cost goals result in higher reductions in product cost than general cost goals under a sequential NPD process, specific goals are no better than general goals in motivating design groups to reduce product cost under a concurrent NPD process; thus, we demonstrate boundary conditions on the usefulness of target costing as a cost control method.
This article reports on the nature of control in 78 retail department store companies. It argues that control and structure have not been clearly distinguished in the literature on organizations. Control is not the same thing as structure. Control can be conceptualized as an evaluation process which is based on the monitoring and evaluation of behavior or of outputs. Another study (Ouchi and Maguire, 1975) has established that approximately 25 percent of the variance in these control mechanisms can be explained by task characteristics and other variables at the individual level of analysis. Using the organization as the unit of analysis it seeks to uncover the relationship between structure and control. The results show that approximately 33 percent of the variance in control can be accounted for by structural characteristics, as well as by a characteristic of the environment-namely, the nature of the clientele served.
Individual creativity is essential to an organisation's ability to innovate (Amabile, , ), and potentially, management control systems could be used to enhance or constrain this creativity in organisations (Amabile, ; Davila et al., ). The purpose of this study is to develop an understanding of how interactive performance measurement system (IPMS) use is implicated in the generation of individual creativity. A conceptual framework linking IPMS use to creativity is developed, incorporating psychological empowerment as an intervening variable. The results of a survey of middle-level managers confirm that IPMS use impacts on creativity through the psychological construct of psychological empowerment.
This study investigates the impact of style of budget use on team-level motivation and team effectiveness. Specifically, we draw on 0405, 0410 and 0415 to examine how, in biotechnology firms, the extent of interactive and diagnostic uses of budgets affect team effectiveness directly and indirectly through perceived collective efficacy. We used an online survey to obtain data for this study and analysed the data using partial least squares approach. The main results suggest that the extent of interactive use of budgets has direct positive effects on team effectiveness and that the positive effect of the interactive use of budgets on team effectiveness is partially mediated by perceived collective efficacy. We did not find support for the predicted positive effect of diagnostic use of budgets on perceived collective efficacy and team effectiveness. We explain the implications of these results.
We unpack the concept of “informal accounting systems” and bracket “vernacular accountings” based on the modality and source of legitimacy of such systems. Vernacular accountings are accounting and control systems that are self-generated by organizational actors in the context of their work and not officially sanctioned within the organizational hierarchy. We argue that these systems capture actionable knowledge from the epistemic perspective of their users. We identify three ideal types of vernacular accountings: vernacular accountings as an inventory of knowledge that employees construct to meet their task specific information needs; vernacular accountings as a defensive resource constructed and used by employees who resist or do not trust the formally sanctioned systems; and, vernacular accountings as organizational practice that has both pragmatic and epistemic functions and that facilitates distributed cognition. Drawing on an epistemic perspective that spans cognitive and social levels of analysis we develop theoretical propositions on the emergence and use of these three types of vernacular accountings.
The small number of full-scale adoptions of activity-based costing (ABC) coupled with ABC implementation failures have fueled a debate about the costs and benefits of ABC relative to more traditional volume-based costing (VBC) systems. ABC differs from VBC by focusing attention on activities and resources that are under the control of multiple workers. Reducing these costs often requires a coordinated effort. Therefore, incentives that motivate workers to cooperate are a prerequisite to successful process improvements based on ABC. Alternatively, when competitive incentives are combined with ABC, the result can be unexpected and negative. We examine how accounting cost system and incentive structure choices interact. We find that profits are highest when ABC is linked with group-based incentives, which provide high motivation to cooperate. In contrast, the lowest level of profit occurs when the same information-rich cost system, ABC, is coupled with tournament-based incentives. VBC, a cost system that provides a lower level of cost driver information, moderates the incentive effect. Thus, our results demonstrate that the effectiveness of ABC relative to traditional VBC is influenced by its interactive effect with incentive compensation.
Open-book accounting has been mentioned both as a means of improving the cost efficiency of supply chains and as a tool for building trust into customer–supplier relationships. However, there is little empirical evidence of how to make open-book accounting work and avoid potential pitfalls. This study, which is based on a contingency framework, contributes to reducing this deficiency in two steps: First, a single case study of a German car manufacturing network describes open-book accounting practice in detail. Second, the results of a cross-case analysis in three Finnish manufacturing networks reveal six major reasons why open-book accounting fails. On the basis of these empirical findings, the contingency framework is specified and theoretical and managerial implications are discussed. The paper concludes with suggestions for further research.
We investigate two determinants of two choices in the control system of divisionalized firms, namely decentralization and use of performance measures. The two determinants are those identified in the literature as important to control system design: (1) information asymmetries between corporate and divisional managers and (2) division interdependencies. We treat decentralization and performance measurement choices as endogenous variables and examine the inter-relation among these choices using a simultaneous equation model. Using data from 78 divisions our results indicate that decentralization is positively related to the level of information asymmetries and negatively to intra-firm interdependencies, while the use of performance measures is affected by the level of interdependencies among divisions within the firm, but not by information asymmetries. We find some evidence that decentralization choice and use of performance measures are complementary.
Despite the trend in investigating combinations of MC practices that form packages or systems, there is ambiguity about what is meant by a “control package” or “control system.” In this paper, we address questions related to MC as a package and as a system, both from a conceptual and empirical perspective. The purpose of our paper is to clarify a number of issues, so as to guide future research in this area. We do not claim to have all the answers. Rather we make a number of assumptions explicit to show when it is important to address multiple MC practices simultaneously, why this is the case, and what the empirical implications are. Our work directly relates to the systems approach to contingency theory and the literature’s struggle to clearly define its most fundamental concept, i.e., “internal consistency.” Our analysis provides a formal definition of “internal consistency” and shows how it can be used to conceptualize MC systems, thereby giving contingency theorists the necessary ingredient to move forward.
The management control literature has been criticised for having concepts that are ill-defined. This causes mixed empirical results and makes it difficult to build a coherent body of knowledge. The paper addresses this issue by developing an important framework, that of Simons’ Levers of Control, which has been criticised in the past for its vague and ambiguous definitions. Using methods of concept analysis, the paper analyses prior literature to identify ambiguities with the different levers of control and uses examples from prior field studies to illustrate these ambiguities. The paper also analyses the positive and negative dimensions of controls which, although part of Simons’ framework, have remained unexplored. For each ambiguity identified, the paper proposes a solution to improve concept definitions or to clarify the relationship between concepts. The result is a revised framework that explicitly separates managerial intentions for controls and employee perceptions of controls. Managerial intentions are comprised of three levels: 1) types of controls (social and technical) 2) which are organised as four control systems (strategic performance, operational performance, strategic boundaries and operational boundaries) and 3) which can be used diagnostically or interactively, have an enabling or constraining role and can lead to either reward or punishment. Finally, after defining the framework’s concepts and explaining how they interact, the paper concludes by offering avenues for future research.
This study investigates the indirect effects of mechanistic and organic types of control on project performance acting through innovativeness in exploratory and exploitative innovation projects. It also examines the interaction effect of these controls on performance. The research model is empirically tested with survey data from 119 projects in various project organizations, using Partial Least Squares (PLS) with controls for the size of the project and task uncertainty. The results illustrate that organic control, acting through innovativeness on project performance is an important form of control in exploratory innovations, and also enhances performance in exploitative innovations. In addition, the results indicate that the interaction effect of organic and mechanistic control types enhances performance in both exploratory and exploitative innovation projects, suggesting a complementary effect. The findings are discussed in relation to theory and their managerial implications.
Inter-organizational cost management is a strategic cost management approach to managing costs that span organizational boundaries in supply chains. Drawing on the resource-based view of the firm, we develop a model to predict which inter-related resources might enable companies to manage inter-organizational costs. We test this model using a survey of managerial accountants whose organizations are part of a supply chain. Using structural equation modeling, we conclude that the resources of internal electronic integration, external electronic integration, internal cost management, and absorptive capacity play significant direct and indirect roles in the development of an inter-organizational cost management (IOCM) resource. We find that these resources are inter-related and together are useful in enabling companies to ultimately benefit from managing inter-organizational costs. We find in particular the importance of relational resources associated with absorptive capacity in the development of an IOCM resource. Our research contributes to theory and practice by explaining how specific resources can be combined in allowing companies to better manage inter-organizational costs.
As manufacturing innovations spread throughout leading organizations, product development becomes a more important source of competitive advantage. Within product development, cost management receives increasing attention. To date, cost management in new product development focuses primarily on target costing, a management practice used inside the product development process by the development team. Although this practice is appropriate for products competing mainly on costs, it presents several limitations when factors such as technology, time-to-market, or customer needs are more pressing. Based on observations from a field study of product development cost practices in high-technology firms and evidence from field studies described elsewhere, this paper identifies alternative practices to manage costs during product development. These alternative practices that facilitate cost management around the projects rather than managing costs inside product development projects are: parallel cost management teams, modular design for cost, clearly defined cost management strategies and cost policies, and product portfolio planning. Companies in our sample use them to manage costs during product development, when cost management is most effective, but still keep the attention of development teams focused on the critical success factors of time-to-market, technology, and customer needs.
This study examines the extent to which a manufacturing company used performance measurement and a gain‐sharing reward system to achieve strategic change over a 15‐year period. The case examines the initial impact of the gain‐sharing scheme in overcoming inherent hostility within the workforce, its continued success in gaining the cooperation of employees to work toward the successful implementation of strategic initiatives and, finally, its limitations in sustaining ongoing strategic change after a ten‐year period of apparent success. The firm eventually adopted team‐based structures to complement gain sharing and sustain commitment to strategic change.
We explain the apparent success of the gain‐sharing scheme over the first ten‐year period in terms of the role of organizational trust. Gain sharing is a mechanistic form of control system, and hence may be compatible with organizational trust. After this initial success, managers believed that the level of employee cooperation to sustain strategic change was insufficient to maintain high performance in an increasingly competitive environment. The firm then introduced team‐based structures to enhance employee enthusiasm to work toward sustaining strategic change. The adoption of teams promotes personal trust and the sharing of values and goals. The team‐based initiatives did not result in significant performance improvements. We attribute this result, in part, to the continued role of gain sharing, a mechanistic control, which inhibited the development of personal trust.
Nissan's approach to total cost control entails a strategic approach, utilizing target costing principles. This article examines how the approach is being applied in the context of U.K. transplant operations and shows, in particular, how it is being extended to encompass local suppliers. The article has been read and approved by a Director of Nissan Motor Manufacturing U.K.'s Finance Department.
This paper examines the factors influencing the relative weights placed on financial and non-financial performance measures in CEO bonus contracts. We find that the use of non-financial measures increases with the level of regulation, the extent to which the firm follows an innovation-oriented strategy, the adoption of strategic quality initiatives, and the noise in financial measures. We find no evidence that the choice of performance measures in bonus contracts is associated with the level of financial distress or the value of CEO equity holdings relative to salary and bonus. Our results also provide no support for the hypothesis that CEOs with greater influence over the board of directors are more likely to be compensated based on non-financial measures.
Complex organizations are conceptualized in terms of their technologies, or the work done on raw materials. Two aspects of technology vary independently: the number of exceptions that must be handled, and the degree to which search is an analyzable or unanalyzable procedure. If there is a large number of exceptions and search is not logical and analytic, the technology is described as nonroutine. Few exceptions and analyzable search procedures describe a routine technology. Two other types result from other combinations--craft and engineering technologies. Task structures vary with the technology utilized, and are analyzed in terms of control and coordination and three levels of management. Social structure in turn is related to technology and task structure. Finally, the variations in three types of goals are weakly related to the preceding variables in this conceptualization. The perspective provides a basis for comparing organizations which avoids many problems found in other schemes utilizing structure, function or goals as the basis for comparison. Furthermore, it allows one to selectively utilize competing organizational theories once it is understood that their relevance is restricted to organizations with specific kinds of technologies. The scheme makes apparent some errors in present efforts to compare organizations.
Strategy requires multiple definitions to fully appreciate its implications. Accordingly, this article proposes five definitions—strategy as plan, ploy, pattern, position, and perspective—and analyzes how these definitions interrelate.
This chapter proposes a framework for analysing the different roles that formal management control systems (MCS) may play in managing various types of innovation, and, the effect that these innovations have on changes in business strategy. Traditionally, MCS have been associ- ated with mechanistic organizations (Burns and Stalker 1961), where their purpose was to reduce variety and implement standardization as portrayed in the cybernetic model (Ashby 1960; Anthony 1965). Accord- ingly, they were frequently perceived as a hindrance to any innovation and change effort in the organization. For example, Ouchi (1979) used an innovation-intensive activity, an R&D department, to illustrate clan control—a control approach that rejects formal MCS and instead relies on social norms. Tushman and O'Reilly (1997: 108) summarize this view: 'With work requirements becoming more complex, uncertain, and changing, control systems cannot be static and formal. Rather, control must come in the form of social control systems that allow directed autonomy and rely on the judgment of employees informed by clarity about vision and objectives of the business.' Recent theory and empirical studies have questioned these com- monly held assumptions about the negative effect of MCS on innovation and laid the foundations for this topic to develop. They highlight instead the positive effect that MCS may have on innovation and develop alter- native interpretations to the command-and-control view. Rather than a rigid mould that rejects the unexpected, MCS may be flexible and dynamic, adapting and evolving to the unpredictable needs of innov- ation, but stable enough to frame cognitive models, communication patterns, and actions. This new way of looking at MCS is consistent with innovation being not a random exogenous event that certain or- ganizations happen to experience, but rather an organizational process susceptible to management that explains why certain organizations are more successful than others.
We describe the development and validation of a new instrument, KEYS: Assessing the Climate for Creativity, designed to assess perceived stimulants and obstacles to creativity in organizational work environments. The KEYS scales have acceptable factor structures, internal consistencies, test-retest reliabilities, and preliminary convergent and discriminant validity. A construct validity study shows that perceived work environments, as assessed by the KEYS scales, discriminate between high-creativity projects and low-creativity projects; certain scales discriminate more strongly and consistently than others. We discuss the utility of this tool for research and practice.
This study tests the contingency or ‘fit’ hypothesis that the effects of budgetary participation on managerial performance will be positive in decentralised organisations and negative in centralised organisations. The responses of 37 managers from a cross-section of Hong Kong manufacturing companies to a questionnaire survey designed to measure the variables were analysed by examining the interaction term in a multiple regression equation. The results supported the interaction hypothesis and found that at high levels of decentralisation there is a positive relationship between budgetary participation and managerial performance but at low levels of decentralisation this relationship is negative. These findings have implications for the design of effective control subsystems.
Based on the initial results of a multi-year research study, the managerial practices of successful large companies and their smaller counterparts are evaluated and patterns in their innovation approaches are considered. A combination of past and present research is used to determine factors crucial to successful small firm innovation. The primary factors identified are: (1) effective technological innovation develops from a knowledge and response to customer demand; (2) founders' commitment to their objective, being technology pioneers and good problem solvers allow them to persevere despite the set-backs, frustrations, and ambiguities that accompany innovations; (3) delays between innovation and commercial production can range from 3 to 25 years, so perseverance is key; (4) few overhead costs are incurred for some small firms (especially home-based businesses) which decreases the risk facing small operations and improves the value of their present success; (5) solutions are adopted wherever they can be found and this unencumbered approach removes limits on imagination and increases motivation; (6) undeterred by delays common in large companies, the inventor-entrepreneur can experiment, test, recycle, and try again with little time lost and can gain timing and performance advantages; (7) inventor-entrepreneurs can foresee tangible personal rewards if they succeed, unlike entrepreneurs with monetary goals who may panic or quit without monetary rewards; and (8) the number and variety of sources for small business financing available in the U.S. is a huge asset to inventor-entrepreneurs. In addition, interviews and secondary sources were used and cross-checked to establish the management patterns of several outstanding innovative large companies in Europe, the United States, and Japan. Finding show these are the most important patterns for successful innovation in large firms: (1) atmosphere and vision; (2) orientation to the market; (3) small, flat organizations; (4) multiple approaches; (5) developmental shoot-outs; (6) small teams of engineers, technicians, designers, and model makers with no intervening organizational or physical barriers to developing a new product from idea to commercial prototype stages; and (7) interactive learning. Finally, these key elements necessary for established companies wishing to innovate are identified and discussed: (1) opportunity orientation; (2) structuring for innovation; and (3) complex portfolio planning. (SFL)
In this paper, I extend the organizational design literature by examining how the delegation choice is affected by the ability to resolve the incentive problem caused by this delegation. Based on the seminal papers by Grossman and Hart (1986) and Holmstrom and Milgrom (1994), I argue that the ability to resolve the incentive problem depends on the contractibility of financial performance measures versus non-financial performance measures, where the contractibility depends on the performance measure properties sensitivity, precision, and verifiability. The empirical results show that, if financial performance measures are "good" ("poor") incentive measures, i.e., high (low) on sensitivity, precision, and verifiability, then using these measures for incentive purposes increases (decreases) delegation. Overall, the results are consistent with the argument that firms design their organizational structure around the quality of contractible performance measures.
This study provides theory and field evidence on the social process of hardening soft accounting information to make it persuasive for planning organizational change. Accounting information intended to support organizational change is often soft, that is, there is lack of interpersonal agreement about its quality. For example, employees can lack agreement about the quality of accounting information (e.g., activity-based costing) because the information is constructed from subjective information obtained from interviews and surveys. This information can contain unintentional errors as well as intentional distortions that are intended to avoid revealing embarrassing inefficiencies and/or to resist painful organizational change. We use concepts from applied game theory and social psychology to identify from the accounting literature four multi-person games that may be played to harden soft accounting information. These hardening games are characterized in terms of payoffs, players, the comparability of soft accounting information, and the rules of the games that are expected to emerge. We interpret the field evidence as indicating that the hardening games that emerge depend on who the players are and the comparability of their soft accounting information. In addition, we provide evidence on how the rules of the games that harden the information emerge from the players’ social interactions. Finally, we provide evidence on how an organization learns by trial-and-error how to harden soft accounting information by changing the players and the comparability of the soft accounting information.