IDEAS home Printed from https://ideas.repec.org/a/eee/aosoci/v51y2016icp12-28.html
   My bibliography  Save this article

Management control effectiveness and strategy: An empirical analysis of packages and systems

Author

Listed:
  • Bedford, David S.
  • Malmi, Teemu
  • Sandelin, Mikko

Abstract

This study examines management control (MC) combinations that are effective in different strategic contexts through two related approaches – MC as a package and MC as a system. First, this study identifies how a set of MC practices combine (i.e. MC packages) to achieve effective control outcomes for firms operating in defender and prospector strategic contexts by applying fuzzy set qualitative comparative analysis (fsQCA). Using data from a survey of top managers the analysis reveals that there are multiple ways by which firms can effectively combine MC practices in a given strategic context. Furthermore, the analysis shows that not all MC practices found to be relevant in isolation are relevant when examined simultaneously as a package. Second, based on a comparison of effective MC packages this study examines interdependencies between MC practices (i.e. MC systems). Results show that in defender firms a diagnostic control use of accounting and mechanistic structural controls act as complements, while mechanistic structural controls and measure diversity act as substitutes. In prospector firms an interactive control use of accounting and organic structural controls are found to have complementary effects. These results indicate that the effectiveness of accounting control and structural control choices are determined not only by their fit with strategic context but also by how they fit with each other. This study also demonstrates how an understanding of MC packages can provide guidance for theory development and empirical analysis of MC systems.

Suggested Citation

  • Bedford, David S. & Malmi, Teemu & Sandelin, Mikko, 2016. "Management control effectiveness and strategy: An empirical analysis of packages and systems," Accounting, Organizations and Society, Elsevier, vol. 51(C), pages 12-28.
    • Handle: RePEc:eee:aosoci:v:51:y:2016:i:c:p:12-28
    DOI: 10.1016/j.aos.2016.04.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0361368216300435
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.aos.2016.04.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gerdin, Jonas & Greve, Jan, 2004. "Forms of contingency fit in management accounting research--a critical review," Accounting, Organizations and Society, Elsevier, vol. 29(3-4), pages 303-326.
    2. Brian K. Boyd & Alain Salamin, 2001. "Strategic reward systems: a contingency model of pay system design," Strategic Management Journal, Wiley Blackwell, vol. 22(8), pages 777-792, August.
    3. Govindarajan, V. & Gupta, Anil K., 1985. "Linking control systems to business unit strategy: impact on performance," Accounting, Organizations and Society, Elsevier, vol. 10(1), pages 51-66, January.
    4. Chenhall, Robert H. & Moers, Frank, 2015. "The role of innovation in the evolution of management accounting and its integration into management control," Accounting, Organizations and Society, Elsevier, vol. 47(C), pages 1-13.
    5. Ittner, Christopher D. & Larcker, David F. & Randall, Taylor, 2003. "Performance implications of strategic performance measurement in financial services firms," Accounting, Organizations and Society, Elsevier, vol. 28(7-8), pages 715-741.
    6. Gordon, Lawrence A. & Narayanan, V. K., 1984. "Management accounting systems, perceived environmental uncertainty and organization structure: An empirical investigation," Accounting, Organizations and Society, Elsevier, vol. 9(1), pages 33-47, January.
    7. Danny Miller & Peter H. Friesen, 1982. "Innovation in conservative and entrepreneurial firms: Two models of strategic momentum," Strategic Management Journal, Wiley Blackwell, vol. 3(1), pages 1-25, January.
    8. Thomas Ahrens & Christopher S. Chapman, 2004. "Accounting for Flexibility and Efficiency: A Field Study of Management Control Systems in a Restaurant Chain," Contemporary Accounting Research, John Wiley & Sons, vol. 21(2), pages 271-301, June.
    9. Margaret A. Abernethy & Henri C. Dekker & Axel K‐D. Schulz, 2015. "Are Employee Selection and Incentive Contracts Complements or Substitutes?," Journal of Accounting Research, Wiley Blackwell, vol. 53(4), pages 633-668, September.
    10. Hall, Matthew, 2010. "Accounting information and managerial work," Accounting, Organizations and Society, Elsevier, vol. 35(3), pages 301-315, April.
    11. Widener, Sally K., 2007. "An empirical analysis of the levers of control framework," Accounting, Organizations and Society, Elsevier, vol. 32(7-8), pages 757-788.
    12. Ittner, Christopher D. & Larcker, David F., 1997. "Quality strategy, strategic control systems, and organizational performance," Accounting, Organizations and Society, Elsevier, vol. 22(3-4), pages 293-314.
    13. Dennis Campbell, 2012. "Employee Selection as a Control System," Journal of Accounting Research, Wiley Blackwell, vol. 50(4), pages 931-966, September.
    14. Govindarajan, V., 1984. "Appropriateness of accounting data in performance evaluation: An empirical examination of environmental uncertainty as an intervening variable," Accounting, Organizations and Society, Elsevier, vol. 9(2), pages 125-135, June.
    15. Scott, Thomas W. & Tiessen, P., 1999. "Performance measurement and managerial teams," Accounting, Organizations and Society, Elsevier, vol. 24(3), pages 263-285, April.
    16. Gerdin, Jonas, 2005. "Management accounting system design in manufacturing departments: an empirical investigation using a multiple contingencies approach," Accounting, Organizations and Society, Elsevier, vol. 30(2), pages 99-126, February.
    17. Chalos, Peter & O'Connor, Neale G., 2004. "Determinants of the use of various control mechanisms in US-Chinese joint ventures," Accounting, Organizations and Society, Elsevier, vol. 29(7), pages 591-608, October.
    18. Chenhall, R. H. & Langfield-Smith, K., 1998. "The relationship between strategic priorities, management techniques and management accounting: an empirical investigation using a systems approach," Accounting, Organizations and Society, Elsevier, vol. 23(3), pages 243-264, April.
    19. Jarvis, Cheryl Burke & MacKenzie, Scott B & Podsakoff, Philip M, 2003. "A Critical Review of Construct Indicators and Measurement Model Misspecification in Marketing and Consumer Research," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 30(2), pages 199-218, September.
    20. Henri Barki & Alain Pinsonneault, 2005. "A Model of Organizational Integration, Implementation Effort, and Performance," Organization Science, INFORMS, vol. 16(2), pages 165-179, April.
    21. Hirst, Mk, 1983. "Reliance On Accounting Performance-Measures, Task Uncertainty, And Dysfunctional Behavior - Some Extensions," Journal of Accounting Research, Wiley Blackwell, vol. 21(2), pages 596-605.
    22. Henri, Jean-Francois, 2006. "Organizational culture and performance measurement systems," Accounting, Organizations and Society, Elsevier, vol. 31(1), pages 77-103, January.
    23. Richard L. Daft & Robert H. Lengel, 1986. "Organizational Information Requirements, Media Richness and Structural Design," Management Science, INFORMS, vol. 32(5), pages 554-571, May.
    24. Abernethy, Margaret A. & Brownell, Peter, 1999. "The role of budgets in organizations facing strategic change: an exploratory study," Accounting, Organizations and Society, Elsevier, vol. 24(3), pages 189-204, April.
    25. Chenhall, Robert H., 2003. "Management control systems design within its organizational context: findings from contingency-based research and directions for the future," Accounting, Organizations and Society, Elsevier, vol. 28(2-3), pages 127-168.
    26. Hartmann, Frank G. H. & Moers, Frank, 1999. "Testing contingency hypotheses in budgetary research: an evaluation of the use of moderated regression analysis," Accounting, Organizations and Society, Elsevier, vol. 24(4), pages 291-315, May.
    27. Chapman, Christopher S., 1997. "Reflections on a contingent view of accounting," Accounting, Organizations and Society, Elsevier, vol. 22(2), pages 189-205, February.
    28. David Bedford & Mikko Sandelin, 2015. "Investigating management control configurations using qualitative comparative analysis: an overview and guidelines for application," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 26(1), pages 5-26, April.
    29. Otley, D. T. & Berry, A. J., 1980. "Control, organisation and accounting," Accounting, Organizations and Society, Elsevier, vol. 5(2), pages 231-244, April.
    30. Grabner, Isabella & Moers, Frank, 2013. "Management control as a system or a package? Conceptual and empirical issues," Accounting, Organizations and Society, Elsevier, vol. 38(6), pages 407-419.
    31. Milgrom, Paul & Roberts, John, 1995. "Complementarities and fit strategy, structure, and organizational change in manufacturing," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 179-208, April.
    32. Van der Stede, Wim A., 2000. "The relationship between two consequences of budgetary controls: budgetary slack creation and managerial short-term orientation," Accounting, Organizations and Society, Elsevier, vol. 25(6), pages 609-622, August.
    33. Chenhall, R. H. & Morris, D., 1995. "Organic decision and communication processes and management accounting systems in entrepreneurial and conservative business organizations," Omega, Elsevier, vol. 23(5), pages 485-497, October.
    34. Dent, Jeremy F., 1990. "Strategy, organization and control: Some possibilities for accounting research," Accounting, Organizations and Society, Elsevier, vol. 15(1-2), pages 3-25.
    35. Barry Cooper & Judith Glaesser, 2011. "Paradoxes and Pitfalls in Using Fuzzy Set QCA: Illustrations from a Critical Review of a Study of Educational Inequality," Sociological Research Online, , vol. 16(3), pages 106-119, August.
    36. Moores, Ken & Yuen, Susana, 2001. "Management accounting systems and organizational configuration: a life-cycle perspective," Accounting, Organizations and Society, Elsevier, vol. 26(4-5), pages 351-389.
    37. Henri, Jean-Francois, 2006. "Management control systems and strategy: A resource-based perspective," Accounting, Organizations and Society, Elsevier, vol. 31(6), pages 529-558, August.
    38. Flamholtz, Eric G., 1983. "Accounting, budgeting and control systems in their organizational context: Theoretical and empirical perspectives," Accounting, Organizations and Society, Elsevier, vol. 8(2-3), pages 153-169, May.
    39. King, Robyn & Clarkson, Peter, 2015. "Management control system design, ownership, and performance in professional service organisations," Accounting, Organizations and Society, Elsevier, vol. 45(C), pages 24-39.
    40. Davila, Tony, 2000. "An empirical study on the drivers of management control systems' design in new product development," Accounting, Organizations and Society, Elsevier, vol. 25(4-5), pages 383-409, May.
    41. Bruno Cassiman & Reinhilde Veugelers, 2006. "In Search of Complementarity in Innovation Strategy: Internal R& D and External Knowledge Acquisition," Management Science, INFORMS, vol. 52(1), pages 68-82, January.
    42. Selto, Frank H. & Renner, Celia J. & Young, S. Mark, 1995. "Assessing the organizational fit of a just-in-time manufacturing system: Testing selection, interaction and systems models of contingency theory," Accounting, Organizations and Society, Elsevier, vol. 20(7-8), pages 665-684.
    43. Robert A. Burgelman, 1991. "Intraorganizational Ecology of Strategy Making and Organizational Adaptation: Theory and Field Research," Organization Science, INFORMS, vol. 2(3), pages 239-262, August.
    44. Simons, Robert, 1987. "Accounting control systems and business strategy: An empirical analysis," Accounting, Organizations and Society, Elsevier, vol. 12(4), pages 357-374, June.
    45. Otley, David T., 1980. "The contingency theory of management accounting: Achievement and prognosis," Accounting, Organizations and Society, Elsevier, vol. 5(4), pages 413-428, October.
    46. Bisbe, Josep & Batista-Foguet, Joan-Manuel & Chenhall, Robert, 2007. "Defining management accounting constructs: A methodological note on the risks of conceptual misspecification," Accounting, Organizations and Society, Elsevier, vol. 32(7-8), pages 789-820.
    47. Hall, Matthew, 2010. "Accounting information and managerial work," LSE Research Online Documents on Economics 28539, London School of Economics and Political Science, LSE Library.
    48. Covin, Jeffrey G. & Slevin, Dennis P. & Heeley, Michael B., 2001. "Strategic decision making in an intuitive vs. technocratic mode: structural and environmental considerations," Journal of Business Research, Elsevier, vol. 52(1), pages 51-67, April.
    49. Boris Kabanoff & Shane Brown, 2008. "Knowledge structures of prospectors, analyzers, and defenders: content, structure, stability, and performance," Strategic Management Journal, Wiley Blackwell, vol. 29(2), pages 149-171, February.
    50. Wayne S. DeSarbo & C. Anthony Di Benedetto & Michael Song & Indrajit Sinha, 2005. "Revisiting the Miles and Snow strategic framework: uncovering interrelationships between strategic types, capabilities, environmental uncertainty, and firm performance," Strategic Management Journal, Wiley Blackwell, vol. 26(1), pages 47-74, January.
    51. Chenhall, Robert H., 2005. "Integrative strategic performance measurement systems, strategic alignment of manufacturing, learning and strategic outcomes: an exploratory study," Accounting, Organizations and Society, Elsevier, vol. 30(5), pages 395-422, July.
    52. Bisbe, Josep & Otley, David, 2004. "The effects of the interactive use of management control systems on product innovation," Accounting, Organizations and Society, Elsevier, vol. 29(8), pages 709-737, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chenhall, Robert H., 2003. "Management control systems design within its organizational context: findings from contingency-based research and directions for the future," Accounting, Organizations and Society, Elsevier, vol. 28(2-3), pages 127-168.
    2. Cadez, Simon & Guilding, Chris, 2008. "An exploratory investigation of an integrated contingency model of strategic management accounting," Accounting, Organizations and Society, Elsevier, vol. 33(7-8), pages 836-863.
    3. Henri, Jean-Francois, 2006. "Management control systems and strategy: A resource-based perspective," Accounting, Organizations and Society, Elsevier, vol. 31(6), pages 529-558, August.
    4. Cooper, Christine, 2015. "Entrepreneurs of the self: The development of management control since 1976," Accounting, Organizations and Society, Elsevier, vol. 47(C), pages 14-24.
    5. Christoph Feichter & Isabella Grabner, 2020. "Empirische Forschung zu Management Control – Ein Überblick und neue Trends [Empirical Management Control Reserach—An Overview and Future Directions]," Schmalenbach Journal of Business Research, Springer, vol. 72(2), pages 149-181, June.
    6. Ellen Haustein & Robert Luther & Peter Schuster, 2014. "Management control systems in innovation companies: a literature based framework," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 24(4), pages 343-382, February.
    7. Chenhall, Robert H. & Moers, Frank, 2015. "The role of innovation in the evolution of management accounting and its integration into management control," Accounting, Organizations and Society, Elsevier, vol. 47(C), pages 1-13.
    8. Gerdin, Jonas & Johansson, Tobias & Wennblom, Gabriella, 2019. "The contingent nature of complementarity between results and value-based controls for managing company-level profitability: A situational strength perspective," Accounting, Organizations and Society, Elsevier, vol. 79(C).
    9. Müller-Stewens, Benedikt & Widener, Sally K. & Möller, Klaus & Steinmann, Jan-Christoph, 2020. "The role of diagnostic and interactive control uses in innovation," Accounting, Organizations and Society, Elsevier, vol. 80(C).
    10. Bisbe, Josep & Batista-Foguet, Joan-Manuel & Chenhall, Robert, 2007. "Defining management accounting constructs: A methodological note on the risks of conceptual misspecification," Accounting, Organizations and Society, Elsevier, vol. 32(7-8), pages 789-820.
    11. Stefan Hofmann & Andreas Wald & Ronald Gleich, 2012. "Determinants and effects of the diagnostic and interactive use of control systems: an empirical analysis on the use of budgets," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 23(3), pages 153-182, December.
    12. Bisbe, Josep & Kruis, Anne-Marie & Madini, Paola, 2019. "Coercive, enabling, diagnostic, and interactive control: Untangling the threads of their connections," Journal of Accounting Literature, Elsevier, vol. 43(C), pages 124-144.
    13. Mundy, Julia, 2010. "Creating dynamic tensions through a balanced use of management control systems," Accounting, Organizations and Society, Elsevier, vol. 35(5), pages 499-523, July.
    14. Verbeeten, F.H.M., 2005. "New’ Performance Measures: Determinants of Their Use and Their Impact on Performance," ERIM Report Series Research in Management ERS-2005-054-F&A, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    15. Abernethy, Margaret A. & Anderson, Shannon W. & Nair, Sujay & Jiang, Yile (Anson), 2021. "Manager ‘growth mindset’ and resource management practices," Accounting, Organizations and Society, Elsevier, vol. 91(C).
    16. Bedford, David S. & Bisbe, Josep & Sweeney, Breda, 2019. "Performance measurement systems as generators of cognitive conflict in ambidextrous firms," Accounting, Organizations and Society, Elsevier, vol. 72(C), pages 21-37.
    17. Lindawati Gani & Johnny Jermias, 2012. "The Effects of Strategy–Management Control System Misfits on Firm Performance," Accounting Perspectives, John Wiley & Sons, vol. 11(3), pages 165-196, September.
    18. Naranjo-Gil, David & Hartmann, Frank, 2007. "Management accounting systems, top management team heterogeneity and strategic change," Accounting, Organizations and Society, Elsevier, vol. 32(7-8), pages 735-756.
    19. Iryna Alves & Sofia M. Lourenço, 2022. "The use of non-financial performance measures for managerial compensation: evidence from SMEs," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 33(2), pages 151-187, June.
    20. van Veen-Dirks, Paula, 2010. "Different uses of performance measures: The evaluation versus reward of production managers," Accounting, Organizations and Society, Elsevier, vol. 35(2), pages 141-164, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:aosoci:v:51:y:2016:i:c:p:12-28. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/aos .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.