IDEAS home Printed from https://ideas.repec.org/a/spr/jmgtco/v30y2019i2d10.1007_s00187-019-00281-0.html
   My bibliography  Save this article

Effective accounting processes: the role of formal and informal controls

Author

Listed:
  • Thomas Gackstatter

    (University of St. Gallen)

  • Benedikt Müller-Stewens

    (University of St. Gallen)

  • Klaus Möller

    (University of St. Gallen)

Abstract

Optimization efforts are increasingly applied to finance departments in organizations, particularly to routinized accounting processes. Mixed satisfaction levels related to performance outcomes hint at control issues in finance departments. Accounting activities are characterized by well understood task environments that are addressed by formal controls. Yet, these activities are also interrelated and people-intensive, which might require other controls complementing formal ones. While current evidence considers merely the role of formal controls, we examine the effect of formal and informal controls as well as their combined effects in accounting processes. Regarding formal controls, results from a cross-sectional survey indicate that process controls have a positive direct effect on information quality while we cannot show any effect for output controls. Among the informal controls, peer pressure accentuates the effect of process controls if the controls are combined. Third, an identification-inducing working environment has a positive impact on information quality. Yet, the positive effect of process controls deteriorates when applied in combination with a positive working environment. This contributes to the literature on at least two dimensions: First, we underline the role of informal controls in accounting processes; second, our data hints at complementary and substitutive effects of formal and informal controls in the accounting function.

Suggested Citation

  • Thomas Gackstatter & Benedikt Müller-Stewens & Klaus Möller, 2019. "Effective accounting processes: the role of formal and informal controls," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 30(2), pages 131-152, July.
    • Handle: RePEc:spr:jmgtco:v:30:y:2019:i:2:d:10.1007_s00187-019-00281-0
    DOI: 10.1007/s00187-019-00281-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00187-019-00281-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s00187-019-00281-0?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. Dekker, Henri C., 2004. "Control of inter-organizational relationships: evidence on appropriation concerns and coordination requirements," Accounting, Organizations and Society, Elsevier, vol. 29(1), pages 27-49, January.
    2. Artz, Martin & Homburg, Christian & Rajab, Thomas, 2012. "Performance-measurement system design and functional strategic decision influence: The role of performance-measure properties," Accounting, Organizations and Society, Elsevier, vol. 37(7), pages 445-460.
    3. William G. Ouchi, 1979. "A Conceptual Framework for the Design of Organizational Control Mechanisms," Management Science, INFORMS, vol. 25(9), pages 833-848, September.
    4. Julian Birkinshaw & Allen Morrison & John Hulland, 1995. "Structural and competitive determinants of a global integration strategy," Strategic Management Journal, Wiley Blackwell, vol. 16(8), pages 637-655.
    5. Bouwens, Jan & Abernethy, Margaret A., 2000. "The consequences of customization on management accounting system design," Accounting, Organizations and Society, Elsevier, vol. 25(3), pages 221-241, April.
    6. 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.
    7. Laura B. Cardinal, 2001. "Technological Innovation in the Pharmaceutical Industry: The Use of Organizational Control in Managing Research and Development," Organization Science, INFORMS, vol. 12(1), pages 19-36, February.
    8. Christian Nitzl & Wynne W. Chin, 2017. "The case of partial least squares (PLS) path modeling in managerial accounting research," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 28(2), pages 137-156, May.
    9. Patricia Everaert & Gerrit Sarens & Jan Rommel, 2010. "Using Transaction Cost Economics to explain outsourcing of accounting," Small Business Economics, Springer, vol. 35(1), pages 93-112, July.
    10. Erik Strauß & Christina Zecher, 2013. "Management control systems: a review," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 23(4), pages 233-268, February.
    11. Dale L. Goodhue, 1995. "Understanding User Evaluations of Information Systems," Management Science, INFORMS, vol. 41(12), pages 1827-1844, December.
    12. Margaret A. Abernethy & Wai Fong Chua, 1996. "A Field Study of Control System “Redesign†: The Impact of Institutional Processes on Strategic Choice," Contemporary Accounting Research, John Wiley & Sons, vol. 13(2), pages 569-606, September.
    13. Herbert, Ian P. & Seal, Will B., 2012. "Shared services as a new organisational form: Some implications for management accounting," The British Accounting Review, Elsevier, vol. 44(2), pages 83-97.
    14. 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.
    15. Nitzl, Christian, 2016. "The use of partial least squares structural equation modelling (PLS-SEM) in management accounting research: Directions for future theory development," Journal of Accounting Literature, Elsevier, vol. 37(C), pages 19-35.
    16. 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.
    17. Abraham Carmeli & Gershon Gilat & David A. Waldman, 2007. "The Role of Perceived Organizational Performance in Organizational Identification, Adjustment and Job Performance," Journal of Management Studies, Wiley Blackwell, vol. 44(6), pages 972-992, September.
    18. Esra F Gencturk & Preet S Aulakh, 1995. "The Use of Process and Output Controls in Foreign Markets," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(4), pages 755-786, December.
    19. Laura B. Cardinal & Sim B. Sitkin & Chris P. Long, 2004. "Balancing and Rebalancing in the Creation and Evolution of Organizational Control," Organization Science, INFORMS, vol. 15(4), pages 411-431, August.
    20. Keith D. Brouthers & Lance Eliot Brouthers, 2003. "Why Service and Manufacturing Entry Mode Choices Differ: The Influence of Transaction Cost Factors, Risk and Trust," Journal of Management Studies, Wiley Blackwell, vol. 40(5), pages 1179-1204, July.
    21. Andrea Masini & Zeinep Aksin Karaesman, 2008. "Effective strategies for internal outsourcing and offshoring of business services: An empirical investigation," Post-Print hal-00516139, HAL.
    22. Abernethy, Margaret A. & Brownell, Peter, 1997. "Management control systems in research and development organizations: The role of accounting, behavior and personnel controls," Accounting, Organizations and Society, Elsevier, vol. 22(3-4), pages 233-248.
    23. Kim Wüllenweber & Daniel Beimborn & Tim Weitzel & Wolfgang König, 2008. "The impact of process standardization on business process outsourcing success," Information Systems Frontiers, Springer, vol. 10(2), pages 211-224, April.
    24. Bart A. De Jong & Katinka M. Bijlsma-Frankema & Laura B. Cardinal, 2014. "Stronger Than the Sum of Its Parts? The Performance Implications of Peer Control Combinations in Teams," Organization Science, INFORMS, vol. 25(6), pages 1703-1721, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Armando Della Porta & Francesco De Luca & Chiara Aufiero, 2023. ""Radicare" la sostenibilit? nella strategia attraverso i sistemi di management control: un caso di studio relativo ad una Pmi," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2023(2), pages 43-68.
    2. Gianluca Vitale & Sebastiano Cupertino & Angelo Riccaboni, 2020. "Big data and management control systems change: the case of an agricultural SME," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 31(1), pages 123-152, April.
    3. Babajide Oyewo & Venancio Tauringana & Babajide Moses Omikunle & Olusola Owoyele, 2022. "The global management accounting principles (GMAP) and the relationship between organizational design elements," Accounting Research Journal, Emerald Group Publishing Limited, vol. 35(5), pages 637-659, March.
    4. Hamood Mohd. Al-Hattami, 2021. "Validation of the D&M IS success model in the context of accounting information system of the banking sector in the least developed countries," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 32(1), pages 127-153, March.
    5. Samir L. Vaz & Anneloes M. L. Raes & Mariano L. M. Heyden, 2022. "Realizing implementation through relational exchanges with top managers: the mediating role of middle managers’ divergent strategic behavior," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 33(1), pages 81-108, March.
    6. Jacobo Gomez‐Conde & Ernesto Lopez‐Valeiras & Ricardo Malagueño & José Carlos Tiomatsu Oyadomari, 2022. "Quality of performance metrics, informal peer monitoring and goal commitment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(3), pages 4041-4077, September.

    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. Marc Janka & Xaver Heinicke & Thomas W. Guenther, 2020. "Beyond the “good” and “evil” of stability values in organizational culture for managerial innovation: the crucial role of management controls," Review of Managerial Science, Springer, vol. 14(6), pages 1363-1404, December.
    2. 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).
    3. 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.
    4. Long, Chris P., 2018. "To control and build trust: How managers use organizational controls and trust-building activities to motivate subordinate cooperation," Accounting, Organizations and Society, Elsevier, vol. 70(C), pages 69-91.
    5. Jetta Frost & Rick Vogel & Khaled Bagban, 2016. "Managing Interdependence in Multi-business Organizations," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 17(2), pages 225-260, August.
    6. Yang, Feifei & Shinkle, George A. & Goudsmit, Mirjam, 2022. "The efficacy of organizational control interactions: External environmental uncertainty as a critical contingency," Journal of Business Research, Elsevier, vol. 139(C), pages 855-868.
    7. Guido Noto & Carmelo Marisca & Gustavo Barresi, 2023. "I "pacchetti" di controllo manageriale nei team virtuali," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2023(3), pages 43-62.
    8. Markus Kreutzer & Laura B. Cardinal & Jorge Walter & Christoph Lechner, 2016. "Formal and Informal Control as Complement or Substitute? The Role of the Task Environment," Strategy Science, INFORMS, vol. 1(4), pages 235-255, December.
    9. Heggen, Campbell, 2019. "The role of value systems in translating environmental planning into performance," The British Accounting Review, Elsevier, vol. 51(2), pages 130-147.
    10. Christian Kleine & Barbara Weißenberger, 2014. "Leadership impact on organizational commitment: the mediating role of management control systems choice," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 24(3), pages 241-266, January.
    11. Ulf Diefenbach & Andreas Wald & Ronald Gleich, 2018. "Between cost and benefit: investigating effects of cost management control systems on cost efficiency and organisational performance," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(1), pages 63-89, March.
    12. Grabner, Isabella & Speckbacher, Gerhard, 2016. "The cost of creativity: A control perspective," Accounting, Organizations and Society, Elsevier, vol. 48(C), pages 31-42.
    13. Davila, Antonio & Foster, George & Li, Mu, 2009. "Reasons for management control systems adoption: Insights from product development systems choice by early-stage entrepreneurial companies," Accounting, Organizations and Society, Elsevier, vol. 34(3-4), pages 322-347, April.
    14. Christian Jung-Gehling & Erik Strauss, 2018. "A Contemporary Concept of Organizational Control: Its Dependence on Shared Values and Impact on Motivation," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 70(4), pages 341-374, November.
    15. Greve, Jan & Ax, Christian & Bedford, David S. & Bednarek, Piotr & Brühl, Rolf & Dergård, Johan & Ditillo, Angelo & Dossi, Andrea & Gosselin, Maurice & Hoozée, Sophie & Israelsen, Poul & Janschek, Ott, 2017. "The impact of society on management control systems," Scandinavian Journal of Management, Elsevier, vol. 33(4), pages 253-266.
    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. Andrea Fried, 2017. "Terminological distinctions of ‘control’: a review of the implications for management control research in the context of innovation," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 28(1), pages 5-40, February.
    18. Devesh Baid & S. V. D. Nageswara Rao, 2017. "Management Controls of Teachers—Scale Development and Validation," Global Business Review, International Management Institute, vol. 18(3), pages 719-733, June.
    19. 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.
    20. Davila, Toni & Foster, George & Li, Mu, 2005. "Designing management control systems in product development: Initial choices and the influence of partners," IESE Research Papers D/598, IESE Business School.

    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:spr:jmgtco:v:30:y:2019:i:2:d:10.1007_s00187-019-00281-0. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.