Summary Short overview articles - Research in Management Control
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Course
Research in Management Control (EBM082A05)
Institution
Rijksuniversiteit Groningen (RuG)
Note: this is a short overview of the important information of all articles. Hall, Ferreira and Otley, Malmi and Brown, van de Ven and Johnson, Malmi and Granlund, Tucker and Lowe, van der Volk et al., Choi et al., Speklé and Verbeeten, van Triest et al., Pfister and Lukka, Jansen et al., Malmi et...
Managerial work involves responding to the unusual, the ad hoc, and the unplanned, where problem
boundaries are typically hazy and unstable.
Three primary insights into how and why managers use accounting information in their work.
1. To develop knowledge of their work environment
2. Common language
3. Verbal forms of communication instead of written reports
Three factors influence the usefulness of accounting information for developing knowledge of the
work environment:
1. ‘’closeness’’ to operational activities,
2. time horizon, and
3. diversity of operational factors under consideration.
The aggregation process inherent in the accounting system serves to provide information to
managers not generally available from other sources. Because the accounting process assigns
financial numbers to a diversity of operational factors, they can be combined and thus compared
through a process of aggregation. In this way we see how accounting information is useful in
developing knowledge of the work environment by helping managers to identify what all the frenetic
operational activities add up to and by assessing trade-offs among different factors.
If information is not uniformly framed, common interpretations are unlikely, and managers may thus
find it more difficult to communicate with each other. In this way, an accounting language can
function as a medium to facilitate communication among managers with different information
requirements, backgrounds and functional experience.
Ferreira and Otley: Performance management systems
Otley’s performance management framework
1. Objectives
2. Strategies and plans
3. Target setting
4. Incentive and reward structures
5. Information feedback loops
Strengths:
- Helpful structure for analyzing MCS by focusing on give key areas
- General nature, so enables other frameworks to use it to complement
- Straightforward, clear and unambiguous
- Dealing with data
Weaknesses:
- Not explicitly consider the role of vision and mission
- Interpreted as being focused on diagnostic control systems
- Ignoring the dynamics of control system change and development
, Simons’ levers of control framework
- Core values are controlled by the beliefs system, which guides the creative process of
exploring new opportunities and instils widely shared beliefs.
- Risks to be avoided are controlled by the boundary system, which plays the negative, limiting
role of circumscribing the domain where the company seeks new opportunities.
- Critical performance variables are controlled by the diagnostic control system, whose
function is to monitor, assess and reward achievement on key areas of performance.
- Strategic uncertainties are controlled by the interactive control system, whose role is to
encourage organizational learning and the process of development of new ideas and
strategies.
Strengths:
- Strongly focuses on strategic issues and on its implications for the control system
- Typology for alternative uses of the MCS
Weaknesses:
- Does not cope well with the range of informal control
- The meaning of the concepts embedded in the LOC are diffuse, leaving plenty of scope for
subjective interpretation
- Not susceptible to universal applicability
Malmi and Brown: management control systems as a package
Why studying the MCS package phenomenon is important?
- MCS do not operate in isolation
- Use and impact of a new MCS element is related to exiting broader MCS package
- Still limited understanding of the impact of other types of control and whether/how they
complement or substitute for each other in different contexts.
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