Accounting, Organisations, and Society (MANMEC052)
Summary
Summary Accounting, Organizations, and Society book and articles
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Course
Accounting, Organisations, and Society (MANMEC052)
Institution
Radboud Universiteit Nijmegen (RU)
Book
Management Control Systems
Summary of the book and articles for Accounting, Organizations, and Society at Radboud University. Master of Accounting and Control of Economics. Course code is MAN-MEC052. Grade . Summary in English. Terms and researchers in italics. Summary of the book Hartmann, Kraus, Nilsson, Anthony & Govindar...
Accounting, Organisations, and Society (MANMEC052)
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AOS literature summary
Chapter 1
Management control systems: comprising a combination of control practices designed and
implemented by top managers to increase the probability that lower-level managers and employees
will behave in ways consistent with the organization’s mission, goals and strategies
Two roles of management control systems:
- Top-down
- Bottom-up
Reasons for the need for management control systems:
- Lower-level managers and employees may not automatically understand the mission, goals
and strategies of the organization, nor how they can contribute to these
- Lower-level managers and employees may not automatically agree with the organizational
mission, goals and strategies
- Lower-level managers and employees may not automatically have the resources needed to act
according to the organizational mission, goals and strategies
Functions of management control systems based on these reasons:
- Top-down:
o Provide lower-level managers and employees with a clear sense of direction that helps
them take actions, make decisions and achieve results that help the organization to
achieve its mission, goals and strategies
o Help the organization achieve its overall mission, goals and strategies
o Ensure that lower-level managers and employees have the skills and the
organizational resources they need to perform in line with the organizational mission,
goals and strategies
- Bottom-up:
o Inform top managers about the progress of the efforts of lower-level managers
o Facilitate information sharing and communication so top mangers can benefit from
the specialized skills and knowledge of lower-level managers and employees
o Enable lower-level managers and employees to acquire the support to develop their
skills as well as the organizational resources to execute their responsibilities
Types of control practices:
- Input controls: have to do with the people in the organization, and the capabilities,
characteristics, knowledge and intentions they bring to their function. Most common;
o Employee selection processes
o Value statements
o Employee socialization processes
o Management style
- Throughput controls: direct lower-level manger and employee behavior through formal
delegation of decision-making responsibility to lower-level managers, and by specifying how
behavior are to be performed or not performed. Most common:
o The organization’s set of rules
o The organizational architecture
- Output controls: making managers account able for certain results or output. Most common:
o Budgets
o Financial and non-financial performance measures
o Risk management
1
,Types of management control systems:
- Coercive: control practices are structural devices for use by top managers to check what
employees are doing, coerce them into cooperation, or force them to do things they would
never do of their own free will
- Enabling: top managers need to design control practices that help maintain or enhance the
skill set, job motivation and organizational commitment that lower-level managers and
employees aim to contribute to the organization.
Features of enabling management control system:
o Lower-level manager and employee involvement during the implementation process
o Lower-level manager and employee understanding
o Communication and visualization
Chapter 2
Views on organizations:
- Shareholder view: organizations exist to satisfy the goals of their owners. Arguments:
o Shareholders have legal power
o Shareholders have higher risk
o The company cannot exist without the shareholder
- Stakeholder view: organizations exist to satisfy the goals of a broader set of groups, including
employees, customers, suppliers, lenders and society. Arguments:
o Organizations are dependent on more stakeholders
o Ethical
o Long-term view
Corporate governance: has to do with the shareholder view. Deals with how owners and owner
representatives of different kinds act to influence the organization to work in the best interest of the
owners. Most common corporate governance means:
- Board of directors
- Financial reports
- Auditing and internal control
- Incentive programs
- Investor meetings
- Media
Corporate social responsibility: CSR. Has to do with stakeholder view. Types of arguments for
working with CSR:
- Ethical
- Business
- Fashion
Common tools for CSR:
- Code of conduct
- Sustainability reporting
- Internal reporting channels
- Culture and values
- Personal example
- Storytelling
- Training
- Intranet
2
, Mission: the reason why an organization exists.
Organizational goals are more concrete than the mission. Types of goals:
- Financial goals: examples:
o Profitability (for-profit organizations)
o Cost effectiveness (non-profit organizations)
- Strategic goals: how the organization is going to build or sustain a competitive advantage
Ways strategies are formed:
- Deliberate strategies: according to the design perspective, strategy should be designed to fit
the organization’s environment and capabilities. The positioning perspective says that the
focus si more on choosing a more generic strategy. A deliberate strategy should consist of
well-based choices and decisions
- Emerging strategies: gradually emerge out of how problems are dealt with in practice
Types of strategy:
- Corporate strategy: being in the right mix of businesses. Three categories:
o Single industry firm: operates in one line of business
o Related diversified firm: operates in a number of industries and businesses are
connected to each other through operating synergies. Operating synergies consist of
two types of linkage across business units:
Ability to share common resources
Ability to share common core competencies
o Unrelated business firm: operates in businesses that are not relate to one another. The
connection is purely financial. Also called conglomerates
- Business unit strategy: how to compete in a particular industry. According to Porter, the
structure of an industry should be analyzed in terms of the collective strength of five
competitive forces:
o Intensity of rivalry among existing competitors
o Bargaining power of customers
o Bargaining power of suppliers
o Threat from substitutes
o Threat of new entry
Two generic ways of responding to the opportunities in the external environment:
o Cost leadership
o Differentiation
o Stuck in the middle (should avoid, so not really and option)
Contingencies:
- Environment: can be VUCA:
o Volatility
o Uncertainty
o Complexity
o Ambiguity
- Strategy
- Technology; how goods or services are produced
Adler & Borys (1996)
Two types of bureaucracy/formalization:
- Enabling: procedures provide organizational memory that captures lessons learned from
experience
3
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