Abstract
Purpose This paper aims to explore controls within an inter-organisational relationship involving outsourced management accounting services from the contractor’s perspective. Design/methodology/approach Qualitative data from within the relationship are analysed in a legitimacy-theory framework, illustrating how controls within the relationship are intended to build the contractor’s legitimacy and what kinds of implications the controls have in relation to conflicts between interests inherent in the relationship. Findings The legitimacy perspective clarifies that while controls are aimed at ensuring efficiency for the client, they may also provide symbolic displays of the appropriateness of the contractor’s actions both at an inter-organisational level for the client and at an individual level for the contractor’s employees. While the contractor intends to build legitimacy with the client by demonstrating utility in the form of efficiency, the process also gives the client influence and allows the disposition in terms of shared values to be demonstrated. However, this process has some negative consequences for the contractor’s employees as it is insufficient for serving the boundary-spanning employees’ interests connected with the nature of their work. Hence, the same controls need to yield benefits and fair outcomes for employees. The controls simultaneously foster interconnections that contribute to permanence and formalise the outsourcing of complex services, thereby rendering such processes comprehensible and transferable to other settings, which can be seen to serve the contractor’s continuity interests. Originality/value The paper contributes to academic research by illustrating how controls within inter-organisational relationships not only steer boundary-spanners’ work to conform to a client’s needs but may also help to build legitimacy via symbolic properties in the presence of conflicting interests at both an inter-organisational and individual level. It specifically highlights the important role of boundary-spanners lower in the organisational structure, who both affect and are influenced by the intentions to build legitimacy with the client.
Highlights
Globalisation and fierce competition have turned various forms of inter-organisational relationships into important tools for success, with scholars, directing attention to what kinds of controls may be used to align the possibly conflicting interests inherent in such relationships (Kraus and Lind, 2007; Mouritsen and Thrane, 2006; Thrane, 2007; Vélez et al, 2008)
To explore controls within inter-organisational relationships in a manner acknowledging the various levels at which controls act and that legitimacy within the relationship may be built, we studied a relationship involving outsourced management accounting services between a client and a contractor, focussing on the contractor’s perspective
We developed a picture of the conflicts of interests affecting the partners and boundary-spanners in the outsourcing relationship, which created a need for the contractor to build legitimacy to satisfy its own organisational interests, and we analysed the place of controls within the interorganisational relationship in this picture
Summary
Globalisation and fierce competition have turned various forms of inter-organisational relationships into important tools for success, with scholars, directing attention to what kinds of controls may be used to align the possibly conflicting interests inherent in such relationships (Kraus and Lind, 2007; Mouritsen and Thrane, 2006; Thrane, 2007; Vélez et al, 2008). While some view the interests in terms of cost-efficiency, this perspective may come into conflict with the interests of those more focussed on customerorientation (Coad and Cullen, 2006) or on developing the product rather than minimising costs (Kraus and Strömsten, 2016; Mouritsen et al, 2001; Seal et al, 2004) These studies attest that how business objectives (economic interests) are pursued in an interorganisational relationship is far from self-evident, as a conflict of interests arises from the differences in social beliefs pertaining to what constitutes (economically) appropriate action
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
More From: Qualitative Research in Accounting & Management
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.