Abstract
The literature on capital budgeting and investment proposals is rich with techniques, such as portfolio management and stage-gate project management, which rely on a rational approach to strategic capital investment projects. There is, however, a lack of research on the process of managing and coordinating strategic capital investment projects where investment proposals and decisions are seen as human constructions. The controller is an important but seldom noticed actor in this process. This paper draws on a pragmatic constructivist framework to create an understanding of the controller role in strategic capital investment projects and how the controller acts to contribute to create a functioning construct causality in such projects. We conducted a case study of a mining company, which had recently decided on strategic capital investments resulting in the moving of two towns to enable continued operations. Based on a two-step thematic data analysis, our results illustrate that the controller is an essential actor in strategic capital investment projects with high degrees of uncertainty and multiple decision-participants. By using the pragmatic constructivist framework we find that gap-bridging between multiple decision-participants is an essential role for controller, in order to create successful investment proposals. The case study further illustrates that controllers need to learn to speak technical and operational language and to become knowledgeable about business operations to gain trust in order create a functioning construct causality. Our study provides an actor-focused understanding of the organizational and managerial processes within strategic capital investment projects, illustrating how the controller contributes to construct causality therein.
Highlights
There is a vast literature in accounting on capital budgeting and investment proposals which relies on a rational approach to strategic capital investment projects (SCIPs), emphasizing managerial tools and techniques for planning and decisionmaking (e.g. Coad 1996; Segelod 2002; Tuomela 2005; Alkaraan and Northcott 2006)
We find that controllers are important actors in SCIPs, because they bridge the gap of multiple topoi and align the different perspectives among multiple decisionparticipants
In combination with the pragmatic constructivist framework (Nørreklit et al 2006), these results reveal how the controller can be understood as an important actor for undertaking successful action, contributing to the creation of a functioning construct causality by acknowledging factual possibilities, aligning them with organizational values and communicating them to managers and other actors in the SCIP
Summary
There is a vast literature in accounting on capital budgeting and investment proposals which relies on a rational approach to strategic capital investment projects (SCIPs), emphasizing managerial tools and techniques for planning and decisionmaking (e.g. Coad 1996; Segelod 2002; Tuomela 2005; Alkaraan and Northcott 2006). Nørreklit et al (2017) found that in complex projects involving multiple decision-participants, the different actors are governed by their own ways of conceptualizing their relations to the world (their topoi) In such situations it is especially challenging to form a functioning construct causality, because the act of integrating facts, possibilities, values and communication is not an individual one. Nørreklit et al (2017) provide clues about the production and use of management accounting information, they stress that more research is needed to understand how actors form a functioning construct causality in organizational planning and decision-making. We use pragmatic constructivism to understand the role of the controllers in constructing and communicating management accounting information for the organization’s planning and decision-making related to the decision to move the towns. We present the theoretical lens that we use to interpret the findings from our study in greater detail
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