Management Control Practices Research Articles

Management control evaluation: a teaching case

Case studies are an innovative method of learning. This case provides students with guidelines to gaining an understanding of management control in a real-world setting. It requires students to obtain a manufacturing firm as a client, and to gain an understanding of the firm's management control practices.

Management Accounting Change and ERP, an Assessment of Research

Extant accounting literature shows that there is increasing research interest into effects of ERP systems on management accounting and control practices (c.f. Granlund, Mouritsen, 2003). This paper provides a review of the literature and identifies knowledge gaps and shows opportunities for research. The review reveals that there are two main streams of research. The first uses a structural approach, while the second uses a process approach. The structural stream adopts a functional approach to technology and is deterministic in nature. It implies the assumption that ERP is the driver of organizational performance improvement. The process approach stream on the other hand seeks to explain how processes of change unfold and how outcomes develop over time (see for example Granlund and Mouritsen, 2001, Granlund and Malmi, 2000, Scapens and Jazayeri, 2003, Caglio, 2003, Quattrone and Hopper, 2004). The focus in this stream is on several different issues, such as hybridization of the accountants' work due to the adoption of ERP and the impacts of ERP on introducing innovative accounting practices. The review of extant literature reveals that there is no cumulative body of research. In this paper several causes for this lack of accumulation are identified. Furthermore, there proves to be very limited coherence among the different studies. Finally, our review shows that although there is some attention for effects of ERP on Management Control, research on this particular subject is still very much lagging behind. We extend our literature review by going through literature from the Information Systems field. It proves that there are some similarities between the two different fields. Based on the findings of our literature review the following recommendations for further research are given: (1) Focus on studying the Management Control aspects of ERP, using a process approach, (2) Build on the results of earlier results of research in Accounting, and (3) Build on the results of earlier research in the IS field.

Relational systems between actors in the face of management control’s contradictory injunctions

Many French organisations have recently chosen to decentralise their management control systems, extending them into the middle‐management level. This “irrigation” of management structure by management control systems called for a study of the articulation between central management control practices (at the head‐office level) and local management control practices (at the unit level). This exploratory study investigates the meaning that the actors in the organisational units‐local controllers and operational managers‐give to their practices aimed at implementing the central management control system. Starting from the standpoint of the subjectivist contingency theory, this research is founded on an interpretive epistemology and is based on a comparative analysis of eight case studies conducted at the regional level of a large French bank’s distribution network. The “Findings” section shows that the central management control system, developed at the bank’s head office, conveys a good many “contradictory ...

Management control and controllership in new economy firms—a life cycle perspective

The purpose of this study is to describe and explain current management control practices in new economy firms (NEFs). According to our definition, NEFs include businesses targeting at fast growth or already fast-growing firms that operate in the information and communications technology business and biotech (life sciences) industry, and are characterized by their R&D and knowledge intensity as well as venture capital finance. There seems to exist a true lack of empirical evidence of what the management control practices, their trends of development, as well as the challenges facing them in NEFs actually are. In order to fill this gap in the existing knowledge, we conducted an explorative multi-organization study of nine NEFs. Our theoretical basis is grounded on corporate life cycle models. Our observations indicate that there exist, in addition to certain similarities, notable differences between management accounting and control practices in NEFs and firms operating in traditional operating environments. The most notable findings relate in this regard to differences in temporal orientation (time pressure), leading many times to prioritizing planning over control. Also, the pressures to meet expectations placed by certain external parties (venture capitalists and later on by stock market players), to develop management control systems is characteristic of the new economy environment. We elaborate these findings further through a corporate life cycle analysis, and by linking them to issues of strategic management and corporate culture.

Examining the effectiveness of sales management control practices in developing countries

Management control consists of managers’ initiatives to direct and influence employees for the purpose of achieving an organization’s objectives. Sales management control is identified as an important antecedent of several salesperson and organizational consequences in prior developed country studies. We examine the impact of management control in combination with incentive pay and territory design on salesperson performance and sales unit effectiveness for sales organizations in three developing countries (Greece, India, and Malaysia). The results point to territory design as a strong predictor of performance and effectiveness. Management control is also a relevant predictor of performance and effectiveness. Surprisingly, incentive pay has no effect on salesperson performance, although it has a positive impact on sales unit effectiveness in Greece and India. Several important managerial implications are highlighted by the study findings.

Exploring notions of control across cultures: a narrative approach

It can be argued that the concept of control is one of the most important and yet complex notions of management accounting theory and practice. Despite its importance, it is not fully understood in terms of its significance in an international context. Using an interpretive approach and against the background of structuration theory, this paper explores and identifies differences in notions of control across European cultures. The empirical research is based on samples of narratives of personal experiences taken from respondents in four European countries: Austria, France, Germany and the United Kingdom. The results indicate that control is influenced by, and deeply embedded in, the cultural context of the respective countries. This has implications for the transfer of management accounting and control knowledge across different European countries and suggests that one has to be aware of the existence, meaning and significance of the differences and characteristics of the regional culture. In an era of internationalization and standardization, this paper responds to calls (Hopwood, 1999) for research, which emphasizes the importance of attempts to understand how the practices of management accounting and control are differentiated in relation to regional cultures.

Changes in the institutional environment and the institutions of governance: extending the contributions of transaction cost economics within the management control literature

Transaction cost economics (TCE) has been proposed as a useful approach for examining management control (MC) issues. The purpose of this paper is to explore the articulation of TCE and MC through the use of the work of early institutional economist John R. Commons. In keeping with Commons’ work, we incorporate institutional change as important to considerations of the viability of alternative forms of governance including various management control practices. Also consistent with Commons’ work, our paper elaborates upon the significance of the concepts of “asset specificity” and “opportunism” through an illustrative analysis of contemporary efforts to de-regulate the utilities industry in the State of California, and the related role of Enron Corporation in those de-regulatory efforts. This context provides a rich backdrop to highlight the joint articulation of TCE and MC issues.

Standardization and the Regulation of Management Control Practices

Zusammenfassung Der Aufsatz diskutiert Überlegungen zu Managementkontrollsystemen auf drei Feldern (Wirtschaftsprüfung, Qualitätssicherung, Risikomanagement) und stellt dar, was bei einem generischen System auf dem Spiel steht, das im Prinzip auf jede Organisation angewendet werden kann. Diese Systementwürfe spielen eine Rolle, indem sie Ordnungsvisionen liefern und legitime öffentliche Organisationsbilder unterstützen, aber sie verkörpern zugleich unrealisierbare Modelle des Organisationslebens und unpraktizierbare Ideale kontinuierlicher Selbstbeobachtung. Der Aufsatz geht davon aus, daß der Wechsel von Versuchen, Qualitätsstandards für eine substantielle Performanz zu setzen, auf Versuche, den Managementprozeß zu standardisieren, für Aufsicht und Management entscheidend gewesen ist. So sind imperialistische Versuche, Standards von oben zu definieren, neoliberalen Programmen gewichen, in denen generische Prozesse aus Netzwerken und Systemen entstanden sind und in denen der Staat die »besten« Praktiken zwar fördert, aber nicht vorschreibt.

Accounting and management controls in the classical Chinese novel: A Dream of the Red Mansions

This study presents a systematic documentation of Chinese accounting and management control practices in two eminent family households of the early Qing Dynasty. There is a lack of information on management control during this period (during the 18th century) and a scarcity of empirical evidence on the control practices of family institutions in ancient China. We attempted to address these problems by analyzing the accounting and management control practices described in the popular novel A Dream of the Red Mansions. Further analyses were made to ensure that the control practices thus observed were in harmony with the social and cultural settings of the early Qing Dynasty. Pairing the control practices observed in the novel with a definite set of cultural and social values led to several empirical conclusions. Big family households of the early Qing Dynasty clearly recognized the importance of, and made distinct achievements in, accounting and management controls. They mastered the segregation of duties, the control of cash, the use of budgets for planning, the containment of costs, and the efficiency of operations. However, social and cultural factors that were prevalent during the Qing Dynasty impeded the effectiveness of such practices. The obsession with preserving harmony in society and the family system eventually led to excessive power distance and rigid rules, at the expense of flexibility and professionalism. As history is often indicative of the future, the research results should facilitate our understanding of the management of family-owned businesses in Chinese communities.

Investment Appraisal and Measures of Performance in Italian Divisionalised Companies

The aim of this study was to describe and analyse the current practice and trends in the development of management control practice as regards divisional investments in large Italian firms, using a survey questionnaire method. Some comparison with top North-American and German international manufacturing units were also made.

Patterns of Cultural and Budgetary Controls in International Joint Ventures in South Korea

This study, conducted in a field setting, examines the pattern of budget and cultural controls across Korean firms and Korean joint ventures with U.S. and European firms in South Korea—a nation with a dominant Confucian philosophy divergent from the modern capitalist philosophy that dominates Anglo‐American approaches to control. The empirical results provide support for the hypothesis that differences exist in the pattern of controls between U.S. and European joint ventures. While European joint ventures exhibited stronger forms of budget control, U.S. joint ventures exhibited a stronger form of cultural controls. Cultural controls were evidenced by lower levels of power distance exhibited by the presence of younger, higher educated Korean managers who have been in a joint venture for a longer period of time. Interview data was used to further examine aspects of control. The education and experience of Korean managers and (self‐) selection were found to facilitate the adoption of foreign parent controls. Accordingly, this paper provides a contribution to theory development on the transfer of parent company management control practices to joint ventures in a specific Asian nation context.

Worm control practices on sheep farms in Denmark and implications for the development of anthelmintic resistance

A questionnaire survey was undertaken on sheep farms in Denmark to obtain information on sheep management and worm control practices. The questionnaires were inserted in the June and July, 1993 issue of the Danish Sheep Breeders Journal, circulated monthly to approximately 1200 sheep breeders nationwide. A total of 183 (11%) questionnaires were returned. A second questionnaire was posted to 50 of the 183 responding farmers to examine the repeatability of responses to the first questionnaire. The majority (97%) of the 183 farmers used anthelmintics. The mean number of doses per year for lambs (< 12 months old) and adult sheep (> 12 months old) were 1.9 and 2.3, respectively. Only 42% of the farms followed predetermined drenching programmes. Live weights were determined by visual appraisal on 45% and 84% of the farms for lambs and adult sheep, respectively. In calculating anthelmintic doses for groups of lambs and adult sheep, the recommended weights of the heaviest animals were only used on only 18% and 27% of the farms respectively. Benzimidazoles were the most commonly used anthelmintics from 1986 to 1993. Eighty one percent of 94 responding farmers had been using the same class of anthelmintic for 3 or more consecutive years. Information from this study indicated lack of knowledge about worm control strategies, anthelmintic use and the problem of anthelmintic resistance among the majority of Danish sheep farmers. The majority of responses to the questionnaire were repeatable at least to a fair degree except when farmers were asked to recall anthelmintics used in past years.

The Influence of Culture on Organizational Design and Planning and Control in Australia and the United States Compared with Singapore and Hong Kong

AbstractThis study draws on the national cultural dimensions of power distance, individualism, and Confucian dynamism to predict and explain differences in philosophies for, and approaches to organizational design and management planning and control systems in Australia and the US, representing Anglo‐American nations, and Singapore and Hong Kong, representing the ‘five dragons' of East Asia. Data were gathered by survey questionnaires mailed to senior accounting and finance executives in 800 organizations.The results were largely as predicted and, in general, provide support for the importance of national culture in influencing organizational design and management planning and control systems. In particular, the cultural values of Anglo‐American society relative to East Asian society are associated with a greater emphasis on decentralization and responsibility centres in organizational design, and a greater emphasis on quantitative and analytical techniques in planning and control. By contrast, the cultural values of East Asian society are associated with a greater emphasis on long‐term planning and on group centred decision‐making. The results are important to managers in global organizations who need to understand the cultural bases of observed differences in organizational and management planning and control practices in Anglo‐American and East Asian nations.

Management control in contemporary organizations: towards a wider framework

This paper argues that the traditional definition of the scope and practice of management control which was developed in the mid 1960s is now too restrictive as it is based on a context of large, hierarchically structured organizations which are now in relative decline. This decline has been caused by changes in the business and social environment which are reflected in the terminology of current management ideas such as 'de-layering', 'right-sizing', 'business process re-engineering', 'out-sourcing' and 'value chain analysis'. The traditional definition has also led to an emphasis on accounting-based controls which are becoming increasingly peripheral to fundamental needs of contemporary organizations. Organizations still need systems of management control but it is likely that they will be very different to those found suitable in the past. Some tentative suggestions are made as to the type of changes that are needed, but it is also necessary for empirical studies to be undertaken to codify and conceptualize what is already happening in practice. The lag before practice is incorporated into theory has created a major opportunity for researchers in management control.

Étude Sur La Prevalence De Streptococcus Agalactiae et Staphylococcus Aureus Dans Les Troupeaux Du Quebec Par La Culture Séquentille Du Reservoir

This study was done on 325 dairy farms in Quebec, Canada to estimate S. agalactiae and S. aureus herd infection prevalence and their impact on milk production and quality. A maximum of 3 bulk tank milk sample were collected in each selected farm for bacteriology and somatic cell counting. A questionnaire for evaluation of farm management and mastitis control practices was administered during the first visit. The study reveals a herd infection prevalence for S. agalactiae and S. aureus of 43% and 93.4% respectively; 4.7% are negative to both bacteria. Adoption on a regular basis of teat dipping of all cows and blanket dry cow therapy is 60.8% and 34% respectively. The high prevalence results for S. agalactiae and S. aureus and the poor adoption of basic mastitis control practices give us a basis to improve upon with a mastitis control program.&#x0D; Article in French, English and Spanish summaries on PDF

Correlation of Diagnostic Methods and Disease Control Practices with Reduction in Prevalence of M. Paratuberculosis in Dairy Cattle

Mycobacterium paratuberculosis, Johne's disease (JD), is a chronic. incurable enteropathy affecting cattle and other ruminants. Both diagnostic and control measures have been inadequate to enable early detection and elimination of the infection from cattle herds.&#x0D; This study attempts to develop and evaluate diagnostic methods and to correlate management and disease control practices with reduction in prevalence of JD-infected animals from known JD-positive herds.

Managing It All By numbers: A Review of Johnson &amp; Kaplan's ‘Relevance Lost’

This review article sets out the Johnson and Kaplan diagnosis of the ‘problem’ with modern US cost accounting and management control systems (‘MAS’) and challenges both their historical analysis and their proposed remedy. It traces the genesis of the knowledge-based disciplinary power of managerialism from the 1830s in the US and contrasts the development of the US/UK focus of MAS on ‘managing by the numbers’, with the different way that knowledge-power has been used by, and has interacted with, managerialism in Japan. It argues that the problems to be confronted with MAS are inherent in the historical genesis of such systems and that it is the behavioural limitations in the way organisations deploy MAS that most need attention. In addition the interrelationships of control between the accounting measurements that create visibility within and without the organisation require that greater attention be addressed to the technical limitations of financial accounting. In conclusion it is suggested that the differing alignments of knowledge-based expertise and disciplinary practices of management control that have developed in the US/UK and in Japan reflect deeper differences in their cultural history.

Survey of internal parasites in Western Australian pig herds. 2. Relationship to anthelmintic usage and parasite control practices.

The housing, management and internal parasite control practices used in piggeries in Western Australia was surveyed by interviewing the owner/manager of 100 randomly selected piggeries. At the time of the interview 20 faecal samples were collected from pigs and examined for evidence of internal parasites. Most herds (80%) in which anthelmintics were used, had evidence of nematode infection. Some pig producers were using an anthelmintic that was ineffective against nematode species present while some herds had nematodes that should have been controlled by the anthelmintic being used. Prevalence of nematode infection was higher in pigs run in paddocks than in pigs housed intensively. Washing sows prior to farrowing was associated with a lower prevalence of nematode infection. The findings suggested that pig producers should ensure that the anthelmintic used is effective against the nematodes present in their pigs. It was concluded that administering anthelmintics as a single dose in the feed may not be the most effective method of deworming pigs.

Management control in a publicly planned health system: A case study from Finland

Implementing improved management control systems has become a high priority within publicly planned health care systems in recent years. This article explores present management control practices and dilemmas within the Finnish health care system. Based upon an intensive case study of one central hospital district, the article analyzes current intra-institutional and cross-institutional management efforts. Subsequently it evaluates implications from the study's findings for both the Finnish and other publicly planned health care systems.

The use of high somatic cell count prevalence in epidemiologic investigations of mastitis control practices

A series of least-squares analytical models were developed in a cross-sectional epidemiologic study of the observed variability in within-herd high somatic cell count (SCC) prevalence, a measure of mastitis prevalence in dairy herds. The dependent variable, high SCC prevalence, was calculated as the 12-month rolling herd average percentage of lactating cows with milk SCC in excess of 283 000 cells ml −1. The first analysis involved the results of a bacteriologic survey of bulk-tank milk samples for the presence of Streptococcus agalactiae and coagulase-positive staphylococci, the two most common contagious intramammary pathogens. The presence of either pathogen in bulk-tank samples was associated with significantly higher high SCC prevalence. The second analysis involved responses to a questionnaire concerning management and mastitis control practices. Both the practices of post-milking teat dopping and dry-cow antibiotic therapy were associated with significantly lower high SCC prevalence. The third analysis combined the data collected for the first two analyses so that the independent variables included both bulk-tank bacteriologic results and management and mastitis control practices. This model was able to explain a greater proportion of the variability in high SCC prevalence than either of the other two models. There were three variables associated with significant decreases in high SCC prevalence namely the absence of Streptococcus agalactiae in the bulk tank milk, the adoption of post-milking teat dipping and the practice of dry-cow antibiotic therapy of all cows. Milk somatic cell counting is now widely accepted and practiced in many countries, and individual-cow SCC data are available from large numbers of herds at a minimal expense. By corroborating the role of post-milking teat dipping and dry-cow antibiotic therapy in mastitis control programs, this study establishes the usefulness of high SCC prevalence data for epidemiologic studies of mastitis control practices.