Management Control In Organizations Research Articles

Management control as an integral element of the management process in the organization

Control is essential to organizing and regulating all types of activities in market conditions. Penetrating all spheres of legal relations, it affects the interests of millions of people and thousands of organizations. In this regard, it becomes necessary to organize control, ensuring operational management decisions are adopted. Control, identify weaknesses, allow optimal use of resources, introduce reserves, and avoid crises. It is necessary to convey to employees the idea of control, which does not consist of pressure and limitation of will but only as a corrective process. In addition, control should be flexible, i.e., maximally adaptable to the circumstances in which the organization functions at this stage. The information's quality, relevance, and usefulness will influence the control effectiveness level. Management control is one of the main tools for policy development and decision-making, which ensures the normal functioning of the company and the achievement of its intended goals both in the long term and in matters of operational management. Management control is one of the most critical functions of management. The main tools for performing this function are observation, detailed verification of all activity elements, accounting, and analysis. In managing the company, control takes the place of the element of feedback because, based on the received information, adjustments to previously made decisions and plans are made. In modern market conditions, organizations need effective management of their economic structure to support competitiveness. It depends on many factors, but the larger the organization, the higher the need for management control and improvement of the management system. Management control in organizations mainly meets the needs of management for planning and analyzing current activities, as well as for making operational and strategic decisions. Control in the organization is both an integral part of each stage of the management process and a separate stage that provides information transparency regarding the quality of the management process at all other stages. Keywords: management, control, enterprise, process, strategy.

Metric intensity and innovation dependency

AbstractWe examine how metric intensity—that is, the quantity, frequency, and extent to which performance metrics are tracked and used—varies with a firm's dependency on innovation for business success. Although performance metrics are essential in an organization's management control system, little is known about how the use of metrics differs in organizations with varying dependencies on incremental and radical innovation. Drawing on data from a sample of small‐ and medium‐sized enterprises (SMEs), we hypothesize and find that firms' dependency on incremental (radical) innovation is positively (negatively) associated with metric intensity. Furthermore, we find that (1) the positive relationship between the dependency on incremental innovation and metric intensity is stronger when the organizational culture is focused more on “control” and (2) the negative relationship between the dependency on radical innovation and metric intensity is mitigated when the organizational culture is focused more on “flexibility.” Additional analysis shows that the positive (negative) relationship between incremental (radical) innovation dependency and metric intensity can be mitigated by greater use of metrics for decision‐facilitating purposes. Our findings suggest that metrics‐based formal controls are designed to match the types of innovation dependencies and pre‐existing informal controls such as organizational culture. This study highlights the importance of distinguishing different types of innovation dependency in studying management control systems.

MANAGEMENT CONTROL SYSTEMS, E-GOVERNMENT DIGITAL PLATFORM AND JOB PERFORMANCE : THE MODERATING ROLE OF TRANSFORMATIONAL LEADERSHIP

An organization's Management Control System (MCS) is crucial. The environment, technology, organizational size, and business strategy are the factors that determine the Management Control System. The State Treasury and Budget System (SPAN) is one of Indonesia's digital e-government systems. This study aims to examine the impact of Management Control Systems and digital e-government platforms with transformational leadership as a moderator on the productivity of SPAN users in the Indonesian Directorate of Treasury. The successful implementation of the digital platform using the UTAUT model variable. The respondents of this study are 171 respondents as a user of the State Treasury and Budget System (SPAN) digital platform throughout Indonesia at the Ministry of Finance office of the State Treasury Directorate. This study finds that Facilitating Condition, Habit, and Feature-Level of Use have a positive effect on Job Performance, while management control systems and behavioral intentions do not affect Job Performance. Transformational leadership strengthens the influence of Feature-Level of Use on Job Performance. This research shows that in government organizations, the management control system is important in supporting the goals of organizations to provide understanding regarding vision, mission, and goals. In government organizations, there are other agency units like the Internal Compliance and Transformation ambassadors who participated in this area. These units are not usually the highest leadership who provide formal activities. Another implication to enhance employee work performance, a transformational leadership style is required.

Obedience Pressure vs. Peer Pressure: An Explanation of Muslims’ Religious Role in Budgetary Slack

Introduction/Main Objectives: The performance of individuals in organizations is generally evaluated based on their success at achieving targets. Furthermore, the role of the budget has a major effect on individual behavior in the preparation of the budget, by allowing unethical actions (budgetary slack). Background Problems: There are a few studies that measure the difference in the influence of social pressure between superiors and peers on individual’s behavior in the organizational budgeting process. On the other hand, there are inconsistencies in the results of the research into the role of religiosity in the creation of budgetary slack. Novelty: To explain why people are not influenced by social pressures to create budgetary slack, we use the Psychological Reactance Theory. We argue that religiosity is one factor that influences people in making decisions about participative budgeting. Religiosity is believed to be able to influence one's personal values, so it impacts on one's judgment and determination of whether a thing is good or bad. Research Methods: This study uses an experimental research method on 65 undergraduate accounting students and a 2x2 factorial design consisting of two factors, social pressure (obedience pressure and peer pressure) and religiosity (high and low). Finding/Results: The results show that religiosity is proven to play an important role in the budget decision-making process, futhermore it minimizes the occurrence of budgetary slack. Conclusion: Individuals who have high religiosity are proven to be better able to avoid creating budgetary slack compared to individuals who have low religiosity, when receiving pressure from superiors and peers. This result has implications for organizational stakeholders dealing with employee recruitment or in the organization's management control system, as religiosity is an important factor that must be prioritized.

Strategic thinking and accounting: potentials and pitfalls from a managerial perspective

This study explores the strategic thinking of managers from an accounting perspective. By building on interview data from managers working with strategic roles in various organizations, an understanding is offered of the experienced potentials and pitfalls of accounting in strategic thinking. The results are elaborated into a framework presenting the dual nature of accounting in strategic contexts. This study suggests that the benefits and pitfalls of accounting for strategic thinking constitute a paradoxical duality, which cannot be fully solved, but must be addressed by practising managers. The observed role of accounting in managers’ strategic thinking also offers implications for management control in organizations.

Management control in circular economy. Exploring and theorizing the adaptation of management control to circular business models

A growing body of literature argues that an organization's management control needs to adapt as an organization changes business model or strategy for the management control to be consistent with the organization's objectives and strategies. Nevertheless, scepticism has been raised about the role of management controls in promoting sustainability or the circular economy within organizations. Based on the management control framework of Malmi and Brown (2008), this paper explores empirically how organizations work with the circular economy and how management control has adapted to the business model. The results show that the circular economy can be practiced in different ways and that the adaptation and application of the circular economy affects the whole management control package. The paper identifies the importance of cultural control and long-range planning for communicating circular values and spreading a culture based on circular principles. However, regardless of what circular strategies are used, circular work tends to steer attention to the early phases of the product life cycle. For management controls this means that action plans, cost accounting, and investment appraisals must reflect a higher level of detail and a longer time horizon. The paper highlights how this is associated with challenges for traditional management controls.

Unpacking the notion of subjectivity: Performance evaluation and supervisor discretion

This study puts forward the notion of subjectivity according to supervisor discretion and the organization's subjective performance evaluation rules. This is needed because most studies investigating subjectivity do not distinguish supervisor idiosyncrasies from features of the organization's management control systems. This study uses a survey to capture subjectivity and suggests that subjectivity entails two concepts. One concept is related to the amount of discretion that supervisors can exercise under the organization's current performance evaluation. The other concept concerns supervisor's idiosyncrasies when evaluating subordinates. This study provides evidence that subjectivity is multidimensional and may not represent a single concept. The results suggest that studies investigating subjectivity should treat supervisor discretion and subjective performance evaluation rules separately because of their different associations towards subordinate performance, psychological empowerment, and supervisor-subordinate conflict.

The impact of regulation on management control

Purpose– This paper aims to contribute to our understanding of the impact of regulation on management control practices. It explores the processes by which the institutionalised properties of certain management controls are adapted to organisational contexts and underpin organisational routines. The authors are interested in the voluntary adoption of management controls with highly developed institutional logics, how organisations respond initially to the institutional logics of new management controls and by what means those logics become a workable basis for institutionalising controls in the organisation.Design/methodology/approach– The paper explores some of the ways in which the institutional logics of management control come to have organisational effects, studying a seemingly simple organisational response to institutional processes: compliance. The argument is illustrated with examples from university accreditation as a management control institution that combines cultural and administrative controls. The paper is based on participant observation in three universities.Findings– The authors find that compliance requires considerable organisational meaning-making and that organisational work of compliance separates into adaptation and execution. Moreover, the process of compliance produces distinctions between experts of the accreditation logic, users of the accreditation logic, agnostics and sceptics. Rather than passive acquiescence, compliance with regulated management control is a creative process of arranging and translating general prescriptions for use in a specific context.Originality/value– This is the first study of university accreditation as a management control institution. It adds to a still emerging literature on the effects of institutional logics, and in particular regulatory logics, on organisational management control.

A Contingency‐Based Framework for Managing Enterprise Risk

Although studies focused on contingency theories of enterprise risk management (ERM) as a critical facet of an organization's management control system abound, they have yielded few significant results. A review of the literature on ERM contingency theory and the factors that can affect ERM leads to a discussion of the impact of decentralization, organization size, and enterprise resource planning (ERP). Several hypotheses on possible interactions result in a contingency‐based model for managing enterprise risk that takes into account the effects of these three factors on ERM practices, and offers organizational leaders guidance on how best to improve performance. ©2015 Wiley Periodicals, Inc.

Technology, change, and management control: a temporal perspective

Purpose – This paper aims to analyze the implications of technology change on management control. Specifically, the paper seeks to examine the deployment of an enterprise resource planning system (ERP), and to apply a temporal perspective of practice as a theoretical tool to discuss the effects of the ERP on the organization's management control systems.Design/methodology/approach – The research is based on a longitudinal case study of a North American Financial. Data were collected during the deployment of a new management control system. The paper introduces the temporal view of agency as a means of examining the practices involved in control system.Findings – The observations suggest that ERP can create an illusion of control, and may jeopardize the systems they are meant to augment through the presence of practices meant to by‐pass the control system and invisible work (work‐arounds).Originality/value – The paper seeks to augment existing studies of technology mitigated change through framing the anal...

Continuous improvement: role of organisational learning mechanisms

Purpose – The purpose of this study is to explore the use of the performance measurement system as an organizational learning mechanism to support continuous improvement.Design/methodology/approach – The paper reports the results of a survey of Australian organizations certified to quality standard ISO 9000.Findings – For those respondents who consider their organization's quality program to be successful, the findings indicate that such organizations have embedded quality into the culture of the organization, and have developed performance measurement systems as an organizational learning mechanism to support the continuous improvement initiatives.Practical implications – The paper highlights the need for management to ensure that the organization's management control systems are structured to support continuous improvement initiatives.Originality/value – The paper explores the links between continuous improvement and organizational learning.

Virtual Transfer Price Negotiations: Unintended Interactions with Incentive Systems

Despite decades of research concerning the impact of computer-mediated communication (CMC) on decision-making, the potential interaction with the organization's management control system has just recently received attention. Media naturalness theory is used to develop hypotheses concerning the interactions of communication medium with the incentive pay scheme, a ubiquitous aspect of management control systems. A laboratory experiment was used to examine the interactions between two treatments: face-to-face negotiations versus virtual (computer-mediated) negotiations and cooperative versus competitive incentive pay schemes. Buyer-seller dyads negotiated the price and quantity of the transferred goods. Results indicate that while virtual negotiations are more efficient in terms of time than face-to-face negotiations, there is not a significant interaction with the incentive pay scheme for efficiency. However, results also indicate that virtual negotiations are less effective in terms of optimal quantity (organizational profit) than face-to-face, and that there is a significant interaction with the incentive pay scheme. Virtual negotiations have the unintended consequence of reducing the effectiveness (organizational profitability) of the negotiations.

A framework for management control research

PurposeThis paper aims to develop a conceptual framework that can be used in studying the changing nature of management control in organizations. It is based on four components of the management control system, namely: organizational structure and strategy; corporate culture; management information systems; and core control package.Design/methodology/approachA range of published works is reviewed to explore the nature of management control.FindingsThe conceptual framework developed in the paper can be used in studying the changing nature of management control in organizations.Research limitations/implicationsThis is not an empirical investigation of management control.Originality/valueThe framework presented in this article is useful to both practitioners and researchers of management control.

Instilling ethical behavior in organizations: A survey of Canadian companies

An organization's management control system can play an important role in influencing ethical behavior among employees. In this paper a theoretical framework of control is developed by linking various ethics related control mechanisms reported in the literature to the primary components of a management control system. In addition, the findings of a survey of the Financial Post's Top 1 000 Canadian industrial and service companies are reported. The survey investigated organizations' use of ethical codes of conduct, whistleblowing systems, ethics committees, judiciary boards, employee training in ethics, and ethics focused corporate governance and reward systems. The findings indicate that ethics related control mechanisms, particularly codes of conduct, are being used by a good number of organizations. However, closer analysis of the data suggests that many companies may only be paying lip service to the importance of promoting ethical behavior.

Developing Standards for Interpreting Agency Performance: An Exploration of Three Models

Organizational theory has long been concerned with the question of organizational effectiveness.' That organizations have multiple and sometimes conflicting goals is well known.2 Not all these goals focus upon performance in terms of achieving the organization's mission. Building employee cohesion and morale and acquiring resources for growth are examples of goals that do not. Quinn and Cameron have recently suggested that the criteria important in evaluating an organization's effectiveness depend upon its stage in the life cycle.3 They suggest that there are four stages in an organization's life cycle-entrepreneurial, collectivity, formalization and control, and, finally, elaboration. For the formalization and control stage, which is the stage that most stable organizations seem to be in, they suggest that the effectiveness criteria emphasize planning, goal setting, efficiency, productivity, information management, communications, stability, and control.4 This paper explores statistical models that may be useful to an organization during its formalization and control stage. These models may provide useful information as a part of an organization's management control system. Two essential elements of a management control system are: (1) information about how the organization is operating, and (2) standards against which to compare this information to judge how well the organization is operating.5 While developing performance measures and collecting performance data can be a difficult, time consuming, and expensive task, this information is not of much use to managers unless it identifies areas that need corrective action. Identifying problem areas requires comparing operations information to standards or benchmarks. Possible sources of such standards for public sector organizations include an organization's goals, objectives, or targets; standards established by relevant professional associations; the performance of similar organizations; the organization's own historical performance record; and optimal or technically efficient performance levels.6 This paper discusses statistical models that managers can use to develop standards based on three of these sources: