Strategic Control System Research Articles

The balance on the balanced scorecard a critical analysis of some of its assumptions

In recent years academic scholars have given increasing attention to the importance of strategic measurement systems including both non-financial and financial measures. One of the approaches adopted is that of the balanced scorecard. It is distinct from other strategic measurement systems in that it is more than an ad hoc collection of financial and non-financial measures. It contains outcome measures and the performance drivers of outcomes, linked together in cause-and-effect relationships, and thus aims to be a feed-forward control system. Furthermore, the balanced scorecard is intended not only as a strategic measurement system but also as a strategic control system which can align departmental and personal goals to overall strategy. This paper first examines the extent to which there is a cause-and-effect relationship among the four areas of measurement suggested (the financial, customer, internal-business-process and learning and growth perspectives). The paper then examines whether the balanced scorecard can link strategy to operational metrics which managers can understand and influence. Finally, it discusses and suggests some improvements to the balanced scorecard.

Performance Drivers: A Practical Guide to Using the Balanced Scorecard

Since the groundbreaking work of Robert S. Kaplan and David P. Norton, the concept of the Balanced Scorecard has achieved increasing popularity in the business world. Previously, many organizations had built their business objectives around financial targets and goals that bore little relation to a long-term strategic vision. Typically, this leaves a gap between the development of a company's strategy and its implementation. The business scorecard, however, provides a more 'balanced view' by looking at not just-financial concerns, but also customers, internal business processes, and learning and growth. But it is not just a system of performance measurement - by focusing on future potential success it can be used as a dynamic management system that reinforces, implements and drives corporate strategy forward. In this book, the authors draw on their extensive experience with scorecard projects to provide a step-by-step method for introducing the Balanced Scorecard into an organization. This is done through the use of some of the most important practical examples in existence, with case studies from ABB, Coca Cola, Electrolux, British Telecom, Nat West, Skandia and Volvo. The desired strategic control system using scorecards that is presented focuses on creating and communicating a total comprehensive picture to all members of the organization from the top down, a long-term view of what the company's strategic objectives really are, how to make use of knowledge gained through experience and the required flexibility of such a system to cope with the fast-changing business environment. This book will provide senior and operational managers, consultants and business academics with a comprehensive view of emerging Balanced Scorecard practice supported by both business advice and a theoretical foundation. Reflections on the relations between the Balanced Scorecard and other areas, such as TQM, information systems and intellectual capital and knowledge management are also made.

Quality strategy, strategic control systems, and organizational performance

Despite calls for greater management accounting involvement in the implementation and monitoring of strategic plans, prior studies suggest that few American or European firms employ formal strategic control systems. Using survey data from the automotive and computer industries in Canada, Germany, Japan, and the United States, we examine whether organizations following a quality-oriented strategy have adopted the strategic control practices discussed in the quality management literature. Our results indicate that organizations placing greater emphasis on quality in their strategic plans do tend to make greater use of quality-related strategic control practices. However, we find no evidence to support the claim that Japanese organizations link their control systems more closely to competitive strategies than organizations in the other countries. Instead, Japanese manufacturers appear to make greater use of many of the strategic control practices regardless of their organization's strategic emphasis The performance consequences of the strategic control practices vary somewhat by industry, suggesting that strategic control systems should be adapted to the organization's competitive environment. Finally, several strategic control practices are negatively associated with performance, consistent with claims that formal strategic control systems can actually hinder performance in some circumstances by focusing attention on formal and rigid action plans, targets, and information gathering when flexible and creative strategic responses may be more appropriate.

Quality Consciousness in Japanese and U.S. electronics manufacturers: an examination of the impact of quality strategy and management control systems on perceptions of the importance of quality to expected management rewards

This study examines the implementation of quality strategies through management control and reward systems in Japan and the U.S. It focuses on electronics manufacturing, an industry in which the Japanese have successfully gained global competitive dominance. The study applies causal modelling methodology and incorporates the effects of company size and management level on quality strategies and the related management control systems for quality. In turn, the impact of these quality strategies and control systems on managers' perceptions of the importance of quality to promotion is explored. Data were gathered from 698 Japanese manufacturing managers in 50 Japanese electronics firms and 789 manufacturing managers in 64 U.S. electronics firms. The results evidence a consistency between quality strategy, management controls and reward systems, especially in the U.S., that support the normative model for strategic control systems.

Strategic Control Systems for Quality: An Empirical Comparison of the Japanese and U.S. Electronics Industry

Management control systems should be designed to complement the strategies pursued. Few empirical studies, however, have focused on management control systems for quality control and zero-defect strategies. This study compares quality strategies and their relationships with management control systems in the Japanese and U.S. electronics industry. The results indicate that the quality strategies of U.S. manufacturing managers reflect adherence to zero-defect philosophies more than those of the Japanese managers. However, fewer U.S. managers receive management control information to support these zero-defect strategies. Tests linking quality strategies to management control information provide limited evidence that those U.S. managers who have adopted zero-defect strategies are more likely to receive modified management control information than U.S. managers who have not adopted zero-defect strategies. In contrast, the data suggest that Japanese managers are provided with goal-setting and feedback information about quality performance regardless of their adherence to a zero-defect versus a traditional quality management strategy, thus focussing workers' attention on continuous quality improvement.

Accounting Practices and Organizational Decision Making

In this paper we argue for the importance of a sociologically informed study of organizational accounting practices. By making the nexus between accounting and decision making problematic, instead of given, we move issues of interpretation and hierarchical control to the center stage of understanding the social construction of accounting practices. We suggest that inductive case studies of the organizational setting is a promising methodological strategy for identifying how accounting operates as an organizational control system. We focus on debates and proceedings of the board of directors as an overlooked source of data on decision making and organizational practices. We show how accounting practices are part of the strategic control system that functions to interpret the environment and direct the adaptation of the organization in a manner particular to the substantive rationality of corporate decision makers. We illustrate these contentions with a case study of accounting practice changes over a six year period.

TOWARDS A COMPREHENSIVE SYSTEM OF STRATEGIC CONTROL*

ABSTRACTNew strategic initiatives often take several years to execute fully and relatively few succeed. Unfortunately, classical control processes have contributed to this situation because they have been designed as feedback systems that detect problems and deviations from planned results only after they have already occurred, and because the standards to which measurements are compared are assumed to be correct or good. Recent conceptual contributors to the strategic control literature have argued for anticipatory feedforward controls, that recognize a rapidly changing and uncertain external environment. These new systems are designed to operate on a continuous basis, checking and critically evaluating assumptions, strategies, and results. This article adds to these conceptual developments by providing and explicit strategic control component to deal with low probability, high impact threatening events, namely, special alert control. In an effort to make all the latest strategic control components operationally useful, mechanisms, methods, and approaches to their efficient implementation are presented and then summarized in tabular form. An overall strategic control process diagram is provided to act as a guide for future strategic control systems. The result is a more comprehensive and workable system of strategic control.

Long‐range nuclear cruise missiles and stability

Long-range nuclear-armed cruise missiles are highly accurate and are capable of reaching most targets within the United States and the Commonwealth of Independent States (CIS) from launch points beyond their borders. Neither the United States nor the CIS has air surveillance systems capable of providing reliable warning against cruise missiles. Thus it is possible that a small-scale cruise missile attack could go entirely undetected until the nuclear weapons arrived over their targets. Such an attack could destroy the other country's entire strategic bomber force on the ground and severely damage its strategic command and control system, perhaps to the point of endangering the ability of its ICBM force to be launched on warning. This capability makes long-range nuclear cruise missiles potentially one of the most destabilizing of all nuclear weapons.

Creating a strategic control system

Strategic controls can be considered to be non-financial performance measures and they are of particular value in a diversified company in controlling, monitoring and guiding the development of operating units. The development of a strategic control process is described and its implementation.

The paradox of strategic controls

AbstractThis paper reviews the literature on strategic controls. It summarizes the main theoretical arguments that have been put forward for establishing strategic control systems, and contrasts these arguments with evidence that suggests that few companies in fact have a strategic control system in place. The paper then identifies some of the difficulties that may be associated with establishing a strategic control system, points up issues that require further empirical research, and suggests a framework for exploring a contingency theory concerning the sorts of businesses in which strategic control systems would be most and least valuable.

Strategic control systems and relative r&d investment in large multiproduct firms

AbstractThis paper hypothesizes that tight financial controls associated with large diversified M‐form firms lead to a short‐term, low‐risk orientation and thereby lower relative investment in R&D. Further, it is hypothesized that increasing levels of diversification require different control systems which have significant implications for investing in R&D. Results of the study of 124 major U.S. firms suggest that less diversified U‐form firms invest more heavily in R&D than more diversified M‐form firms after controlling for size and industry effects. Additionally, dominant business firms invested more in R&D than either related or unrelated business firms. Finally, the relationship between R&D intensity and market performance was negative for related and unrelated firms. The findings suggest that the market evaluates R&D investment more positively for firms that are organized to seek synergy than for those that are organized to pursue a hedging (or diversification) strategy.

Strategic control of factory automation

This article identifies strategic control as an unexpected difficulty in implementing the ‘factory of the future’ and as a major stumbling block to firms in their automation efforts. The concept of strategic control is discussed and an example is given. The results of a study in this area are then described and used to explain how managers have unknowingly relinquished control of the manufacturing operation. The article concludes with advice for managers in setting up strategic control systems in their firms that will facilitate rather than hinder the progress of factory automation.

SPONTANEOUS COMBUSTION

THE BUTTON The Pentagon's Strategic Command and Control System by Daniel Ford

Designing innovative systems

Some current authors of management theory suggest that formal systems and procedures are inconsistent with innovative behaviour in organizations. Yet many organisations are developing increasingly formal strategic planning and control systems to assure organisational change and responsiveness to dynamic environments. In this article, the author suggests that these trends are not as paradoxical as they initially seem. However, formal systems design—to assists the innovation process—must exhibit different characteristics from the traditional design methods used by systems analysts, industrial engineers, or writers of policies and procedures.

Development Engineering on System 465L

The development engineering involved in large scale systems is but one of many problems included in acquisition of these systems. The purpose of this paper is to explore some of the engineering problems encountered in the development of the Strategic Air Command and Control System 465L and to indicate how the interaction between the technical problems and the nontechnical problems affects the final engineering decisions. In this paper we will indicate the basic requirements for the system and show how the system was configured to meet these requirements. The deficiencies uncovered in the design and first cut solutions to the problems and the compromises which were necessary to implement the system will also be discussed. Illustrative examples will be used to show how the design evolved into the final system configuration which is now in use.