34 research outputs found
How Firms Learn From the Uses of Different Types of Management Control Systems
Many users of management control systems claim that a system’s effectiveness in creating business performance resides in its ability to facilitate learning and decision making. Yet this does not explain why users of management control systems have varying levels of success in terms of business performance with these tools. Our IMA-sponsored research project1 examines the following questions that relate management control system use, learning, and performance:
• How are management control systems used?
• How do organizations learn from management control systems?
• What uses of management control systems and styles of learning characterize high performing firms?
To answer these questions, we examine a set of management control systems that are in existence today: business intelligence systems. Business intelligence systems are computerized systems that identify, extract, and analyze business data (e.g., sales revenue by product and/or department and/or location). They facilitate learning and support decision making through the provision of various types of information. We examine three popular types of business intelligence systems and how they are used to facilitate learning in firms. The three types are: (1) dashboards and visualization, (2) query, analysis, and reporting, and (3) data management and data quality. We developed a survey to collect data that would help answer our questions
Culture and Management Control Systems in Today’s High-Performing Firms
You might think that firms with bureaucratic cultures would emphasize their use of management control systems. Contrary to expectations, firms with bureaucratic cultures are not users of management control systems
Counterproductive Work Behaviors and Work Climate:The Role of an Ethically Focused Management Control System and Peers’ Self-Focused Behavior
The importance of curtailing undesirable behaviors and, ultimately, self-focused work climates in organizations is undeniable. This study examines how management control systems (MCSs), as a crucial part of a firm’s formal ethical infrastructure, can contribute to this objective. We conceptualize an ethically focused MCS as one that communicates ethical values and motivates employees to act accordingly. Our study is based on data from a sample of 120 department managers from 120 different firms. We show that department managers’ perceptions of the extent to which the MCS imposed on them is ethically focused are associated with a reduction in their counterproductive work behaviors (CWBs). We also examine department managers’ perceptions of peer managers’ self-focused behaviors, as a core part of a firm’s informal ethical infrastructure and find that peers’ behaviors are not associated with an increase in CWBs of the department manager. However, we find some evidence that the negative association between an ethically focused MCS and managers’ CWBs is limited when peers act in ways that are more self-focused. Finally, we find that CWBs of department managers are not only relevant in and of themselves, but they translate into more self-focused behaviors of department employees (as manifested in their work climates). Overall, this study suggests that, while including and emphasizing ethical content in the MCS is associated with less CWB and, in turn, with a work climate less focused on self, peer managers’ behaviors are also seemingly important
An empirical investigation of the relation between the use of strategic human capital and the design of the management control system
The Performance Effects of Using Business Intelligence Systems for Exploitation and Exploration Learning
Accounting researchers are becoming increasingly interested in the performance effects of business intelligence (BI) systems in their role as management control systems. Extant research focuses on the performance effects of adopting and implementing such systems. However, there is less known about how organizations use the information in BI systems for management control once implemented, and whether the use of this information translates into organizational performance. We utilize the theoretical connection between information systems and organizational learning to explain the performance effects of BI system use through organizational learning. Evidence from recent literature indicates the need for organizations to engage in exploitation and exploration learning in pursuit of organizational ambidexterity. Our study draws on agenda setting and framing theories to provide insights that will enable organizations to strategically use the information in two fundamental BI systems to emphasize either or both modes of learning. Subsequently, we examine whether the two modes of learning translate into performance
The Use of Management Control Mechanisms to Mitigate Moral Hazard in the Decision to Outsource
Using archival data from the U.S. passenger airline industry, this study examines whether management control mechanisms aimed at mitigating moral hazard explain outsourcing decisions over and above transaction cost economics (TCE) determinants documented in prior research. Consistent with TCE theory, we find that in-house production efficiencies and our proxy for transaction risk (i.e., deriving from transaction infrequency, transaction complexity, and relationship specific investments) significantly explain the extent of outsourcing of aircraft maintenance. We extend TCE insights to show that incentive delta (i.e., the sensitivity of CEO portfolio holdings to stock price changes) strengthens the negative association between production efficiencies and outsourcing while incentive vega (i.e., the sensitivity of CEO holdings to stock return volatility) weakens the negative association between transaction risk and outsourcing. Monitoring strengthens the negative association between in-house production efficiencies and outsourcing, but has no effect on the transaction risk-outsourcing relation. The results suggest that the use of outsourcing to achieve cost savings is promoted through both incentive contracts and monitoring, but outsourcing to achieve the desired risk level is promoted only through incentive contracts
The Use of Management Control Mechanisms to Mitigate Moral Hazard in the Decision to Outsource
Using archival data from the U.S. passenger airline industry, this study examines whether management control mechanisms aimed at mitigating moral hazard explain outsourcing decisions over and above transaction cost economics (TCE) determinants documented in prior research. Consistent with TCE theory, we find that in-house production efficiencies and our proxy for transaction risk (i.e., deriving from transaction infrequency, transaction complexity, and relationship specific investments) significantly explain the extent of outsourcing of aircraft maintenance. We extend TCE insights to show that incentive delta (i.e., the sensitivity of CEO portfolio holdings to stock price changes) strengthens the negative association between production efficiencies and outsourcing while incentive vega (i.e., the sensitivity of CEO holdings to stock return volatility) weakens the negative association between transaction risk and outsourcing. Monitoring strengthens the negative association between in-house production efficiencies and outsourcing, but has no effect on the transaction risk-outsourcing relation. The results suggest that the use of outsourcing to achieve cost savings is promoted through both incentive contracts and monitoring, but outsourcing to achieve the desired risk level is promoted only through incentive contracts