Management control systems as a coupled package : an analytical framework and empirically grounded implications

Publication Type:
Thesis
Issue Date:
2005
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NO FULL TEXT AVAILABLE. Access is restricted indefinitely. ----- The thesis examines the research question; how do elements of a management control system (MCS) package operate and relate to one another? While the management accounting literature has recognise for many years that MCS are a package of control elements (such as organisational structure, governance, budgets, non-financial measures, value systems and culture), little research has explicitly considered MCS as a package of controls. This thesis addresses this important gap in our knowledge by developing an analytic framework for examining MCS packages and applying this framework to study the MCS package in the Asia-Pacific region of a large transnational company. The thesis first considers how the elements of MCS relate to each other. A typology of an MCS package is developed that identifies a range of control elements. Then, in order to establish how control elements relate to each other, loose coupling theory is adapted to allow the study of MCS packages. This conceptual framework is tested empirically in the case company, Global. The application of the MCS framework and loose coupling theory enabled a more coherent and understandable depiction of the structure of Global’s complex and multi-layered MCS package. This included an understanding of which MCS elements had the greatest impact on the implementation of Global’s strategy and objectives, control of activities, and delivering organisational outcomes. The thesis then considers how the elements of an MCS package operate. This is examined first in terms of the type of MCS package that will enable more effective control and better performance for Global. There are two key insights developed from the case analysis. First, different MCS elements were coupled to different objectives and planning approaches, which enabled the case organisation to manage the incompatible expectations associated with short and long run objectives without building an inherit incongruence into single control elements. Second, as control elements form a package, a suboptimal fit between MCS elements or between elements and activities can exist and the organisation is still able to be effectively managed. The second key issue that is examined in considering how an MCS package operates, relates to what influences need to be considered in developing and implementing a successful MCS package. Again, two key insights were developed from the case analysis. First, there was some evidence that contingent factors may impact the way MCS elements are coupled, rather than the traditional contingency argument that MCS element focus is the contingent outcome. Second, the existence of any particular MCS element is the result of support from either the dominant coalition or a specific interest group. However, in order for the element to be coupled to the MCS elements sponsored by other interest groups and/or their activities, both dominant coalition and subsidiary interest group support is necessary.
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