Management control as a system: Integrating and extending theorizing on MC complementarity and institutional logics
Introduction
Ever since Otley (1980) coined the notion of ‘organizational control package’, there has been an ongoing discussion in the accounting and control literature about how to conceptualize the building blocks of management control systems (MCSs), their functionalities, and interdependencies (see e.g. Alvesson and Kärreman, 2004; Grabner and Moers, 2013; Milgrom and Roberts, 1995). A dominating approach in this literature has been to view MCSs as composed of different forms of control, e.g. in terms of behaviour, output and social forms of control (see e.g. Cardinal et al., 2017; Malmi and Brown, 2008; Mazmanian and Beckman, 2018; Merchant and Van der Stede, 2012; Ouchi, 1977, 1979). The premise is that such control forms convey different, yet complementary functionalities (abilities) to handle the control problems system designers seek to address (Chadwick, 2010; De Jong et al., 2014). For example, output controls typically motivate and provide direction towards organizational goals, while behaviour controls set boundary conditions for how such goals can be achieved (Gerdin et al., 2019; Kreutzer et al., 2015; Merchant and Van der Stede, 2012; Simons, 2005). As clarified by Grabner and Moers (2013, p. 409), therefore, a MC system should be seen as collection of interdependent control forms where “the design choice has taken these interdependencies into account” (see also Bedford et al., 2016).1
The present study problematizes and extends this ‘MC complementarity approach’ to conceptualizing MC as a system by integrating it with insights made in the institutional logics literature (e.g. Carlsson-Wall et al., 2016; Järvinen, 2012; Rautiainen and Järvenpää, 2012). Drawing upon an abductive research design (Alvesson and Sköldberg, 2018; Lukka and Modell, 2010), this endeavour is premised on an empirical observation of a university’s MCS design suggesting that the functionalities of MCs for handling the control problems specified by the Vice Chancellor stemmed less from the particular qualities of the control forms per se (e.g. whether they focus on employee behaviour, output, or beliefs), and more from their underpinning institutional logics (see also Amans et al., 2015; Chenhall et al., 2013; Ezzamel et al., 2012). In fact, I found that different parts of one and the same control form (e.g. a vision statement or a budget) could be underpinned by a ‘neoliberal’ and a ‘programmatic’ logic, respectively. I also found that these logics both ‘glued together’ social and technical forms of control2 to form what below will referred to as two ‘socio-technical dyads of MC’ (see also Alvesson and Kärreman, 2004; Ferner, 2000; Mazmanian and Beckman, 2018), and gave them different, yet complementary functionalities to handle the control problems defined by the Vice Chancellor.
Importantly, however, the empirical analyses also suggest that the institutional logics approach can be usefully integrated with recent theorizing on MC complementarities to better understand why the Vice Chancellor decided to complement an extant socio-technical dyad of MC underpinned by a neoliberal logic (nurturing values of individualized freedom, market-based competition, and an entrepreneurial spirit), with one underpinned by a programmatic logic (nurturing the opposite values of centralized decision-making and the homogenization and prioritization of research efforts). The premise is that while the former literature has primarily focused on how institutional logics affect and work through single MCs such as budgets (Ahmans et al., 2015; Ezzamel et al., 2012; Lepori and Montauti, 2020) or performance measurement systems (PMSs; see e.g. Chenhall et al., 2013; Grossi et al., 2019; Rautiainen and Järvenpää, 2012), the latter has shown how the effects of one form of MC is typically dependent on those of others, and vice versa (De Jong et al., 2014; Grabner and Moers, 2013; Kreutzer et al., 2016). Furthermore, by drawing upon recent theorizing about intentional MC design and complementarity (e.g. De Jong et al., 2014; Gerdin et al., 2019; Grabner and Moers, 2013; Kreutzer et al., 2016), I find that key actors may introduce institutional complexity not only to achieve organizational autonomy (Conrath-Hargreaves and Wüstemann, 2019) and external legitimacy (Ahrens and Khalifa, 2015), but also to better address particular MC problems.
Overall, therefore, through iterating back and forth between these literatures and an emerging interpretation of the empirics (cf. Ahrens and Chapman, 2006; Alvesson and Sköldberg, 2018), I arrived at the conclusion that neither the MC complementarity approach, nor the institutional logics approach could alone fully account for the empirical findings. This led me to pose the following research question:
RQ: How can MC complementarity and institutional logics approaches be usefully integrated to better understand MC as a system?
In addressing this research question, this study offers several empirical and theoretical insights. In relation to the MC complementarity approach, it fundamentally problematizes the assumption that MCSs are constituted by two or more interdependent forms of control (Bedford et al., 2016; Gerdin et al., 2019; Grabner and Moers, 2013). The premise is that not only may control forms per se convey complementary functionalities for addressing particular control problems (see e.g. Gerdin et al., 2019), but also the institutional logic/s that underpin them (see e.g. Amans et al., 2015; Chenhall et al., 2013; Ezzamel et al., 2012). Accordingly, MC forms should not (necessarily) be conceived as standalone, yet interdependent building blocks of MCSs conveying only one functionality related to the particular qualities of the control form as such. Rather, any one MC form (e.g. a budget or a vision statement) may convey two or more functionalities depending on whether it is underpinned by two or more institutional logics, thereby problematizing the assumption that control forms are monolithic entities (for more details, see Sections 2 and 6 below).
As suggested above, however, the focus on socio-technical dyads of MC also usefully extends the institutional logics literature which has directed scant attention to how such logics influence, or are enacted through, multiple forms of MC (but see e.g. Schäffer et al., 2015). In so doing, this study thus addresses recent calls for “Future studies [which] look at other management controls such as policies and procedures, incentive systems, strategic planning or cultural controls to deepen our understanding of how organizations manage the co-existence of multiple institutional logics” (Carlsson-Wall et al., 2016, p. 59, see also Damayanthi and Gooneratne, 2017; Schäffer et al., 2015).
Furthermore, while the institutional logics literature has devoted much attention to how key actors may skillfully respond to the influence of two or more, typically externally imposed logics (e.g. Hyvönen et al., 2009; Schäffer et al., 2015; Rautiainen and Järvenpää, 2012), this study elaborates theoretically on how and why actors may strategically adopt a new logic. Specifically, drawing upon the idea about MC complementarity as an important impetus for intentional MCS design changes (e.g. De Jong et al., 2014; Gerdin et al., 2019; Grabner and Moers, 2013; Kreutzer et al., 2016), it adds to the institutional logics literature a potentially important explanation of why key actors may voluntarily choose to introduce institutional complexity into their MCS (see also Ahrens and Khalifa, 2015; Schäffer et al., 2015).3
The remainder of the paper is organized as follows. In the ensuing sections, I will briefly outline and integrate the MC complementarity and institutional logics approaches to MC as a system. After that, I explain how the empirical data were collected and analyzed. Finally, I present the empirical findings and discuss how they augment extant understandings of MCSs within the MC complementarity and institutional logics literatures.
Section snippets
The MC complementarity approach to MCSs
In this section, I will briefly describe how recent theorizing on MC complementarity conceptualizes MC as a system. Specifically, and as illustrated by Panel A in Fig. 1, it will be argued that different forms of control (e.g. in terms of social and technical MC forms) constitute building blocks of MCSs, and that such forms of control are intentionally designed to complement one another to solve particular control problems (Bedford et al., 2016; Grabner and Moers, 2013).
The institutional logics approach to MCSs
While there is no single definition of institutional logics, they are commonly seen as ““taken-for-granted social prescriptions” (Battilana and Dorado, 2010; 1420) that define goals and expectations, legitimate activity (e.g. Thornton and Ocasio, 1999; Thornton, 2002, 2004), and often become embodied in organizational structures and practices” (McPherson and Sauder, 2013, p. 167; see also Besharov and Smith, 2014; Lounsbury, 2008). In other words, institutional logics inform and prescribe
Choice of case
As suggested above, this paper is based on an abductive study (Alvesson and Sköldberg, 2018; Lukka and Modell, 2010) of MCS design in a Swedish university referred to as Central University. This case was deemed interesting for at least two reasons. First, the new Vice Chancellor, entering this position in 2016, immediately reformed the extant MCS through the development of a new vision statement and strategic plan, which permeated the design of both social and technical controls. Hence, this
Empirical findings
As stated above, I take side with Alvesson and Kärreman (2004) and others (Abrahamsson et al., 2011; Ferner, 2000; Mazmanian and Beckman, 2018) to argue that social and technical MCs may feed upon and inform one another to form socio-technical dyads of MC underpinned and held together by particular institutional logics (see also Chenhall et al., 2013; Ezzamel et al., 2012). More specifically, I will empirically illustrate that Central University’s newly revised MCS for managing research
Discussion
This study set out to problematize and extend the complementarity approach to MC as a system by integrating it with insights from the institutional logics approach, and vice versa. Drawing upon an abductive research design (Alvesson and Sköldberg, 2018; Lukka and Modell, 2010), this endeavour was premised on an empirical study of MCS design in a Swedish university suggesting that neither the MC complementarity, nor the institutional logics approach, could alone fully account for the Vice
Acknowledgments
Financial support from Örebro University, and the Jan Wallander and Tom Hedelius Foundation (P20-0036) is gratefully acknowledged. I also gratefully acknowledge the useful comments made by Hans Englund and Jan Greve at CEROC (Centre for Empirical Research on Organizational Control), Örebro University, on previous versions of this paper. I would also like to thank the editor Martin Messner and the two reviewers for their insightful comments and constructive advice during the review process.
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