Kim Langfield-Smith

Management control systems and strategy: A critical review☆

Abstract This paper reviews research that studies the relationship between management control systems (MCS) and business strategy. Empirical research studies that use contingency approaches and case study applications are examined focusing on specific aspects of MCS and their relationship with strategy. These aspects include cost control orientation, performance evaluation and reward systems, the effect of resource sharing, the role of MCS in influencing strategic change and the choice of interactive and diagnostic controls. More contemporary approaches to the relationship between performance measurement systems and strategy are also considered. It is concluded that our knowledge of the relationship between MCS and strategy is limited, providing considerable scope for further research. A series of future research questions is presented.

The relationship between strategic priorities, management techniques and management accounting: an empirical investigation using a systems approach

Abstract The study examines how combinations of management techniques and management accounting practices enhance the performance of organizations, under particular strategic priorities. Companies were identified as emphasizing product differentiation, low price strategies or a combination of both. Management techniques included in the study were improving existing processes; quality systems; manufacturing systems innovations; integrating systems; team-based structures and human resource management policies. Management accounting practices important in assisting managers implement management techniques were traditional management accounting techniques; activity-based techniques; balanced performance measures; employee-based measures; benchmarking and strategic planning. A systems approach, using cluster analysis, was used to examine hypothesized associations between performance and a range of management techniques and management accounting practices, under various strategic orientations. This provided a method to examine the way in which the entire range of variables combined to affect performance.

Management control systems and trust in outsourcing relationships

Outsourcing is a form of strategic alliance that has increased in popularity over the past decade. However, there has been limited research that studies the design of management control systems (MCS) and the role of trust in such inter-firm relationships. This paper draws on a model by van der Meer-Kooistra and Vosselman [Acc. Organ. Society 25 (2001) 51] to examine how control mechanisms and trust are used to achieve control in a single case study of an electricity company and its outsourced IT operations. An analysis of the characteristics of the transaction, environment and parties, indicated that the control strategy adopted appeared to be a trust based pattern of control, rather than a market based or bureaucratic based pattern. Control was achieved through outcome controls and social controls developing over time, and through the development of trust, particularly goodwill trust. This paper adds to the growing knowledge of the design of control systems and trust in outsourcing relationships.

Antecedents to management accounting change: a structural equation approach

Abstract This paper reports on a survey of manufacturing companies, and uses structural equation modeling to examine the relationships between the changing competitive environment, and a range of organizational variables as antecedents to management accounting change. The results indicate that an increasingly competitive environment has resulted in an increased focus on differentiation strategies. This, in turn, has influenced changes in organizational design, advanced manufacturing technology and advanced management accounting practices. These three changes have led to a greater reliance on non-financial accounting information which has led to improved organizational performance.

Team Mental Models: Techniques, Methods, and Analytic Approaches

Effective team functioning requires the existence of a shared or team mental model among members of a team. However, the best method for measuring team mental models is unclear. Methods reported vary in terms of how mental model content is elicited and analyzed or represented. We review the strengths and weaknesses of various methods that have been used to elicit, represent, and analyze individual and team mental models and provide recommendations for method selection and development. We describe the nature of mental models and review techniques that have been used to elicit and represent them. We focus on a case study on selecting a method to examine team mental models in industry. The processes involved in the selection and development of an appropriate method for eliciting, representing, and analyzing team mental models are described. The criteria for method selection were (a) applicability to the problem under investigation; (b) practical considerations---suitability for collecting data from the targeted research sample; and (c) theoretical rationale---the assumption that associative networks in memory are a basis for the development of mental models. We provide an evaluation of the method matched to the research problem and make recommendations for future research. The practical applications of this research include the provision of a technique for analyzing team mental models in organizations, the development of methods and processes for eliciting a mental model from research participants in their normal work environment, and a survey of available methodologies for mental model research.

Strategic management accounting: how far have we come in 25 years?

Purpose - The purpose of this paper is to provide a review of the origins of strategic management accounting and to assess the extent of adoption and “success” of strategic management accounting (SMA). Design/methodology/approach - Empirical papers which have directly researched SMA and prior review papers of the adoption and implementation of SMA or SMA techniques are reviewed. As well as assessing the extent of adoption of SMA and the reasons underlying an apparent low adoption rate, the role of accountants in adopting and implementing SMA is considered. Finally, the success or otherwise of SMA is discussed. Findings - SMA or SMA techniques have not been adopted widely, nor is the term SMA widely understood or used. However, aspects of SMA have had an impact, influencing the thinking and language of business, and the way in which we undertake various business processes. These issues cut across the wider domain of management, and are not just the province of management accountants. Research limitations/implications - There is limited value in conducting future surveys of the adoption and implementation of SMA or SMA techniques. Rather, the focus should be on how SMA-inspired techniques and processes diffuse into general practice within organizations. Originality/value - Twenty-five years after the term strategic management accounting was first introduced in the literature, this paper brings together disparate literature and provides a broad assessment of the “state-of-the-art” of strategic management accounting to inform researchers and practitioners.

A Review of Quantitative Research in Management Control Systems and Strategy

Abstract This chapter reviews and critiques quantitative research that focuses on the relation between management control systems (MCS) and strategy. This quantitative research typically relies on survey evidence, and to a lesser extent, interviews and archival data. The focus of research up to the late 1990s was on the fit between the design of MCS and strategy. Controls included cost controls, budgetary controls, and performance evaluation and reward systems. These controls are usually related to business strategy. However, some papers studied operational strategies, such as quality, manufacturing flexibility, and product-related strategies. Recently, more complex characterizations have emerged that focus on the role of MCS in influencing strategic change, through interactive controls, and balanced scorecard approaches, which integrate a range of measures to enable strategic outcomes. It is concluded that our knowledge of the relationship between MCS and strategy is still somewhat limited. The chapter finishes with an outline of methodological limitations and areas for future research.

Developing Co-operative Buyer-Supplier Relationships: A Case Study of Toyota

Over recent years many businesses have recognized that there are strong competitive advantages in developing co‐operative partnerships with suppliers. An important challenge for many companies is to identify the factors to enable them to move from relationships characterized by strong buyer power and bargaining position, to partnerships based on trust and co‐operation. The purpose of this paper is to consider factors that may influence the development of co‐operative buyer–supplier relationships. A case study is presented which illustrates the developing relationship between an automotive manufacturer, Toyota Australia, and its suppliers, as part of a new supplier strategy. Several factors are proposed which provide areas for further research. These include the consideration of similarities between the industry and technologies of buyer and suppliers, prior experiences of change among suppliers, effective communications between buyer and suppliers, and the importance of experiential learning in the acceptance of change.

Revisiting the Vexing Question: Does Superior Corporate Social Performance Lead to Improved Financial Performance?

The empirical evidence documenting the association between a firms level of corporate social performance (CSP) and corporate financial performance (CFP) remains divided. This paper reinvestigates the CSP/CFP association using a more rigorous methodology whilst taking advantage of a superior measure of CSP. In contrast to the findings of much of the prior research, the market-based tests suggest a negative association between CSP and CFP, while the accounting tests indicate no association exists. We suggest that the negative market CSP/CFP relation should not be interpreted as CSP having no value. Rather, our results may suggest that leading CSP firms trade at a price premium (i.e. returns discount) relative to lagging CSP firms, thereby indicating that financial markets value CSP and are prepared to realise lower returns. For firms, this signals an ability to obtain a lower cost of equity capital when they proactively manage their CSP profiles.

Analyzing shared and team mental models

Abstract In recent years, there has been a resurgence of interest in the notion of shared cognition. Subsequent to this interest, two similar yet distinct concepts have emerged: ‘shared mental models’ and ‘team mental models’. A ‘shared mental model’ can be described as the extent to which a dyad of individuals possesses a similar cognitive representation of some situation or phenomenon. The notion of ‘team mental model’, is distinct from that of a shared mental model in that it refers to shared cognition in a team as a collectivity, not shared cognition among dyads of individuals, which the alternative phrase ‘shared mental models’ does allow. While a number of techniques have been developed to measure mental model similarity dyadically, appropriate measures of team mental models have eluded researchers. This issue presents a problem for the evolution of the team mental model concept in psychology and the establishment of its validity, for example, as a predictor of team performance. The primary aim of the current paper was to describe the application of randomization tests as a new method for measuring mental model similarity at the team level, that is the measurement of team mental models. A secondary aim was to apply this technique to examine team mental models (of team functioning) in shop floor teams and shared mental models (of team functioning) among shop floor team members, teamwork ‘experts’ and managers. The advantages and disadvantages of the technique are discussed. Relevance to industry The present project aims to provide authors with a roadmap on how to answer team mental models. The team mental model construct has extreme usefulness to individuals and researchers engaged in attempts to make teams work; to help individuals adapt to teamworking, and to make teams more efficient and productive. Teamwork has expanded exponentially in the last 10–15 years with most workers involved in some form of teamwork. Thus, the present paper is timely in its practical value of helping those in industry and organizations, to understand the dynamics of teamwork, and in particular, the ‘how to’ of measuring team mental models.