Management Control System Design
This paper is a review of the empirical contingency-based literature regarding the development and structure of management control systems. It categorizes the literature by topic: meaning of MCS, outcomes of MCS, and contextual variables including external environment, technology, organizational structure, size, strategy, and national culture. The paper provides a thorough review of studies that examine these topics. Additionally, Chenhall provides recommendations for future research.
The study limits its focus to contingency-based theories developed from a functionalist perspective. In other words, the assumption is that management control systems “are adopted to assist managers achieve some desired organizational outcomes or organizational goals. The appropriate design(s) of MCS will be influenced by the context in which they operate” (p.128). The figure below has been designed to clarify the functionalist perspective.
The Meaning of MCS
There are multiple terms that have been used in describing ‘management control systems.’ The author chooses to use MCS to refer to the broad application of a system that provides both financial and non-financial information on both internal and external factors, to managers for the purposes of control and decision-making.
When studying MCS, one of two approaches can be taken. First, one can build on existing areas, trying to extend overall theories. Second, researchers may choose to evaluate new and novel ideas as they come into practice. Both types of research make important contributions. Primarily, because MCS change over time, it is important to study the implementation and success of new managerial accounting tools. Furthermore, as old MCS lose relevance, research on them does not have significant practical applications. The author also warns of the dangers of studying accounting MCS in isolation. Consideration of other organization control systems is imperative given the interactive
The study limits its focus to contingency-based theories developed from a functionalist perspective. In other words, the assumption is that management control systems “are adopted to assist managers achieve some desired organizational outcomes or organizational goals. The appropriate design(s) of MCS will be influenced by the context in which they operate” (p.128). The figure below has been designed to clarify the functionalist perspective.
The Meaning of MCS
There are multiple terms that have been used in describing ‘management control systems.’ The author chooses to use MCS to refer to the broad application of a system that provides both financial and non-financial information on both internal and external factors, to managers for the purposes of control and decision-making.
When studying MCS, one of two approaches can be taken. First, one can build on existing areas, trying to extend overall theories. Second, researchers may choose to evaluate new and novel ideas as they come into practice. Both types of research make important contributions. Primarily, because MCS change over time, it is important to study the implementation and success of new managerial accounting tools. Furthermore, as old MCS lose relevance, research on them does not have significant practical applications. The author also warns of the dangers of studying accounting MCS in isolation. Consideration of other organization control systems is imperative given the interactive