Management Control Systems as a Package—Opportunities,

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Management Accounting Research 19 (2008) 287–300

Management control systems as a package—Opportunities, challenges and research directions Teemu Malmi a,∗ , David A. Brown b

Department of Accounting & Finance, Helsinki School of Economics, Finland b School of Accounting, University of Technology, Sydney, Australia

Abstract There has been very little explicit theoretical and empirical research on the concept of management control systems (MCS) as a package despite the existence of the idea in management accounting literature for decades. In this editorial we discuss a range of ways researchers have defined MCS and the problems this has created. We provide a new typology for MCS structured around five groups: planning, cybernetic, reward and compensation, administrative and cultural controls. The typology is based on the distinction between decision-making and control and addresses those controls managers use to direct employee behaviour. We discuss the conclusions of the articles included within this special issue and provide ideas for further research. © 2008 Elsevier Ltd. All rights reserved. Keyword: Management control systems package

1. Why study management control systems as a package? The idea of management control systems (MCS) operating as a package1 has existed for over 30 years (Otley, 1980) and there have been regular calls to study the phenomenon (Chenhall, 2003; Dent, 1990; Fisher, 1998; Flamholtz et al., 1985; Otley, 1980). Despite this there has been little explicit theorizing or empirical research on the topic (Abernethy and Chua, 1996; Alvesson and Karreman, 2004; Simons, 1995). There are a number of reasons why studying the MCS package phenomenon is important. Firstly, MCS do not operate in isolation. While much of the MCS research considers single themes or practices that are seemingly unconnected from each other and the context in which they operate, these invariably sit within a broader control system (Chenhall, 2003). This has several implications. For one, Fisher (1998) argued that if the links between various MCS are not recognized, then the way in which the considered MCS components relate to studied contingent variables will lead to erroneous conclusions. This idea is supported by Chenhall (2003) who warned that studying specific MCS elements in isolation has “the potential for serious model under specification” (p. 131). This may provide the underlying reason ∗

Corresponding author at: Helsinki School of Economics, Runeberginkatu 22-24, 00100 Helsinki, Finland. Tel.: +358 9 43138472; fax: +358 9 43138678. E-mail address: (T. Malmi). 1 As a general conception, a management control systems (MCS) package is a collection or set of controls and control systems. The individual control systems may be more traditional accounting controls such as budgets and financial measures, or administrative controls, for example organisation structure and governance systems, along with more socially based controls such as values and culture. Organisations may have numerous controls present, and they all may be used to some extent to align individual’s activities with organisational goals (Abernethy and Chua, 1996; Alvesson and Karreman, 2004; Flamholtz et al., 1985; Otley, 1980; Simons, 1995). 1044-5005/$ – see front matter © 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.mar.2008.09.003


T. Malmi, D.A. Brown / Management Accounting Research 19 (2008) 287–300

for Dent’s (1990) assessment of MCS contingency research when he argued that while some relationships have been found between some contingency variables and MCS, on the whole the “relationships are weak and the conclusions are fragmentary” (p. 10). In his more recent examination of contingency research, Chenhall (2003) supported Dent’s (1990) point and argued that the variables considered have not provided consistent explanations of the kind of MCS that fit organisation types or drive performance. A second and...
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