Hello!

Our group will be talking about Management Control Systems, but in the perspective of the academic
world.

The paper talks about its history, the differences, and the theories that are most prevalently taught in
schools.

This was a paper in the 2008, and they wrote it because of 2 issues that always pop up in an
organization:

- Management Control Frameworks are always requested or expected.

And why is this important? Because you might have multiple managers that are not in
sync and you want to standardize your internal systems.
- And in the Academic world, there are multiple definitions of what Management Control systems
are that they are always debating on what should it be and what to do.

So, the paper looked back into history to see when the first time the term was used.

It was used in a class taught by Harvard Business School to the US National Defense

to enhance their analytical skills and help them to optimize the management of scarce resources
available for the war effort. This was in 1941-1945(WWII)

So in this class they actually just taught the same things they already know and just re-labeled it, pouring
old wine into a new bottle. The concept Harvard Business School used starter with:

Thomas Sanders was the one who coined ‘control’ in accounting in 1921.

Earl Burchell was the first to use budgetary control, also in accounting, in 1922

Ross Walker, who first mixed these 2 made a distinguishable jump from classical accounting and
into control, and stating that it would not only affect human behavior but also ensures an
adequate future supply

And lastly Robert Anthony who elegantly defined is as “The process by which managers assure
that resources are obtained and used effectively and efficiently in the accomplishment of the
organization’s objectives.”

Now they went a little further in the research paper and thought of a systematical approach on how to
quantify the theories in the present, well present 2008.

Which books are most widely used?

 Finding the books used most often to teach MCS will give the theory most often taught.

MCS concepts that are presented in textbooks are already established in the academic world.

Email Survey

759 invitation; 75 respondents, so we’re above 30.

56.8 % USA, 13.5 % Canada, 12.2 % UK, 10.8 % Europe, 1.4% Australia from 71 different schools

Specialization: Cost Accounting, Managerial Accounting, or Controllership

Strategic planning is defined as “the process of deciding on objectives of the organization, on changes in
these objectives, and on the policies that are to govern the acquisition, use, and disposition of these
resources”

Management control as “the process by which managers assure that resources are obtained and used
effectively and efficiently in the accomplishment of the organization’s objectives”

Operational control “is the process of assuring that specific tasks are carried out effectively and
efficiently”

Top-three ranked textbooks by Merchant and Van der Stede (2003), Anthony and Govindarajan (2007),
and Simons (2000)

As all 3 books look at human behavior as a factor in achieving the organization’s goals, it is important to
note that MCS becomes a need to balance “Changing to adapt to an environment” and “Work behavior
of Employees to achieve the goal”

But the 3 top books have variations on their emphasis regarding control. One looks more at formal
control, regarding results and feedback. One on the other hand has more soft controls, concerning
culture and the organizational strategy. The top ranked book has a holistic view and touches on more
things, but not much emphasis on any one thing.

So, the big picture for this concept is to identify and implement complementary methods and
approaches depending on the organization. This is the key to success.

So, the key to success when it comes to which Management Controls to use is still, “it depends!”
Why review of the past analytical conceptualizations of MCS literatures is important?

Answers:

 different attempts to improve conceptualizations of MCS and to overcome existing inconsistencies

have not (yet) been successful.
 the fact that the literature has not yet provided a review of past research on conceptualizations of
MCS contributes to the fragmented view of the field.

Are there any positive correlation between analytical conceptualizations of MCS that have been developed
in the academic literature with organizational performance?

Answers:

There is no universally best management control system that applies to all organizations. The contingency
theory of Chenhall (2003) describes the impact of contingency variables (i.e. strategy, external
environment, technology, organizational structure, firm size and culture) on MCS design. As an
organization strives to achieve effectiveness, it will seek to attain “fit” between the contingent variables
and the MCS (Auzair & Langfield-Smith, 2005).

The identification of contextual variables potentially implicated in the design of effective MCS can be
traced back to the original structural contingency frameworks developed within organizational theory.