A configuration approach to management control systems design in service organizations

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5 Citations (Scopus)

Abstract

Purpose: The purpose of this study is to utilize a configuration approach to examine the relationships between multiple contingent variables and management control systems (MCS) in service organizations from various industries. The contingent variables include service process type, cost leadership and differentiation strategies, environmental unpredictability, change and complexity and organizational life cycle stage. Design/methodology/approach: Questionnaires were administered to the financial controllers of service organizations operating in Australia. Cluster analysis is utilized to reveal the MCSs fit. Findings: The data reveals that high-performing service organizations are those firms that place high emphasis on a differentiation strategy. The lower performers, on the other hand, are firms with a lack of emphasis on both cost leadership and differentiation strategies. Overall, the data demonstrates that strategic orientation plays an important role in high-performing organizations and the ability to incorporate various contingent situations determines the effectiveness of an organization. Practical implications: The potentially broad framework offered in this study allows managers from various service industries to relate the variations in the combination of situations to those of their firms. The service managers' experience with certain type of combinations can assist them to identify the strategic position of their respective organizations. Consequently, service managers can estimate the prospect for further development to enhance the firm performance. Originality/value: This study offers a holistic view of the multiple and simultaneous relationships between contingent factors and MCS design in service organizations using a configuration approach. This paper contributes to the literature on organizational configurations in particular by studying the systematic nature of effective MCSs in service organizations when adapting to the contextual settings of the organizations.

Original languageEnglish
Pages (from-to)47-72
Number of pages26
JournalJournal of Accounting and Organizational Change
Volume11
Issue number1
DOIs
Publication statusPublished - 2 Mar 2015

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Management control systems
Service organization
System design
Differentiation strategy
Managers
Cost leadership
Factors
Service industries
Strategic orientation
Cluster analysis
Service process
Organizational configurations
Firm performance
Environmental change
Questionnaire
Life cycle
Environmental complexity
Design methodology
Industry
Controller

Keywords

  • Business strategy
  • Cluster analysis
  • External environment
  • Management control systems
  • Organizational life cycle
  • Service process type

ASJC Scopus subject areas

  • Accounting
  • Organizational Behavior and Human Resource Management
  • Strategy and Management

Cite this

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