Past Projects

Management Control Systems (MCS) of corporations are central devices to guide behavior of managers and employees. Their overall goal is to direct and coordinate activities so that corporate objectives are fulfilled. The complexity of MCS is the grounded in a lot of different practices: strategic and operational planning, budgeting, balanced scorecards, incentive systems etc. In addition to these formal sytems, informal systems, for instance organizational culture, are important for guiding behavior.

Although we have studies about MCS and about some MCS practices, we still lack studies about the MCS as a package. This approach assumes that MCS are configured (intended or unintended) and that some configurations are more effective than other configurations. Taking an international view on configurations, we are interested about configurations in different countries (or cultural regions).

An international research team from nine European countries, Australia and Canada investigates MCS in these countries. Teemu Malmi (project leader) and over twenty researchers from Austria, Australia, Belgium, Canada, Denmark, Finland, Germany, Italy,  Norway, Poland, Sweden explore how and which configurations of MCS prevail in their home countries.

Most cross-cultural studies on management control have compared Anglo-Saxon firms to Asian firms, leaving us with limited understanding of potential variations between developed Western societies. In our study, we address differences and similarities in a wide variety of management control practices in Anglo-Saxon (Australia, English Canada), Germanic (Austria, non-Walloon Belgium, Germany) and Nordic firms (Denmark, Finland, Norway, Sweden). Unique data is collected through structured interviews from 584 strategic business units (SBUs). We find that management control structures in Anglo-Saxon SBUs, relative to those from Germanic and Nordic regions, are more decentralized and participative and place greater emphasis on performance-based pay. Comparing Germanic SBUs to Nordic ones, we find Germanic SBUs to rely more on individual behaviour in performance evaluation, whereas Nordic SBUs rely more on quantitative measures and value alignment in employee selection. We also observe numerous similarities in MC practices between the three cultural regions. The implications of these findings for theory development are outlined.

In another study, we examine the influence of cultural regions on the interdependence between delegation of authority and other management control (MC) practices. In particular, we assess whether one of the central contentions of agency theory, that incentive contracting and delegation are jointly determined, holds in different cultural regions. Drawing on prior literature, we hypothesize that the MC practices that operate as a complement to delegation vary depending on societal values and preferences, and that MC practices other than incentive contracting will complement delegation in firms in non-Anglo cultural regions. Using data collected from 584 strategic business units across three Western cultural regions (Anglo, Germanic, Nordic), our results show that the interdependence between delegation and incentive contracting is confined to Anglo firms. In the Nordic and Germanic regions, we find that strategic and action planning participation operate as a complement to delegation, while delegation is also complemented by manager selection in Nordic firms. Overall, our study demonstrates that cultural values and preferences significantly influence MC interdependence, and suggests that caution needs to be taken in making cross-cultural generalizations about the complementarity of MC practices.

The aim of a first publication (Greve et al., 2017) is to investigate whether certain configurations of management controls dominate in certain societies (socio-cultural contexts) and whether the effectiveness of a given archetype of (MCSs) varies depending on the socio-cultural setting —the society —in which it operates. The findings indicate that distinct differences between societies make a particular MCS design more appropriate in a given society, but where such differences are not

dramatic (as in the present case), multiple MCS designs can be found in the same society.

Christian Ax, University of Gothenburg, Sweden; David Bedford, University of Technology Sydney, Australia; Piotr Bednarek,Wrocław University of Economics, Poland; Johan Dergård, Lund University, Sweden; Angelo Ditillo, Università Bocconi, Italy; Andrea Dossi, Università Bocconi, Italy; Maurice Gosselin, Université Laval, Canada; Jan Greve, Örebro University, Sweden; Michael Hanzlick, Germany; Sophie Hoozée, Ghent University, Belgium; Poul Israelsen, Aalborg University, Denmark; Otto Janschek, University of Economics and Business Vienna, Austria; Daniel Johansson, Norwegian School of Economics, Norway, Tobias Johansson, Örebro University, Sweden; Dag Øivind Madsen, University College of Southeast Norway, Norway; Teemu Malmi, Aalto University, Finland; Carsten Rohde, Copenhagen Business School, Denmark; Mikko Sandelin, Aalto University, Finland; Torkel Strömsten, Stockholm School of Economics, Sweden; Thomas Toldbod, Aalborg University, Denmark; Jeanette Willert, Copenhagen Business School, Denmark