Knowledge that Transforms

Inspired by the theme of the AOS Conference - Management Controls as System or Package - I discuss two issues regarding the notion of interdependence, the key feature distinguishing management controls as a system or package. First, I use the semantic framework of force dynamics to characterize interdependence between management control practices as a causal relationship between them, and use examples of research presented at the conference to highlight the usefulness of the force dynamics framework to study and understand interdependence. Second, I highlight two benefits of experiments for studying interdependence (force dynamics) between management control practices, both of which involve creating "ideal" counterfactuals: (1) leveraging the high level of internal validity of experiments to isolate the causal relationship between management control practices and the mechanism underlying that relationship, and (2) creating the variation in management control practice that may be absent in real-world settings, but are necessary for theory testing.

An important challenge for management control (MC) research is to better understand how MC practices work together in combinations. We approach this challenge from the perspective of survey researchers and, first, reflect on the potential of survey research to inform the debate on systems of control. Second, we draw on the article by Grabner and Moers (2013) to discuss how contemporary survey research can be strengthened by following their suggestions.

This paper presents an ethnography on the ways in which a large international NGO operating in Nepal mobilizes accounting in order to make operable a new market-based approach to development. Focusing on diverse groups of actors along the chain of translation, we show how it required unfolding experimentation to make accounting fit local contexts. Initially, these unfolding forms of using accounting constituted a particular strength in inscribing the ideals of the markets into the everyday doings of beneficiaries. However, we continue to explore the momentum created by the increasing levels of reflexivity on the side of ‘the governed’ that led to unforeseen discoveries in which also their personal hopes and desires, initially vague and abstract, can become translated into the NGO’s accounting designs. In so doing, accounting became locally reprogrammed into a host within which seemingly unrelated local ambitions matured into enforceable agendas - something which gradually eroded accounting’s thrust to govern along the NGO’s aspired market rationales. We built upon studies in governmentality and Michel de Certeau’s theory of everyday practice to conceptualize a form of resistance that is not outside accounting’s webs of power but emerges in the course of ‘consuming’ accounting locally. We demonstrate how this resistance through (rather than against) accounting left the NGO with little capacity to guard against the ways in which the project became used for different ends locally. Like Goethe’s sorcerer’s apprentice, the NGO’s managers did not get rid of the ’spirits that they summoned’ but became trapped in their own accounting and, at least in part, themselves subject to governance ‘from below’.

This study adds to the literature on accounting incompleteness and instability an understanding of how accounting acts upon an object that is practised as a multiple. It explores how accounting, in the form of a sales and operations planning (SO this adds new accountings onto existing ones, all of which exist simultaneously.

Despite third parties being important conduits of trust, little is known about the mechanisms and conditions relevant to their influence on trust formation and partner selection in interfirm relationships. In this study, we experimentally examine how varying levels of third-party information shape the trust that buyer managers have in a potential supplier firm, and how this trust affects subsequent selection decisions. In addition, we investigate when this information is most influential, by accounting for the moderating impact of the focal firm’s own prior experience. As expected, both neutral and favorable third-party information are able to elicit trust, yet with different effects on competence and goodwill trusting beliefs. These trusting beliefs, in turn, are positively associated with the likelihood of the supplier to be selected. Notably, we find third-party effects over and above the effects resulting from own prior experience. Overall, by investigating differences with regard to the origin and content of information and the specific type of trust, this study advances a more nuanced understanding of the partner selection process.

Junior auditors collect the bulk of audit evidence, yet they do not always speak up to communicate potentially important audit issues. Such inappropriate “voice” decisions can endanger audit quality. We examine whether and how staff auditors influence each other in making voice decisions. First, a survey provides descriptive evidence that staff auditors consult their peers for advice on whether to speak up. Next, two experiments provide evidence that voice advice among peers at the staff level can be problematic. We find that staff auditors consistently underestimate the importance of raising issues compared to their supervisors, and they rely on social cues that are not diagnostic of issue importance in giving voice advice to peers. Finally, we predict and find that staff auditors tend to follow peer advice when it confirms their initial stance, and that an expectation of high (versus low) quality supervisor feedback increases their willingness to speak up. Most importantly, we find that contradictory peer advice only influences staff auditors’ willingness to speak up when leadership feedback is not expected to be of high quality. Together these results indicate that staff auditors seek out and follow voice advice from their peers, but appropriate leadership feedback practices can mitigate the negative impact of peer advice on upward communication.

Prior research has produced conflicting views on whether incentives help or hinder innovation. This paper takes a more fine-grained view arguing that the innovation process consists of various interrelated behaviors where the primary role of incentives is not to motivate employees to work harder but rather to support behaviors that are considered effective for generating innovation outcomes. We point at two key innovation behaviors, knowledge exchange and distal search, and argue that they complement each other in driving innovation. Because of this complementarity, the question arises of how to design incentives that simultaneously motivate both behaviors effectively. We propose that adequately designed explicit incentives support knowledge exchange, while implicit career incentives focus the individual’s attention on future tasks and, by doing so, effectively support behavior that opens up distant sources of knowledge. Overall, our study provides a new theoretical argument for why explicit and implicit incentives are interdependent choices within innovation processes. We test our hypotheses combining survey data with patent data from 282 firms in the chemical and pharmaceutical industry.

We examine accounting professionalization in Iran to understand state-controlled adaptation of Iran’s professional accounting organization in response to transnational pressure. Using a neo-Gramscian theory of hegemony, the study shows that Iran’s accounting occupation as an element of civil society was re-constituted through the interplay of shifting state ideology and transnational capitalism over the past five decades. The state’s desire to integrate Iran with the global financial system in recent decades drove changes to Iran’s accounting professional organization for alignment with transnational norms. The adaptation occurred amidst local resistance to transnational preference for granting regulatory powers to an autonomous professional accounting body. The study highlights professional autonomy as a contested ideational site of struggle in this process. The state preserved standard setting authority within the state apparatus, granted statutory audit and professional certification powers to an ideologically-trusted professional body, and relegated an accounting association construed as espousing neoliberal ideology to the politically less sensitive responsibility of offering professional education. We interpret this regulatory role specialization of the occupational groups as a product of the state’s selective co-optation of the groups on ideological grounds. The study highlights the role of a country’s ideological distance from neoliberalism in shaping adaptation of regulatory institutions for alignment to transnational norms.

Based on a two-year participant observation, this paper shows how CSR managers align CSR programs closer to their personal convictions and eventually bring about incremental change. We focus on two CSR managers working on a project to develop a business aimed at serving rural West African consumers and show that while they frame their project in financial terms, they incrementally transform the firm’s representations in accordance with their own vision of CSR. We deploy Butler’s understanding of subjection through performative agency to show that even if CSR managers reproduce the CSR business case discourse to render their actions legitimate and recognizable, this empowers them to exercise a small degree of agency, allowing them to infuse a more inclusive perception of rural low-income populations into the firm’s practices. This paper makes two contributions. First, it shows that the subject can incrementally act to transform the dominant financial discourse governing her subjection to better align it with her desire. Second, we establish that the CSR manager navigates between the traditional duo of CSR actors: the organization and its stakeholders and therefore renders porous the boundary between them both.

By reviewing the theory underlying the design and interdependency of management control systems, I highlight the important role firm dynamics plays in our understanding of these control systems. I provide both theoretical and empirical extensions encouraging authors to explore more longitudinal studies to better understand the path dependency of control system design, how control system elements vary over time within a firm, and how the interdependent nature of individual control elements might vary.