Simons levers of control disentangled: A quasi-experiment into the competitiveness of hybrid firms

Journal title MANAGEMENT CONTROL
Author/s Ashish Varma, Adnan Khan
Publishing Year 2023 Issue 2023/2
Language English Pages 23 P. 19-41 File size 311 KB
DOI 10.3280/MACO2023-002002
DOI is like a bar code for intellectual property: to have more infomation click here

Below, you can see the article first page

If you want to buy this article in PDF format, you can do it, following the instructions to buy download credits

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

Controls are used to ensure “that resources are obtained and used efficiently and effectively to achieve the organization’s objective” (Merchant and Otley, 2007, p. 788). Hybrid workplaces, which include flexible work arrangements like working from home, working outside of regular business hours, having flexible work hours, etc. (Stirpe and Zarraga-Oberty, 2017), are characterized by spatial and/or tem-poral separation. This presents control challenges because controlling requires that employee behaviour be in line with the company's goals (Snell 1992). Strict con-trols signal a compromise on trust (Christ et al., 2008), and loose controls dilute subordinates getting strong and clear directives (Long, 2010). Through a quasi-experiment utilizing the theoretical underpinning of Simon’s levers of control (1995, 2000), this study explores the types of controls which enable hybrid firm’s competitiveness. According to Widener (2007), the levers both individually and collectively drive firm-level knowledge production and attention direction, and be-cause they interact with one another, their effects are intricately entangled. This entanglement causes tension for organizational actors, who are largely interested in knowing which types of controls are effective in the hybrid firm’s context and how these controls relate to each other. The results of the experiment identify that the best possible combination to enable hybrid firm competitiveness is ‘High IC and High DC’. The findings establish a significant role of high IC and high DC, in ensuring hybrid firm competitiveness.

Keywords: Simons levers of control (LOC), Competitiveness, Management con-trols, Quasi-experiment, Hybrid firms

  1. A.M. Kruis, R.F. Spekl´e S.K. Widener (2016), The levers of control framework: an exploratory analysis of balance, Manag. Account. Res. 32, pp. 27-44.
  2. Acquaah M. (2013), Management control systems, business strategy and performance: A comparative analysis of family and non-family businesses in a transition economy in sub-Saharan Africa, Journal of Family Business Strategy, 4(2), pp. 131-146.
  3. Ahlvik C., Björkman I. (2015), Towards explaining subsidiary implementation, integration, and internalization of MNC headquarters HRM practices, International Business Review, 24(3), pp. 497-505.
  4. Ahrens T., Chapman C.S. (2007), Management accounting as practice, Accounting, organizations and society, 32(1-2), pp.1-27.
  5. Ajzen I., Fishbein M. (1980), Understanding attitudes and predicting social behavior. Englewood cliffs, NJ, Prentice Hall.
  6. Allen T.D., Golden T.D., Shockley K.M. (2015), How effective is telecommuting? Assessing the status of our scientific findings, Psychological Science in the Public Inter-est, 16, 40e68. DOI: 10.1177/1529100615593273
  7. Arachchilage N.D., Smith M. (2013), The effects of the diagnostic and interactive use of management control systems on the strategy performance relationship. J. Appl. Manage. Account. Res. 11, pp. 9-27.
  8. Auzair S.M., Langfield-Smith K. (2005), The effect of service process type, business strategy and life cycle stage on bureaucratic MCS in service organisations, Manage. Account. Res., 16, pp. 399-421.
  9. Baek I.G. (2022), The effect of telecommuting on information acquisition: Evidence from the U.S. Patent Office, The Accounting Review.
  10. Barnard C. (1938), The functions of the Executive, Harvard University Press, Cambridge, MA.
  11. Barney J.B. (1991), Firm resources and sustained competitive advantage, Journal of Management, 17(1), pp. 99-120. DOI: 10.1177/014920639101700108
  12. Bedford D.S., Malmi T. (2015), Configurations of control: An exploratory analysis, Management Accounting Research, 27, pp. 2-26.
  13. Bedford D.S. (2015), Management control systems across different modes of innovation: Implications for firm performance, Management Accounting Research, 28, pp.12-30.
  14. Bedford D.S., Malmi T., Sandelin M. (2016), Management control effectiveness and strategy: An empirical analysis of packages and systems, Accounting, Organizations and Society, 51, pp.12-28.
  15. Bellora-Bienengräber L., Radtke R.R., Widener S.K. (2022), Counterproductive work behaviors and work climate: The role of an ethically focused management control system and peers’ self-focused behavior, Accounting, Organizations and Society, 96, 101275.
  16. Bellora-Bienengraber L., K. Derfuss, J. Endrikat, Taking stock of research on the levers of control with meta-analytic methods: Stylized facts and boundary conditions, Ac-counting, Organizations and Society.
  17. Boland R.J. (1979), Control, causality and information system requirements, Accounting, Organizations and Society, 4, pp. 259-272. DOI: 10.1016/0361-3682(79)90017-5
  18. Braumann E.C., Grabner I., Posch A. (2020), Tone from the top in risk management: A complementarity perspective on how control systems influence risk awareness, Accounting, organizations and society, 84, 101128.
  19. Brownell P. (1995), Research methods in management accounting, Coopers and Lybrand and Accounting Association of Australia and New Zealand.
  20. Burchell S., Clubb C., Hopwood A., Hughes J., Nahapiet J. (1980), The roles of accounting in organizations and society, Accounting, organizations and society, 5, pp. 5-27. DOI: 10.1016/0361-3682(80)90017-3
  21. Campbell D.T., Riecken H.W. (1968), Quasi-experimental design, International ency-clopedia of the social sciences, 5(3), pp. 259-263.
  22. Chenhall R.H., Langfield-Smith K. (1998), The relationship between strategic priorities, management techniques and Management Accounting: An empirical investigation using a systems approach. Accounting, Organizations and Society, 23(3), pp. 243-264.
  23. Chenhall R.H., Morris D. (1986), The impact of structure, environment and inter-dependencies on the perceived usefulness of management accounting systems, The Ac-counting Review, 61(1), pp. 16-35.
  24. Chenhall R.H. (2003), Management control systems design within its organizational context: findings from contingency-based research and directions for the future, Account. Org. Soc., 28, pp. 127-168. DOI: 10.1016/S0361-3682(01)00027-7
  25. Choudhury P. (2020), Our work-from-anywhere future, Harvard Business Review, 98(6), pp. 58-67.
  26. Christ M.H., Sedatole K.L., Towry K.L., Thomas M.A. (2008), When formal controls undermine trust and cooperation, Strategic finance, 89(7), p. 39.
  27. Collins F., Holzmann O., Mendoza R. (1997), Strategy, budgeting, and crisis in Latin America, Accounting, Organizations and Society, 22(7), pp. 669-689. DOI: 10.1016/S0361-3682(96)00050-5
  28. Cook T.D., Campbell D.T., Shadish W. (2002), Experimental and quasi-experimental designs for generalized causal inference (pp. 103-134), Boston, Houghton Mifflin.
  29. de Harlez Y., Malagueño R. (2016), Examining the joint effects of strategic priorities, use of management control systems, and personal background on hospital performance, Management Accounting Research, 30, pp. 2-17.
  30. Dent J.F., (1987), Tensions in the Design of Formal Control Systems: A Field Study in a Computer Company, Harvard Business School Press, Boston, USA.
  31. Ejelöv E., Luke T.J. (2020), Rarely safe to assume: Evaluating the use and interpretation of manipulation checks in experimental social psychology, Journal of Experimental Social Psychology, 87, 103937.
  32. Ezzamel M., Bourn M. (1990), The roles of accounting information systems in an organization experiencing financial crisis, Accounting, Organizations and Society, 15(5), pp. 399-424. DOI: 10.1016/0361-3682(90)90025-P
  33. Fayol H. (1949), General and Industrial Administration, New York, Pitman.
  34. Flamholtz E., Das T., Tsui A. (1985), Toward an integrative framework of organization-al control, Account. Organ. Soc., 10(1), pp. 35-50. DOI: 10.1016/0361-3682(85)90030-3
  35. Franco-Santos M., Lucianetti L., Bourne M. (2012), Contemporary performance measurement systems: A review of their consequences and a framework for research, Management Accounting Research, 23(2), pp. 79-119.
  36. Friis I., Hansen A., Vámosi T. (2015), On the effectiveness of incentive pay: exploring complementarities and substitution between management control system elements in a manufacturing firm, European Accounting Review, 24(2), pp. 241-276. DOI: 10.1080/09638180.2014.976055
  37. Garcia Osma B., Gomez-Conde J., Heras E. (2018), Debt pressure and interactive use of control systems: effects on cost of debt, Management Accounting Research, 40, pp. 27-46.
  38. Ghemawat P.E., Rivkin J.W. (1999), Creating competitive advantage. In Strategy and the Business Landscape: Text and Cases, Ghemawat P.E. (ed). Addison-Wesley, Reading, MA, pp. 49-74.
  39. Gomez-Conde J., Lunkes R.J., Rosa F.S. (2019), Environmental innovation practices and operational performance: The joint effects of management accounting and control systems and environmental training, Accounting, Auditing & Accountability Journal, 32(5), pp. 1325-1357. DOI: 10.1108/AAAJ-01-2018-3327
  40. Grabner I., Moers F. (2013), Management control as a system or a package? Conceptual and empirical issues, Accounting, Organizations and Society, 38(6-7), pp. 407-419.
  41. Gratton L. (2021), Four principles to ensure hybrid work is productive work, MIT Sloan Management Review, 62(2), pp. 11A-16A.
  42. Groen B.A.C., van Triest S.P., Coers M., Wtenweerde N. (2018), Managing flexible work arrangements: Teleworking and output controls, European Management Journal, 36(6), pp. 727-735.
  43. Guenther T.W., Heinicke A. (2019), Relationships among types of use, levels of so-phistication, and organizational outcomes of performance measurement systems: The crucial role of design choices, Management Accounting Research, 42, pp. 1-25.
  44. Halford S. (2005), Hybrid workspace: Respatialisations of work, organisation and man-agement, New Technology, Work and Employment, 20(1), pp. 19-33.
  45. Hauser D.J., Ellsworth P.C., Gonzalez R. (2018), Are manipulation checks necessary?, Frontiers in psychology, 9, p. 998.
  46. Heinicke A., Guenther T.W., Widener S.K. (2016), An examination of the relationship between the extent of a flexible culture and the levers of control system: The key role of beliefs control, Management Accounting Research, 33, pp. 25-41.
  47. Helfat CE, Peteraf MA. (2003), The dynamic resource based view: capability lifecycles, Strategic Management Journal, 24(10), pp. 997-1010.
  48. Henri J.F. (2006), Management control systems and strategy: A resource-based perspective, Accounting, organizations and society, 31(6), pp. 529-558.
  49. Hopwood A.G. (1989), Organizational contingencies and accounting configurations. In B. Fridman, L. Ostman (Eds.) Accounting development-some perspectives in honour of Sven-Eric Johansson, pp.23-44, Stockholm.
  50. Janka M., Guenther T.M. (2018), Management control of new product development and perceived environmental uncertainty: exploring heterogeneity using a finite mixture approach, Journal of Management Accounting Research, 30(2), pp. 131-161.
  51. Jensen MC., Meckling WH. (1977), Theory of the firm: managerial behavior, agency costs and ownership structure, J. Financ. Econ., 3, pp. 305-60. DOI: 10.1016/0304-405X(76)90026-X
  52. Laguir I., Gupta S., Bose I., Stekelorum R., Laguir L. (2022), Analytics capabilities and organizational competitiveness: Unveiling the impact of Management Control Systems and environmental uncertainty, Decision Support Systems, 156, 113744.
  53. Latour B. (1999), On recalling ANT. In J. Law & J. Hassard (Eds.), Actor Network Theory and after, (pp.15-25), Oxford, Blackwell.
  54. Lawson B., Samson D. (2001), Developing innovation capability in organisations: a dy-namic capabilities approach, International Journal of Innovation Management, 5(3), pp. 377-400. DOI: 10.1142/S1363919601000427
  55. Lee M.T., Widener S.K. (2016), The performance effects of using business intelligence systems for exploitation and exploration learning, Journal of Information Systems, 30(3), pp. 1-31.
  56. Lewis M.W. (2000), Exploring paradox: Toward a more comprehensive guide, Academy of Management review, 25(4), pp. 760-776.
  57. Long C.P. (2018), To control and build trust: How managers use organizational controls and trust-building activities to motivate subordinate cooperation, Accounting, Organizations and Society, 70, pp. 69-91.
  58. Markus M.L., Pfeffer J. (1983), Power and the design and implementation of accounting and control systems, Accounting, Organizations and Society, 8, pp. 205-218. DOI: 10.1016/0361-3682(83)90028-4
  59. Merchant KA., Otley DT. (2006), A review of the literature on control and accountability, Handb. Manag. Account. Res, 2, pp. 785-802. DOI: 10.1016/S1751-3243(06)02013-X
  60. Merchant K., Van der Stede W. (2012), Management control systems: Performance measurement, evaluation and incentives (3rd ed.), Harlow, Pearson.
  61. Merchant K.A., Van der Stede W.A. (2007), Management control systems: performance measurement, evaluation and incentives, 2nd edition Pearson education Limited, Edinburgh Gate, England.
  62. Mikalef J. P., Krogstie I.O. Pappas, P. Pavlou (2020), Exploring the relationship between big data analytics capability and competitive performance: the mediating roles of dynamic and operational capabilities, Inf. Manag. 57(2) (forthcoming).
  63. Morales A.C., Amir O., Lee L. (2017), Keeping it real in experimental research –Understanding when, where, and how to enhance realism and measure consumer behavior, Journal of Consumer Research, 44(2), pp. 465-476.
  64. Naranjo-Gil D. (2016). Role of management control systems in crafting realized strategies, Journal of Business Economics and Management, 17(6), pp. 865-881.
  65. Naranjo-Gil D., Hartmann F. (2006), How top management teams use management accounting systems to implement strategy, Journal of Management Accounting Research, 18(1), pp. 21-53.
  66. Orlikowski W.J., Scott S.V. (2008), Sociomateriality: Challenging the separation of technology, work and organization, Academy of Management Annals, 2(1), pp. 433-474. DOI: 10.5465/19416520802211644
  67. Otley D.T. (1980), The contingency theory of management accounting: achievement and prognosis. Account. Organ. Soc., 4, pp. 413-428. DOI: 10.1007/978-1-4899-7138-8_5
  68. Paas L.J., Dolnicar S., Karlsson L. (2018), Instructional manipulation checks: A longitudinal analysis with implications for MTurk, International Journal of Research in Marketing, 35(2), pp. 258-269.
  69. Porter M.E. (1985), Competitive advantage, New York, Free Press.
  70. Rich B.L., Lepine J.A., Crawford E.R. (2010), Job engagement: Antecedents and effects on job performance, Academy of management journal, 53(3), pp. 617-635.
  71. Sakka O., Barki H., Cote L. (2013), Interactive and diagnostic uses of management control systems in IS projects: antecedents and their impact on performance, Inform. Manage. 50, pp. 265-274.
  72. Schaefer T., Guenther T. (2016), Exploring strategic planning outcomes: The influential role of top versus middle management participation, Journal of Management Control, 27(2), pp. 205-249.
  73. Schatzki T.R. (2001), Practice minded orders. Ingår i TR Schatzki, K. Knorr-Cetina, & E. Von Savigny (Red.). The Practice Turn in Contemporery Theory (pp. 42-55) London and New York, Routledge.
  74. Schatzki T.R. (2005), Peripheral vision: The sites of organizations, Organization studies, 26(3), pp.465-484. DOI: 10.1177/0170840605050876
  75. Schilke O. (2014), On the contingent value of dynamic capabilities for competitive ad-vantage: The nonlinear moderating effect of environmental dynamism, Strategic man-agement journal, 35(2), pp. 179-203.
  76. Schulz A.K.D. (1999), Experimental research method in a management accounting context, Accounting & Finance, 39(1), pp. 29-51. DOI: 10.1111/1467-629X.00016
  77. Sewell G., Taskin L. (2015), Out of sight, out of mind in a new world of work? Autonomy, control, and spatiotemporal scaling in telework, Organization Studies, 36, 1507e1529. DOI: 10.1177/0170840615593587
  78. Sharma A. (1997), Professional as agent: knowledge asymmetry in agency exchange, Acad. Manag. Rev., 22, pp. 758-98.
  79. Simon H.A., Guetzkow H., Kozmetsky G., Tyndall G. (1954), Centralization vs. Decentralization in Organizing the Controller’s Department, Houston, TX, Scholars Book Co.
  80. Simons R. (1995), Levers of control: How managers use innovative control systems to drive strategic renewal, Harvard Business School Press, Boston, MA.
  81. Simons R. (2000), Performance measurement & control systems for implementing strat-egies, Prentice Hall, Upper Saddle River, NJ.
  82. Sitkin S.B., Long C.P., Cardinal L.B. (2020), Assessing the control literature: Looking back and looking forward, Annual Review of Organizational Psychology and Organizational Behavior, 7(1), pp. 339-368.
  83. Snell S.A. (1992), Control theory in strategic human resource management: The mediating effect of administrative information, Academy of Management Journal, 35, pp. 292-327. DOI: 10.5465/256375
  84. Spekle R.F., van Elten H.J., Widener S.K. (2017), Creativity and control: A para-dox. Evidence from the levers of control framework, Behavioral Research in Accounting, 29(2), pp. 73-96.
  85. Stirpe L., Zarraga-Oberty C. (2017), Are high-performance work systems always a valuable retention tool? The roles of workforce feminization and flexible work arrangements, European Management Journal, 35, 128e136.
  86. Tessier S., Otley D. (2012b), A conceptual development of Simons’ levers of control framework, Management Accounting Research, 23(3), pp. 171-185.
  87. Tracey M., M.A. Vonderembse, J.S. Lim (1999), Manufacturing technology and strategy formulation: keys to enhancing competitiveness and improving performance, J. Oper. Manag, 17(4), pp. 411-428. DOI: 10.1016/S0272-6963(98)00045-X
  88. van der Kolk, B., van Veen-Dirks, P.M. and Ter Bogt H.J. (2020), How combinations of control elements create tensions and how these can be managed: An embedded case study, Management Accounting Research, 48, 100677.
  89. Vandenbosch B. (1999), An empirical analysis of the association between the use of ex-ecutive support systems and perceived organizational competitiveness, Accounting, Or-ganizations and Society, 24(1), pp. 77-92. DOI: 10.1016/S0361-3682(97)00064-0
  90. Varma A., Malhotra G. (2022), Establishing the antecedents of account-ant’s job satisfaction in an emerging market, Journal of Financial Reporting and Accounting, 20(1), pp. 5-23.
  91. Varma A., Malhotra G. (2020), Psychological empowerment and job satisfaction of accountants: the mediating effect of task performance, International Journal of Organizational Analysis, Vol. ahead-of- print No. ahead-of- print. DOI: 10.1108/IJOA-08-2020-2360.
  92. Varma A., Lamboglia R., Mancini D. (2021), What motivates the accountants' awareness of their impact on corporate reputation? International Journal of Management and Decision Making, 20(1), pp. 88-111.
  93. Varma A., Mancini D., Dalela A.A., Varma A. (2022), Online accounting courses: digital loyalty for an inclusive and open society, Journal of Information, Communication and Ethics in Society, (ahead-of-print).
  94. Walls J.G., Widmeyer G.R., El Sawy O.A. (1992), Building an information system design theory for vigilant EIS. Information systems research, 3, pp. 36-59.
  95. Widener S.K. (2007), An empirical analysis of the levers of control framework, Ac-counting, Organizations and Society, 32(7-8), pp. 757-788.
  96. Wijethilake C., Munir R., Appuhami R. (2018), Environmental innovation strategy and organizational performance: enabling and controlling uses of management control systems, Journal of Business Ethics, 151(4), pp. 1139-1160.

  • Assessing the Impact of Accounting Analytic Capabilities on Firm Performance Ashish Varma, Anuj Sharma, in Journal of Computer Information Systems /2024 pp.1
    DOI: 10.1080/08874417.2024.2329137

Ashish Varma, Adnan Khan, Simons levers of control disentangled: A quasi-experiment into the competitiveness of hybrid firms in "MANAGEMENT CONTROL" 2/2023, pp 19-41, DOI: 10.3280/MACO2023-002002