Traditional management accounting tools in SMEs’ network. Do they foster partner dialogue and business innovation?

Journal title MANAGEMENT CONTROL
Author/s Selena Aureli, Andrea Cardoni, Mara Del Baldo, Rosa Lombardi
Publishing Year 2019 Issue 2019/Suppl. 1
Language English Pages 16 P. 35-50 File size 224 KB
DOI 10.3280/MACO2019-SU1003
DOI is like a bar code for intellectual property: to have more infomation click here

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.

This paper aims to understand whether traditional management accounting tools (e.g. financial statement, reclassification and contribution margin analysis) contribute to foster dialogue and innovation in business networks composed of SMEs (small and medium-sized enterprises). Through the analysis of a case study, the paper focuses on a contractual network operating in the paper&print sector in Italy. Framing the analysis in the Simons’ construct (1990 and 1995), who distinguishes between diagnostic and interactive controls, the paper provides insights on the use of management control in inter-organizational settings, arguing that the traditional accounting tools can play an innovative role in network success. The contribution of the paper is on the ongoing debate on which functions, accounting information and MCSs (management control systems) may play in networks. In particular, findings shed light on the need to adapt the distinction between "diagnostic" and "interactive" in the network setting, given the horizontal and non-hierarchical relationships between the units involved.

Keywords: Business innovation, horizontal networks, diagnostic control, interfirm relationships, accounting tools

  1. Abernathy M., Brownell P. (1999), The role of budgets in organizations facing strategic change: An exploratory study, Accounting, Organizations and Society, Vol. 24, No. 3, pp. 189–204.
  2. Amabile T.M. (1998), How to kill creativity, Harvard Business Review, Vol. 76, pp. 77-87.
  3. Aureli S., Del Baldo M. (2016a), Formal Inter-Firm Cooperation and International Expansion: How Italian SMEs are Using the Network Contract. In: Etemad H., Denicolai S., Hagen B., Zucchella A. (ed), The Changing Global Economy and its Impact on International Entrepreneurship. The McGill International Entrepreneurship series, Edward Elgar Publishing, Cheltenham, UK, pp. 157-182. DOI: 10.4337/9781783479849.00014
  4. Aureli S., Del Baldo M. (2016b), Performance Appraisal of Business Networks. How Small and Medium Enterprises Define and Monitor Network Objectives, Management Control, Vol. 1, pp. 35-58. DOI: 10.3280/MACO2016-001003
  5. Baiman S., Rajan M.V. (2002), The role of information and opportunism in the choice of buyer-supplier relationships, Journal of Accounting Research, Vol. 40, pp. 247-278.
  6. Barnes D., Clear F., Dyerson R., Harindranath G., Harris L., Rae A. (2012), Web 2.0 and micro-businesses: an exploratory investigation, Journal of Small Business and Enterprise Development, Vol. 19 No. 4, pp. 687- 711. DOI: 10.1108/14626001211277479
  7. Broadbent J., Laughlin R. (2009), Performance management systems: A conceptual model, Management Accounting Research, Vol. 20, pp. 283-295.
  8. Burns J., Vaivio J. (2001), Management accounting change, Management Accounting Research, Vol. 12, pp. 389-402.
  9. Busco C., Quattrone P., Riccaboni A. (2007), Management accounting: issues in interpreting its nature and change, Management Accounting, Research, Vol. 18, pp. 125-149.
  10. Caglio A., Ditillo A. (2012), Interdependence and accounting information exchanges in inter-firm relationships, Journal of Management and Governance, Vol. 16, pp. 57-80.
  11. Caglio A., Ditillo A. (2008), A review and discussion of management control in inter-firm relationships: Achievements and future directions, Accounting, Organizations and Society, Vol. 33, pp. 865-898.
  12. Cantele S., Vernizzi S., Ricciardi F. (2016), The emerging wave of agility-oriented business networks in Italy: a new strategy for facing global competition, World Review of Entrepreneurship, Management and Sustainable Development, Vol. 12, No. 2/3, pp. 270-284. DOI: 10.1504/WREMSD.2016.074967
  13. Camarinha-Matos L.M., Afsarmanesh H., Galeano N., Molina A. (2009), Collaborative networked organizations – concepts and practice in manufacturing enterprises, Computers & Industrial Engineering, Vol. 57 No. 1, pp. 46-60.
  14. Cardinal L.B., Sitkin S.B., Long C.P. (2004), Balancing and rebalancing in the creation and evolution of organizational control, Organization Science, Vol. 15, No. 4, pp. 411-431.
  15. Cardoni A. (2012), Business planning and management accounting in strategic networks: theoretical development and empirical evidence from enterprises’ network agreement, Management Control, Vol. 3, pp. 91-116. DOI: 10.3280/MACO2013-SU300
  16. Carr C., Ng J. (1995), Total cost control: Nissan and its UK supplier partnerships, Management Accounting Research, Vol. 6, pp. 347-365.
  17. Chiesa V., Frattini F., Lamberti L., Noci G. (2009), Exploring management control in radical innovation projects, European Journal of Innovation Management, Vol. 12, No. 4, pp. 416-443.
  18. Coad A.F., Cullen J. (2006), Inter-organisational cost management: Towards an evolutionary perspective, Management Accounting Research, Vol. 17, No. 4, pp. 342-369.
  19. Cuganesan S., Lee R. (2006), Intra-organisational influences in procurement networks controls: The impacts of information technology, Management Accounting Research, Vol. 17, No. 2, pp. 141-170.
  20. Chua W. F., Mahama H. (2007), The effect of network ties on accounting controls in a supply alliance: field study evidence, Contemporary Accounting Research, Vol. 24, No. 1, pp. 47-86.
  21. Cooper R., Slagmulder R. (2004), Interorganizational cost management and relational context. Accounting, Organizations and Society, Vol. 29, pp. 1-26.
  22. Das T.K., Teng B.S. (2001), Trust, control, and risk in strategic alliances: An integrated framework, Organization Studies, Vol. 22, No. 2, pp. 251-283
  23. Davila T., Epstein M. J., Matusik F. (2004), Innovation strategy and the use of performance measures, Advances in Management Accounting, Vol. 13, pp. 27-58.
  24. Davila A., Foster G., Li M. (2009), Reasons for management control systems adoption: Insights from product development systems choice by early-stage entrepreneurial companies, Accounting, Organizations and Society, Vol. 34, pp. 322-347.
  25. Davila T. (2000), An empirical study on the drivers of management control systems’ design in new product development, Accounting, Organizations and Society, Vol. 25, pp. 383-409.
  26. Davila T. (2005), The Promise of Management Control Systems for Innovation and Strategic Change, in C.S. Chapman (ed.), Controlling Strategy, Oxford: Oxford University Press, pp. 37-61.
  27. Dekker H. (2016), On the boundaries between intrafirm and interfirm management accounting research, Management Accounting Research, Vol. 31, pp. 86-99.
  28. Ditillo A. (2004), Dealing with uncertainty in knowledge-intensive firms: the role of management control systems as knowledge integration mechanisms, Accounting, Organizations and Society, Vol. 29, pp. 401-421.
  29. Fernhaber S., Li D. (2013) International exposure through network relationship: implication for new venture internationalization, Journal of Business Venturing, Vol. 28 No. 2, pp. 316-334.
  30. Flick U. (2009), An introduction to qualitative research, Sage, London, UK.
  31. Ghazali A. (2005), Small firm Owner-managers’ networks in Tourism and Hospitality, International Journal of Business and Society, Vol. 6, No. 2, pp. 37-54.
  32. Grafton G., Lillis A.M., Mahama H. (2011), Mixed methods research in accounting, Qualitative Research in Accounting & Management, Vol. 8, no. 1, pp. 5-21.
  33. Grippo G., Marchiori M., Tunisini A. (2016), Lo start up delle reti tra imprese. Analisi dei gap tra intenzione e interazione, Piccola Impresa/Small Business, Vol. 2, pp. 5-25.
  34. Håkansson H., Ford D., Gadde L.E., Shenota I., Waluszewski A. (2009), Business in Network, John Wiley & Son Ltd, New York.
  35. Halinen A., Törnroos J.A. (2005), Using case methods in the study of contemporary business networks, Journal of Business Research, Vol. 58, No. 9, pp. 1285-1297.
  36. Hall M. (2010), Accounting information and managerial work, Accounting, Organizations and Society, Vol. 35, pp. 301-315.
  37. Haustein E. (2014), Management control systems in innovation companies: a literature based framework, Journal of Management Control, Vol. 4, pp. 343-382.
  38. Henri J.F. (2006), Management Control systems and strategy: a resource-based perspective, Accounting, Organizations and Society, Vol. 31, No. 6, pp. 529-558.
  39. Kominis G., Dudau A.I. (2012), Time for interactive control systems in the public sector? The case of every child matters policy change in England, Management Accounting Research, Vol. 23, pp. 142-155.
  40. Lin F., Lin Y. (2016), The effect of network relationship on the performance of SMEs, Journal of Business Research, Vol. 69, No. 5, pp. 1780-1784.
  41. Lombardi R. (2015), Le reti d’impresa in economia aziendale. Profili critici e interpretativi, Giappichelli, Torino.
  42. Lu J., Beamish P. (2001), The internazionalisation and performance of SMEs, Strategic Management Journal, Vol. 22, No. 6-7, pp. 565-586.
  43. Lukka K. (2007), Management accounting change and stability: loosely coupled rules and routines in action, Management Accounting Research, Vol. 18, pp. 76-101.
  44. Mahama H. (2006), Management control systems, cooperation and performance in strategic supply relationships: a survey in the mines, Management Accounting Research, Vol. 17, No. 3, pp. 315-339.
  45. Martyn P., Sweeney, B., Curtis E., (2016), Strategy and control: 25 years of empirical use of Simons’ Levers of Control framework, Journal of Accounting & Organizational Change, Vol. 12, No 3, pp. 281-324.
  46. Massaro M., Zanin F., Bardy R. (2014), Levers of control and knowledge sharing in alliances among large firms and small firms in the pharmaceutical industry, Management Control, Vol. 2, pp. 117-138.
  47. Meira J., Kartalis N.D., Tsamenyi M., Cullen J. (2010), Management controls and inter-firm relationship: a review, Journal of Accounting & Organizational Change, Vol. 6, No. 1, pp. 149-169.
  48. Mouritsen J. (1999), The flexible firm: Strategies for a subcontractor’s management control. Accounting, Organizations and Society, Vol. 24, pp. 31-55.
  49. Mouritsen J., Hansen A., Hansen C.Ø. (2001), Interorganizational controls and organizational competencies: Episodes around target cost management/functional analysis and open book accounting, Management Accounting Research, Vol. 12, pp. 221-244.
  50. Pekkola S. (2013b), Managing a network by utilizing performance measurement information, Measuring Business Excellence, Vol. 17, No. 1, pp. 72- 79.
  51. Provan K.G., Fish A., Sidow J. (2007), Interorganizational Networks at the Network Level: A Review of the Empirical Literature on Whole Networks, Journal of Management and Governance, Vol. 33, N. 6, pp. 479-516. DOI: 10.1177/0149206307302554
  52. Simons R. (1995), Levers of Control. How Managers Use Innovative Control System to Drive Strategic Renewal, Boston, MA, Harvard Business School Press.
  53. Simons R. (1990), The role of management control systems in creating competitive advantage: New Perspectives. Accounting, Organizations and Society, Vol. 15, No. 1/2, pp. 127-143.
  54. Simons R. (2000), Performance measurement and control systems for implementing strategy: text & cases, Upper Saddle River, NJ, Prentice Hall.
  55. Trequattrini R., Russo G., Lombardi R. (2012), Network Governance: Organizational and Legal Profiles, Corporate Ownership & Control, Vol. 9, No. 4, pp. 346-350.
  56. Thrane S., Hald K.S. (2006), The emergence of boundaries and accounting in supply fields: The dynamics of integration and fragmentation, Management Accounting Research, Vol 17, No. 3, pp. 288-314.
  57. Thrane S. (2007), The complexity of management accounting change: Bifurcation and oscillation in schizophrenic inter-organisational systems, Management Accounting Research, Vol. 18, No. 2, pp. 248-272.
  58. Verschoore J.R., Wegner D., Balestrin A. (2015), The evolution of collaborative practices in small-firm networks: a qualitative analysis of four Brazilian cases, International Journal of Management Practice, Vol. 8, No. 2, pp. 152-168. DOI: 10.1504/IJMP.2015.07169
  59. Wouters M., Anderson J.C., Wynstra F. (2005), The adoption of total cost of ownership for sourcing decisions – a structural equation analysis, Accounting, Organizations and Society, Vol. 30, pp. 167-191.
  60. Yin R.K. (2009), Case study research – design and methods, 4th ed. Sage Publications, Newbury Park, CA.

  • Management accounting systems in venture capital-backed start-up companies Simone Aresu, Luigi Rombi, Andrea Cardia, in MANAGEMENT CONTROL 3/2019 pp.35
    DOI: 10.3280/MACO2019-003003
  • Creatività organizzativa ed individuale nelle piccole e medie imprese: il ruolo del sistema di controllo Daniela Di Berardino, Faisal Anees, in MANAGEMENT CONTROL 1/2024 pp.227
    DOI: 10.3280/MACO2024-001011
  • Knowledge Management and Performance Measurement Systems for SMEs’ Economic Sustainability Andrea Cardoni, Filippo Zanin, Giulio Corazza, Alessio Paradisi, in Sustainability /2020 pp.2594
    DOI: 10.3390/su12072594
  • Economic and Policy Implications of Artificial Intelligence Domenico Nicolò, pp.23 (ISBN:978-3-030-45339-8)
  • The moderating effect of corporate size on the relationship between prospector strategy and management accounting practices Federica Palazzi, Francesca Sgrò, Massimo Ciambotti, Nick Bontis, Lorenzo Gelsomini, in Journal of Management Control /2023 pp.135
    DOI: 10.1007/s00187-023-00353-2

Selena Aureli, Andrea Cardoni, Mara Del Baldo, Rosa Lombardi, Traditional management accounting tools in SMEs’ network. Do they foster partner dialogue and business innovation? in "MANAGEMENT CONTROL" Suppl. 1/2019, pp 35-50, DOI: 10.3280/MACO2019-SU1003