Contingency-based research has a long tradition in the study of management control systems (MCS). Researchers have attempted to explain the effectiveness of MCS by examining designs that best suit the nature of the environment, technology, size, structure, strategy and national culture. In recent years, contingency-based research has maintained its popularity with studies including these variables but redefining them in contemporary terms. This paper provides a critical review of findings from contingency-based studies over the past 20 years, deriving a series of propositions relating MCS to organizational context. The paper examines issues related to the purpose of MCS, the elements of MCS, the meaning and measurement of contextual variables, and issues concerning theory development. A final section considers the possibility that contingency-based ideas could encompass insights from a variety of theories to help understand MCS within its organizational context.

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Management control systems design within its organizational context: findings from contingency-based research and directions for the future

Performance management: a framework for management control systems research

This paper reviews research that studies the relationship between management control systems (MCS) and business strategy. Empirical research studies that use contingency approaches and case study applications are examined focusing on specific aspects of MCS and their relationship with strategy. These aspects include cost control orientation, performance evaluation and reward systems, the effect of resource sharing, the role of MCS in influencing strategic change and the choice of interactive and diagnostic controls. More contemporary approaches to the relationship between performance measurement systems and strategy are also considered. It is concluded that our knowledge of the relationship between MCS and strategy is limited, providing considerable scope for further research. A series of future research questions is presented.

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Management control systems and strategy: A critical review☆

There is considerable interest in the role of strategic performance measurement systems (SPMS), such as balanced scorecards, in assisting managers develop competitive strategies. A distinctive feature of SPMS is that they are designed to present managers with financial and non-financial measures covering different perspectives which, in combination, provide a way of translating strategy into a coherent set of performance measures. There appears to be wide variation in how these systems are configured. However, as yet, there has been little consideration given to identifying underlying information characteristics that might help explain how the systems have beneficial effects. This study identifies a key dimension of SPMS, integrative information, as being instrumental in assisting managers deliver positive strategic outcomes. Three interrelated dimensions of integrative SPMS were identified in this study. The first, strategic and operational linkages, was a generic factor that captures the overall extent to which the systems provide for integration between strategy and operations, and integration across elements of the value chain. The second attribute, customer orientation, focuses on customer linkages and includes financial and customer measures. The third dimension, supplier orientation, is based on linkages to suppliers and includes business process and innovation measures. A model is developed that predicts that integrative SPMS will enhance the strategic competitiveness of organizations. It is proposed that the influence of integrative SPMS on strategic outcomes is indirect through the mediating roles of alignment of manufacturing with strategy and organizational learning. Data from a survey of 80 strategic business units provide varying support for the proposed relationships.

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Integrative strategic performance measurement systems, strategic alignment of manufacturing, learning and strategic outcomes: an exploratory study

The purpose of this paper is to review theories and evidence regarding the effects of (performance-contingent) monetary incentives on individual effort and task performance. We provide a framework for understanding these effects in numerous contexts of interest to accounting researchers and focus particularly on how salient features of accounting settings may affect the incentives-effort and effort-performance relations. Our compilation and integration of theories and evidence across a wide variety of disciplines reveals significant implications for accounting research and practice. Based on the framework, theories, and prior evidence, we develop and discuss numerous directions for future research in accounting that could provide important insights into the efficacy of monetary reward systems.

The effects of monetary incentives on effort and task performance: theories, evidence, and a framework for research

This paper provides a review of studies that focus on the use of budgetary information in performance evaluation. Our survey shows that studies have recognized that this information is used in a variety of ways. In addition, various psychological and behavioural effects of alternative uses as well as factors that give rise to a particular use have been identified. Notwithstanding this breadth of analysis, a critical review of the literature shows that in recent years theoretical development has been piecemeal, and there are instances of selective referencing and an uncritical acceptance of theory statements in related literature. More generally, theoretical development has taken a secondary role to an emphasis on statistical analysis. Further, recent empirical studies tend to be method-driven in their selection of relevant phenomena and, in addition, include several characteristics that cause an uncoupling of the connection between theory statements and empirical tests. The present review interprets these limitations as providing opportunities for future research.

The role of budgetary information in performance evaluation

This study examines the effects of budgetary goal difficulty and feedback on budgetary performance. It is predicted that both goals and feedback are necessary, but neither is sufficient for improvements in performance. Results from a questionnaire survey of 44 senior managers with budget responsibilities in a property development and management corporation provide support for these predictions. They show that goals and feedback interact to affect performance, while independently, goals and feedback have no effect on performance. These results are discussed in the light of available evidence, and some implications for future research are examined.

The linear additive and interactive effects of budgetary goal difficulty and feedback on performance

 This experimental study tests the predicted effects of three performance-contingent pay schemes on subordinate misrepresentations: profit sharing, a single-subordinate truth-inducing scheme, and the Groves scheme A contribution not found in prior experimental research is the introduction of the distinction between direct and indirect misrepresentations The results show that, as predicted, the three schemes have different abilities to deter the two types of misrepresentations The fewest direct and indirect misrepresentations occur under the Groves scheme and the most under the linear profit-sharing scheme There is no significant difference between the single-subordinate truth-inducing scheme and the Groves scheme in the incidence of direct misrepresentations, but indirect misrepresentations are significantly more frequent under the former



Resume La presente etude experimentale vise a tester certaines hypotheses relatives aux resultats de l'application de trois structures salariales liees au rendement sur les declarations trompeuses des subordonnes: la participation lineaire aux benefices, une structure salariale individuelle favorisant la franchise et la structure Groves Cette etude se demarque des etudes experimentales anterieures en ce qu'elle introduit une distinction entre l'information trompeuse directe et indirecte Les resultats revelent que, conformement aux hypotheses, les trois structures salariales presentent des capacites differentes de decourager les deux formes de declarations trompeuses La structure Groves est celle qui occasionne le plus petit nombre de declarations trompeuses directes et indirectes, tandis que la participation lineaire aux benefices est celle qui en occasionne le plus Il n'existe pas de difference significative entre la structure salariale individuelle favorisant la franchise et la structure Groves en ce qui a trait a l'occurrence des declarations trompeuses directes, mais les declarations trompeuses indirectes sont beaucoup plus frequentes dans le cas de la structure salariale individuelle

Motivating Truthful Subordinate Reporting: An Experimental Investigation in a Two‐Subordinate Context*

Abstract The effects of goal setting and task interdependence on both the level of and variance in performance are examined using a laboratory, resource allocation task. The results show, consistent with existing research, main effects for goal setting and task interdependence on the level of performance, but no goal setting by task interaction effect as hypothesised. The results also show that an increase in task interdependence increases performance variance but that goal setting reduces it with important implications for budget setting.

The effects of budget goals and task interdependence on the level of and variance in performance

The effects of goal setting and task interdependence on both the level of and variance in performance are examined using a laboratory, resource allocation task. The results show, consistent with existing research, main effects for goal setting and task interdependence on the level of performance, but no goal setting by task interaction effect as hypothesised. The results also show that an increase in task interdependence increases performance variance but that goal setting reduces it with important implications for budget setting.

http://directory.umm.ac.id/Data%20Elmu/jurnal/A/Accounting,%20Organizations%20and%20Society/Vol24.Issue3.April1999/252.pdf

Mark K. Hirst

Papers

The role of budgetary information in performance evaluation

The linear additive and interactive effects of budgetary goal difficulty and feedback on performance

Motivating Truthful Subordinate Reporting: An Experimental Investigation in a Two‐Subordinate Context*

The effects of budget goals and task interdependence on the level of and variance in performance

The effects of budget goals and task interdependence on the level of and variance in performance: a research note