The contingent nature of complementarity between results and value-based controls for managing company-level profitability: A situational strength perspective

Jonas Gerdin, Tobias Johansson and Gabriella Wennblom

Accounting, Organizations and Society, 2019, vol. 79, issue C

Abstract: Integrating recent theorizing on complementarity and situational strength with management control system (MCS) theory, we investigate how, why and under what circumstances companies may beneficially combine results control and two value-based controls (the use of belief systems and employee socialization practices) to handle the goal alignment problem that typically arises when managing company-level profitability. Drawing upon a survey of MCS practices in 103 strategic business units within the largest companies in Sweden, we find that the use of socialization practices reinforces the marginal return of results control, and vice versa. We also find that higher levels of environmental unpredictability both strengthen this synergetic effect, and reveal a similar complementarity effect of the simultaneous use of results control and the belief system. Our study thus contributes to the MCS literature by showing that; (i) results control may beneficially interact with two important, yet largely unexplored value-based controls, (ii) situational strength theory is highly useful for analytically disentangling the (dis)abilities of these controls in terms of them conveying clarity, consequentiality, consistency and constraint, respectively, and; (iii) the extent to which these controls convey non-overlapping, yet complementary abilities to address the goal alignment problem (required to produce synergetic effects on company-level profitability) is dependent on environmental context.

Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:aosoci:v:79:y:2019:i:c:s0361368219300534

DOI: 10.1016/j.aos.2019.101058

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