Gaining traction: how SMEs succeed in making management control systems stick

Jeff Reinking and Peter Resch

Qualitative Research in Accounting & Management, 2023, vol. 20, issue 3, 372-397

Abstract: Purpose - This study aims to explore why certain firms can transition successfully to more sophisticated accounting and management control systems than others. Design/methodology/approach - This study uses 20 semi-structured interviews with senior executives of former and present SMEs in the construction industry and business advisory firms to explore the factors behind making sophisticated control systems a permanent organizational feature. Findings - Sophisticated control systems function based on the compliance of lower-level employees, whose lack of buy-in is a major hurdle for smaller firms. Foundational controls of basic human resources and systematic communication routines facilitate their buy-in through accountability, participation and information-sharing, without which firms fail to transition successfully to sophisticated control systems. Research limitations/implications - The results are based on firms in a single industry and subject to the limitations of cross-sectional research. The transition strategy to more sophisticated control systems is important. This study suggests that foundational controls are necessary to successfully transition to more sophisticated controls. Originality/value - This study focuses on smaller firms seeking to transition to more sophisticated control systems. This study identifies the key roadblock of noncompliance by lower-level employees, elaborates the role of foundational controls and describes the underlying mechanism behind gaining employee buy-in.

Keywords: SMEs; Transparency; Management control systems; Employee buy-in; HR controls; Systematic communication routines (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:qrampp:qram-01-2022-0011

DOI: 10.1108/QRAM-01-2022-0011

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