Management Control System in the Business Network: Control and Trust

Wingsun Li ()
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Wingsun Li: Beijing Normal University & Hong Kong Baptist University—United International College

Chapter Chapter 11 in Strategic Management Accounting in a Network Economy, 2023, pp 263-291 from Springer

Abstract: Abstract This chapter discusses how the management control system (MCS) regulates the extended organization of a business network. The MCS serves as the central governing control mechanism for the organization, managing all aspects of activities from the strategic level to the operational level. The latest conceptualization of MCS recognizes that both formal control (e.g., output control) and informal control (e.g., social control) can be appropriately employed in different types of business environments, such as simple vs. complex or stable vs. volatile business climates. Recent management development has shown that not only control but also trust can reduce relational risk and performance risk. These factors are indeed complementary in nature. Trust refers to a psychological state of willingness to make oneself vulnerable to the actions of another. Trust can also reduce risk perceptions and alleviate conflicts and frictions, making it particularly applicable in the network economy. It becomes evident that control and trust are symbiotic; lacking one of them will render the MCS ineffective as a governing control mechanism. This chapter explores how control and trust influence the MCS in its extended role within the business network.

Keywords: Management control; Network business; Trust; Control; Perceived risk (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:mgmchp:978-981-99-5253-3_11

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DOI: 10.1007/978-981-99-5253-3_11

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