Sie sind auf Seite 1von 39


discussions, stats, and author profiles for this publication at:

Management Control Systems: A Review

Article February 2013

DOI: 10.1007/s00187-012-0158-7


32 7,156

2 authors, including:

Erik Strauss
Universitt Witten/Herdecke


Some of the authors of this publication are also working on these related projects:

Cloud computing and management accounting - CIMA-funded study 2013 View project

Routledge Companion: The Role of the Management Accountant: Local Variations and Global
Influences View project

All content following this page was uploaded by Erik Strauss on 19 July 2014.

The user has requested enhancement of the downloaded file.

Management control systems: a review

Erik Strau & Christina Zecher

Journal of Management Control

Zeitschrift fr Planung und

ISSN 2191-4761
Volume 23
Number 4

J Manag Control (2013) 23:233-268

DOI 10.1007/s00187-012-0158-7

1 23
Your article is protected by copyright and
all rights are held exclusively by Springer-
Verlag Berlin Heidelberg. This e-offprint is
for personal use only and shall not be self-
archived in electronic repositories. If you
wish to self-archive your work, please use the
accepted authors version for posting to your
own website or your institutions repository.
You may further deposit the accepted authors
version on a funders repository at a funders
request, provided it is not made publicly
available until 12 months after publication.

1 23
Author's personal copy
J Manag Control (2013) 23:233268
DOI 10.1007/s00187-012-0158-7

Management control systems: a review

Erik Strau Christina Zecher

Published online: 13 October 2012

Springer-Verlag Berlin Heidelberg 2012

Abstract The purpose of this paper is to review analytical conceptualizations of

management control systems (MCS) that have been developed in the academic litera-
ture. By means of a systematic review (Tranfield et al. in Br. J. Manag. 14: 207222,
2003), a comprehensive analysis that encompasses both textbook approaches and re-
search papers is provided. As a result, this article presents a landscape of possible
MCS understandings. For the selection of textbooks a survey among accounting re-
searchers and a syllabi search were conducted (Hoffjan and Wmpener in Schmalen-
bach Bus. Rev., 58: 234258, 2006). Merchant and Van der Stede (Management con-
trol systems: Performance measurement, evaluation and incentives, 2nd edn. Prentice
Hall, Harlow, 2003), Anthony and Govindarajan (Management control systems, 12th
edn. McGraw-Hill, Boston, 2007), and Simons (Performance measurement and con-
trol systems for implementing strategy. Pearson, Upper Saddle River, 2000) as the
three top-ranked textbooks were analyzed and used to generate criteria for the subse-
quent identification of relevant articles. Additional conceptual papers were included
in the analysis. Accordingly, this paper contributes to the management control lit-
erature by presenting a review of analytical conceptualizations of MCS. In contrast
to previous reviews, we compare analytical concepts of MCS at different categories
such as definitions, purposes, types, and frameworks. Moreover, our review was con-
ducted in a systematic manner, i.e. it follows a transparent and thorough process and,
by doing this, it complements prior not primarily objective reviews. Finally, we out-
line a map of the fragmented MCS landscape.

Keywords Management control Management control systems Systematic review

Electronic supplementary material The online version of this article

(doi:10.1007/s00187-012-0158-7) contains supplementary material, which is available to authorized
Dr. E. Strau () C. Zecher
Institute of Management Accounting and Control (IMC), WHUOtto Beisheim School
of Management, Valendar, Germany
Author's personal copy
234 E. Strau, C. Zecher

1 Introduction

In recent years, the field of management accounting and control has experienced a
new dynamic in terms of proposing various new analytical conceptualizations of man-
agement control systems (MCS). A diverse set of recently published frameworks,
such as the performance management and control framework (Ferreira and Otley
2005, 2009) or the MCS package (Malmi and Brown 2008), exemplifies this devel-
opment. Two issues that seem symptomatic for MCS research have motivated each
framework. First, contemporary management control frameworks are requested peri-
odically because [. . .] the control needs of the current environment are significantly
different from those developed in an earlier period [. . .] (Nixon and Burns 2005,
p. 260). In particular, recent research suggests that none of the extant conceptualiza-
tions fulfills the current needs to accommodate the perspectives of a wide range of
actors (Malmi and Brown 2008). Second, the lack of a consistent conceptualization of
MCS has led to an impediment of a precise academic debate in the field (Eilon 1962;
Fisher 1998; Fleming 1972; Machin 1983; Merchant and Otley 2007; Merchant and
Van der Stede 2003; Otley et al. 1995). Consequently, building a cumulative body
of knowledge about the design and use of MCS becomes difficult without well-
articulated definitions and purposes of MCS (Malmi and Brown 2008, p. 289). How-
ever, different attempts to improve conceptualizations of MCS and to overcome exist-
ing inconsistencies have not (yet) been successful. Rather, the field of MCS research
is still characterized by its fragmented status, manifested in divergent, but coexisting
definitions, conceptualizations, and theoretical underpinnings of MCS (Berry et al.
2009). In addition, the fact that the literature has not yet provided a review of past
research on conceptualizations of MCS contributes to the fragmented view of the
Therefore, the purpose of this paper is to illustrate, to compare, and to review
analytical conceptualizations of MCS that have been developed in the academic lit-
erature. As our aim is to provide a comprehensive and systematic review (Tranfield
et al. 2003), the analysis encompasses both textbook approaches and research papers.
Definitions, purposes, types, and frameworks are compared in detail. Finally, we de-
velop a MCS map that should give a comprehensive overview about the fragmented
MCS landscape.
This paper contributes to the management control literature by presenting a re-
view of analytical conceptualizations of MCS. Prior reviews on this topic covered
first and foremost empirical research, either structured historically (e.g. Bedeian and
Giglioni 1974) or along different theoretical lenses on management control such as
contingency or agency theory (e.g. Merchant and Simons 1986).1 We add to the liter-
ature by contrasting and comparing analytical concepts of MCS along different cat-
egories such as definitions, purposes, and types. In addition, as conceptual research
on MCS gained relevance in recent years (Nixon and Burns 2005), past reviews have
not included these developments. Therefore, we include most recent work, that, for

1 An exception is the review by Merchant and Otley (2007), which portrays different MCS concepts. How-
ever, they do so in a consecutive manner without explicitly highlighting commonalities and differences of
those concepts.
Author's personal copy
Management control systems: a review 235

instance, encompasses the MCS as a package approach by Malmi and Brown (2008)
and the holistic MCS framework by Ferreira and Otley (2005, 2009) and Broadbent
and Laughlin (2009). As we conduct a systematic review according to the guide-
lines by Tranfield et al. (2003) our review follows a transparent and thorough process
aimed at enhancing scientific rigor and at developing a reliable stock of knowledge.
An essential part of assessing relevant conceptual literature on MCS is an exploratory
textbook survey among accounting academics, since textbooks convey the predomi-
nating view on what is considered fundamental knowledge (Hoffjan and Wmpener
2006). Furthermore, textbooks are essential means for disseminating analytical con-
cepts of MCS to future practitioners as well as to future researchers (Zeff 2008).
According to the exploratory survey results, the three top-ranked MCS textbooks
seem to be those by Merchant and Van der Stede (2003), Anthony and Govindara-
jan (2007), and Simons (2000). From these textbooks, search terms were derived to
identify research papers on this topic. As a third contribution, we draw a map of the
MCS landscape in order to give researchers a first orientation in this broad research
area. While core elements of an MCS include formal controls and emphasize the use
of MCS information for decision-making purposes, a holistic view on MCS takes ac-
count of informal controls, the fact that MCS are designed to influence behavior, and
even strategic issues. Notably, more contemporary approaches in management ac-
counting and control research call for a holistic understanding of MCS (e.g. Ferreira
and Otley 2005, 2009).
The remainder of this paper is organized as follows: Sect. 2 discusses the emer-
gence of the term management control (systems). Our research design is outlined in
Sect. 3. The results of our exploratory textbook survey, syllabi search as well as lit-
erature review are presented in Sect. 4. In Sect. 5, we analyze and evaluate analytical
conceptualizations of MCS. The paper concludes (Sect. 6) with a map of the analyzed
MCS landscape.

2 The emergence of management control (systems) as academic term

In this section we show how the term management control and management con-
trol systems emerged in order to give insights into its origins because this supports
the understanding of past, current, and future developments in the field of MCS.
Therefore, we dedicate the following paragraphs to a short history of management
Reviewing the broad literature stream, it is surprising that the emergence of man-
agement control systems as academic term can be traced back to few people and few
universities. Specifically, the Harvard Business School (HBS) has an outstanding po-
sition with regards to its influence on the field of management control because two
main protagonists of the management control stream were located at this school, i.e.
Ross Walker and Robert Anthony (Zeff 2008).2 Walker and Anthony were the two

2 It is worth mentioning that also the Massachusetts Institute of Technology (MIT) and the University of
Chicago have contributed to the development of management control. However, the influence of the HBS
was more important due to the governmental programs it ran and the success of the textbooks by Anthony.
Therefore, we decided to focus only on HBS for the purpose of our paper. For more information about the
MIT and University of Chicagos influence see Zeff (2008).
Author's personal copy
236 E. Strau, C. Zecher

most influential leaders concerning the transformation from accounting to manage-

ment control. They picked up the emerging trend initiated by Thomas Sanders, who
was the first who named control in an accounting course in 1921/22, and they con-
tinued the ideas by Earle Burchell, who made the first reference to budgetary control
in an accounting course 1922/23. Specifically, Ross Walker took the first steps to-
wards a transformation from classical accounting to control. He shifted the focus of
the HBS accounting education form satisfying the needs of the accounting profes-
sion to satisfying the information demands of managers in order to foster rational
behavior (Zaleznik 2005). Walker interpreted the term control in a way that control
would not only mean limitation to human behavior but also ensuring an adequate
supply of successful operation (Walker, 1938 cited in Zeff 2008, p. 181). This shift
was fostered by courses for the US National Defense that were ran by the HBS from
19411945. The business school trained military officers and civilian executives to
enhance their analytical skills, helping them to optimize the management of scarce
resources available for the war effort. [. . .] Adopting, the faculty poured old wine into
new bottles and called it Management Control (Vancil 1989, pp. ixx). This was
the first time that the modern term management control was used. After the military
initiation, the HBS also integrated this new course into its Industrial Administrator
degree program in 1941 and, in 1942, in its elective MBA program as well.
In addition to Walker, the other dominant actor behind the shift from account-
ing to management control was Robert Anthony. Walker and Anthony supported the
curriculums change with the creation of accompanying textbooks. Developing his
prior Management Accounting course, Anthony offered in 1963/64 for the first
time a course with the same title as his seminal book in 1965, i.e. Planning and
Control Systems. A first step towards a systems approach for management control
was taken. In the consequent year, he continued this course but changed its title to
Management Control Systems, which brought the term for the first time in the aca-
demic world (Otley 1994). The accompanying textbook to this course was the starting
point of modern MCS discussion (Machin 1983; Otley et al. 1995; Herath 2007) as
it provided not only for students and practitioners a comprehensive overview about
management control but also it provided researchers with a structure that allowed a
clear research design. Anthonys (1965) work will be outlined and discussed in the
next paragraphs.3
Anthony defined management control as the process by which managers assure
that resources are obtained and used effectively and efficiently in the accomplish-
ment of the organizations objectives (1965, p. 17). Regarding the conceptualization
of MCS, Anthony (1965) distinguished planning and control systems into three dis-
crete processes of strategic planning, management control, and operational control.
These processes relate to the organizational hierarchy in such a manner that they in-
dicate the respective managerial levels. Strategic planning is defined as the process

3 For a review of management control concepts before 1965 see Bedeian and Giglioni (1974) who trace
the development of management control theory to the early 1900s. Similarly, Parker (1986) examines
the conceptual development of management control from 1900 until 1979. The evolution of management
control from 1908 until 1980 at HBS as well as at the Massachusetts Institute of Technology and at the
University of Chicago is discussed in a historical study by Zeff (2008). Parker (1986, Appendix A) provides
an overview of control-related sections in 21 management accounting texts.
Author's personal copy
Management control systems: a review 237

of deciding on objectives of the organization, on changes in these objectives, and

on the policies that are to govern the acquisition, use, and disposition of these re-
sources (Anthony 1965, p. 16). Strategic planning activities encompass the setting
of long-term goals and objectives as well as the formulation of long-range plans and
policies for the whole organization. In contrast, operational control is the process
of assuring that specific tasks are carried out effectively and efficiently (Anthony
1965, p. 18). Activities related to operational control involve particular tasks and
transactions whose accomplishment can be objectively evaluated. The process that
connects strategic planning and operational control is termed management control.
MCS should be integrated and coordinated systems, i.e. they should consist of a col-
lection of reconcilable subsystems.
Although Anthonys work was a milestone in the development of management
control and MCS research, many management control researchers expressed their
discontent with this framework over time. For example, Anthony (1965) has been
criticized for his narrow view due to an emphasis on financial and accounting-based
controls (Emmanuel et al. 1990; Otley et al. 1995; Merchant and Otley 2007) and
for his separation of management control from strategic and operational control. As
employees in lower hierarchical levels become more and more involved in activi-
ties of strategic planning or at least of strategic importance, this distinction seem
no longer appropriate (Langfield-Smith 1997; Otley 1994). Moreover, Anthonys
(1965) avoidance of strategic issues as well as the disregard of different types of
operational controls in different technological environments was deemed problem-
atic (Otley et al. 1995; Merchant and Otley 2007). Also, the possibility that strate-
gies can emerge (Mintzberg 1979) and evolve over time as well as the dynamic
role of MCS in formulating strategies is not considered by Anthony (Otley 1994;
Spekl 2001).
As a consequence of the scope and the complexity of the topic as well as of the
growing discontent with Anthonys (1965) approach, the need for more contemporary
and broader analytical conceptualizations of MCS became apparent. Therefore, many
authors advanced their own conceptualizations to facilitate and stimulate research on
MCS (Merchant and Otley 2007). In addition to different conceptualizations, MCS
have been studied from different theoretical perspectives, such as systems theory and
sociology. Both developments resulted in diverse conceptualizations and approaches
towards studying MCS.4 A systematic review of these analytical conceptualizations
requires first an identification of relevant literature. This process is described in the
following section.

3 Research design

Due to the historical (accounting) origins of MCS, we focus on accounting academics

and literature in order to contribute to the MCS stream by systematically reviewing

4 Overviews over the progress in MCS research in the 1970s and 1980s are provided by Machin (1983)
and Merchant and Simons (1986). For a review of more current developments in MCS research, see, for
instance, Otley et al. (1995), Merchant and Otley (2007) and Berry et al. (2009).
Author's personal copy
238 E. Strau, C. Zecher

this relevant literature. We have three primary data sources: Textbooks, syllabi, and
research papers, which make a contribution to the conceptualization of MCS. We fo-
cus on textbooks because they show what students are taught and what they will use
as their knowledgebase in the future when they work in the corporate or academic
world, i.e. textbooks provide the knowledge, which will be transported into the aca-
demic and corporate world. In addition, we assume that only these MCS conceptual-
izations are presented in textbooks that are already established in the academic world
(Hoffjan and Wmpener 2006). Moreover, textbooks influence not only the students
themselves but also other academic actors such as lecturers or research assistants in
their design of syllabi for example. Therefore, we added syllabi as second source
in order to provide additional insights into the taught MCS conceptualizations. As a
third source for our review, we used research papers that focus primarily on the con-
ceptualization of MCS. Therefore, we complement the already established academic
views on MCS by newer (may be not fully established) conceptualizations presented
in research papers.
For conducting our review, we followed the guidelines proposed by Tranfield et al.
(2003). At first, with the purpose of assessing the relevance and the amount of the lit-
erature, we conducted scoping studies. Moreover, prior to conducting the review, a
review protocol was composed (see Appendix A). This document contained a de-
scription of the review process and the search strategy as well as the criteria for
inclusion of sources.
As a comprehensive, impartial and balanced search is essential for a systematic
review, we decided to collect our data in three stages. First, we conducted an ex-
ploratory e-mail survey about MCS textbooks among accounting academics. Second,
we searched online for syllabi designed for courses covering MCS to enhance the re-
liability of the survey results. Third, we identified keywords and search terms based
on the results of the first two steps and searched for articles and working papers in the
online database EBSCO/Business Source Complete. In the following, all three parts
are explained in detail.
With respect to the e-mail survey among academics, we followed Hoffjan and
Wmpeners (2006) approach and generated the e-mail addresses from Hasselbacks
Accounting Faculty and Research Directory5 (20052006).6 This directory compre-
hends not only most of the American accounting faculty members but also (in the
20052006 edition) more than 140 international schools and their faculty members
outside the US (such as Aachen, Hong Kong, Mnster, Nanyang, Sydney etc.). More-
over, the directory provides also information about the specialization of the faculty
members, which supported focusing our survey to faculty members who are active
in the area of management control (systems). Accordingly, we asked every faculty
member that was included in the Hasselback Directory and who had at least one
of the following areas of specialization: Cost accounting, managerial accounting, or

5 For more information about the Hasselback Directory please visit or
6 Due to the history of the topic management control and its roots in accounting, we focus our analysis on
accounting academics as they still dominate the teaching of and research on management control systems.
Author's personal copy
Management control systems: a review 239

controllership.7 In case that no full professor was registered in those areas, we con-
tacted associate professors or alternatively assistant professors at these schools. We
asked the participants to name and rank the three textbooks that they considered most
relevant concerning MCS and to provide a rationale for their selection.8 The survey
was conducted in September and October 2008. Two weeks after the initial contact,
a reminder was sent. Due to the abovementioned restrictions, we initially contacted
1,062 (81.3 % USA, 5.5 % Canada, 2.8 % UK, 2.6 Europe, 7.8 % other) out of the
2,586 accounting researchers that are included in the Hasselback Directory. Some
forwarded our email to their colleagues, increasing our original sample size by 35 to
1,097 accounting scholars. Of those, 158 claimed that MCS do not fall in their areas
of expertise as, for instance, they had retired and are not longer up to date concern-
ing textbooks or had never taught MCS. Further, 180 email-addresses were incorrect
or did not exist anymore, resulting in an adjusted sample size of 759 academic ac-
countants. We received feedback from 74 respondents (56.8 % USA, 13.5 % Canada,
12.2 % UK, Europe 10.8 %, Australia 1.4 %) from 71 different schools, equivalent to
a response rate of 9.75 %.
Regarding syllabi for courses covering MCS, we generated a search algorithm for
the Internet search engine Google. In doing so, we searched for the terms manage-
ment control system and syllabus. Additionally, we limited our search to universities
and colleges in English-speaking countries, i.e. in the UK, the US, Canada, Ireland,
Australia and New Zealand. This yielded 75 syllabi (73.3 % USA, 12 % UK, 8 %
Canada, 6.7 % Australia). However, in order to get course syllabi with a distinct em-
phasis on MCS, we further limited our search to those courses containing the word
control in their title.9 In total, our search yielded 27 syllabi. Almost 52 % of the syl-
labi originated from the US, 30 % from the UK, about 11 % from Canada, and more
than 7 % from Australia. None of them originated from Ireland or New Zealand.
As a last step, we derived keywords and search terms from the results of the e-
mail survey and the syllabi search in order to identify relevant published studies. We
analyzed the title and content of the named textbooks within the survey and syllabi
to derive more specific search terms, which are strongly connected with MCS or are
used as synonyms. However, the results of our analysis provided (unsurprising) terms:
We found that the most relevant search terms would be organizational control and
management control. Using the online database EBSCO/Business Source Com-
plete, we searched for documents containing these terms in their title. Other search
criteria were also tested, but yielded less useful results. Next, on the basis of the ab-
stracts of the resulting articles and papers, it was decided which studies became part

7 Hoffjan and Wmpener (2006) focused on management accounting lecturers from Germany, UK, USA,
Australia, Switzerland, Austria, and Canada since their aim was to a comparative textbook analysis on
strategic management accounting. In contrast, we extended the population to individuals in the areas of
controllership and cost accounting to account for the broader scope of the term MCS (Merchant and Otley
8 For an overview about the given rationales see Appendix D.
9 We did not use the term management control because we realized that many syllabi contain abbrevia-
tions or university-specific adaptations to management control. Therefore, we decided to use the broader
term control in order to capture all relevant syllabi.
Author's personal copy
240 E. Strau, C. Zecher

of the final listing. Criteria for the inclusion of papers were whether a relevant con-
tribution to the conceptualization of MCS was made, for instance, when a typology
of MCS was developed or when different kinds of controls were propagated. Also,
studies describing the control process were included. In contrast, papers that primar-
ily illustrated or applied a MCS framework were excluded. Further, studies focusing
on specific control systems or devices as well as issues such as MCS in cross-cultural
contexts were felt to go beyond the scope of this paper. In summary, 37 studies were

4 Results

4.1 Top-ranked textbooks according to survey results

The results of the exploratory e-mail survey are shown in Table 1. As we asked the
participants to rank the textbooks, we assigned three points to each textbook ranked
first; two points to textbooks ranked second, and one point to those ranked third.
Respondents considered Merchant and Van der Stede (2003) as the most relevant
textbook concerning MCS, followed by Anthony and Govindarajan (2007), and Si-
mons (2000). Since the difference between these three and the rest of the textbooks is
notable, there is a clear indication that Merchant and Van der Stede (2003), Anthony
and Govindarajan (2007), and Simons (2000) form the basis for any MCS-related
textbook analysis.
Apart from the top-three ranks, a number of different managerial and cost ac-
counting textbooks were selected. Other textbooks selected by respondents focus on
performance measurement or management information systems, revealing the variety
of topics that draw on notions of management control. Of course, we have to men-
tion that the focus on accounting-based books is due to our sample of (accounting)
Regarding the reasons provided by respondents for selecting a certain MCS text-
book, the majority of the participants justified their choice with content-related rea-
sons, the comprehensibility to students, or with the perceived quality of the cases.
The rationales given are thus broadly in line with the selection criteria that Smith and
DeRidder (1997) observed for accounting textbooks. More importantly, these reasons
also indicate what accounting scholars recognize as essential for a conceptualization
of MCS. Many respondents underlined the broad, holistic, or in-depth cover-
age or the exhaustive manner in which management controls are described in the
top-three ranked textbooks. In particular, respondents who selected one of those text-
books thought that other texts put an overemphasis on accounting. To their mind,
accounting takes a narrow focus and MCS are not just something which can be
understood from an accounting point of view. Another noticeable result refers to the
reasons provided for selecting the textbook by Anthony and Govindarajan (2007).
Respondents pointed to Anthonys long experience in the field that gave credibility

10 For an detailed overview about studies that make a relevant contribution to MCS conceptualization see
Appendix C.
Author's personal copy
Management control systems: a review 241

Table 1 Results from e-mail survey

Author(s) Title Ed. Year Experts Total

1st rank 2nd rank 3rd rank Points Rank

Merchant and Management Control 2nd 2003 18 14 2 84 1

Van der Stede Systems
Anthony and Management Control 12th 2007 18 9 7 79 2
Govindarajan Systems
Simons Performance 1st 2000 12 11 7 65 3
Measurement and
Control Systems for
Horngren, Foster, Cost Accounting 13th 2008 4 1 2 16 4
Datar, Rajan, and
Zimmerman Accounting for 6th 2008 2 2 1 11 5
Decision Making
and Control
Emmanuel, Accounting for 2nd 1990 1 3 1 10 6
Merchant, and Otley Management Control
Atkinson, Kaplan, Management 5th 2007 1 3 0 9 7
Matsumura, and Accounting
Demski Managerial Uses of 2nd 2008 2 0 0 6 8
Macintosh Management 1st 1995 1 1 0 5 9
Accounting and
Control Systems
Hilton Managerial 6th 2008 1 0 1 4 10
Merchant Modern 1st 1997 1 0 1 4 10
Management Control
Anthony Planning and Control 1st 1965 1 0 0 3 11
Dorf and Bishop Modern Control 11th 2007 1 0 0 3 11
Ewert and Interne Unter- 7th 2008 1 0 0 3 11
Wagenhofer nehmensrechnung
Gordon Managerial 6th 2005 1 0 0 3 11
Hopper, Northcott, Issues in 3rd 2007 0 1 1 3 11
and Scapens Management
Sandoe, Corbitt, and Enterprise 1st 2001 1 0 0 3 11
Boykin Integration
Solomons Divisional 1st 1965 1 0 0 3 11
Author's personal copy
242 E. Strau, C. Zecher

Table 1 (Continued)

Author(s) Title Ed. Year Experts Total

1st rank 2nd rank 3rd rank Points Rank

Vancil What Kind of 1st 1973 1 0 0 3 11

Management Control
Do You Need?
Allen, Brownlee, Cases in 4th 2004 0 1 0 2 12
Haskins, Lynch, and Management
Rotch Accounting and
Control Systems
Anderson and Post Management 4th 2005 0 1 0 2 12
Information Systems
Anthony and Young Management Control 7th 2003 0 0 2 2 12
in Nonprofit
Senge The Fifth Discipline 1st 2006 0 1 0 2 12
Anthony, Hawkins, Accounting: Texts 12th 2006 0 0 1 1 13
and Merchant and Cases
Christensen and Economics of 1st 2005 0 0 1 1 13
Feltham Accounting
Garrison, Noreen, Managerial 12th 2007 0 0 1 1 13
and Brewer Accounting
Maciariello and Management Control 2nd 1994 0 0 1 1 13
Kirby Systems
Maher, Weil, and Managerial 10th 2007 0 0 1 1 13
Stickney Accounting
Merchant Rewarding Results 1st 1989 0 0 1 1 13
Shank and Strategic Cost 1st 1993 0 0 1 1 13
Govindarajan Management
Smith Performance 1st 2005 0 0 1 1 13
Measurement and
Turban, Aronson, Decision Support 8th 2008 0 0 1 1 13
Liang, and Sharda and Business
Intelligence Systems

to the textbook content. Specifically, Anthony as the godfather of management con-

trol authored a textbook that is the original and keeps the subject area somewhat
anchored . Consistent with Zeff (2008), a respondent remarked that Bob Anthony
and the folks at HBS really defined the discipline. Although not explicitly mentioned
by respondents, their comments suggest that Anthonys (1965) approach is still rel-
evant for more recent conceptualizations of MCS. Finally, a couple of participants
pointed to the difficulty of finding a consistent definition of management control.
The term MCS seems to be used differently in different communities since in the
US accounting academicians tend to use the term managerial (or management) ac-
counting to include what most accounting academicians in Europe call management
control . Similarly, a respondent noted that Anglo-Saxon researchers have tended
to use management control to indicate a broader approach to control than just man-
Author's personal copy
Management control systems: a review 243

agement accounting. This might also explain why several respondents selected an
accounting textbook. It further means that accounting textbooks cannot be completely
disregarded, despite their lower ranks. Therefore, we also looked at those textbooks
to assess their coverage of MCS. Although they typically include a section on MCS,
accounting textbooks cover this topic rather marginally, with some even referring to
one of the top-three ranked textbooks. For instance, Horngren et al. (2008a) provide
a brief description of MCS and discuss issues of transfer pricing and multinational
considerations in the same chapter. In the next chapter, Simons (1995) levers of
control are presented. Similarly, Atkinson et al. (2007) address the topic rather con-
cisely, but cover characteristics of MCS more extensively. However, later the authors
also refer to Simons (1995). Conversely, Zimmerman (2008) avoids the term MCS
completely and instead introduces the concept of organizational architecture. Never-
theless, his text is focused on (cost) accounting issues. In sum, these textbooks do not
seem to contribute to the conceptualization of MCS. While recognizing the impact of
accounting textbooks on certain communities, we thus decided to exclude them from
our analysis.

4.2 Top-ranked textbooks according to the syllabi analysis

Concerning the syllabi search, 27 syllabi may seem as a rather small number com-
pared to 125 management accounting course syllabi that Hoffjan and Wmpener
(2006) identified. However, we did not include German-speaking countries which
accounted for more than one fifth of the syllabi in the management accounting course
sample (Hoffjan and Wmpener 2006). As management accounting is a core topic
in any undergraduate business program, there may exist per se more management
accounting than MCS courses. Moreover, 75 syllabi were initially identified but we
decided to focus on those courses with a distinct emphasis on control, and thus on
MCS. These reasons may explain the differences of both syllabi sample sizes.
Although the low sample size limits the generalizability of our results, the MCS
textbooks recommended in syllabi seem to be to a large extent similar to those men-
tioned in the e-mail survey. While Anthony and Govindarajan (2007) is the most
frequently recommended textbook, Merchant and Van der Stede (2003) are ranked
second, although far behind Anthony and Govindarajan (2007). These two textbooks
represent almost three quarters (74 %) of all results. The remainder, which includes
Simons (2000) and all other textbooks that were found only once, is close to negligi-
ble. Table 2 contains the results of the syllabi search.
Overall, the e-mail survey and the syllabi search suggest that Merchant and
Van der Stede (2003), Anthony and Govindarajan (2007), and Simons (2000) are
the most important textbooks on MCS.

4.3 Selection of articles

We used the abovementioned textbooks to derive criteria for selecting relevant arti-
cles and working papers (see Appendix B for a detailed overview). Our selection of
papers covers the time period of the last forty years and includes both highly-ranked
and lower ranked (accounting) journals. The majority of the papers are normative
Author's personal copy
244 E. Strau, C. Zecher

Table 2 Textbooks recommended in syllabi for courses covering MCS and containing the word control
in their title

Author(s) Title Ed. Year Syllabi Rank

Anthony and Management Control 12th 2007 16 1

Govindarajan Systems
Merchant and Management Control 2nd 2003 4 2
Van der Stede Systems
Anthony and Young Management Control 7th 2003 1 3
in Nonprofit
Atkinson, Kaplan, Management 5th 2007 1 3
Matsumura, and Accounting
Berry, Broadbent, Management Control 2nd 2005 1 3
and Otley
Emmanuel, Accounting for 2nd 1990 1 3
Merchant, and Otley Management Control
Hilton Managerial 6th 2008 1 3
Malone The Future of Work 1st 2004 1 3
Simons Performance 1st 2000 1 3
Measurement and
Control Systems for
Total 27

or empirical in nature as it can be expected in light of our review questions. In the

following section, the textbooks contents as well as the different aspects of concep-
tualizing MCS covered in research papers are described and compared.

5 Conceptualizations of MCS

In this section, textbooks as well as relevant articles about analytical concepts of MCS
will be contrasted and compared. The discussion is thus organized in two parts. The
first part consists of a depiction and a comparison of the top-three ranked textbooks by
Merchant and Van der Stede (2003), Anthony and Govindarajan (2007), and Simons
(2000). The second part provides a discussion of relevant articles to gain a complete
picture on the field of conceptual research on MCS.

5.1 MCS according to the three top-ranked textbooks

A comparison of the three top-ranked textbooks requires first a description of the

underlying schools of thought. Therefore, Sect. 5.1.1 presents the understanding and
definition of MCS according to the respective authors. Subsequently, different types
of controls and of MCS are described and analyzed in Sect. 5.1.2.
Author's personal copy
Management control systems: a review 245

5.1.1 Understanding and definition of MCS

The first ranked book by Merchant and Van der Stede (2003) builds on an object-
of-control framework (p. X). Within that framework, MCS are based on the objects
of control which encompass results, actions, and personnel/culture (Merchant and
Van der Stede 2003, p. X). These objects have to be controlled because of personnel
limitations, motivational problems, and lack of direction as the three main manage-
ment problems. Lack of direction means that some employees just perform poorly
because they do not know what they are expected to do. Although it is assumed that
most employees know what to do, they sometimesif not alwaysbehave in a self-
interested manner which means that the personal goals of employees are not congru-
ent with the organizational ones. Personnel limitations mean that people know what to
do and are motivated to act in that way but they are not able to reach the required per-
formance because of certain limitations. Accordingly, the reason for and therefore the
overall objective of control in the framework of Merchant and Van der Stede (2003)
is human behavior, which has to be controlled in order to avoid divergence from set
objectiveswhich means that they follow the classical command and control under-
standing of MCS (cf. Simons 1995). Their MCS understanding also determines the
positioning of MCS within the management process. The first step in the general
management process is objective setting. Objectives are a necessary requirement for
the design of MCS because employees need an understanding of what the organiza-
tion is trying to reach. Therefore, objectives need to be elaborated before any MCS
can be designed. Strategies were seen by Merchant and Van der Stede (2003) as ways
resources should be used to meet the firms objectives, which classes them as sec-
ond step in the general management process. The third and last general management
process step is management control. MCS address the behavior of the employees,
because [. . .] it is people in the organization who make things happen (Merchant
and Van der Stede 2003, p. 7). Management controland so MCSwould be redun-
dant if employees were always able and willing to act in the organizations interest.
Therefore, management control [. . .] includes all the devices or systems managers
use to ensure that behaviors and decisions of their employees are consistent with the
organizations objectives and strategies (p. 4). Consequently, systems that ensure
congruence between the organization and its employees in objectives and strategies
are called MCS. It is important to note that this understanding and definition of MCS
explicitly encompass informal controls.
Anthony and Govindarajans (2007) second-ranked textbook is based on the sem-
inal work of Anthony (1965) and uses his trichotomy of strategic formulation, man-
agement control, and task control. This hierarchical differentiation reflects Anthony
and Govindarajans (2007) understanding of management control, which is defined
as [. . .] the process by which managers influence other members of the organiza-
tion to implement the organizations strategies (p. 17). Management controls task
is the implementation of the set organizational strategies, which means that diver-
gences have to be controlled. Thus, MCS are defined as [. . .] system[s] used by
management to control the activities of an organization is called management control
system (p. 17). This command and control understanding is quite similar to Mer-
chant and Van der Stede (2003), and is well reflected in Anthony and Govindarajans
(2007) formal control process (see Fig. 1).
Author's personal copy
246 E. Strau, C. Zecher

Fig. 1 The formal control process (Anthony and Govindarajan 2007, p. 105)

All MCS in Fig. 1 are used as feedback- and/or feedforward-controls, which is

characteristic for a cybernetic approach. But it is important to note that Anthony and
Govindarajan (2007)
[. . .] focus primarily on the systematic (i.e., formal) aspects of the control
function. One can describe in considerable depth the various steps in the for-
mal system, the information that is collected and used in each step, and the
principles that govern the systems operation as a whole. But it is very diffi-
cult, except in general terms, to describe the appropriate actions for managers
encountering situations not contemplated in the formal systems (p. 6).
This understanding excludes all informal control mechanisms (e.g., personnel and
cultural controls) as parts of MCS and causes that MCS are just one tool for imple-
menting strategy and interact with the organizational structure, culture, and human
resource management of the firm (see Fig. 2).
In contrast to Anthony and Govindarajans (2007) focus on formal controls, Si-
mons (1995, 2000)11 understanding of MCS is wider because he recognizes even
more explicitly the fact that organizational control can be achieved by adopting dif-
ferent forms of control such as direct monitoring or social and cultural control. In
addition, his understanding of MCS differs from the command and control perspec-
tive in the way that in his approach a feedback mechanism between goals and actions
and business strategy is integrated. This bottom-up perspective12 explicitly allows

11 Simons (2000) textbook is essentially based on his monograph (Simons 1995) that, in turn, elaborates
on his conceptual levers of control model based upon several empirical studies (Simons 1987, 1990,
1991, 1994). In order to give a comprehensive review of Simons model, references are sometimes made
to his earlier publications.
12 This bottom-up perspective has been inspired by Simons Ph.D. supervisor Henry Mintzberg, who dif-
ferentiated between emergent and planned strategies (see Mintzberg and Waters 1985).
Author's personal copy
Management control systems: a review 247

Fig. 2 Framework for strategy implementation (Anthony and Govindarajan 2007, p. 8)

strategies to emerge out of patterns of action (Simons 2000, p. 34), and, accordingly,
allows MCS to re-influence strategy. Therefore, his understanding can be described
as innovation and control (cf. Simons 1995, p. 4). However, Simons (1995, 2000)
positioning of MCS in the general management is affected by a strong hierarchical
understanding as he develops a hierarchically structured process of formulating and
implementing business strategy. Thereby, the business strategy reflects competitive
market dynamics, firm-specific resources, and capabilities as well as the firms mis-
sion. From the business strategy, performance goals and measures are derived, which,
in turn, determine the firms actions (Simons 2000, p. 18). Thus, MCS do not form an
explicit part of this process, but serve as levers for implementing business strategy
and achieving profit goals. Accordingly, strategy formulation is beyond the scope of
MCS, and takes place before MCS can be designed.
However, Simons (1995, 2000) focus is on informational issues, i.e. how infor-
mation is generated, communicated, and used by the organizations top managers.
This becomes clear when MCS are defined as [. . .] the formal, information-based
routines and procedures managers use to maintain or alter patterns in organizational
activities (Simons 1995, p. 5). According to Simons (1995), four attributes of his
definition have to be highlighted and explained in greater detail. First, Simons focus
is on formal routines and procedures, such as planning and monitoring systems. This
element is in line with the approach by Anthony and Govindarajan (2007). Next, as
outlined above, an emphasis is based on informational aspects, i.e. the purposes for
which and the ways how managers use MCS. Then, the maintaining or altering of
patterns does not only refer to goal-oriented activities but also to the search for new
opportunities and innovations that can stimulate emergent strategies. Finally, Simons
concentrates on top managers use of MCS and is not concerned with managers and
control systems at lower levels in the organizational hierarchy, which was criticized
by several authors (e.g. Ferreira and Otley 2005, 2009; Langfield-Smith 1997).
Another distinctive feature of Simons (1995, 2000) approach is the omission of
informal controls, as he described in his early work on the interplay of strategy and
MCS: Within the domain of interest implied by this definition are planning systems,
Author's personal copy
248 E. Strau, C. Zecher

reporting systems, and monitoring procedures which are based on information use;
excluded (somewhat arbitrarily) from this analysis are informal control mechanisms
[. . .] (Simons 1987, p. 358). At first, this statement seems contradictory since Si-
mons (1995, 2000) explicitly incorporates values and beliefs as informal aspects in
his framework. However, values and beliefs only become a part of Simons (1995,
2000) model if they are formalized. That means they have to be written down, for in-
stance, in an organizations mission statement. In this regard, Simons (1995, 2000)
framework differs from Anthony and Govindarajans (2007) approach as they do not
consider social and cultural controls at all.
Overall, it can be summarized that Anthony and Govindarajan (2007) have a nar-
rower understanding of MCS than Merchant and Van der Stede (2003) but both follow
the command and control MCS perspective. Simons (1995, 2000), however, has a
narrower MCS understanding than Merchant and Van der Stede (2003) but a wider
than Anthony and Govindarajan (2007) because of the integration of cultural con-
trols. Additionally, Simons (1995, 2000) endeavors to leave the path chosen by the
other authors and follows an innovation and control understanding of MCS, which
results in the ability of MCS to influence strategy.

5.1.2 Types of MCS

Merchant and Van der Stede (2003, pp. 1123) distinguish (within their object-of-
control framework) between results controls, action controls, personnel controls, and
cultural controls as four types of MCS. The first type of MCS, i.e. results controls,
influences actions because they cause employees to be concerned about the con-
sequences of their actions they take (p. 23). That means that the outcome of em-
ployees behavior is the objective of MCS. Typically, results controls create meri-
tocracies in which the highest reward is given to the person (or business unit) with
the highest results. However, results controls like every other type of MCS cannot be
used in every situation. A necessary requirement is that the results can be controlled
by those whose actions influence the results, i.e. the controllability principle, and
where the results can be measured effectively. Nevertheless, these requirements are
fulfilled in many organizational situations and hierarchy levels, and nearly all man-
agers in the firm can potentially use results controls. Concerning the three identified
control problems of Merchant and Van der Stede (2003), results controls are particu-
larly effective in addressing motivational problems because they induce employees
to behave so as to maximize their chances of producing the results the organizations
desires (p. 26)without upper-level manager supervision. The second MCS type is
devoted to action controls. These controls are the most direct form of management
control because they involve taking steps to ensure that employees act in the organi-
zations best interest by making their actions themselves the focus of control (p. 67).
Action controls can have different forms, such as behavioral constraints, pre-action
reviews, action accountability, or redundancy. All of these different alternatives ad-
dress different control problems to a certain degree. Behavioral constraints address
solely motivational problems, whereas pre-action reviews and action accountability
address all three control problemsapart from motivational problems, lack of di-
rection and personnel limitations. At least, redundancy can solve motivational and
Author's personal copy
Management control systems: a review 249

personnel problems. The third and fourth types of control are personnel and cultural
controls. These two types are strongly related because cultural controls are an accu-
mulated form of personnel controls. Personnel controls are based on the employees
natural tendencies to control and/or motivate themselves (p. 74). They can solve
each of the control problems by introducing a self-monitoring mentality within each
employee. For a successful implementation of personnel controls, the main challenge
is to find the right people who are self-motivated by their own goals that are congruent
with firms overall objectives. Cultural controls allow a certain (minimal) deviation
from the abovementioned internal goal-congruence of the employees. Cultural con-
trols are designed to encourage mutual monitoring, a powerful form of group pres-
sure on individuals who deviate from the group norms and values (p. 77). Therefore,
cultural controls effectively work in groups with high emotional ties and/or a high de-
gree of reciprocal dependency.
After the introduction of the different types of MCS, Merchant and Van der Stede
(2003) explicate that each type can be used more tightly or loosely, i.e. can vary in
its level of control tightness (or looseness). The main task of MCS is that they will or
should lead to a higher probability that the organizational objectives will be achieved.
This benefit can define the control tightness of an MCS, since a tighter MCS should
provide a high(er) degree of certainty that employees will act as the organization
wishes (2003, p. 124). That means that the degrees of freedom or the fault tolerance
will be minimized if the MCS is tight.
In comparison to Merchant and Van der Stede (2003), Anthony and Govindarajan
(2007) do not classify different types of MCS. They further base their differentia-
tion of MCS on their general management process (see Fig. 2). The different MCS
in the management process show the strict formal understanding of Anthony and
Govindarajan (2007). Merchant and Van der Stede (2003) would classify the major-
ity of the listed MCS as results controls. However, the classification by Merchant and
Van der Stede (2003) cannot disjunctly be applied to Anthony and Govindarajans
(2007) types of MCS. The main reason for this incomparability is the narrower focus
on MCS by Anthony and Govindarajan (2007), i.e. the exclusion of informal controls
from MCS.
Simons (1995, 2000) classification of MCS types is again different. Business
strategy represents the core of the analysis. Four key constructs form the next level
of analysis as critical indicators for a successful implementation of business strategy:
Core values, risks to be avoided, critical performance variables, and strategic uncer-
tainties. Consequently, beliefs, boundary, interactive, and diagnostic control systems
as the four levers of control each address one of these key constructs (Fig. 3).
Before each lever of control is explained in detail, Simons (1995, 2000) makes a
distinction between positive and negative forces which signifies his thinking of MCS:
These four levers create the opposing forcesthe yin and yangof effective
strategy implementation. In Chinese philosophy, positive and negative forces
are opposing principles into which creative energy divides and whose fusion
creates the world as we know it. Two of these control leversbeliefs systems
and interactive control systemscreate positive and inspirational forces. These
are the yang: forces representing sun, warmth, and light. The other two levers
boundary systems and diagnostic control systemscreate constraints and en-
Author's personal copy
250 E. Strau, C. Zecher

Fig. 3 Levers of control

framework (Simons 1995, p. 7)

sure compliance with orders. These are the yin: forces representing darkness
and cold. (Simons 1995, pp. 78)
Thus, the need to balance opposing forces and to integrate different kinds of controls
is an essential element of Simons (1995, 2000) philosophy.
The first types of MCS that Simons (1995, 2000) present are so-called beliefs sys-
tems which are the explicit set of organizational definitions that senior managers
communicate formally and reinforce systematically to provide basic values, purpose,
and direction for the organization (Simons 2000, p. 276). Accordingly, belief sys-
tems encompass mission and vision statements, credos, and statements of purpose.
Management creates and communicates the organizations values through these sys-
tems to provide momentum and direct individual opportunity-seeking (Simons 1995).
Beliefs systems appeal to the innate desires of organizational participants to belong
and contribute to purposive organizations (Simons 2000, p. 303). Although Simons
(1995, 2000) focuses this belief system on formal procedures, he also recognizes the
importance of (informal) believes and values for MCS. The second category encom-
passes boundary systems as explicit statements embedded in formal information
systems that define and communicate specific risks to be avoided (Simons 2000,
p. 764). Though these systems represent negative forces and set limits on the search
for (strategic) opportunities, the purpose of those systems is to stimulate the creativity
of individual organizational participants within predefined boundaries. Boundary sys-
tems include codes of business conduct, strategic planning systems, asset acquisition
systems, and operational guidelines. When the organizations reputation is crucial or
when excessive opportunity-seeking behavior endangers an organizations resources,
the use of boundary systems is recommended by Simons (1995).
Diagnostic control systems, the next category, play a critical role in the process
of transforming intended into realized strategies since, for instance, they are used
Author's personal copy
Management control systems: a review 251

for defining goals and monitoring initiated actions. Diagnostic control systems are
defined as the formal information systems that managers use to monitor organiza-
tional outcomes and correct deviations from preset standards of performance (Si-
mons 2000, p. 209). Examples of diagnostic control systems include budgets and
project monitoring systems. In general, diagnostic control systems allow an effec-
tive resource allocation by directing management attention to critical performance
variables and imply the activities of standard setting, performance measurement and
the design of goal-congruent incentive systems. Preconditions for the use of diag-
nostic control systems are, therefore, the possibility to set standards and measure
performance variables as well as the possibility to use feedback information to take
corrective actions (Simons 1995).
In contrast to diagnostic control systems, interactive control systems are essential
for the realization of emergent strategies: Interactive control systems are the for-
mal information systems that managers use to personally involve themselves in the
decision activities of subordinates (Simons 2000, p. 216). Since interactive control
systems focus organizational attention on strategic uncertainties and stimulate the
emergence of new strategic initiatives, they can be used at each point in time and are
not restricted to particular situations. Precondition for an interactive use is the regular
discussion of the data generated by the systems to ensure attention is paid constantly
to strategic uncertainties. Examples for systems that can be used interactively are
project and profit planning systems (Simons 2000). It is important to note that man-
agement decides which systems should be used interactively and which should be
used diagnostically. However, recently, the possibility of using certain systems both
diagnostically and interactively is discussed (Besson et al. 2008). A distinctive char-
acteristic of Simons (1995, 2000) types of MCS is that he assumed and highlighted
the interconnectedness of these four types of MCS. A firm has to establish and bal-
ance all four types of MCS to successfully control the organization:
The power of these levers in implementing strategy does not lie in how each is
used alone, but rather in how they complement each other when used together.
The interplay of positive and negative forces creates a dynamic tension between
opportunistic innovation and predictable goal achievement that is necessary to
stimulate and control profitable growth. (Simons 2000, p. 301)
The main insights from the textbooks are summarized in Fig. 4. As it can be rec-
ognized here, all three textbooks define MCS in a similar but not equal way. They
especially differ in the fundamental MCS understanding and in the wideness of their
MCS definition. The variance of this core literature will be the basis for even a wider
variability of understandings and definitions in other publications because of the prac-
tice variation in academe.

5.2 Relevant articles

After having reviewed selected textbook approaches towards the study of MCS, we
add now research papers that focus on the conceptualization of MCS, i.e. we only
included article that focus on the concept of MCS itself and did not include papers
primarily illustrating or applying an MCS framework or studies focusing on specific
Author's personal copy
252 E. Strau, C. Zecher

Fig. 4 Comparison of the three textbooks (own illustration)

control systems or devices as well as issues such as MCS in cross-cultural contexts

because they were felt to go beyond the scope of this paper. Overall, 37 papers formed
the basis of the following review.

5.2.1 Understandings and definitions of MCS

In this section, we present the different MCS understandings and definitions that are
postulated in the relevant articles. In order to systematically review these articles, we
follow Zimmerman (2008, see p. 37) by distinguishing the papers according to their
focus on either decision-making or control.
With respect to decision-making purposes, one of the earliest definitions comes
from Lowe (1971):
A management control system might be defined as a system of organizational
information seeking and gathering, accountability, and feedback designed to
ensure that the enterprise adapts to changes in its substantial environment and
that the work behavior of its employees is measured by reference to a set of sub-
goals (which conform with overall objectives) so that the discrepancy between
the two can be reconciled and corrected for. (p. 5)
This definition emphasizes the importance of information for decision-making but
also notices, to a certain extent, the influence of human behavior. In particular, it re-
flects the idea of decisions as a starting point of MCS design and of organizations as
decision-making entities (Lowe 1971). In addition, Amigoni (1978) stated that [. . .]
in the first one the management control systems function is mainly information
(p. 282) and Machin (1979) postulated that MCS [. . .] give managers the informa-
tion needed to effectively do their job [. . .] (p. 2). Morris III (1986) used a similar
definition of MCS, and understood the purpose of an MCS as the primary com-
ponent of a control system is the confidence both the employee and the organization
have the information provided by the system (p. 8). Moreover, Evans III et al. (1986)
regarded MCS as a decision-making and planning tool: [. . .] the role of the control
Author's personal copy
Management control systems: a review 253

system is to report to the owner and the manager whether the environmental condi-
tions [. . .] will be favorable or unfavorable in the coming period. [. . .] MCS is used
primarily as a [. . .] planning system [. . .] (Evans III et al. 1986, p. 489).
Whereas this early papers primarily understand MCS as decision-making tool,
Baiman (1982) was one of the first (apart from Anthony 1965) who linked decision-
making with control but still kept a focus on information for decision-making. He
argued that the most important aspect of MCS is the use of information not espe-
cially the control of behavior itself. He distinguished between three different uses
of MCS information: belief revision, motivation, and allocation. The belief revision
means that the use of MCS information changes managers beliefs about the future
expenditures of a plant for example. The second use of MCS information concerns
the motivation of subordinates by, for example, setting targets that are based on in-
formation provided by the MCS. Facilitating the allocation among members of the
organization is the last use of MCS information. Managers can, for instance, use
MCS to allocate resources between different departments or decentralized entities.
Whereas Baiman (1962) took a first step in the direction of understanding MCS as
control device but still focused on the information aspect of MCS, Otley (1999) fol-
lowed this line of thinking but put greater emphasize on the consequences of using
MCS information on employees behavior. From his point of view, MCS [. . .] pro-
vide information that is intended to be useful to managers in performing their jobs
and to assist organizations in developing and maintaining viable patterns of behav-
ior (p. 364). In this vein, Whitley (1999) published in the same year like Otley a
quite similar MCS understanding as he understood MCS as [. . .] ensuring that work
activities and sub-units fulfilled top managers objectives and provided the informa-
tion and systems to enable the managerial hierarchy to correct any deviations from
established plans (Whitley 1999, p. 507). Although both authors can be classified
to the decision-making stream of MCS papers, both authors indicated that issues of
control are an essential feature of MCS and built a bridge to the other MCS stream,
i.e. controlling human behavior.
One of the first definitions of MCS in the MCS as controlling human behavior
stream stems from Eilon (1962). He defined MCS as [. . .] tools and procedures used
by managers in the course of their job in managing the affairs of an organization
(Eilon 1962, p. 13) and understood organizational affairs in the way that managers
can control either the acting individual itself or the diverse relationships between indi-
viduals. Ouchi (1977) built on Eilon (1962) and his emphasis on individual behavior
but distinguishes between behavior and output controls:
[. . .] control systems can be regarded as being based essentially on the mon-
itoring and evaluation of one or the other, and these will be referred to as
being behavior control and output controlremembering that even in the case
of output control, real control comes about only through changing the workers
behavior, although the means is by selectively rewarding certain of his outputs.
(p. 97)
In a subsequent publication, Ouchi (1979) finally formulated a new trichotomy
of control mechanisms that can be used to move the organization towards its objec-
Author's personal copy
254 E. Strau, C. Zecher

tives: market, bureaucracy, and clans.13 Otley and Berry (1980) took up these ideas
of differentiation between different kinds of control in different conditions and the
recognition of the interaction of control and the social community. A cybernetic def-
inition of MCS is provided thus stressing both monitoring activities as well as taking
corrective actions. This leads to a holistic approach with accounting as a universal or-
ganizational language. However, the limits of cybernetic control are also recognized
since not each and every action can be controlled in a human organization (Otley and
Berry 1980). Another influential definition of MCS that goes beyond the account-
ing focus of Otley and Berry (1980) was developed by Flamholtz (1983). According
to his account, MCS include [. . .] any actions or activities taken to influence the
probability that people will behave in ways which lead to the attainment of organiza-
tional objectives (p. 154, see also Flamholtz 1979; Flamholtz et al. 1985; Otley and
Berry 1980). Moreover, Flamholtz (1979) and Flamholtz et al. (1985) have already
indicated the MCS as a package understanding as they mentioned that most orga-
nizations combine different systems to control their employees. This wider package
understanding was early taken up by Otley (1994) and Otley et al. (1995) who called
for a broader approach towards the study of MCS (and is nowadays rediscovered by
Malmi and Brown 2008).
Another aspect of MCS understanding within the stream of control relates to MCS
as tools for strategy implementation. Daft and Macintosh (1984) defined the main
purpose of MCS [. . .] is to implement organizational strategy downward to the de-
partmental level. [. . .] The MCS accomplish strategy implementation by directing
and controlling resource inputs, influencing the transformation process, and monitor-
ing departmental outputs (p. 61). This understanding is quite similar to the seminal
work of Simons (1995).
To summarize, various understandings and definitions of MCS exist in the aca-
demic literature. However, it seems that in the early beginning of research on MCS
the decision-making or information approach had dominated academe. In the last ten
years, the focus of research and the underlying MCS approaches have been shifted to
the control approach and was accompanied by a expansion of the control aspects that
are subsumed under the label MCS. The increasing diversity of MCS understandings
results also in an increasing variety of MCS types. Therefore, we review the diverse
MCS types in the following section.

5.2.2 Types of MCS

After discussing the different understandings of MCS that are proposed in research
papers, we will discuss the different MCS types that are developed in this academic
literature stream. However, only few authors who contribute to the understanding of
MCS also provide types of MCS. Overall, only six papers will be discussed in this
section, i.e. Eilon (1962), Ouchi (1979), Flamholtz et al. (1985), Lebas and Weigen-
stein (1986), Whitley (1999), and Spekl (2001).14 In order to emphasize the similar-
ities and differences, we grouped the papers according to their theoretical background

13 Section 5.2.2 elaborates on the different controls proposed by Ouchi (1977, 1979).
14 Although Spekl (2001) is discussed in Sect. 5.2.2, we excluded his MCS definition here because he only
refers to already presented authors such as Ouchi (1979), Flamholtz et al. (1985), and Whitley (1999).
Author's personal copy
Management control systems: a review 255

of cybernetic approach, transaction cost economics (TCE), and comparative sociol-

ogy approach.
A first group of MCS types, which is inspired by a cybernetic approach, can be
found in Eilon (1962). He postulates a comprehensive view on MCS types and dis-
tinguishes MCS categories along a (stereotypical) management process. The first
three steps of the process in his understanding are goal determination, planning, and
execution, which are beyond the MCS scope. The last step is control that encom-
passes the MCS types measurement, evaluation, and reaction (Eilon 1962). Flamholtz
et al. (1985) follow this view and differentiate their core control system in four differ-
ent control types: planning mechanisms, measurement mechanisms, feedback mech-
anisms, and evaluation mechanisms. Planning mechanisms include activities such as
goal setting and standard establishment. Measurement mechanisms include the man-
agement information system and the employee performance appraisal system. Feed-
back mechanisms encompass activities such as performance variance analysis. The
evaluation mechanism includes administration of extrinsic rewards and the design of
intrinsically rewarding tasks (Flamholtz et al. 1985).
Instead of following a cybernetic approach, Ouchi (1977, 1979, 1980) kept to a
TCE approach and distinguishes between three main MCS types: markets, bureau-
cracy, and clans. Markets can be seen as one type of MCS because [. . .] markets are
able to precisely measure and reward individual contributions, since prices contain
theoretically all relevant information [. . .] (Ouchi 1979, pp. 834835). Bureaucratic
controls consist essentially of [. . .] close personal surveillance and direction of sub-
ordinates by supervisors. The information necessary for task completion is contained
in rules; these may be rules concerning processes to be completed or rules which
specify standards of output or quality (Ouchi 1979, pp. 835). In contrast to these,
clan controls refer to the informal social structure in organizations, which basically
establishes goal congruence among organizational members. Ritual, ceremonies, and
traditions contain information necessary for decision-making since they reflect the
shared values and beliefs of the organizations. Lebas and Weigenstein (1986) used
nearly the same classification but slightly changed the names of the different MCS
types. They distinguish between market, rules, and culture as control types. In order
to build a theoretical coherent understanding of MCS Spekl (2001) resurrected the
TCE approach and developed another set of (TCE based) MCS types. First, he dis-
tinguished between high and low ex ante programmability of contributions, which
are activities for that the organization has (not) [. . .] sufficient knowledge and in-
formation to decide in advance on the way in which they are to be executed in order
to achieve success [. . .] (p. 428). Within the group of control types under a high ex
ante programmability of contributions three types can be subsumed: market control,
arms length control, and machine control. Market control is based on control-on-
competition. Arms length control is a form of output control that is based on market-
derived standards or predefined contractual provisions. Machine control is a form of
administrative control that is based on codification of behavior (action oriented) or
predefined performance targets (result oriented). Within the second group, i.e. low
ex ante programmability, Spekl (2001) defined three different types: market con-
trol, exploratory control (hierarchical or hybrid), and boundary control (hierarchical
or market-based). As under high ex ante programmability, the type market control is
Author's personal copy
256 E. Strau, C. Zecher

still based on competition. Exploratory control is based on converging insights that

accrue and spread during the process. Convergence is either administratively induced
or based on market-disciplined information sharing. Boundary control is based on
market procurement if reputation effects are reliable, orin the case of pure hierar-
chical boundary controlon control through interdictions, emphasizing behavior to
be avoided (Spekl 2001).
Based on criticizing TCE approaches for disregarding the institutional context,
Whitley (1999) developed an alternative set of MCS types. Whitley conceptualizes
types from the angle of comparative sociology, thus accounting for distinct institu-
tional conditions. He uses four dimensions (reliance on formal rules and procedures,
control over how economic activities are to be carried out, involvement and influence
of subordinates in control system, scope of control system)15 to distinguish between
four control system types: bureaucratic, output, delegated, and patriarchal. The bu-
reaucratic control type is determined by a high level of formalization and clear in-
structions about carrying economic activities out. Such high reliance on formaliza-
tion and instructions causes a low subordinate involvement and limits the scope of
the control system. Output-based control systems strongly rely also on formal rules
and procedures but are less strict concerning the control over how economic activ-
ities have to be performed. The possibility of subordinate influence is very limited
and the scope of this control is very low. Delegated control systems are character-
ized by a mixed reliance on formal rules, a low control over how economic activities
have to be performed, a medium influence of subordinates, and a high scope of the
control system. The last type, patriarchal control systems, rely only low on formal
rules and procedures but have a high extent of control over how economic activities
are to be carried out. In addition, the possible involvement of subordinates is low and
the scope of the control system is considerable (Whitley 1999). The dimensions re-
flect implicitly and explicitly the recognition of institutional influences on the MCS
configurations. All different sets of MCS types are summarized in Table 3.

5.2.3 MCS frameworks

A framework is a conceptual structure for categorizing and systematizing complex

information. In this regard, frameworks operate on a different level of detail than
MCS types. While types allow a classification of more than one entire MCS (Spekl
2001), frameworks serve the purpose of studying all individual parts or aspects that
make up a single MCS. Elements common to all frameworks point to the core of
MCS, while elements beyond this core may indicate a more holistic understanding of
MCS. In order to complement the previously presented research papers that provided
an overview about different MCS types, this section reviews research that develops
frameworks of MCS. In particular, the frameworks by Simons (1995), Otley (1999),
Ferreira and Otley (2009) as well as the extension by Broadbent and Laughlin (2009),
and Malmi and Brown (2008) are presented. Moreover, commonalities and differ-
ences between these approaches are outlined in the final part of this section. As the
publication dates indicate, all frameworks were developed in the last decade, which

15 For a more detailed description of the different dimension see Whitley (1999, pp. 509512).
Author's personal copy
Management control systems: a review 257

Table 3 MCS typpes

Category Author(s) Year Types

TCE oriented Ouchi 1977, 1979, Market

1980 Bureaucracy
Lebas and 1986 Market
Weigenstein Rules
Spekl 2001 Market
Arms length
Exploratory control
(hierarchical or hybrid)
Boundary control
(hierarchical or

Comparative Whitley 1999 Bureaucratic

sociological approach Output-based

Cybernetic oriented Eilon 1962 Measurement

Flamholtz et al. 1985 Planning

suggests that the topic is at present highly relevant for researchers in the area. In the
following, the frameworks are discussed chronologically since they partly build upon

The levers of control framework by Simons Please see Sect. 5.1.

The performance management framework by Otley Otleys (1999) motivation to

develop a new framework for MCS research lies in the emphasis of management
accounting on financial performance and on the use of economic theories, such as
agency theory. According to Otley, these approaches give a too narrow view of in-
ternal processes and offer little guidance for designing MCS. Consequently, he in-
tends to look beyond the measurement of performance to the management of per-
formance (Otley 1999, p. 364) by considering the whole MCS of an organization.
Performance is thereby understood as the achievement of organizational objectives
as defined by key stakeholders.
Author's personal copy
258 E. Strau, C. Zecher

In order to widen the scope of prior MCS research, Otley (1999) readdressed An-
thonys (1965) assumptions. In particular, the artificial differentiation of task control,
management control and strategic planning as well as the neglect of non-financial
performance measurement are questioned. As a result, a performance management
framework structured around five issues is proposed. The framework is presented in
the form of five questions that are supposed to cover all relevant facets of manage-
ment control:
1. What are the key objectives that are central to the organizations future success,
and how does it go about evaluating its achievement for each of these objectives?
2. What strategies and plans has the organization adopted and what are the pro-
cesses and activities that it has decided will be required for it to successfully imple-
ment these? How does it assess and measure the performance of these activities?
3. What level of performance does the organization need to achieve in each of the
areas defined in the above two questions, and how does it go about setting appropriate
performance targets for them?
4. What rewards will managers (and other employees) gain by achieving these per-
formance targets (or, conversely, what penalties will they suffer by failing to achieve
5. What are the information flows (feedback and feed-forward loops) that are nec-
essary to enable the organization to learn from its experience, and to adapt its current
behavior in the light of that experience? (Otley 1999, pp. 365366)
According to Otley (1999), these questions relate to previous experiences in con-
ducting field research. Moreover, Otley emphasizes that organizations operate in con-
texts that are continually changing. In order to account for these changing environ-
ments, organizations repeatedly have to find new answers to all five questions.

The performance management systems framework by Ferreira and Otley The per-
formance management systems (PMSs) framework has been proposed by Ferreira
and Otley (2009) as a research tool to describe the design and processes of MCS.
It is designed as an holistic approach towards MCS research since it integrates Si-
mons (1995) and Otleys (1999) framework. In particular, it addresses the respective
strengths and weaknesses of each framework.
Ferreira and Otley (2009) conducted two case studies and consecutively applied
both frameworks. As a result, the PMSs model was generated. While Otleys (1999)
framework proves to be useful in structuring and presenting the data collected, Si-
mons (1995) levers of control stress the design and, more importantly, the use of
MCS. Also, Otley focuses on the transmission of control across the organizational
hierarchy, whereas Simons (1995) explicitly concentrates on top management. Com-
mon to both conceptualizations is strategy as a crucial element. With Otley (1999) as
a starting point, Simons (1995) four key concepts are integrated to a question mode.
In total, twelve questions form the PMS framework. These questions relate to (1) vi-
sion and mission, (2) key success factors, (3) strategies and plans, (4) organization
structure, (5) key performance measures, (6) target setting, (7) performance evalua-
tion, (8) rewards system, (9) feedback and feed-forward information flows, (10) type
of use of the PMS, (11) change in the PMS, and (12) strength and coherence of links.
Figure 5 contains a schematic overview of the twelve questions. As indicated,
cultural and other contextual factors lie beyond the PMS framework. Ferreira and
Author's personal copy
Management control systems: a review 259

Fig. 5 The PMC framework (Ferreira and Otley 2009, 268)

Otley (2009) argue that these aspects do not belong to the characteristics of a MCS
and, thus, do not have to be included in their description. Rather, contextual variables
offer an explanation for the effectiveness of MCS in certain settings.

The performance management system by Broadbent and Laughlin Together with

the work by Ferreira and Otley (2009), an extension of the PMS framework by Broad-
bent and Laughlin (2009) has been published. Their conceptual model of a PMS elab-
orates on the last four questions of the PMS framework with an emphasis on questions
9 and 10. In particular, they address the aspects of context and different forms of ra-
tionality, i.e. specifically those aspects that were explicitly excluded by Ferreira and
Drawing on Max Weber and Jrgen Habermas, Broadbent and Laughlin (2009)
distinguish between instrumental and communicative rationality that can be regarded
as two ends of a continuum. Communicative rationality is characterized by desired,
agreed ends. These objectives can be achieved by a multiplicity of means and the
achievement of objectives is measured by discursively agreed performance indica-
Author's personal copy
260 E. Strau, C. Zecher

tors. As a result, organizational participants are likely to approve and to feel a sense of
ownership of the PMS. To further pursue the agreed ends, the governance structure of
the organization should be built on reflexivity, i.e. in the belief that decision-making
rules are negotiated by actors and institutions. In contrast, instrumental rationality
emphasizes performance indicators based on accounting and calculation. These fig-
ures do not necessarily reflect the concerns of stakeholders to the PMS. Thus, they
may impose a set of values on them and negative consequences, such as the rejection
of the MCS, are provoked.
According to Broadbent and Laughlin (2009), these two rationality models lead
to two different types of PMS which are referred to as transactional and relational
PMS. These terms are supposed to describe the design of PMS in any organizational
context. Transactional PMS provide clear and specific means and measurement tech-
niques to achieve ends within a defined period of time. They are frequently set up as
projects. In contrast, relational PMS rely on a discourse between stakeholders to iden-
tify means and ends. A focus on long-term survival and sustainability is characteristic
of those PMS. Furthermore, Broadbent and Laughlin (2009) stress that transactional
characteristics may be observed in relational PMS whereas the other way around is
less probable.
The second extension of the conceptual model by Ferreira and Otley (2009) refers
to contextual issues that are supposed to guide the nature of PMS in two ways. First,
context relates to the focus of management control and covers the internal as well
as the external environment of the organization. In that way, context influences the
eight functional questions, while it has only an indirect impact on the modes of ra-
tionality through the designers of the PMS. Second, context implies an intervening
filter (Broadbent and Laughlin 2009, p. 290) between the PMS and the organization
and organizational sub-units. This filter consists of financial transfers and related ac-
countability requirements and emphasizes the role and uses of money for PMS. Both
extensions are depicted in Fig. 6.

The MCS package by Malmi and Brown A conceptual typology of an MCS package
is proposed by Malmi and Brown (2008) as one of the most recent frameworks in the
accounting and control literature. With the aim to facilitate and encourage research on
MCS, a typology based on a synthesis of about forty years of literature is developed.
Consistent with Otley (1999), Malmi and Brown (2008) prefer the term package to
systems, as the concept of a package indicates that individual systems are designed
and implemented by different actors at different points in time. Central to the pack-
age approach is the idea that MCS direct employee behavior. Figure 7 provides an
overview over the elements of the MCS package. Whereas administrative controls at
the bottom represent the basis of the control system, cultural controls are at the top
as they are the broadest set of controls. The controls in the middle of the figure are
depicted in a temporal order.
Planning, as an ex ante form of control, has a goal-setting, monitoring and coordi-
nation function. Thereby, it directs the behavior of organizational members towards
aspired organizational outcomes. More specifically, planning comprises action plan-
ning, which typically has a short-term focus of no more than twelve months, and
long range planning, which is characterized by a medium- to long-term orientation.
Author's personal copy
Management control systems: a review 261

Fig. 6 PMS: A conceptual model taking into account of models of rationality and context (Broadbent and
Laughlin 2009, p. 8)

Fig. 7 MCS as a package (Malmi and Brown 2008, p. 291)

Cybernetic controls include budgets, financial measures, non-financial measures, and

hybrids. Cybernetic systems combine both financial and non-financial elements. De-
pending on the use, a cybernetic system can either be classified as an information
and decision-support system with an ex ante or a control system with an ex post
focus. This differentiation corresponds to Simons (1995) dichotomy of interactive
and diagnostic control systems. Reward and compensation systems are directed at
motivating individual or groups of employees. In addition, reward and compensation
systems are designed to align individual interests with those of the organization.
Administrative controls refer to designing and maintaining the structure of an or-
ganization. This group of elements within the MCS package consists of controls re-
lated to organization design and structure, governance structure, and procedures and
Author's personal copy
262 E. Strau, C. Zecher

policies. Whereas this category contains rather formal and bureaucratic approaches,
cultural controls work through a shared set of values, beliefs and social norms. In
particular, value-based, symbol-based, and clan controls are part of cultural control
systems. Whereas value-based controls are explicitly formulated, e.g. in a mission
statement, clan controls are embedded in individual groups and thus less visible.

Comparing the frameworks The abovementioned frameworks encompass a variety

of different aspects and views as they were developed by different researchers and
at different points in time. Nevertheless, we will highlight some connections and
differences between those frameworks.
Simons (1995) framework reflects his innovation and control approach that allows
strategies to emerge bottom-up. Although Simons positions management control and
MCS as tools for strategy implementation, for strategies that were developed by
the organizations top management, his MCS framework allows a variation of hu-
man behavior that can result in new strategies (which have then to be approved by
the top management). In contrast to Simons, Otley (1999) developed a new but more
traditional command and control MCS framework that explicitly excludes the role
of strategy formation. Provoked by his discontentment with economic and agency
theory, Otley tried to formulate an alternative MCS framework that was based on an
inductive approach and theoretically informed by contingency theory. This alterna-
tive approach shares the holistic view on the overall organizational control system
with Simons but positions MCS in a slightly different way along the organizational
hierarchy. Ferreira and Otley (2009) combined Simons (1995) and Otleys (1999)
frameworks in order to provide a descriptive tool that supports a broader perspec-
tive of the role of control in the managing organizational performance (Ferreira and
Otley 2009, p. 266). Consequently, they try to separate their own work from more
traditional compartmentalized approaches of organizational control such as Anthony
(1965) and to address the criticisms (e.g., Collier 2005) of Otleys focus on formal
controls. Although Ferreira and Otley (2009) extended the framework of Otley (1999)
and combined it with the broader Simons approach, they explicitly excluded exter-
nal factors such as culture and context from their framework. The reason for this is
the limited control that organizations have over culture and context and, therefore,
the limited influence they can access on those factors via their MCS. This exclusion
motivated Broadbent and Laughlin (2009) to extend the framework by integrating
organizational context and models of rationality into their framework.
In comparison to the abovementioned authors, Malmi and Brown (2008) devel-
oped a MCS as a package framework that encompasses not only various types of
MCS but also different approaches such as cybernetic, administrative, and cultural
controls. Similar to Otley (1999) and Ferreira and Otley (2009), Malmi and Browns
framework is providing a very broad understanding of a MCS. However, their under-
standing is not as broad as Broadbent and Laughlins (2009) understanding as they
integrate cultural aspects only indirectly: cultural context influences the firms MCS
only via the values, norms, and beliefs of its employees and not directly via societal
expectations on the firms overall behavior. Figure 8 provides a graphical illustration
of the relation between the different frameworks.
Author's personal copy
Management control systems: a review 263

Fig. 8 Comparison of the

different MCS frameworks (own

6 Concluding remarks

This paper was motivated by heterogeneity and the new dynamic in the field of con-
ceptual MCS research, manifested in a variety of new conceptualizations of MCS
that have been developed in the last years. However, the field of MCS research is
still fragmented in terms of definitions, conceptualizations, and theoretical perspec-
tives (Berry et al. 2009). Moreover, these inconsistent conceptualizations are likely to
persist as they are used in educating future researchers and practitioners (Zeff 2008).
To shed some light on the differences, this paper has presented a comprehensive and
systematic review (Tranfield et al. 2003) on the conceptual literature on MCS. To
this end, textbooks as well as research papers have been included in the analysis.
All essential contents, i.e. existing understandings, definitions and types have been
discussed. This broad discussion is the basis for understanding the full continuum of
MCS in academe.
The point of departure for our database was an explorative study concerning the
most commonly used textbooks on MCS, since these textbooks are likely to be most
influential for students, young practitioners, and emerging researchers, i.e. all relevant
future actors in the field. The three most important textbooks on MCS seem to be
those by Merchant and Van der Stede (2003), Anthony and Govindarajan (2007), and
Simons (2000). While a comparison showed both similarities and differences, their
most significant difference is probably the range of activities covered by MCS as
depicted in Fig. 4.
From this textbook review, several criteria for the subsequent paper search and
analysis were derived. The analysis of purposes and definitions allowed a recon-
struction of the development of different understandings of MCS. During the emer-
gence of the study of management control as a separate discipline, researchers tried
to separate management control from other aspects of general management such as
strategy formulation. At first, MCS were regarded as means to provide information
Author's personal copy
264 E. Strau, C. Zecher

for decision-making purposes. However, this scope gradually widened to include

behavioral-influencing aspects as well. Additionally, early research focused on for-
mal MCS because informal structures were perceived as to difficult to investigate
(e.g. Anthony and Govindarajan 2007, p. 17). Though, in contemporary research, in-
formal controls became an integral part of MCS definitions and research (e.g. Malmi
and Brown 2008).
As a final part of the analysis, various frameworks of MCS have been presented
and discussed. The comparison of different MCS frameworks revealed that essential
elements of MCS contain planning, performance measurement, rewards, and feed-
back and feed-forward information loops. Thus, they are to some extent cybernetic
or process oriented (e.g. Otley 1999). All frameworks assume that MCS influence the
behavior of an organizations members. However, the frameworks differ in regard to
structure or the organizations vision and mission. While some focus on the design
of MCS (e.g. Malmi and Brown 2008), others claim to be also adequate for studying
the use and change of MCS (e.g. Ferreira and Otley 2005, 2009). Others, in turn, are
concerned with the underlying nature of an MCS and different modes of rationality
(Broadbent and Laughlin 2009).
Accordingly, a core understanding of MCS emerges that regards MCS primarily
as information-providing devices used for decision-making purposes in context of
organizational goals. Such an MCS is essentially a cybernetic process of planning,
performance measurement, and rewarding. In this view, only formalized controls are
included. In contrast, a holistic understanding of MCS puts an emphasis on the con-
trol of human behavior by formal and informal control mechanisms. Superiors at all
hierarchical levels can use these interrelated or reciprocal mechanisms to direct their
subordinates behavior and to ultimately achieve an organizations goals. Thus, in
this holistic sense, principally every variable that managers can influence belongs to
a MCS. Examples include an organizations strategy, mission, vision, structure, and
culture. We tried to summarize our findings in a map of the MCS landscape that is
provided by Fig. 9.16
Apart from our contribution, our study deals also with some limitations. We based
our textbook selection on a survey and syllabi searchboth databases suffer from a
relatively small sample size, which reduces the generalizability of our results. More-
over, we limited our textbook survey to accounting academics due to the historical
accounting background of MCS, which might have biased our results. Therefore, we
may have implicitly underestimated the influence of other fields of researchsuch as
information systemson the development of MCS.
Against this backdrop, we see several opportunities for future research. First, fu-
ture studies can address the limitations of our study and conduct a survey with a
larger sample size that does not only consist of accounting academics. Second, a ci-
tation analysis could be undertaken in order to investigate which definitions and un-
derstandings of MCS will really be used in academe. Third, MCS emerged in a time
when most of the organization were offering products and not services, the variety

16 Please note that the figure just gives some kind of graphical illustration. The distances between the
different articles cannot be strictly interpreted in the sense of equidistance to other articles or to the end of
the continuum.
Author's personal copy
Management control systems: a review 265

Fig. 9 Map of the MCS landscape (own illustration)

of organizational forms was more limited then today, and the boundaries of the or-
ganization were clearer. Today, more and different organizational forms with unique
products (e.g. Facebook) emerge, which have due to their network-like character no
clear boundaries. These developments require different forms of management control
and MCS than organizations located in classical industries. Therefore, we see var-
ious opportunities for future research in this direction. Fourth, context factors such
as the society have developed quite fast since the emergence of first MCS concep-
tualizations. Specifically, demographic factors play an important role because they
reflect the characteristics of human beings that work in organizations and have to be
controlled by MCS. For example, Europe is facing the challenge of an aging society.
We know from psychological and behavioral research that elderly people will be mo-
tivated by other incentives than younger people. However, this difference seems not
to be reflected in our understanding and design of MCS.
Acknowledgements We would like to thank Lukas Goretzki, Maik Hamann, Stephan Kramer, Matthias
D. Mahlendorf, Pascal Nevries, Andreas Veit, Elmar Wyszomirski, and Stephen A. Zeff for their insight-
ful comments on earlier versions of this paper. The second author gratefully acknowledges the financial
support of the Foundation of German Business (Stiftung der Deutschen Wirtschaft). The responsibility for
any errors in the resulting work remains our own.

Accounting faculty and research directory (20052006).
Author's personal copy
266 E. Strau, C. Zecher

Allen, B. R., Brownlee, R. E., Haskins, M. E., Lynch, L. J., & Rotch, J. W. (2005). Cases in management
accounting and control systems (4th edn.). Upper Saddle River: Pearson/Prentice Hall.
Amigoni, F. (1978). Planning management control systems. Journal of Business Finance & Accounting,
5(3), 279291.
Anderson, D. L., & Post, G. V. (2005). Management information systems: solving business problems with
information technology (4th edn.). New York: McGraw-Hill.
Anthony, R. N. (1965). Planning and control systems: a framework for analysis. Boston: Harvard Business
Anthony, R. N., & Govindarajan, V. (2007). Management control systems (12th edn.). Boston: McGraw-
Anthony, R. N., & Young, D. W. (2003). Management control in nonprofit organizations (7th edn.).
Boston: McGraw-Hill/Irwin.
Anthony, R. N., Hawkins, D., & Merchant, K. A. (2006). Accounting: texts and cases (12th edn.). New
York: McGraw-Hill/Irwin.
Atkinson, A. A., Kaplan, R. S., Matsumura, E. M., & Young, S. M. (2007). Management accounting (5th
edn.). Upper Saddle River: Pearson/Prentice-Hall.
Baiman, S. (1982). Agency research in managerial accounting: a survey. Journal of Accounting Literature,
1(1), 154213.
Bedeian, A. G., & Giglioni, G. B. (1974). A conspectus of management control theory: 19001972.
Academy of Management Journal, 17(2), 292305.
Berry, A. J., Broadbent, J., & Otley, D. T. (2005). Management control: theories, issues, and performance
(2nd edn.). Houndmills: Palgrave/Macmillan.
Berry, A. J., Coad, A. F., Harris, E. P., Otley, D. T., & Stringer, C. (2009). Emerging themes in management
control: a review of recent literature. The British Accounting Review, 41(1), 220.
Besson, M., Lning, H., & Mendoza, C. (2008). Dual use of budgeting in uncertainty contexts: explorative
study of senior sales and marketing managers. Cahiers de Recherche. HEC school of management,
accounting and control department, Jouy en Josas Cedex.
Broadbent, J., & Laughlin, R. (2009). Performance management systems: a conceptual model. Manage-
ment Accounting Research 20(4), 283295
Chenhall, R. H. (2003). Management control systems design within its organizational context: findings
from contingency-based research and directions for the future. Accounting, Organizations and Soci-
ety, 28(2/3), 127168.
Christensen, P. O., & Feltham, G. A. (2008). Economics of accounting: performance evaluation. Berlin:
Collier, P. M. (2005). Entrepreneurial control and the construction of a relevant accounting. Management
Accounting Research, 16(3), 321339.
Demski, J. S. (2008). Managerial uses of accounting information. Springer series in accounting scholar-
ship (2nd edn.). Berlin: Springer.
Dorf, R. C., & Bishop, R. H. (2007). Modern control systems (11th edn.). Upper Saddle River: Prentice
Eilon, S. (1962). Problems in studying management control. International Journal of Production Research,
1(4), 13.
Emmanuel, C., Merchant, K. A., & Otley, D. T. (1990). Accounting for management control (2nd edn.).
London: Chapman & Hall.
Evans, J. H. III, Lewis, B. L., & Patton, J. M. (1986). An economic modeling approach to contingency
theory and management control. Accounting, Organizations and Society, 11(6), 483498.
Ewert, R., & Wagenhofer, A. (2008). Interne Unternehmensrechnung (7th edn.). Berlin: Springer.
Ferreira, A., & Otley, D. T. (2005). The design and use of management control systems: an extended
framework for analysis. SSRN.
Ferreira, A., & Otley, D. T. (2009). The design and use of performance management systems: an extended
framework for analysis. Management Accounting Research 20(4), 263282.
Fisher, J. G. (1998). Contingency theory, management control systems and firm outcomes: past results and
future directions. Behavioral Research in Accounting, 10, 47.
Flamholtz, E. G. (1979). Toward a psycho-technical systems paradigm of organizational measurement.
Decision Sciences, 10(1), 7184.
Flamholtz, E. G. (1983). Accounting, budgeting and control systems in their organizational context: theo-
retical and empirical perspectives. Accounting, Organizations and Society, 8(23), 153169.
Flamholtz, E. G., Das, T. K., & Tsui, A. S. (1985). Toward an integrative framework of organizational
control. Accounting, Organizations and Society, 10(1), 3550.
Author's personal copy
Management control systems: a review 267

Fleming, J. E. (1972). The spectrum of management control. S.A.M. Advanced Management Journal,
37(2), 5461.
Garrison, R., Noreen, E., & Brewer, P. (2007). Managerial accounting (12th edn.). Boston: McGraw-
Gordon, L. (2005). Managerial accounting: concepts and empirical evidence (6th edn.). New York:
Herath, S. K. (2007). A framework for management control research. Journal of Management Develop-
ment, 26(9), 895915.
Hilton, R. (2008). Managerial accounting: creating value in a dynamic business environment (8th edn.).
New York: McGraw-Hill/Irwin.
Hoffjan, A., & Wmpener, A. (2006). Comparative analysis of strategic management accounting in
German- and English-language general management accounting textbooks. Schmalenbach Business
Review, 58, 234258.
Hofstede, G. (1978). The poverty of management control philosophy. The Academy of Management Re-
view, 3(3), 450461.
Hopper, T., Northcott, D., & Scapens, R. W. (2007). Issues in management accounting (3rd edn.). Harlow:
Financial Times/Prentice Hall.
Horngren, C. T., Foster, G. T., Datar, S. M., Rajan, M. V., & Ittner, C. (2008a). Cost accounting: a man-
agerial emphasis (13th edn). Upper Saddle River: Pearson/Prentice Hall.
Langfield-Smith, K. (1997). Management control systems and strategy: a critical review. Accounting, Or-
ganizations and Society, 22(2), 207232.
Lebas, M., & Weigenstein, J. (1986). Management control: the roles of rules markets and culture. Journal
of Management Studies, 23(3), 259272.
Lowe, E. A. (1971). On the idea of a management control system: integrating accounting and management
control. Journal of Management Studies, 8(1), 112.
Machin, J. L. J. (1979). A contingent methodology for management control. Journal of Management Stud-
ies, 16(1), 129.
Machin, J. L. J. (1983). Management control systems: whence and whither? In E. A. Lowe & J. L. J.
Machin (Eds.), New perspectives in management control (pp. 2242). New York: Macmillan.
Maciariello, J. A., & Kirby, C. J. (1994). Management control systems: using adaptive systems to attain
control (2nd edn.). Englewood Cliffs: Prentice Hall.
Macintosh, N. B. (1995). Management accounting and control systems: an organizational and behavioral
approach. Chichester: Wiley.
Maher, M. W., Weil, R. L., & Stickney, C. P. (2007). Managerial accounting: an introduction to concepts,
methods, and uses (10th edn.). Mason: Thomson.
Malmi, T., & Brown, D. A. (2008). Management control systems as a package: opportunities, challenges
and research directions. Management Accounting Research, 19, 287300.
Malone, T. W. (2004). The future of work: how the new order of business will shape your organization,
your management style, and your life. Boston: Harvard Business School Press.
Merchant, K. A. (1989). Rewarding results: motivating profit center managers. Harvard business school
series in accounting and control. Boston: Harvard Business School Press.
Merchant, K. A. (1997). Modern management control systems. Upper Saddle River: Prentice Hall.
Merchant, K. A., & Otley, D. T. (2007). A review of the literature on control and accountability. In Hand-
books of management accounting research (Vol. 2, pp. 785802). Amsterdam: Elsevier.
Merchant, K. A., & Simons, R. (1986). Research and control in complex organizations: an overview.
Journal of Accounting Literature, 5, 183203.
Merchant, K. A. & Van der Stede, W. A. (2003). Management control systems: performance measurement,
evaluation and incentives (2nd edn.). Harlow: Prentice Hall.
Mintzberg, H. (1979). The structuring of organizations: a synthesis of the research. Englewood: Prentice-
Mintzberg, H., & Waters, J. A. (1985). Of strategies, deliberate and emergent. Strategic Management
Journal, 6(3), 257272.
Morris, R. M. III (1986). Management control and decision support systems: an overview. Industrial Man-
agement, 28(1), 8.
Nixon, W. A. J., & Burns, J. (2005). Management control in the 21st century. Management Accounting
Research, 16(3), 260268.
Otley, D. T. (1994). Management control in contemporary organizations: towards a wider framework.
Management Accounting Research, 5(34), 289299.
Author's personal copy
268 E. Strau, C. Zecher

Otley, D. T. (1999). Performance management: a framework for management control systems research.
Management Accounting Research, 10(4), 363382.
Otley, D. T., & Berry, A. J. (1980). Control, organisation and accounting. Accounting, Organizations and
Society, 5(2), 231244.
Otley, D. T., Broadbent, J., & Berry, A. J. (1995). Research in management control: an overview of its
development. British Journal of Management, 6(6), 31.
Ouchi, W. G. (1977). The relationship between organizational structure and organizational control. Admin-
istrative Science Quarterly, 22(1), 95113.
Ouchi, W. G. (1979). A conceptual framework for the design of organizational control mechanisms. Man-
agement Science, 25(9), 833848.
Ouchi, W. G. (1980). Markets, bureaucracies, and clans. Administrative Science Quarterly, 25(1), 129
Parker, L. D. (1986). Developing control concepts in the 20th century. Accounting thought and practice
through the years. New York: Garland.
Sandoe, K., Corbitt, G., & Boykin, R. (2001). Enterprise integration. New York: Wiley.
Senge, P. M. (2006). The fifth discipline: the art and practice of the learning organization. New York:
Shank, J. K., & Govindarajan, V. (1993). Strategic cost management: the new tool for competitive advan-
tage. New York: Free Press.
Simons, R. L. (1987). Accounting control systems and business strategy: an empirical analysis. Account-
ing, Organizations and Society, 12(4), 357374.
Simons, R. L. (1990). The role of management control systems in creating competitive advantage: new
perspectives. Accounting, Organizations and Society, 15(1/2), 127143.
Simons, R. L. (1991). Strategic orientation and top management attention to control systems. Strategic
Management Journal, 12(1), 4962.
Simons, R. L. (1994). How new top managers use control systems as levers of strategic renewal. Strategic
Management Journal, 15(3), 169189.
Simons, R. L. (1995). Levers of control: how managers use innovative control systems to drive strategic
renewal (Hardcover). Boston: Harvard Business School Press Books.
Simons, R. L. (2000). Performance measurement and control systems for implementing strategy. Upper
Saddle River: Pearson.
Sisaye, S. (1998). An overview of the social and behavioral sciences approaches in management control
research. Behavioral Research in Accounting, 10(11), 1126.
Smith, K. J., & DeRidder, J. J. (1997). The selection process for accounting textbooks: general criteria and
publisher incentivesa survey. Issues in Accounting Education, 12(2), 367384.
Smith, M. (2005). Performance measurement and management: a strategic approach to management ac-
counting. London: Sage.
Solomons, D. (1965). Divisional performance: measurement and control. Homewood: Irwin.
Spekl, R. F. (2001). Explaining management control structure variety: a transaction cost economics per-
spective. Accounting, Organizations and Society, 26(4/5), 419441.
Tranfield, D., Denyer, D., & Smart, P. (2003). Towards a methodology for developing Evidence-Informed
management knowledge by means of systematic review. British Journal of Management, 14, 207
Turban, E., Aronson, J. E., Liang, T.-P., & Sharda, R. (2008). Decision support and business intelligence
systems (8th edn.). Upper Saddle River: Pearson/Prentice Hall.
Vancil, R. F. (1973). What kind of management control do you need? Boston: Harvard Business Review.
Vancil, R. F. (1989). In K. A. Merchant (Ed.), Rewarding results: motivating profit center managers.
Boston: Harvard Business School Press.
Whitley, R. (1999). Firms, institutions and management control: the comparative analysis of coordination
and control systems. Accounting, Organizations and Society, 24(5/6), 507524.
Zaleznik, A. (2005). The education of Robert S. McNamara, secretary of defense, 19611968. Revue Franc
aise de Gestion 2005/6, 159, 4570.
Zeff, S. A. (2008). The contribution of the Harvard business school to management control, 19081980.
Management Accounting Research, 20(s1), 175208.
Zimmerman, J. L. (2008). Accounting for decision making and control (6th edn.). Chicago: Irwin.

View publication stats

Das könnte Ihnen auch gefallen