Academic journal article Management Accounting Quarterly

Culture and Management Control Systems in Today's High-Performing Firms

Academic journal article Management Accounting Quarterly

Culture and Management Control Systems in Today's High-Performing Firms

Article excerpt

Richard Kovacevich, former CEO of Wells Fargo, once stated, "What actually provides competitive success and what is difficult to copy is not so much knowing what to do-- deciding on the right strategy--but instead having the ability to do it." (1) That ability is found in a company's culture. Examining the links between culture and the types and uses of management control systems (MCS) may explain why users of MCS have varying levels of success with these tools in terms of performance. By finding the right combination, a company can increase its ability to learn, grow, and improve its business processes.

To take a close look at the interconnectivity of the links, in our IMA-sponsored research project we asked the following questions about culture, types and uses of MCS, and performance:

* What types of cultures do companies exhibit?

* What is the relationship between culture and types and uses of MCS?

* What cultures and choices of MCS characterize highperforming firms? (2)


To better understand the association between culture and management control systems, we surveyed attendees at the 2010 American SAP Business Objects Annual User Conference. This was an ideal opportunity to poll a large number of diverse users of a set of MCS that are common in companies today--business intelligence (BI) systems. We selected this group because SAP is one of the four largest BI vendors along with Oracle, IBM, and Microsoft. Business Objects, a BI software company owned by SAP, provides three popular types of business intelligence systems:

1. Dashboards and visualization;

2. Query, analysis, and reporting; and

3. Data management and data quality.

Business Objects users will recognize the "labels" of the three systems, and users of different BI software systems can easily conduct their own translation and comparison for the use of their systems as they go through the article.

We collected 366 survey responses, and 343 were usable. As Figure 1 shows, 98% of the respondents use the query, analysis, and reporting system; 71.7% use dashboards and visualization; and 49% use the data management and data quality system.

To address our three research questions, we focused on data from 150 (43.7%) respondents who use all three business intelligence systems. Figure 2, Panel A shows that the vast majority of respondents work in information technology (65.1%), 11.5% work in manufacturing, and 9.5% are in accounting and finance departments. Our respondents are directors and managers (25.3%), developers and architects (13.9%), system analysts (10.8%), business analysts (10.2%), and project managers (8.4%). As Figure 2, Panel B shows, the firm size ranged from sales of less than $250 million (16.9%) to more than $1 billion (61.3%), with medium-sized firms (sales of $250 million to $1 billion) representing 12.7% of the sample. Some 9.2% of our respondents work in nonprofit organizations.

Our respondents also work in a range of industries, including healthcare (14.6%), financial services (12.3%), high-tech and electronics (12.3%), public sector (11.5%), professional services (11.4%), utilities (7.7%), insurance (6.2%), and retail (6.2%).

In summary, the sample we used in this study exhibits the following characteristics:

* The majority of respondents are directors and managers as well as team leaders from the IT department. Some responses are from manufacturing as well as accounting and finance departments.

* Our sample consists mostly of large firms and contains a broad spectrum of industries.


Culture is the shared value and norms of the collective organization. The Competing Values Framework provides a set of dimensions for defining culture and assumes that firms vary their internal emphases across a limited set of competing values. (3) Flexibility and control represent two competing values that define behavioral norms that are attributes of culture. …

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