Do management control systems in SMEs reflect CEO demographics?

Abstract

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -Drawing on upper echelons theory, the purpose of this paper is to examine whether CEOs place their distinctive marks on the design of planning, control and evaluation systems (i.e. management control systems (MCS)) in small-and medium-sized enterprises (SMEs). Design/methodology/approach -The authors use survey data from 189 Belgian SMEs and perform regression analyses to investigate the relation between the CEO demographics tenure, education and experience and various aspects of MCS design, controlling for the classical contingent variables. Findings -CEO tenure and education are related to evaluation system design, but there is no link between CEO demographics and planning and control system design. The lack of managerial discretion concerning planning and control systems could be explained by their more external and observable character, giving rise to pressures to comply with institutional norms ("good practices"). The presence of discretion concerning the design of evaluation systems could be due to their internal character. Practical implications -Since evaluation systems are an important determinant of work-related attitudes and can lead to dysfunctional behavior, it is important for company owners and board members to consider the demographics of present or new CEOs, and to understand the associated inclinations reflected in evaluation systems. Originality/value -The authors apply a more comprehensive approach than (the few) existing SME studies by relating a larger number of CEO demographics to a more comprehensive set of MCS elements, controlling for a larger group of contingent variables. Moreover, the authors fill gaps in the upper echelons and MCS literature.

Management Control Systems in Small Business Transfers — A Resource-Based View

“…Moreover, the SME business transfer context differs in some respects from organizational change situations such as investments or strategic changes: SME business transfers frequently comprise uncertainties such as information asymmetry between the acquirer and the acquired firm. The contingency theory proposes that use of MCS is dependent on the organizational contextual characteristics such as environmental uncertainty, size, strategy or organizational structure (Chenhall, 2003;Grant, 1991;Reheul and Jorissen, 2014;Tsamenyi et al, 2011). According to contingency theory (Chenhall, 2003), MCS do not have an essential role in small firms which can be managed with other modes such as informal MCS (i.e.…”

“…The contingency theory predicts that larger firms, due to their higher complexity, benefit more from MCS systems (e.g. Chenhall, 2003 see also Reheul and Jorissen, 2014). In addition to the greater expected benefits, larger firms also have more resources for PBTMCSD.…”

Upper echelon characteristics and the use of management control systems: an integrative review

“…Among the management practices and processes, Management Control Systems (MCS) are considered an important part of strategic implementation (Simons, 1991), responsible for providing information for planning, controlling, and assessment (Reheul & Jorissen, 2014).…”

“…The practical implications of this research also include benefits for the owners and board members once MCS are major influencers of attitudes at work (motivation and effort), and may lead negatively to dysfunctional behaviors among employees, especially when rigid financial systems are used. Thus, it is important to consider the attributes of top managers and, consequently, to contribute to the understanding of trends reflected in control and evaluation systems (Reheul & Jorissen, 2014).…”

“…Chief Executive Officers (CEOs) must also be aware of their influence on evaluation systems as a key for an organization sucess. Board members and owners, responsible for hiring the CEO and other high level managers, should also know which managerial practices reflect the CEO characteristics and determine if they fit in the desired context (Reheul & Jorissen, 2014).…”