Enterprise governance and value-based management: a theoretical contingency framework

Value-based management as a tailor-made management practice? A literature review

“…Garvey and Milbourn 2000;Lovata and Costigan 2002;Hogan and Lewis 2005). Thus, with the help of the conceptual model developed by Elgharbawy and Abdel-Kader (2013) and a comprehensive review of the value-based management literature, this study contributes to management accounting theories, that generally help managers, organizations, and society to understand what kind of management accounting system should be applied and in what circumstances (Malmi and Granlund 2009). Yet, value-based management as such is not a (formal) management accounting theory, but rather a theory of firm performance (Malmi and Granlund 2009).…”

“…Furthermore, using the firm's cost of capital as a benchmark in decision-making and for performance evaluation, shareholder's costs to monitor the management's activities decrease (Lovata and Costigan 2002;Ryan and Trahan 2007). In this view Elgharbawy and Abdel-Kader (2013) propose the role of value-based management contributing to organizational success by ''keep[ing] the balance between conformance [with corporate governance standards] and [organizational] performance […]'' (Elgharbawy and AbdelKader 2013, p. 100). Moreover, the authors suggest that value-based management influences both corporate governance and corporate entrepreneurship as important drivers of organizational performance.…”

“…Based on the conceptual model for enterprise governance by Elgharbawy and Abdel-Kader (2013) this study discusses whether value-based management is an old-fashioned management practice from the 1990s or a tailor-made management practice to manage organizations successfully and that has diffused to those firms that seemingly benefit from its implementation. 1 Elgharbawy and Abdel-Kader (2013) view the key function of corporate governance as ''to protect shareholder rights and to [re]store investors' confidence in capital markets''. Further, the authors define corporate entrepreneurship according to Zahra (1995, p. 227) as ''the sum of a company's innovation, renewal, and venturing efforts.…”

“…Yet, value-based management as such is not a (formal) management accounting theory, but rather a theory of firm performance (Malmi and Granlund 2009). Therefore, to explain performance outcomes by value-based management, conceptual value-based management research can be extended by contingency-based research (Chenhall 2003(Chenhall , 2007Lueg and Schäffer 2010;Elgharbawy and Abdel-Kader 2013).…”

“…First, the conceptual model by Elgharbawy and Abdel-Kader (2013) is used to categorize the findings from the previous literature according to the four contingency dimensions, namely (1) size, (2) agency conflicts, (3) environmental uncertainty, and (4) strategy, supposed to determine the effectiveness of value-based management systems. This approach can therefore be seen as a follow up to the study by Lueg and Schäffer (2010).…”