Logics, complexities and paradoxical tensions: management controls in a clustered firm

Abstract

PurposeThis paper explores how management controls of a clustered apparel firm in Sri Lanka (Stitch-It) is shaped by institutional field and societal logics, firm's head office prescriptions, clusters' own attributes and strategic behavior of cluster managers.Design/methodology/approachIt follows the research philosophy of interpretivism and embedded case study approach within the qualitative research design, while institutional complexity within the institutional logics perspective and paradoxical tensions, organizational attributes and strategic responses to institutional processes provide the theoretical underpinning.FindingsThe findings suggest that market, profession and state logics in the apparel field, alongside community logic at the societal level, develop a state of complexity in Stitch-It and its clusters. At the cluster level, such complexity is further intensified by head office guidelines (on controls), which gets filtered by the organizational attributes of the particular clusters. At this state, paradoxical tensions are developed within clusters, and to mitigate such tensions, key organizational members employ different strategies, which in turn shape management controls of the clusters.Practical implicationsThis paper highlights that practicing managers need to be mindful of different logics in the field, organizational attributes, resulting tensions, complexities, strategies to deal with them and their ramifications on controls.Originality/valueThe paper asserts that management controls is a dynamic and a situational phenomenon, which continuously evolves in light of organizational attributes, multiple logics and head office prescriptions. It conceptualizes the “tensions” evident in the design and implementation of management controls, arising due to multiplicity of pressures as “paradoxical tensions.” Although important and relevant to management control arena, “paradoxical tensions” has been scantly explored by prior researchers.

Is Institutional Research on Management Accounting Degenerating or Progressing? A Lakatosian Analysis*

“…Following Lounsbury's (2008) introduction of the institutional logics perspective to an accounting audience, a substantial amount of empirical research has examined how the prevalence of multiple logics gives rise to variations in MA practices across organizations in the same institutional field (Hyvönen et al 2009; Ezzamel et al 2012; Kantola and Järvinen 2012; Rautiainen and Järvenpää 2012; Amans et al 2015; Järvinen 2016; Rautiainen et al 2017; Rana and Hoque 2020; Damayanthi et al 2020). The institutional logics perspective has also been used to explain the emergence of diverse, intra‐organizational accounting practices that are at least partially separated from each other (Carlsson‐Wall et al 2016; Conrath‐Hargreaves and Wüstemann 2019; Kaufman and Covaleski 2019; Lada et al 2020; Knardal 2020; Lepori and Montauti 2020; Rozenfeld and Scapens 2021) or combined into hybrid practices (Pettersen and Solstad 2014; Busco et al 2017; Dai et al 2017; Convery and Kaufman 2021; Kallio et al 2021).…”

“…Many MA scholars bracket the dynamics through which institutional logics are reproduced and transformed without providing any justifications for why such bracketing took place (Kantola and Järvinen 2012; Pettersen and Solstad 2014; Herremans and Nazari 2016; Järvinen 2016; Busco et al 2017; Rautiainen et al 2017; Dai et al 2017; Knardal 2020; Rana and Hoque 2020; Diab 2021) and, thereby, run the risk of reifying extant logics (Thornton et al 2012; Lounsbury et al 2021). Others revert to a view of the agency involved in responding to competing institutional logics as a deliberate, or strategic, phenomenon and focus on how diverse logics are enacted by different actors without paying much attention to how such enactment is conditioned by extant institutions such as the professional backgrounds and identities of individual actors (Hyvönen et al 2009; Rautiainen and Järvenpää 2012; Carlsson‐Wall et al 2016; Gerdin 2020; Lada et al 2020; Damayanthi et al 2020). This leads to a voluntarist view of actors as capable of drawing on diverse logics at will to achieve different organizational objectives.…”

Managing institutional complexity in a state-owned enterprise – the role of explicated values and other management controls

“…on the scope of opportunity within these set boundaries. The "grey areas" and the undefined and unexplored areas in legislative and regulatory frameworks could be described as "pockets of discretion and autonomy" (Damayanthi et al, 2021), making room for innovation and growth. The management controls present in the organization become important for organizational members to be able to use these pockets of discretion.…”

“…This suggests that the managers in StateEnt appreciate the implications of different constituents of management control and understand the need to develop the management controls to fit the needs of the organization. This underlines that management control is an evolving phenomenon (Damayanthi et al, 2021) that needs continuous adjustment to enable organizations to accomplish their mission.…”

“…Lounsbury (2008) stated that a more complete revival of the more pluralistic approach to institutional rationality signaled by Meyer and Rowan (1977) requires an approach to logics that conceptualizes institutional environments as more fragmented and contested. This has been done in recent studies, with researchers highlighting organizational settings with the prevalence of several logics over lengthy periods of time (Carlsson-Wall et al, 2016;Damayanthi et al, 2021;Łada et al, 2020;Laguecir et al, 2020;Lounsbury, 2007;McPherson and Sauder, 2013;Pache and Santos, 2013;Hinings, 2005, 2009).…”