The emergence of management controls in an entrepreneurial company

Abstract

The dilemma faced by founders of entrepreneurial companies is how to scale their business while staying in control. While the accounting literature has found that financial controls are important to rapidly scale a business, we do not know how these controls emerge in entrepreneurial companies in relation to other management controls. Using a case study of an entrepreneurial company that rapidly scaled its business, this study examines the management controls that emerged to become a package of controls. We highlight the importance of the management control package remaining in balance, with controls working together interdependently in a complementary fashion. South Wales for their comments. We also wish to thank Paul Andon, Philip Brown, Gary Monroe and Ann Lillis for their feedback and suggestions for improvement. Last, but definitely not least, we would like to make special mention of the editor, Associate Professor John Dumay, and the two anonymous reviewers for their constructive feedback and support. The review process and your comments have substantially improved the paper and we are extremely thankful.

Top managers’ formal and informal control practices in product innovation processes

“…In contrast, studying a range of controls enable an understanding of how different controls supplement and complement each other and how contrasting controls may create beneficial dynamic tensions that promote innovation (Curtis and Sweeney, 2017; Henri, 2006; Moll, 2015; Mundy, 2010; van der Kolk et al , 2020). Many recent studies have thus started to incorporate a broad set of controls, going beyond formal accounting-based controls (Davila et al , 2009; Chenhall and Moers, 2015) to include informal and “softer” forms of controls (Akroyd et al , 2019; Akroyd and Kober, 2020; Evans and Tucker, 2015; Goebel and Weissenberger, 2017; Grunwald-Delitz et al , 2019; Tucker, 2019).…”

Qualitative accounting research: special issue introduction

“…Their study is important because it takes a longitudinal examination of how strategy and management controls evolved while the firm experienced a turbulent external environment (Kloot, 1997). The next paper, by Akroyd et al (2019), is interesting because it addresses management controls within a small entrepreneurial company. Accounting research on small and medium enterprises (SMEs) is most often qualitative because sourcing large amounts of quantitative data is difficult.…”

“…Ozdil and Hoque (2019) Accounting as an engine for the re-creation of strategy at a university Tekathen et al (2019) Strategising in the midst of management controls: a case study on the relationship between management controls and promises on strategies Akroyd et al (2019) The emergence of management controls in an entrepreneurial company Wang and Dyball (2019) Management controls and their links with fairness and performance in inter-organisational relationships Islam (2019) Business models and the managerial sensemaking process than before, accounting research and reporting frameworks such as integrated reporting require business to not only understand their business models but also be able to articulate how they create value (International Integrated Reporting Council (IIRC) 2013). However, not all managers understand what their business models are, nor how they work, as there is often much ambiguity about the combination of resources (or capital) responsible for value creation (Dierickx and Cool, 1989).…”

The evolution of a management control package: a retrospective case study

“…One strand of literature argues that management control systems should be studied as a 'package' (Malmi and Brown, 2008), meaning that the various parts of the management control system do not operate in isolation, but interact with each other (Bedford et al, 2016;Malmi and Brown, 2008). In general, the rationale for studying "management control packages" (MCP) is to understand how the complementarity of controls may, or may not, affect organizational outcomes (Akroyd et al, 2019;Gerdin et al, 2019). Fundamentally, the MCP should contribute to company performance either via supporting decision making (Labro, 2015) or by guiding the behaviour of subordinates with the aim of achieving organizational goal alignment (Zimmerman, 2001(Zimmerman, , 2014.…”

“…For example, a company's MCP is shaped by the presence and decisions of key individuals (e.g. CFOs) as well as important events which took place during the company's founding and early years (Akroyd and Kober, 2020;Akroyd et al, 2019). Hence, the evolution of a company's MCP may be shaped by a multitude of past events and experiences, such as the development of a distinct organizational culture or prior successful or unsuccessful use and application of specific management accounting tools and techniques.…”