The Network Effects of Core Values on Management Controls

Abstract

Acknowledgements -This paper has benefited from the helpful comments on earlier versions made by Habib Mahama, Kohji Yoshikawa, Casey Rowe, participants at the 8 th International Management Control Research Conference, participants at MONFORMA 2010, participants at the 4th New Zealand Management Accounting Conference, participants at the 2013 Management Accounting Section Research and Case Conference, and seminar participants at the Department of Operations Management, Copenhagen Business School and Department of Accounting, University of Exeter, Business School. 1 The Network Effects of Core Values on Management Controls Abstract:Simons' (1995b) levers of control have become one of the most prominently utilized management control system frameworks in the accounting literature. In this paper we focus on core values, which guide and motivate an organization, an area of the framework not examined in the accounting literature. Specifically we examine the process through which a new core value develops. We also show how this process is influenced by and acts upon the other levers of control. We highlight how this process initially involves few actors, little complexity and creates a descriptive definition for the core value. This descriptive definition prompts more actors to become involved resulting in greater complexity. The prompt for these actors to become involved is their search and discovery activities aimed at understanding the practical relevance of the new core value. The process of developing the core value and the search for practical relevance necessitates the creation and transformation of other management controls. These management controls in turn change the core value and other actors within the process. The process of search and discovery provides belief control through embedding elements of the core value in the management controls that were created or transformed. While the core value may be displaced its effects on other controls remain in place thus showing how and why controls embody both technical and social elements.