Management Control Systems, Results Oriented Culture, and Performance: Evidence from Dutch Municipalities
Roland F. Spekle
Nyenrode Business University
Amsterdam Business School; Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)
August 12, 2011
AAA 2012 Management Accounting Section (MAS) Meeting Paper
New Public Management (NPM) literature has argued that the use of result controls and associated incentives is key in improving the efficiency and effectiveness of public sector organizations. The (implicit) hypothesis seems to be that the use of these result controls and incentives will establish a results oriented culture, which subsequently will translate in better performance. However, management control systems literature suggests that a different use of result controls (for example, use for the communication of strategy, strategic use or diagnostic use) respectively the use of other controls (for example, cultural or action controls) may be equally or even more effective. We explicitly test the NPM-argument using survey responses of 96 financial officers from municipalities in the Netherlands. Our results indicate that the use of performance measurement systems is positively associated with a results oriented culture, which in turn is associated with an increase in performance. However, it is the use for the communication of strategy rather than the use for incentive purposes that is associated with such a culture. In addition, we find that both the use of cultural and action controls contribute to a results oriented culture. Jointly, our findings suggest that the NPM-argument that the use of incentives will increase performance through a results oriented culture does not hold, and that municipalities need to seek other ways to improve effectiveness.
Number of Pages in PDF File: 34working papers series
Date posted: August 12, 2011
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