Heard it Through the Grapevine: A Small-Worlds Perspective on Control as a Package

25 Pages Posted: 14 Aug 2010

Date Written: August 12, 2010

Abstract

The investigation of management control has attracted the increasing attention of management accounting researchers over the past three decades. As a result of this burgeoning inventory of knowledge, the evolution of management control theory has progressed from Anthony’s primarily formal, quantitative and accounting-based view of control, to one that embraces a more holistic perspective incorporating formal management control systems (MCS), informal controls and the combination of formal MCS and informal controls collectively operating as a ‘package’. Despite this accumulated body of literature however, empirical studies which explicitly investigate the relative influence of formal and informal controls, as well as the interaction of these two broad control modes in an organizations’ overall control package, have been limited. This paper argues that this empirical gap in our knowledge may be partly explainable by the intrinsic difficulties associated with operationalizing informal control and in particular, the absence of an established framework to conceptualize and analyze the role of informal networks and relationships in the control efforts of organizations. Such a framework, it is contended, would contribute to our understanding not only of the ways in which informal control is propagated and diffused throughout an organization, but also, how informal controls interact with formal MCS. This paper advocates the adoption of social network theory and particularly, ‘small-worlds phenomenon’, as a means to provide insights into how informal control may be promulgated within organizations, how researchers may operationalize the ways in which this form of control is transmitted, and, as an aid to practitioners involved in the design and use of control systems.

Keywords: MCS, informal control, control as a package, social network theory, small-worlds phenomenon

JEL Classification: M41

Suggested Citation

Tucker, Basil P., Heard it Through the Grapevine: A Small-Worlds Perspective on Control as a Package (August 12, 2010). AAA 2011 Management Accounting Section (MAS) Meeting Paper, Available at SSRN: https://ssrn.com/abstract=1658237 or http://dx.doi.org/10.2139/ssrn.1658237

Basil P. Tucker (Contact Author)

University of South Australia ( email )

37-44 North Terrace
Adelaide SA 5000, South Australia 5001
Australia

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