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We examine how subjectivity in performance measurement and reward systems (PMRS) is used to mitigate incentive contracting risks. Drawing on data from 38 interviews with supervisory and subordinate managers in four firms, we provide a more comprehensive explanation of the role of subjectivity in risk mitigation than is evident in the prior literature. We provide empirical evidence of the importance firms place on the use of subjectivity to mitigate the risk of incentive misalignment and employee sorting errors relative to its well-documented role in mitigating employee compensation risk. We find that incentive misalignment arising from unanticipated behavioral responses to performance measures is a particularly important risk, managed through subjective performance assessments. The extent of subjectivity we observe poses a significant risk of errors and bias. We observe that both vertical and horizontal information gathering and review by calibration panels are key strategies to mitigate the downside risk of subjectivity. JEL Classifications: M49; M55; M52; M51.

In its recently revised conceptual framework, the IASB re-affirms decision-usefulness as the objective of financial reporting, disregarding claims about its lack of coherence. In this paper, we examine how this notion of decision-usefulness works in practice by focusing on the case of fair value measurement. In particular, we explore how decision-usefulness is perceived and experienced by financial analysts when using fair values in their work. We use the frame of ‘problematisation’, which involves challenging assumptions in existing literature, to formulate our research question and to interpret our findings. Empirical evidence, drawn from interviews with UK financial analysts and comment letters analysts wrote to the IASB, puts into question three key assumptions inherent in\ud the revised conceptual framework. First, fair values are not considered to be unquestionably useful to decision-making; second, this usefulness is found to be contingent on the context of the decision being made; and third, the qualitative characteristics required to achieve decision-usefulness are challenged for their lack of meaning. Analysts’ testimonies also challenge taken-for- granted assumptions implicit in academic studies. Assumptions that the decision-usefulness of fair values can be established prior to practice are re-evaluated. We also reflect on the premise that the\ud decision-usefulness of fair values can be challenged on its underlying market-based economic rationales. Overall, our findings contribute to thinking problematically about decision-usefulness which appears to be contingent rather than given by some\ud Q1 predetermined ideals as envisaged in accounting conceptual frameworks.

There is no doubt that attribution theories have made their mark in social psychology and other related disciplines, but their application and extension to the field of HRs is in its infancy. Indeed, HR scholars have recently realized that understanding the process by which individuals explain the causes of behaviors and events provides insight into a host of HR-related issues. In our review of 65 papers, we identified three research streams with different foci – those that focused on HR system strength, on attributions that influence judgements and behaviors within functional HRM domains, and on the attributions employees make of the intent of HR practices. Notably, despite shared foundations, these three streams of literature rarely overlap. We summarize and provide theoretical and empirical directions for future research within each research area to help steer courses in these areas. Importantly, we also draw connections among the three streams to inspire future research to stretch the bounds of current theorizing on attributions in the field of HR.

Despite significant interest in the attributions employees make about their organization's human resource (HR) practices, there is little understanding of the antecedents of HR attributions. Drawing on attribution theory, we suggest that HR attributions are influenced by information (perceptions of distributive and procedural fairness), beliefs (organizational cynicism), and motivation (perceived relevance). We test a model through a two‐wave survey of 347 academic faculty in the United Kingdom, examining their attributions of the purpose of their institution's workload management framework. After two preliminary studies (an interview study and a cross‐sectional survey) to establish contextually relevant attributions, we find that fairness and cynicism are important for the formation of internal attributions of commitment but less so for cost‐saving or exploitation attributions. Fairness and cynicism also interact such that distributive fairness buffers the negative attributional effect of cynicism, and individuals are more likely to attribute fair procedures to external forces if they are cynical about their organization. This study furthers the application of attribution theory to the organizational domain while making significant contributions to our understanding of the HR‐performance process.

In this paper, we investigate the role of formal and relational contracts in managing alliance risks that arise in co-opetitive collaborations. We undertake a case study of a co-opetitive sales alliance within the independent publishing sector, incorporating data from all firms to the alliance. We provide empirical evidence of the relational risks of misappropriation and opportunism as manifest in both vertical (buyer-supplier) and horizontal activities within the alliance and identify a further relational risk relating to concerns of introducing homogeneity into the product offerings of firms. We also examine the nature of compliance and regulatory risk, which is salient in this setting given the potential for anti-competitive behaviour towards customers and suppliers. We find that the firms mitigate alliance risks primarily through the use of relational contracts (informal self-enforcing agreements). Formal contracts are evident in the buyer-supplier relationship, but are used mainly for ex post co-ordination. We adopt an organisational economics perspective to explain the specific mechanisms that support relational contracting between the firms. We find that shared values, implicit understandings, restricted membership, meetings, and collective sanctions encourage the firms to demonstrate commitment to the alliance, to diffuse information about partners’ behaviours, and, crucially, to monitor partners. Informal agreements between partners are sustained by self-regulating behaviours, reinforced by the ‘shadow of the future’ in that firms have a great deal to gain from continued participation in the alliance and face losses if excluded. Notably, our findings support economic arguments that trust is a weak proxy for observable control mechanisms. Our study contributes to knowledge of the management of inter-firm risks in two significant ways. First, we draw on our empirical findings to develop an organising framework that presents a means of systematically investigating the mechanisms and factors that support the use of relational contracts. Second, by employing an economics approach to the management of alliance risks, we are able to present a richer and potentially more compelling view of inter-firm control than is traditionally presented in studies that rely on intra-firm notions of social controls, in particular trust.

International audience; Little is known about the role of management control systems (MCS) in managing the strategic processes that underpin Corporate Social Responsibility (CSR). To enhance our understanding of this phenomenon, this study employs Simons' (1995) levers of control framework to explore how organizations leverage MCS in different ways in order to drive strategic renewal and trigger organizational change while simultaneously supporting society's broader sustainability agenda. Drawing on data gathered from France's largest listed companies - members of the CAC 40 - we provide insights into the structures and processes that companies employ to design, implement and monitor their CSR strategy. In doing so, we provide evidence of the way that organizations seek to attain their CSR objectives, and of the relationship between the management of CSR and other business processes. Of particular interest is the role of the levers of control in enabling managers to identify and manage threats and opportunities associated with CSR strategy, thus forming risk management processes that support organizations in their attainment of strategic objectives. Furthermore, the study provides evidence suggesting the use of MCS has the potential to contribute to society's broader sustainability agenda through processes that enable innovation, communication, reporting, and the identification of threats and opportunities.

This article reports the findings of a case study conducted in a multinational organization that aims to investigate how an enterprise resource planning system ERP can facilitate control over reporting processes and thus ensure compliance with regulatory requirements. The findings demonstrate how the use of an ERP to comply with financial regulation can impact organizational roles. In particular, IT managers must ensure that the ERP addresses regulatory requirements for internal control over financial reporting.

PurposeThe authors aim to present an overview of the papers in this special issue on the theme of the role of management accounting and control in routine and change in organizations, which arose from the Management Control Association Conference at the University of Greenwich, London, UK in September 2010.Design/methodology/approachThe authors place the research undertaken and the interpretations offered by the authors in the context of ongoing developments in new institutionalism in sociology.FindingsThe authors' review shows that researchers are now exploring routine and change in the context of competitive environments in both the private and the public sector.Originality/valueThe review brings attention to emerging work in the area of management accounting and control that explores change in changing organizational forms.

This Teaching Note reports on an initiative designed to increase the number of students who undertake homework in the absence of formal rewards, such as additional marks. While the initiative was successful in increasing the number of students who attempted the homework each week, preliminary findings suggest it may have been accompanied by a fall in attendance levels. The note concludes with some lessons learned and recommendations for educators who wish to undertake a rigorous empirical study of the initiative's effectiveness and impact.

HR attributions are defined as the explanations that employees make regarding their organization’s intentions in implementing HR practices. These attributions are important because they explain the...

This paper explores how organisations balance controlling and enabling uses of management control systems (MCS), and how this balance facilitates the creation of dynamic tensions and unique organisational capabilities. By employing Simons’ (1995) levers of control framework in a case study setting, the paper investigates the challenges faced by senior managers when they use MCS simultaneously to direct and empower. The findings indicate a number of factors – internal consistency, logical progression, historical tendency, dominance, and suppression – that impact the capacity of organisations to balance different uses of MCS. The interactive lever of control also plays a significant role in achieving and sustaining a balance between controlling and enabling uses of MCS, and its impact on the other levers is seen to constitute a unique organisational capability in its own right. The findings from this study offer an elaboration of how dynamic tensions are created through managers’ attempts to balance controlling and enabling uses of MCS.

While empirical researchers in management accounting frequently address overlapping research issues using a variety of methods, there is little evidence of productive dialogue addressing the uncertainties and ambiguities raised within each stream of research. For example, survey researchers frequently call for deeper field-based insights into conflicting or ambiguous findings. Case study researchers convey rich organizational stories of management accounting in context. However, these field-based findings are rarely used to resolve the ambiguity in construct definition, measurement, and inter-relationships that plague our empirical research bases. In this paper we seek to regenerate interest in a method that has been implemented in the past to promote productive field-based dialogue on issues related to complex constructs and their interrelationships. The method is best illustrated by the cross-sectional field study approach adopted by Merchant and Manzoni (1989) to study budget target achievability. By considering the Merchant and Manzoni (1989) study as well as two other examples (Bruns and McKinnon 1993; Abernethy and Lillis 1995) we identify the range of questions suited to this method and how the method contributes significant insights to the management accounting literature. We also articulate the design attributes of cross-sectional field studies by explicitly linking the rationale for these studies with the complexity of the phenomenon under study, sampling logic, instrument design, and data analysis protocols. The insights produced from the relatively few published studies using a cross-sectional field study method suggest that opportunities for the application of this method may be underexploited.

Management control is about the process of steering organisations through the environments in which they operate, to achieve both short-term and longer-term goals. These goals will differ from organisation to organisation because their stakeholder demands will be resolved in different ways, in part dependent on the relative power of different stakeholder groups in each context, and also on the past history and trajectory of the organisation. However, the longer-term goals will almost inevitably include the survival of the enterprise itself, as this generally is in the interests of most stakeholder groups, most of the time. \ud In addition, the environment in which organisations operate is itself constantly changing and may be very difficult to predict. Thus, the context within which organisation is being steered is highly uncertain and may change, sometimes quite quickly and radically. It is a moot point as to whether the rate of environmental change, or the degree of uncertainty which organisation now have to face, has increased in recent years. We certainly seem to perceive it as increasing, although this may be partly due to the future being less predictable than the past. It is always difficult to try and look back and envisage how previous situations we face looked at the time, without having our perception coloured by the way events actually turned out, and the consequences for ourselves.