Management control and controllership in the new economy firms - a life cycle perspective
The purpose of this study is to describe and explain current management control practices in new economy firms(NEFs). According to our definition, NEFs include businesses targeting at fast growth or already fast-growing firmsthat operate in the information and communications technology business and biotech (life sciences) industry, andare characterized by their R&D and knowledge intensity as well as venture capital finance. There seems to exist atrue lack of empirical evidence of what the management control practices, their trends of development, as well asthe challenges facing them in NEFs actually are. In order to fill this gap in the existing knowledge we conductedan explorative multi-organization study of nine NEFs. Our theoretical basis is grounded on corporate life cyclemodels. Our observations indicate that there exist, in addition to certain similarities, notable differences betweenmanagement accounting and control practices in NEFs and firms operating in traditional operating environments.The most notable findings relate in this regard to differences in temporal orientation (time pressure), leading manytimes to prioritizing planning over control. Also, the pressures to meet expectations placed by certain external parties(venture capitalists and later on by stock market players), to develop management control systems is characteristicof the new economy environment. We elaborate these findings further through a corporate life cycle analysis, andby linking them to issues of strategic management and corporate culture.
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|Authors:||Granlund Markus ; Taipaleenmaki Jani|
Elsevier Sci Ltd
|Type of publication:||Other|