The evolution of a management control package : a retrospective case study

Purpose: This paper examines the evolution of a company's management control package (MCP) over time. The overall aim is to gain a deeper understanding of internal and external factors shaping a company's management control package. Design/methodology/approach: This paper employs a retrospective single-case methodology where a company is followed over a ten-year period (2005–2015). Theoretically, the paper builds on Malmi and Brown's (2008) MCP framework while also utilizing Simons' (1994) levers of control framework as well as Abrahamson's (1991) management fashion theory. Findings: The company's MCP evolved in several ways. First, there was a change from using an interactive to a diagnostic budget. Second, the Balanced Scorecard approach was replaced by a narrow, strong focus on shareholder value. Finally, the quality system was reduced from a system for continuous learning and improvement to a system for compliance purposes only. Research limitations/implications: This paper offers naturalistic generalization to enable a holistic understanding of the changes to a management control package over time. The findings suggest that history matters in the design and configuration of MCPs. The MCP has evolved from being balanced and interactive, resembling Beyond Budgeting, to a diagnostic approach resembling traditional budgetary control. In 2005, the different controls were complementary and used for different purposes, while in 2015 the controls solely support the creation of shareholder value. The findings also indicate that management accounting innovations such as The Balanced Scorecard and Beyond Budgeting in this specific context may be considered fashions or even fads. Practical implications: The findings of the paper could be useful for CFOs and other managers who are involved in the design and configuration of MCPs. The findings show that internal and external events shape how much leeway managers have in the design and configuration of MCPs. Originality/value: The paper answers a call for more empirical studies on MCPs. By adopting a retrospective approach, the paper can provide insight into the temporal evolution of a control package.