Controlling continuous improvement in financial control processes : A case study
Rintakoski, Amanda (2021)
Rintakoski, Amanda
2021
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2021120759449
https://urn.fi/URN:NBN:fi-fe2021120759449
Tiivistelmä
This thesis investigates how continuous improvement (CI) is controlled in financial control processes and how said controls are de facto used by management. The agile environment of a CI program is in stark contrast to the traditional management control system environment. This study's primary focus is to investigate the two different approaches' relationships and if CI could indeed be controlled by MCS. MCS, such as Malmi & Brown (2008), Simons (1995) and Tessier’s & Otley’s (2012) frameworks were used to analyze the case company’s CI program. The secondary purpose of the study is to examine how management uses controls and performance measures (Malmi & Brown 2008; Kennedy & Widener 2008; Artz, Homburg & Rajab 2012). This study is conducted as a case study.
The findings describe the functions and purposes of control systems but also how controls could be applied to CI initiatives. The findings support Malmi & Brown’s argument that cultural controls are the most important for establishing a CI culture although they are also the most complex to influence. Employee expectation, behavior and perception of CI could be influenced by active communication of beliefs and boundaries, defining operational and strategic targets. Although managerial intentions were to create an enabling tool for employees, it was suggested that the launch of the CI program could receive a mixed response from employees. Further, there were no direct cybernetic controls in the case company specifically tied to CI activities. Intrinsic rewards, such as acknowledgement and a sense of accomplishment, was suggested to be more relevant as opposed to extrinsic rewards, such as monetary, since CI activities were seen as part of employees jobs already and should not be performed to gain additional rewards. There was also a preference among participants to review data through an interactive approach because the background, context and situation of measurements was important to understand to be able to make informed decisions.
This thesis contributes with insights into the relationship between control systems and agile approaches to the collection of research into how continuous improvement in financial control processes could be controlled, studying the practical implications through applying control system frameworks to a CI program in a company. This thesis also offers many opportunities for further research, especially requiring further studies into the feasibility and value of controlling continuous improvement.
The findings describe the functions and purposes of control systems but also how controls could be applied to CI initiatives. The findings support Malmi & Brown’s argument that cultural controls are the most important for establishing a CI culture although they are also the most complex to influence. Employee expectation, behavior and perception of CI could be influenced by active communication of beliefs and boundaries, defining operational and strategic targets. Although managerial intentions were to create an enabling tool for employees, it was suggested that the launch of the CI program could receive a mixed response from employees. Further, there were no direct cybernetic controls in the case company specifically tied to CI activities. Intrinsic rewards, such as acknowledgement and a sense of accomplishment, was suggested to be more relevant as opposed to extrinsic rewards, such as monetary, since CI activities were seen as part of employees jobs already and should not be performed to gain additional rewards. There was also a preference among participants to review data through an interactive approach because the background, context and situation of measurements was important to understand to be able to make informed decisions.
This thesis contributes with insights into the relationship between control systems and agile approaches to the collection of research into how continuous improvement in financial control processes could be controlled, studying the practical implications through applying control system frameworks to a CI program in a company. This thesis also offers many opportunities for further research, especially requiring further studies into the feasibility and value of controlling continuous improvement.
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