Gaining traction: how SMEs succeed in making management control systems stick

Abstract

Purpose

This study aims to explore why certain firms can transition successfully to more sophisticated accounting and management control systems than others.

Design/methodology/approach

This study uses 20 semi-structured interviews with senior executives of former and present SMEs in the construction industry and business advisory firms to explore the factors behind making sophisticated control systems a permanent organizational feature.

Findings

Sophisticated control systems function based on the compliance of lower-level employees, whose lack of buy-in is a major hurdle for smaller firms. Foundational controls of basic human resources and systematic communication routines facilitate their buy-in through accountability, participation and information-sharing, without which firms fail to transition successfully to sophisticated control systems.

Research limitations/implications

The results are based on firms in a single industry and subject to the limitations of cross-sectional research. The transition strategy to more sophisticated control systems is important. This study suggests that foundational controls are necessary to successfully transition to more sophisticated controls.

Originality/value

This study focuses on smaller firms seeking to transition to more sophisticated control systems. This study identifies the key roadblock of noncompliance by lower-level employees, elaborates the role of foundational controls and describes the underlying mechanism behind gaining employee buy-in.

Citation

Reinking, J. and Resch, P. (2023), "Gaining traction: how SMEs succeed in making management control systems stick", Qualitative Research in Accounting & Management, Vol. 20 No. 3, pp. 372-397. https://doi.org/10.1108/QRAM-01-2022-0011