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Article
Publication date: 3 August 2020

Pall Rikhardsson, Stefan Wendt, Auður Arna Arnardóttir and Throstur Olaf Sigurjónsson

This paper asks the question of whether more environmental uncertainty affects the design of performance measurement systems in terms of a greater variety of performance measures…

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Abstract

Purpose

This paper asks the question of whether more environmental uncertainty affects the design of performance measurement systems in terms of a greater variety of performance measures and whether this leads to more management satisfaction with the performance measurement system and improved firm performance.

Design/methodology/approach

Information processing theory is used to frame the hypotheses and findings. A questionnaire was sent to the 300 largest companies in Iceland, where environmental uncertainty has been prevalent.

Findings

The results indicate that increased uncertainty leads to a larger variety of non-financial performance measures, such as customer measures. A positive relationship is found between management satisfaction with the performance measurement system and firm performance. However, the variety of performance measures was not linked to management satisfaction or firm performance.

Research limitations/implications

The results suggest that managers increase the variety of performance measures when uncertainty increases. However, it is not the variety itself that increases management satisfaction or improves firm performance.

Practical implications

Performance measurement design is affected by environmental uncertainty. Managers focus on important stakeholder groups such as customers under such conditions and can consult research and practice for the purpose of customer relationship management and customer profitability measurement to improve measurement selection.

Originality/value

This work focusses on performance measurement system design, examining the use of more than 50 different performance measures, and differentiates between small and medium-sized firms and between service and non-service firms.

Details

International Journal of Productivity and Performance Management, vol. 70 no. 6
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 11 June 2018

Leif Christensen, Pall Rikhardsson, Carsten Rohde and Catherine Elisabet Batt

This paper aims to explore and explain how administrative controls have been changed as a response to a significant crisis, using the transition of the three largest Icelandic…

1541

Abstract

Purpose

This paper aims to explore and explain how administrative controls have been changed as a response to a significant crisis, using the transition of the three largest Icelandic banks from bankrupt to operational entities after the 2008 financial crisis. The Icelandic banks are compared with three Danish banks to separate crisis-driven responses from simple market-driven reactions.

Design/methodology/approach

Empirical data were collected using semi-structured interviews. The participating Icelandic and Danish banks were considered as two units, which formed the basis for a comparative case study between the two countries.

Findings

Driven by an understanding of what is expected by the market rather than the need to inform and guide the employees the Icelandic banks implemented a number of revolutionary and formally documented changes. These changes included significant bigger risk management functions and policies and procedures documenting “everything”. However, in both countries, it seems that new values supported by the “tone at the top”, areas with limited formal documentation, are the most important management tools.

Research limitations/implications

The study relies on interviews with employees, and the actual changes of administrative controls have not been reviewed. The most important implication is that the situated logics in Iceland driven by external institutional pressure initiated a revolutionary implementation of values bypassing existing routines and formalised rules.

Originality/value

Although the use of management controls has been studied intensively, detailed studies of the banking sector have been lacking. Furthermore, there is limited knowledge of how administrative controls changed in response to the financial crisis.

Details

Qualitative Research in Accounting & Management, vol. 15 no. 2
Type: Research Article
ISSN: 1176-6093

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Article
Publication date: 16 February 2021

Pall Rikhardsson, Carsten Rohde, Leif Christensen and Catherine E. Batt

This paper investigates the use of management controls when environmental uncertainty and hostility increase abruptly. Specifically, it explores this in the context of the 2008…

2363

Abstract

Purpose

This paper investigates the use of management controls when environmental uncertainty and hostility increase abruptly. Specifically, it explores this in the context of the 2008 financial crisis in six banks located in two countries.

Design/methodology/approach

The paper is based on 26 qualitative interviews with selected managers employed by the six banks. Eight interview guides were developed based on the typology of controls in Malmi and Brown (2008). Respondents explained which changes in management controls occurred after the crisis.

Findings

Both organic and mechanistic management controls were mobilized at the same time to deal with the change. The use of controls played three main roles: (1) guide and control behavior, (2) change internal and external perceptions and (3) discharge accountability. Finally, control use during a crisis evolves as individual managers design and implement controls. There is no “grand design” rationally guiding the design of the overall system of controls.

Originality/value

The use of management controls in dealing with an increase in uncertainty and hostility cannot be labeled either organic or mechanistic, but will depend on the specific type of change in environmental characteristics. Management controls evolve by interaction with outside actors, as well as internal techniques.

Details

Accounting, Auditing & Accountability Journal, vol. 34 no. 4
Type: Research Article
ISSN: 0951-3574

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