A review of an article using argument and questioning methods: on complexity and management control systems, for advanced management accounting study

A review of an article using argument and questioning methods: on complexity and management control systems, for advanced management accounting study

 

How to describe the article in Harvard reference format?

Dávila, A., Derchi, G.-B., Oyon, D. and Schnegg, M., 2024. External complexity and the design of management control systems: a case study. Management Accounting Research, 63, p.100875. Available at: https://doi.org/10.1016/j.mar.2023.100875 [Accessed date].

Replace "[Accessed date]" with the date you accessed the article.

 

Highlight the main research issues and research objectives, 2 main academic theories used and the main research methods used in this article.

Based on the content of the article, here are the requested details:

Main Research Issues:

1.    The challenge organizations face due to increasing external complexity and dynamism in technologies and markets, which traditional management control systems (MCS) struggle to address.

2.    The inadequacy of internally-focused MCS to provide sufficient information for sensing and responding to external complexity.

3.    How to design management control systems that support top management in making sense of external complexity and strategic uncertainties.

4.    The difficulty in capturing and utilizing qualitative, external information for strategic foresight and decision-making .

Research Objectives:

1.    To trace and describe the experience of a real estate fund management company in designing and implementing a management control system aimed at capturing and managing external complexity.

2.    To understand how management control systems can be adapted or newly designed to incorporate qualitative and external data for strategic control.

3.    To explore the process of system design and use over time through a longitudinal case study, focusing on strategic uncertainties and environmental scanning.

Two Main Academic Theories Used:

Interactive Control Systems Theory (Simons, 1995): Focuses on management control systems used interactively to stimulate dialogue and strategic discussions within organizations.

Strategic Foresight Literature: Pertains to techniques and systems that help organizations anticipate and prepare for future strategic uncertainties, involving qualitative information and external scanning concepts like peripheral vision and wisdom of crowds.

Main Research Methods Used:

Longitudinal Single Case Study Design: Spanning eight years (2013–2021), with the researchers engaged in action research involving both observation and active co-creation with the company.

Action Research Approach: Researchers participated as both observers and advisors, contributing to the design and implementation of the externally-focused control system while collecting rich qualitative data.

Use of qualitative data collected from company documents, press clippings, reports, interviews (CEO and Chief of Staff), and participation in management meetings.

These insights collectively allow the study to contribute to theory and practice regarding externally-focused management control systems in complex environments 

 

Describe 3 main claims of the article in terms of Toulmin's model of argument and then provide a critical review of the article using the Socratic Method.

Below I present three main claims from the article framed in Toulmin's Argument Model, followed by a critical review structured around the Socratic method.

---

Three Main Claims in Terms of Toulmin’s Model

Claim 1:

Claim: Internally-focused management control systems are inadequate for monitoring and managing strategic uncertainties arising from external complexity.

Data (Evidence): RE-Co’s initial experience showed that relying on internal data and anecdotal external evidence failed to produce strategic discussions or comprehensive understanding of external changes.

Warrant: If control systems focus mainly on internal data, they miss critical external signals essential for strategic foresight.

Backing: Literature on strategic control (Lorange et al., 1986; Simons, 1995) and the case showing the gap of internal systems in dynamic environments.

Qualifier: This applies especially to mature companies facing increasing complexity in markets and technologies.

Rebuttal: In startups or crisis situations, internal systems may suffice temporarily focusing on operational control.

Claim 2:

Claim: An externally-focused management control system combining qualitative data, interactive processes, and technology can effectively stimulate strategic discussions around uncertainties.

Data: RE-Co’s custom-developed system (2019–2021) employed machine learning, synthesized external qualitative and quantitative data, and embedded routines for management dialogue, leading to richer strategic debates.

Warrant: Combining accessible, synthesized external information with interactive processes enhances managerial attention and engagement.

Backing: Concepts from foresight literature and interactive control system theory support integrating qualitative external insights with group discussions.

Qualifier: The system is effective when top management is receptive and routines support continuous use.

Rebuttal: The system requires investment and a culture shift, which may encounter resistance.

Claim 3:

Claim: Successful implementation of externally-focused control systems requires top management awareness of strategic uncertainties and a long-term perspective rather than focus on short-term performance.

Data: RE-Co’s adoption was gradual, driven by accumulated missed opportunities rather than immediate performance crises, consistent with theory that interactive systems are adopted after diagnostic and belief systems.

Warrant: Without leadership sensitivity to uncertainties and slack resources, such systems will not be prioritized or utilized.

Backing: Scholars like Simons (1995) and foresight research highlight the role of managerial mindset and organizational context.

Qualifier: Applies mostly to mature, stable companies with resources and strategic consciousness.

Rebuttal: In crisis or startup phases, short-term survival priorities override long-term strategic monitoring.

---

A critical review Using Socratic Method on the article.

Question 1: What is the problem the article addresses, and why is it important?

Answer: The problem is how to design management control systems that effectively help organizations sense and manage external complexity and strategic uncertainties. It is important because traditional internally-focused controls fail in increasingly dynamic environments, risking strategic drift or missed opportunities.

Question 2: How does the article attempt to solve this problem?

Answer: By conducting a longitudinal case study at RE-Co where the company iteratively developed an externally-focused control system leveraging qualitative data, interactive routines, and technology, the study provides empirical insights into design and adoption.

Question 3: Does the evidence sufficiently support the conclusions?

Answer: The case study offers rich qualitative evidence and managerial testimonials demonstrating how early systems failed and how the new system better enabled strategic discussions. However, being a single case limits generalizability, and some claims rely heavily on management perceptions, which could be biased.

Question 4: Are the theoretical frameworks used appropriate and effectively applied?

Answer: Yes, the integration of Simons’ interactive control systems theory and foresight literature is apt for framing externally-focused control systems. The study extends existing frameworks thoughtfully but could delve deeper into contrasting alternative theories about control system adoption and information processing .

Question 5: Does the article consider alternative explanations or limitations?

Answer: The article acknowledges limitations such as the single case nature and inability to generalize. It also reflects on organizational culture and managerial willingness as contingencies in adopting externally-focused systems. However, alternative technological or organizational solutions beyond control systems (e.g., strategic flexibility or agile governance) are less discussed.

Question 6: What are the practical implications, and how feasible are they?

Answer: The study offers a blueprint for companies to design external control systems combining technology and interactive practices. Feasibility depends on managerial commitment and willingness to invest time and resources, which might be hard for firms without slack resources or in crisis.

Question 7: What future research questions does the article open?

Answer: It calls for studies on adoption drivers of externally-focused systems, their cost-benefit trade-offs, comparative designs of external vs. internal systems, and how organizations process unstructured qualitative external data.

---

Summary of Critique

The article provides a valuable exploratory longitudinal insight into designing externally-focused management control systems, effectively using theory and empirical data. Its strengths lie in the rich managerial perspectives and integration of foresight concepts. Limitations include single case scope, reliance on perceptions, and the challenge of technological and cultural adoption in other contexts. The work opens promising avenues for future research but would benefit from incorporating alternative perspectives and broader empirical validation.

 

Describe 2 main research limitations of the article.

Based on the content of the article, here are two main research limitations:

Single Case Study and Limited Generalizability: The research is based on an in-depth longitudinal action research study of a single mature company, RE-Co, over an eight-year period. While this allows for detailed understanding and rich contextual insights, the findings cannot be readily generalized to other organizations or industries. The authors explicitly recognize that the evidence is limited to one case study and caution against labeling their system as a novel construct without further empirical support from additional cases .

Researcher Involvement and Potential Bias: The action research design involved researchers actively participating as observers, advisors, and co-creators in the design and implementation of the new control system . This deep involvement provides unique access and reflexivity but also means the researchers influenced the organization’s response and decisions. Consequently, the study’s findings may be shaped by this interaction, limiting replicability and potentially introducing bias in interpretations.

These limitations are openly acknowledged by the authors and highlight the exploratory and context-dependent nature of the research.