A1 Refereed original research article in a scientific journal
Explaining the Unintended Consequences of Management Control Systems: Managerial Cognitions and Inertia in the Case of Nokia Mobile Phones
Authors: Malmi Teemu, Kolehmainen Katja, Granlund Markus
Publisher: Wiley
Publication year: 2023
Journal: Contemporary Accounting Research
Journal name in source: CONTEMPORARY ACCOUNTING RESEARCH
Journal acronym: CONTEMP ACCOUNT RES
Number of pages: 33
ISSN: 0823-9150
DOI: https://doi.org/10.1111/1911-3846.12849
Web address : https://doi.org/10.1111/1911-3846.12849
Self-archived copy’s web address: https://research.utu.fi/converis/portal/detail/Publication/179316560
Management control systems (MCS) have been known to produce unintended, dysfunctional consequences. However, relatively little is known about how MCS can contribute to the inertia and even decline of a firm. Our analysis in the abductive mode was triggered by a surprising case study observation that although Nokia Mobile Phones (NMP) certainly had many capabilities that could have facilitated a timely response to disruptive environmental change, this did not happen. In developing an explanation for this, we draw on the managerial cognitions literature, showing how the cognitions at NMP, developed in the era of organizational success, became embedded in its MCS. This embeddedness, in turn, intensified existing cognitions. As the cognitions became less accurate over time, the once effective MCS started to cause various inertial effects, such as suboptimal and slow decision-making. We contribute to the literature on the dysfunctional consequences of MCS by theorizing how MCS can contribute to inertia via cognitions in two ways: first, by reinforcing prevailing cognitions and hence preventing management from realizing a need for change; and second, by moderating the impact cognitions have on actions by delaying actions based on renewed cognitions. Both ways may be fatal, especially in hyper-competitive contexts.
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