Shared service centres and management control structure change: Exploring the scope and limitations of a transaction cost economics approach

Abstract

Purpose

This paper aims to explore management control structure change related to the development of a shared service centre (SSC).

Design/methodology/approach

The paper explores a transaction costs economics perspective (TCE‐perspective) on management control structure change related to the development of an SSC. Particularly, it explores and challenges the scope of such a perspective both in terms of contents (i.e. the nature of management control related to the dimensions of transactions) and process (i.e. the way change is effectuated). It does so by theorizing as well as empirically investigating management control structure change through a case study at PCM (a Dutch newspaper publisher).

Findings

The theoretical analysis broadens existing frameworks of management control structures by particularly pointing to the possibility of including governance structures for internal transactions and exit threats (connected to a market mechanism) in the management control structure of an organization. However, the paper's empirical investigations challenge the broader framework: the possibility of an exit threat was not explicitly considered by top management (“the designer” of management control). More profoundly, empirical investigations challenge the calculative approach of the change and show that the change in management control is to a large extent a drifting process.

Research limitations/implications

An instrumental calculative approach towards SSC‐related management control change should be complemented with a relational perspective on such change, in order to further explore its drifting character.

Practical implications

A transaction costs economics approach to change in management control might provide practitioners with insights into the efficiency of specific management control structures.

Originality/value

The paper contributes to the extant knowledge by both exploring and challenging a TCE‐perspective on SSC‐related changes in management control.

Citation

Minnaar, R.A. and Vosselman, E.G.J. (2013), "Shared service centres and management control structure change: Exploring the scope and limitations of a transaction cost economics approach", Journal of Accounting & Organizational Change, Vol. 9 No. 1, pp. 74-98. https://doi.org/10.1108/18325911311307212