An investigation of the relation between ownership structure and management control in professional service organisations

Robyn King (UQ Business School, University of Queensland, Brisbane, Australia)
Peter Clarkson (UQ Business School, University of Queensland, Brisbane, Australia and Beedie School of Business, Simon Fraser University, Burnaby, Canada)

Journal of Accounting & Organizational Change

ISSN: 1832-5912

Publication date: 3 April 2019

Abstract

Purpose

This study aims to examine the interplay between ownership structure (organisational form) and management control system (MCS) design as governance structures within Australian primary health-care organisations (PHOs), seeking support for the suggestion that professional services will be most efficiently and effectively provided in organisations that have internal governance that is matched to their ownership form.

Design/methodology/approach

The analysis is based on a series of in-depth investigations into the MCS choices made by seven Australian PHOs. Arguing that the degree of information impactedness is inversely related to the level of general practitioner (GP) ownership, organisations where more than 50 per cent of the GPs working within the practice are owners are classified as “high ownership” (“low information impactedness”). The adoption by high-performing organisations of their predicted MCS archetype according to Speklé’s development is then interpreted as representing empirical support.

Findings

The findings provide uniform support for the importance of the match between ownership structure and internal governance mechanisms. As predicted, the two high-performing, high member-owned organisations reported MCS resembling exploratory archetypes, the three high-performing, low member-owned organisations reported MCS consistent with a boundary archetype and the two low-performing organisations reported little emphasis on any control.

Research limitations/implications

This study provides evidence of the importance of the appropriate match between ownership structure and internal governance mechanisms for PHOs.

Practical implications

This study has potential to assist managers, owners and advisors to optimise MCS design in professional services organisations where there is heterogeneous ownership by professionals.

Originality/value

This study is one of the few attempts to provide empirical support for the assertion of the importance of a match between ownership structure and MCS design. It also represents one of the few attempts to provide empirical support for Speklé’s (2001) control archetypes, here the boundary and exploratory archetypes, archetypes that are applicable within important sectors of the economy, notably the professional services sector.

Keywords

Citation

King, R. and Clarkson, P. (2019), "An investigation of the relation between ownership structure and management control in professional service organisations", Journal of Accounting & Organizational Change, Vol. 15 No. 1, pp. 147-168. https://doi.org/10.1108/JAOC-03-2018-0033

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Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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