Impact of Organizational Culture on Cybernetic Controls – A Practice Perspective

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School of Business | Master's thesis
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The purpose of this thesis is to examine the impact of organizational culture on cybernetic con-trols: budget, financial measures, non-financial measures, and hybrids. The goal is to provide management accounting research information on an under-researched topic of impact of organizational culture impact on accounting-based management controls. The findings of this study are based on a qualitative case study of a company operating within automotive industry. The empirical material of this study consists of nine semi-structured interviews conducted in the headquarters of the case company. The aim of this thesis is to provide a rich description of the examined phenomena. The research findings indicated that organizational culture, and its impact on cybernetic control practices, could be described using the practice theory-based concepts of anchor practices and practice organizing elements. The study showed that the anchor practice of silo-like thinking strongly influenced on cybernetic control practices. While the subsidiary practice – the thought of going well, reinforced the anchor practice and operated as a factor that decreased the need for change. The findings of the case study then indicated that in some organizations anchor practic-es might emerge as cultural anchor practices, which are of un-bureaucratic and passive character. Findings indicate that anchor practices then may emerge in organizations as socio-cultural phenomena without management’s deliberate intention. Then, multiple cybernetic control practices’ organizing elements were identified to be engineering-based. The findings of the study also indicated that the impact of organizational culture on cybernetic controls could be described on a broader level using anchor practices concept, while the concept of practice organizing elements could be more suitable to examine cultural aspects on a deeper level. Finally, the findings of this study suggested that the overall character of anchor practices might be influenced by the specifics of the industry and the level of competition experienced by the organization. This case study has been a single case qualitative study, practical findings of which are highly specific to the organizational context of the studied case company. The case study has aimed for theoretical generalization, and then to provide management accounting research more information on practice based theoretical models within the accounting context, and especially, in relation to studying organizational cultures. The originality and value of his thesis is that it is of one of the first publications to study impact of organizational culture on cybernetic controls using a practice based theoretical approach. The practical implications of this thesis are that organizational culture’s overarching impact on accounting-based controls could be better recognized within organizations by using the concept of anchor practices, but also by using the notion of general practice organizing elements that are considered to be shared among multiple organizational practices.
Thesis advisor
Vaivio, Juhani
MCS, organizational culture, cybernetic controls, practice theory, anchor practices, practice organizing elements
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