Explaining the Unintended Consequences of Management Control Systems: Managerial Cognitions and Inertia in the Case of Nokia Mobile Phones

Teemu Malmi, Katja Kolehmainen, Markus Granlund

Research output: Contribution to journalArticleScientificpeer-review

2 Citations (Scopus)
67 Downloads (Pure)

Abstract

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.
Original languageEnglish
Pages (from-to)1013-1045
Number of pages33
JournalContemporary Accounting Research
Volume40
Issue number2
Early online date22 Dec 2022
DOIs
Publication statusPublished - 1 May 2023
MoE publication typeA1 Journal article-refereed

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