Management Accounting Section Midyear Meeting

Management Control Systems in SMEs: The Role of Cost Control

• In Event: Survey Studies on Management Controls

Abstract

SMEs are considered the backbone of modern economy. Nevertheless, little is known about management control (MC) practices in SMEs. The scarce evidence shows that cost control is one of the most important MC practices in SMEs, however we lack a deeper understanding of its role in the management control system of SMEs. We address this research gap by theorizing about interdependencies of cost control with other common MC practices in SMEs: measure diversity, communication, diagnostic control and interactive control. Our analyses are based on matched archival data and survey data collected among Scandinavian SMEs. We find that cost control and measure diversity, as well as cost control and diagnostic use of budgets and performance measures, and cost control and interactive use of budgets and performance measures are complements. This research makes an important contribution to the literature on the use and interdependence of MC practices and theory building in the so far underdeveloped realm of SMEs. This study further provides first large-scale empirical evidence on complementarities of MC practices in SMEs.

Authors

• Evelyn Caroline Braumann, VU University Amsterdam

• Melanie Lucia Feldhues, Copenhagen Business School