Management Accounting Section Midyear Meeting

Big Brother or Good Fella? Hidden Costs and Benefits of Process Monitoring

• In Event: Control Systems II

Abstract

We investigate how process monitoring and error management climate affect process improvements. While previous accounting literature points out negative effects of intensive controls on process improvements, we provide evidence that this does not generalize to all working environments. Instead, we find that the error management climate moderates the effect of process monitoring on individuals’ implementation of process improvements. In particular, we find that under an open error management climate, process monitoring motivates employees to implement more process improvements, as employees perceive process monitoring as an opportunity to demonstrate their skill. Our results have important implications for firms that use or consider using process monitoring within their management control systems and help to understand, why negative findings of prior literature are not necessarily affecting all organizations.

Authors

• Ivo Schedlinsky, University of Bayreuth

• Maximilian Schmidt, University of Giessen

• Friedrich Sommer, University of Bayreuth

• Arnt Woehrmann, University of Giessen