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Journal cover: Journal of Accounting & Organizational Change

Journal of Accounting & Organizational Change

ISSN: 1832-5912

Online from: 2005

Subject Area: Accounting and Finance

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Management control practices in public and private sector banks: evidence from two Sri Lankan cases

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Article citation: , (2012) "Management control practices in public and private sector banks: evidence from two Sri Lankan cases", Journal of Accounting & Organizational Change, Vol. 8 Iss: 4, pp. -



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Article Type: Doctoral research abstracts From: Journal of Accounting & Organizational Change, Volume 8, Issue 4

Purpose – The primary purpose of this study was to investigate, understand and interpret how management control was exercised in a public sector (Bank Alpha) and a private sector (Bank Omega) commercial bank, and to explore whether control practices in public sector banks differ from those in the private sector.
Design/methodology/approach – Theoretically, this study primarily draws on actor-network theory (ANT), in addressing how organizational actors in various hierarchical levels and different functional arenas formed relational networks in the design, operation and use of two formal management control systems (MCS), budgeting and the balanced scorecard (BSC), in these two banks. ANT was complemented by a new institutional sociology (NIS) perspective, in illustrating how external institutional forces also influenced the MCS. In this study data were collected using in-depth interviews with 64 people, study of organizational and web-based documents, and observation of practices.
Findings – The findings from the two cases highlight how traditional budgetary control systems can still play a significant part in organizational planning, controlling and decision making processes. It further suggests that MCS is a cyclical process moving through various modes of control, such as budgeting and BSC, as desired by powerful actors in the organizational landscape across time. The study provides evidence that the BSC, although introduced as a contemporary strategic performance measurement system failed to be sustained, due to differing ideologies of powerful actors across time, organizational members’ resistance to change, and deficiencies in the BSC design.
Research limitations/implications – Although this study explored actions of actors and networks formed regarding the MCS, inevitability some events would have been missed.
Practical implications – From a practical stance, this study offers guidance to practitioners on the effective implementation and use of control systems (including new techniques such as BSC) and the identification and rectification of any pitfalls in the process.
Originality/value – This study contributes to the management accounting literature by providing evidence on how MCS functioned in two distinct settings, the public sector and the private sector. It demonstrates how internal actor-networks become intertwined amid multiple external institutional forces, including coercive authority from the state, mimicking processes from competitors, and influences from professional networks. Empirical management accounting research in banking has so far remained silent on how the dual facets of internal dynamics (micro) and external institutional concerns (macro) could be meaningfully brought together in a single study. This study exhibits how NIS can complement ANT in yielding a wider and plausible explanation on the functioning of organizational control practices in their socio-political and institutional contexts. This reinforces that context matters, as MCS are economically as well as a socially and politically constructed, and cannot be divorced from the context within which they operate. Such contextual ramifications may extend well beyond the divergence between public and private.

Keywords: Management control, Budgeting, Balanced scorecard, Public sector, Private sector, Banks

Research type – Case study
Contact e-mail:
Tharusha Gooneratne
Department of Accounting, Faculty of Management & Finance University of Colombo, Sri Lanka