The Use of Management Controls in Different Industries

The master’s thesis compares management control (MC) practices between the manufacturing and the service sector. Moreover, another comparison will be conducted between different industries. The research objective is to figure out how MCs are used among organizations from different sectors and industries. The thesis does not study the appropriate design of MCSs for each sector or industry, nor the interactions between separate management controls. It focuses only on the differences and the similarities between the groups. Thus, the first research question examines how MCs practices differ between manufacturing and service organizations. For the second question, it researches how they differ between different industries. The objective is chosen because of the lack of empirical evidence on the sector or industry effect on MC practices. Moreover, there is a need for studies that consider all kinds of control vehicles as the current MC research has predominantly focused on studying a specific control. Therefore, the thesis adopts “management controls as a package” -framework by Malmi and Brown (2008) as it provides a broad and comprehensive understanding of various formal and informal MCs. This framework is used for comparing MC practices between the different groups. As it is necessary to control other contextual factors by excluding their effect on MC practices, the quantitative analysis was based on comparing adjusted mean scores of the variables representing several MC constructs by utilizing the one-way analysis of covariance (ANCOVA) in SPSS software. The data was from an international survey conducted through structured interviews in the SBU level among different industries. The population consisted of large, private for-profit organizations from ten different Western countries. For the main findings, there are hardly any differences in MC practices between the sectors. Thus, it seems that MC habits are somewhat universal between manufacturing and service organizations. Secondly, there is slightly more variation among industries, mainly with the cybernetic controls regarding the diagnostic use of budgets and PMSs and the extent of using non-financial measures, but the majority of MC practices still appear to be very similar across different industries