2. Toward a Contemporary Concept of Management Control

Literally: verifica, accertamento dell’esistenza di un fatto o dell’esattezza, del corretto funzionamento, della regolarità di qualche cosa, dal punto di vista amministrativo o tecnologico.

This is the literal definition of the term “control” retrieved from the Oxford Dictionary Of English, Third Edition, Oxford University Press, Oxford 2013. The diffusion of the concept of control the guide (which coexists and integrates with the concept of inspection and verification) appears to be also linked to the spread of North American managerial theories in which “to control” is meant precisely to influence the behavior of people or the course of events.

Literally: complesso apparato di norme, generalmente codificate (e più o meno interiorizzate da parte dei singoli), finalizzato a identificare, prevenire, scoraggiare e punire quei comportamenti che sono considerati devianti rispetto ai valori della comunità, e quindi a permettere la riproduzione della società sulla base dei rapporti consolidati.

Brunetti literally affirms: “L’analisi di molte situazioni di imprese operanti nel nostro Paese ha messo chiaramente in luce che il successo o meno della gestione dipende anche dalle capacità delle direzioni d’impresa di disegnare e di far funzionare sistemi di controllo coerenti con le strategie e le altre variabili organizzative.” It must be emphasized that in order to achieve the business purpose, it is not sufficient to rely on a random combination of the various resources involved in the management processes. In fact, only with “a conscious balancing the flows originating from the subsystems related to the different company resources, it is possible to reach the realization of that synergic process that is fundamental for the system” (Bertini, 1977, p. 83). Consequently, “the requirement of awareness, in particular, emerges at the moment in which the subjects in charge of the management of the resources can have an exact perception both of the objectives (for the achievement of which the management activities are carried out), and the degree of achievement of them” (Castellano, 2003, p. 4).

Fayol literally divides the business operations into:

Fayol literally states: “Contrôler, c’est-à-dire veiller à ce que tout se passe conformément aux règles établies et aux ordres donnés” (Fayol, 1917, p. 11).

Indeed, although the concept of management control had not yet been made explicit, translating the French term “administration” into the English term “management” makes the similarity with Antony’s definition (1965) more visible, as, at least, the control activity is classified as one component of the management activities.

It is important to emphasize that in Italy, the evolution of the concept of business control is deeply related not only to the evolution and the debate on the theories related to the accounting systems but also to the evolution and the debate on the accounting recording methodologies. The first definitions of control are concomitant with the beginning of the theoretical accounting debate, therefore in the period between the beginning of the eighteenth century and the last decades of the nineteenth century (Lamboglia, 2012). For an in-depth analysis of the evolution of the accounting studies in Italy, see also: Campedelli (1986); Antonelli and D’Alessio (2011).

Besta literally affirms: “quella parte dell’amministrazione per cui tutto il lavoro economico si rileva e si studia nelle sue cause e nei suoi effetti, al fine di poterlo con fondata conoscenza dirigere, e si stimola e vincola, di guisa che abbia tutto a procedere in quei modi, i quali, dalla autorità eminente o da altri per delegazione sua diretta o indiretta, furono riconosciuti più vantaggiosi e come tali preferibili […]. Il controllo risulta nel parer mio di due parti: l’una comprende la determinazione dei momenti dell’amministrazione ed il ricordo loro per via di note scritte, vo’ dire la registrazione; l’altra la costrizione del lavoro economico. Ma quella integra questa, ed entrambe formano un tutto solo, perché non si può con sicura efficacia astringere alcuno a seguire determinato cammino, ove non si abbia modo di vedere se ha obbedito. Vo’ dire se non si rileva il cammino che in fatto segue per confrontarlo con quello tracciatogli innanzi” (1922: vol. I, 114).

Literally: “mi avvalgo senza scrupoli della voce controllo sebbene non sia stata ancor registrata nel codice della lingua nostra; se pecco nell’adoperarla, mi si dovrà almeno concedere che ho molti compagni in questo peccato. Io poi le attribuisco un significato più ampio di quello che ad essa danno parecchi scrittori di ragioneria, non più ampio però di quello che le si dà nel linguaggio comune” (Besta, 1987, p. 15).

For a more detailed analysis on the topic, see also: Cassandro (1972); Riccaboni (1993); Paolini (1999).

The constraint of the economic effort, in turn, was divided into three types with regard to the moment in which they are carried out:

Regarding this tripartite division, D’Onza (2008) states: “[…] perhaps it is exactly the emphasis assigned to the concomitant control that leads us to believe that between the meaning of constraint of economic work and that of well-founded management of the company to prevail is the first, this does not in any way reduce Author’s contribution.” Differently put, although generally not very far from what his teacher said a few years later, D’Alvise (1934, p. 18) confirms that the category of antecedent control does not make sense, as “it is rather a matter of preventive cognitive functions that predispose to future administrative work and make possible a concomitant or subsequent control to the administrative work itself.”

Zappa clearly began to declare his distance from his “Maestro” already in the 20s during an opening speech of the academic year.

It is worth to notice that also in Antony’s work this distinction will be clear only in the 80s in his revised version of “planning and control systems.” See and compare Anthony (1965) with Anthony (1988).

It must be emphasized that also Koontz (1958) identified this overlap. However, he believes that a clear distinction between planning and control is necessary in any event.

Citing Giannessi (1979) and the systematic order, it must be emphasized that the individual operations do not occur by chance, but in close connection with the others and in accordance with the purpose pursued by the company.

In fact, the company can be defined as a basic unit of the general economic order, consisting of a system of operations originating from the combination of particular factors and the composition of internal and external forces in which the phenomena of production, distribution, and consumption are set up for the achievement of a determined economic balance over time (Giannessi, 1979, p. 11).

Strategic planning includes the analysis and the study of the strategies that are in place in the light of internal and external inputs, definition and choice of new strategies, and also control of the correct execution of this decision process in order to discover possible procedural weaknesses or evaluation errors (Paolini, 1993). Moreover, the carrying out of the strategic activity presupposes the definition of a set of decisions taken in order to guide the dynamics of the business management in a chosen direction (Giannessi, 1960). It is important to emphasize that this interest in the external environment will grow in the following years, as in Anthony’s model it is not emphasized enough.

In this regard, Anthony (1988, p. 37) states: “[…] the objective of management control is that of congruence of the; that is, the system should be such that the actions taken by the operational managers, in view of what they perceive to be their personal interest, correspond to those actions that are the best for the organization. The difference in goals may seem subtle; nevertheless, it is important.”

Otley and Berry (1980, p. 232) define the cybernetic connotation of the term “control” as “monitoring activities and then taking action in order to ensure that the desired ends are attained.”

The behavioral approach finds its roots in Argyris (1953) and has been developed, among others, by Hofstede (1968) and Hopwood (1974). This approach is focused on human resources, as it is based on the assumption that the behavior of the actors operating in the company is not neutral to the control activity. Therefore, this approach gives importance to the psychological, social, and behavioral aspects of control, drawing attention to the informal part of control and the impact that control can have on employee motivation and performance. For further information about the classification that distinguishes between structuralist and behavioral approach, see also: Ansari (1978), Terzani (1999), Corsi (2003), Lamboglia (2012).

In the revised edition of Planning and Control Systems: A Framework for Analysis, Anthony (1988, pp. 18–19) illustrates a new framework where the environment (composed by external, organization structure, rules, and culture) and the process (divided into management control of operating activities and management control of projects) play an important role since they are explicitly considered variations of what Anthony believes to be a typical situation in management control practices.

For a more detailed analysis of the interplay between management control studies and organizational and sociological studies, see also Bergamin Barbato (1991).

Bubbio literally states: “Resta il fatto che, come tutte le proposte che superano la prova del tempo, anche quella di Anthony rappresenta il punto di partenza rispetto al quale posizionare le successive concettualizzazioni in tema di pianificazione e controllo.”

In this regard, see Grabner and Moers (2013).

For a more detailed analysis about the complexity/use relationship of planning and control mechanisms during those years, see also: Lorsch and Allen III (1973); Rumelt (1974); Vancil and Buddrus (1979).

According to Marasca (1989), Anthony’s model has two main strengths. The first strength is related to the model’s pragmatism, as, following the most common corporate decision-making processes, it can facilitate the management of complex structures. The second strength is related to the model’s ease of adoption and implementation, as it is easy to translate the model into rules and procedures that can be easily adopted in different business contexts.

Here we refer to Ansoff’s (1979) concept of contemporary organizations.

Concerning operational control—which will be not a central topic of this study—it is worth emphasizing that, over the years, it has changed its main object. From a focus on technical efficiency, which is more related to an inspectorate activity, it has moved toward guaranteeing the total quality of the processes and the flow of the information from the operational level to the upper levels. For an in-depth examination of operational control’s evolution and of how operational control differs from executive control, see Amigoni (1979) and Bergamin Barbato (1991).

According to Gatti and Chiucchi (2018), this managerial myopia was also due to the adoption of Anthony’s model that “allowed managers to be fully aware of the inputs and outputs of the production process, but concealed the cause-effect relationships between them, instrumental to understanding the reasons underlying mismatches between objectives and results achieved.”

Literally: “Con tali prerogative il controllo direzionale si presenta da un lato come meccanismo non aperto all’esterno, per cui le forze che caratterizzano l’ambiente si riflettono nel sistema di controllo solo indirettamente tramite la pianificazione strategica, dall’altro si presenta come un insieme di strumenti contabili volti a confrontare i risultati effettivi con quelli desiderati senza cogliere le complesse relazioni interne, formali ed informali, che generano il conseguimento di tale risultato. […] All’aumentare della velocità dei cambiamenti e al diminuire della loro prevedibilità si rende necessario sia controllare in via continuativa la validità delle strategie formulate, sia enfatizzare l’attenzione alle risorse umane.”

For a more in-depth analysis of the extension of the business interests’ spatial horizon, see also: A. G. Hopwood (1996) and Tomkins (2001).

This is a portfolio matrix, ideated by the Boston Consulting Group. The BCG matrix is a tool that allows the classification of a company’s strategic business areas. Through this matrix, management decides how to allocate resources in various activities, observing and measuring the positioning of a strategic business area in relation to the competitors. The matrix measures the attractiveness of a business based on the impact it generates on cash flows (Collis et al., 2012).

Analyzing the reason the planning activities were replaced by more flexible ones, Bubbio (in Kaplan & Atkinson, 1998, p. XX) shares the following thought: “It is a demanding job due to the time and resources involved, which is frustrated by those unexpected changes in the hectic economic or political context of recent years. Moreover, sometimes it is a work done ‘by default’ by people different than those who should then realize the plans: the result of stylistically perfect analyses, but too aseptic to be true.”

Ansoff’s research started from an intuition similar to Anthony’s, i.e. that there is a substantial difference between strategic and operational choices, although it is difficult to identify the borderlines between the two, given that in reality, they are intimately intertwined. However, starting from the original concept of long-term strategic planning and passing through strategic planning, Ansoff arrived at the concept of strategic management, shifting from a normative perspective of analysis to a more reflective and interpretative one. At the same time, Ansoff realized that the study of control and management activities required the involvement of several disciplines of various kinds. His final research was therefore aimed not only at formulating a theory of strategic behavior, but also at giving practical instructions for operators.

Brunetti literally states: “accerta l’efficacia, a breve e a lungo termine, con cui si svolge l’attività e tende a verificare non solo il conseguimento, ma anche l’andamento dei fattori ambientali e di quelli interni, al fine di individuare minacce e opportunità incombenti.” For further details, see also: Amigoni (1988) and Paolini (1993).

Specifically, they identify the following four typologies of strategic control: steering control, contingency control, anticipative control, and ex-post control. The use of one of these types of control depends on the combination of two variables: the degree of predictability of environmental changes, and the level of discretion in the response by the company (Lorange & Vancil, 1977).

Clearly, it may be affirmed that Lorange’s research, on the contrary, expands the boundaries of strategic planning. However, considering that his research starts in the management control area, the idea of an expansion of the management control boundaries appears more plausible.

Simons (1995) highlights how the boundary system and the beliefs system operate at the same time, as the first one sets the limits within which it is possible to search for the set of opportunities provided by the beliefs system.

It is important to emphasize that “the action of behavioral influence is jointly exercised by organizational control, individual control and social control, but these latter forms of control have a ‘personal’ nature, on which the company can only have a partial influence” (Corsi, 2003, p. 32).

Although the authors in this instance refer to the British literature, this statement can be extended to the USA as well, at least for that which concerns the initial development of behavioral research.

Clearly, when management control was based on economic-financial measurement, management accounting was the core of the process of controlling. In fact, the comments on the use of only economic-financial measures is a comment that is specifically referred to in management accounting and then extended to the broader area of management control.

“The neglect of control by organizational theorists has been paralleled by the neglect of organization by theorists” (Otley & Berry, 1980, p. 234).

Malmi and Brown (2008, p. 287) specify that “the individual control systems may be more traditional accounting controls such as budgets and financial measures, or administrative controls, for example organization structure and governance systems, along with more socially based controls such as values and culture. Organizations may have numerous controls present, and they all may be used to some extent to align individual’s activities with organizational goals.”

Here, I refer to the 2019 International Management Control Conference—Joint ENROAC & MCA, Roehampton University, London.

See Sect. 2.1.2 for further thoughts on contingency theory and its relevance in management control studies.