The influence of control system structure on strategic change processes: A viable system analysis of e-learning

Abstract

This thesis investigates how the structure of management control systems (MCS) influences control processes for strategic change. The structure considered is that of the viable system model (VSM) which specifies a recursive arrangement of five control functions and the communication channels linking them. The control processes investigated are those that motivate, identify and evaluate emerging strategic activities. The case addresses the control processes for e-learning, identified as an example of emerging strategic activity, in a University setting. Analysis of interview data, collected from participants in key roles relevant to e-learning control system, reveals a range of e-learning control issues. A two stage analysis identifies the cause of these issues. Formal e-learning controls, identified through a documentary review process, are mapped onto the VSM to conceptualize the structure of the control system. The adequacy of this structure is assessed using the concept of requisite variety and assessing whether the communication channels linking interacting components can adequately handle the volume (variety) of e-learning information being exchanged. The analysis identifies structural weaknesses and associates them with the observed control issues. More specifically, weaknesses in the structures supporting interactions between strategic intelligence and operational control constrain strategic change. This finding reveals that structure must be considered in management control research as it can enable or inhibit the successful use of control systems. The research identified the usefulness of the VSM for assessing the operation of control systems in complex, real world settings. VSM analysis enables researchers to: conceptualize the structure of control systems, including the interactions between components, both within and across organizational levels; assess the completeness of control systems; assess the adequacy of interactions between components of systems; identify structural weaknesses that give rise to control issues; investigate how MCS operate to balance the competing objectives of operational control and strategic change; and to simultaneously consider top-down and bottom-up processes for strategic change. The VSM thus provides the opportunity to extend the scope of management control research beyond the areas supported by traditional accounting control frameworks. Additionally, this research provides evidence that counters criticisms of the VSM previously reported in the accounting literature.