Determinants of Management Control at Responsibility Centre Level: Software Industry as a Case

26 Pages Posted: 2 Aug 2012

See all articles by G. Ramesh

G. Ramesh

Indian Institute of Management (IIMB), Bangalore

L. Murty

Indian Institute of Management (IIMB), Bangalore

Date Written: December 30, 2011

Abstract

Current body of knowledge primarily focuses on variations in and determinants of management control systems at organizational level and, to some extent, at Strategic Business Unit (SBU) level. This study proposes that the level of analysis be extended to Responsibility Center (RC) level. Further, the extant studies focus on limited contingent variables like size, top management style, strategy, structure, etc. This paper makes a departure by extending the control system determinants at RC level to also include its own environmental variables in terms of its product market characteristics, client characteristics, and profitability of unit and project. The study is set in the software industry wherein activities are homogenous across divisions and RCs; but operate in different environments which provides ideal research site for study of intra-organizational control variations. An online survey was conducted on two of the leading Indian software firms at the levels of Project Manager and Project Lead. The survey confirmed the hypotheses that control variations at RC level can be explained through strategic determinants specific to their environments. In summary, this study explored the variations in and determinants of control systems at RC level. These variations and determinants are extendable to organizational and SBU levels also.

Keywords: Control Determinants, Responsibility Centers, Strategic Determinants, Market and Client Influence, Software Industry

Suggested Citation

Ramesh, G. and Murty, L., Determinants of Management Control at Responsibility Centre Level: Software Industry as a Case (December 30, 2011). IIM Bangalore Research Paper No. 330, Available at SSRN: https://ssrn.com/abstract=2122697 or http://dx.doi.org/10.2139/ssrn.2122697

G. Ramesh (Contact Author)

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

L. Murty

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

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