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    Management control system design, ownership, and performance...
    research summary posted November 14, 2016 by Jennifer M Mueller-Phillips, tagged 07.0 Internal Control, 07.02 Assessing Material Weaknesses 
    Management control system design, ownership, and performance in professional service organizations
    Practical Implications:

    This study provides some of the first empirical evidence of the characteristics of efficient MCS design for PHOs. This evidence has the potential to assist primary healthcare owners, managers and their advisors to better understand the relationship between ownership and MCS design and thereby improve the effectiveness and efficiency of delivery of primary care. 


    King, R. and P. Clarkson. 2015. Management control system design, ownership, and performance in professional service organizations. Accounting, Organizations and Society 45: 24-39. 

    Control systems, ownership, TCE, and primary healthcare organizations.
    Purpose of the Study:

    The authors investigate the implications for organizational performance of the interplay between ownership and management control system (MCS) design in professional service organizations. The setting for the investigation is the primary healthcare sector in Australia, specifically primary healthcare organizations (PHOs). PHOs are small ‘for profit’ organizations where general practitioners (GPs) provide a first point of contact with the healthcare system. These organizations present a significant control challenge because GPs work independently to produce an intangible output and have preferences that conflict with bureaucracy. Despite professional belief, the authors find variation in the level of GP ownership across PHOs. The performance implications of this variation have not been investigated to date; furthermore, whether differences in the MCS design can mitigate these differences can also be investigated. 

    Design/Method/ Approach:

    The authors structure the analysis around Transaction Cost Economics (TCE), a holistic MCS design theory that allows for the possibility of misalignment and resultant performance effects and employ data from an online survey of practice managers.

    • The authors find that a lack of fit between MCS design and ownership will result in reduced organizational performance. 
    Internal Control
    Assessing Material Weaknesses