Making Sense of MCS - a case study on how MCS become enabling or coercive through sensemaking, sensegiving and sensebreaking in a decentralized firm

Abstract: How does a management control system (MCS) come to be perceived as enabling or coercive (Ahrens & Chapman, 2004)? Although previous research has shown this to result from how actors make sense of the features of MCS (Englund & Gerdin, 2015), it has disregarded the special role of the middle manager as an intermediary (Floyd & Lane, 2000), channelling control from top management to operational staff. Using the theory of sensemaking (Weick, 1995), we attempt to shed light on this issue through a single case study with two embedded, contrasting cases in two divisions of a decentralized firm, Conglom. We show how middle managers' sensemaking of MCS affects how they use the system for controlling operational staff, as the different sensemaking efforts result in various sensegiving- (Gioia & Chittipedi, 1991) and sensebreaking efforts (Pratt, 2000), which come to impact how the controlled operating staff make sense of the MCS. This, in turn, leads to diverging perceptions of the MCS as coercive or enabling among the operational staff. Whereas middle managers in the division CarinspectCo used MCS in a way that conflicted with some of the operating staff's view of their role in the organization, managers in the WholesaleCo division could align their use of MCS with operating staff's views through knowledge integration (Wouters & Roijmans, 2011). This alignment resulted in what we denote MCS coherence, as the aligned views allowed a coherent use of MCS between hierarchical levels, leading to the MCS being perceived as enabling by the operating staff controlled. In contrast, CarinspectCo showed MCS incoherence as middle managers' MCS use stood in conflict with the view of operating staff, leading to coercive perceptions.