Controlling centralized F&A services - A multi-case study on the role of charging in the context of the overall control setup

Abstract: Increased global competitiveness and market uncertainty have led multinational companies to change their organizational structures to refocus on core activities (Ezzamel, Morris, & Smith, 2005; Herbert & Seal, 2012; Janssen & Joha, 2008; Triplett & Scheumann, 2000). As a result, new setups for sourcing finance & accounting (F&A) processes are created, such as shared service centers (SSCs) or outsourcing, aiming to combine the advantages of centralization with the business orientation of decentralization (Triplett & Scheumann, 2000). This in turn has influenced the management control systems (MCS) used to govern these setups. Previous research argues that charging is a powerful and central MCS tool to manage the relationship between local business units (BUs) and the providers of F&A services (Aron & Singh, 2005; Bergeron, 2002; Herbert & Seal, 2012; Quinn, Cooke, & Kris, 2000), albeit with several limitations and interdependencies to other control tools (Kaplan & Norton, 2006; Quinn et al., 2000). Using a multi-case study of local Swedish subsidiaries of four multinational companies, this thesis explores the role of charging in the control of F&A sourcing setups. From the analysis, it is found that charging has only a limited role in the control of the MCS setup due to three major reasons: (i) charging can be substituted through a single or combination of other control tools, (ii) charging can be of less importance in the overall MCS setup given the dominance of another single or set of control tools, and (iii) charging can be of less importance in the overall MCS setup as its use can be dependent on the interplay with other complementing control tools.