سیستم های کنترل مدیریت و تغییر استراتژی در buyouts

The impact of management buy-outs (MBO) on strategy and management control systems (MCS) is little understood. Previous research by [Ace. Org. Soc. 17 (1992) 151] focused on efficiency-enhancing buy-outs that were a feature of the early development of the market. However, MBOs are heterogeneous and more recent developments have involved ownership changes that stimulate entrepreneurial practices. The novel contribution of this paper is to use Simons’ [Levers of Control: How Managers Use Innovative Control Systems to Drive Strategic Renewal, Harvard Business School, Cambridge, MA, USA] classification of beliefs systems, boundary systems, diagnostic and interactive control systems to explore management control in these newer forms of MBO. Within-case analysis and cross-case comparisons from two buyout firms are used to capture the interaction between management control systems and competitive strategy formulation, implementation and modification. This evidence supports arguments that buy-out managers undertake efforts in balancing the traditional systems with the newer systems that stimulate opportunity-seeking and learning.

Management buy-outs (MBOs) represent an important threshold in the life of a company, creating a juncture at which to reconsider the strategy of a firm and its associated management control system. Jones’ (1992) study of 17 MBOs completed in 1984 and 1985 shows that the budget preparation process became more appropriate, including an increase in participation. Owner-managers initiated improvements in the quality of information, intensified formal controls, introduced more disaggregated feedback and used existing management accounting techniques to communicate managerial philosophies. These early MBOs were strongly dominated by restructuring buy-outs that take actions to enhance efficiency and protect the firm against downside risks (Wright et al., 2000 and Wright et al., 2000). More recently, MBOs frequently take revitalization and entrepreneurial measures to exploit the upside potential of the firm (Wright et al., 2000 and Wright et al., 2000). In 1994, Rehab (a pseudonym) was privatized through an MBO, taking over service contracts for disabled persons with local authorities in competition with other companies. After privatization it introduced a wheelchair renting system that lowered costs by 20% and led to 25% savings on the budgets for the municipalities. In addition to being price competitive, the firm improved service levels and developed new orthopaedic products in order to grow organically. The firm created an own dealers network, and acquired a care products firm, so that by 1997 employment had risen from 240 to with 1000 fte’s. Also in 1994 Packaging (another pseudonym), which manufactures synthetic packaging for the consumer market in the food sector, was sold by its heavily constrained state owned Austrian parent in a management buy-out. After initially improving efficiency and exploiting synergies between its business units, the firm developed into a specialist in providing a wide range of specialist packaging services that demand high speed, capacity imagination and innovation. This included development of a high barrier packaging which keeps fruit fresh, allows customers to see the product and which has an easy opening facility. Otley (1999) stresses the importance of studying management control in situations like MBOs where managers become responsible for strategy, management control and operational control. Both firms faced major opportunities and challenges that have implications for the interaction between management control systems and competitive strategy formulation, implementation and modification (Atkinson et al., 1997). The literature on management control systems has tended to focus on isolated elements in organizations such as organizational design, allocation of responsibility and accountability, planning and budgeting, reward and incentive structures, information systems and performance evaluation practices (Speklé, 2001). These cases emphasise the importance of adopting a comprehensive control system framework rather than examining isolated control mechanisms and management accounting techniques (Jones, 1992). Simons’ (1995) model of the dynamic relationships between management control systems and strategic change is an attempt to offer a coherent and comprehensive body of management control theory. His framework contains four levers of control that represent important variables from literature with clear linkage to achieve strategy, e.g. beliefs systems, boundaries systems, the traditional diagnostic control systems and interactive control systems. In this paper, we use Simons’ framework to explore the development of management control in these newer forms of buy-out that have significant upside entrepreneurial opportunities. We examine the questions: what changes in the content and process of the firm’s strategy take place after the buy-out and why and how the directors of the firm change their management control systems to implement these strategies? The structure is as follows: after defining an MBO, we describe the framework of levers of control. Then we link the MBO to the framework in order to highlight the role of buy-out management along four levers of control in relation with strategy. The research methodology used and data gathered are explained in the following section. Using two case studies, the role of the buy-out managers pre- and post-MBO are analyzed with regard to their potential to contribute to each of the four control levers. In a comparative analysis of the cases the differences in the way buy-out managers undertake management control activities are explained. The discussion section considers the case study evidence in the light of the existing literature and develops theoretical insights. The last section summarises the major conclusions regarding the contribution of this article and identifies the implications of the study for researchers and practitioners.

Overall, we conclude that post-MBO there is a need to develop coherence between a change in strategy and the application of levers of control. The coherence of management control and management accounting systems, which was lacking pre-buy-out, developed dynamically post-buy-out. We suggest that the development of belief and interaction control systems are of particular importance in more entrepreneurial buy-outs and serve as a valuable complement and extension to but not replacement of the more traditional diagnostic control systems post-MBO. The analysis has implications for practitioners involved in buy-outs. The study adds to insights regarding the development of management control in different types of buy-out. For practitioners, the findings suggest the need to adopt approaches to control according to whether the MBO is in a traditional sector with limited investment opportunities or whether the firm has significant scope for innovation. It is well-established that the change in ownership provides scope for accounting control and planning systems in traditional buy-outs in stable sectors become more relevant. Our evidence suggests that this also seems to be the case in more entrepreneurial buy-outs in more uncertain environments. However, it was also evident that problems may arise where such systems are too informal and narrowly specified in an entrepreneurial environment. Rather, there appears to be a need to develop appropriate systems through a dynamic, flexible process. What is distinctive about more entrepreneurial buy-outs appears to be the need to develop other dimensions of control that facilitate entrepreneurial and innovative activity. As illustrated by the case of Rehab, for example, this involved the development of focused communication mechanisms that helped to inculcate an entrepreneurial culture that involved employees learning to anticipate opportunities. There also appears to be a need to developed proactive interactive control with both clients and the market in order to reduce strategic uncertainties and to make the firm more market responsive. Our study also suggests that management in more entrepreneurial MBOs need to find private equity investors with more than just diagnostic financial monitoring skills. This in turn indicates that private equity firms may need to develop their range of human capital to include skills that enable them to contribute to the development of the growth of MBO investees. In addition, this also suggests a need for private equity firms to develop relationships with management rather than relying solely on contractual monitoring arrangements. More generally, our evidence leads us to propose that there is a need to find a fit between the nature of the buy-out and the nature of the private equity investor. While venture capital firms investing in early stage investments possess these skills, this is less true of private equity firms investing in traditional MBOs in stable sectors with few growth opportunities where the requirement is to improve incentives and financial control systems (Lockett et al., 2002 and Wright et al., 2001). With respect to researchers, our study has a number of implications. First, the study suggests that change in ownership provides a major opportunity to effect changes in beliefs and the interaction between management control systems and competitive strategy formulation, implementation and modification. In extending Jones’ (1992) study to buyouts involving major entrepreneurial opportunities for growth rather than restructuring of mature businesses, we would suggest that our findings extend the contingency perspective on control systems. Control systems in buyouts lead to a better fit with environmental contingencies but these control systems also appear to be influenced by the nature of the buyout. These contingent aspects relate not just to the structure of control systems but also to the process of control, notably in terms of the processes involved in communicating beliefs, processes of interaction and the budgetary process. The contingency perspective may also be extended to the application of an agency theory approach to monitoring and control in MBOs that focuses on contractual financial control arrangements. The agency theory perspective may be more appropriate in traditional mature sectors where the need is to enhance cost efficiencies. In more dynamic markets with growth opportunities, a broader approach appears to be required that keys into resource-based and capabilities perspectives. There appears to be a need to develop further research that explicitly links the different control systems to these concepts. In contrast to more traditional management buy-outs, managers’ concerns about risk appear to be less important in our cases than their recognition of new opportunities. Strategic information on opportunities emerges from managers’ experience and their rapid interpretation of the changing business environment and less from formal control systems. In this context, financial investors provide support through both traditional controls as well as attaching importance to strategic controls and sharing strategic insight. These investors allow the new owners to exploit their entrepreneurial skills instead of constraining them by high debt repayments and tight contractual arrangements (Wright et al., 2000 and Wright et al., 2000). Although we have focused only on the management buy-out context, a second implication concerns the more general questions of how do these interactions change during the various ’thresholds’ in the life-cycle of firms and what are the barriers to these changes being effective (Daily and Dalton, 1992). These thresholds can be identified in terms of initial start-up, entry of an external financier (especially venture capital firm), the move from private company to listed company in an initial public offering, subsequent takeover (or buy-out of all or part of the company), and possible entry into administrative receivership when there may be a need to reconsider the direction of the firm in order to rescue it. Further research might usefully examine these various threshold junctures in conjunction with strategy change and management control actions. This point, in turn, raises a final implication for researchers as it suggests a need to undertake more longitudinal studies of the development of the full scope of information and control systems in MBOs. Our analysis provides some indication of the dynamics of the mechanisms for developing beliefs and interactions. It would be interesting to examine how these change further as the pressures and desires emerge to exit the buy-out arrangement, either through sale to another corporation or stock market flotation.