Torkel Strömsten

Relying on two embedded case studies of product development within IKEA's industrial network, this paper examines the role of Target Costing as an accounting tool that has the capacity to frame development efforts into either exploitative or explorative projects. Such a framing affects, in turn, the configuration of the relevant network of resources and mediates the behavior of the actors involved via specific types of controls. We contribute to the IMP-inspired literature on innovation and product development as we add nuances to how the concepts of exploitative and explorative innovation paths play out on a network level, especially in relation to the resource dimension. In addition, the notion of the mediating role of accounting adds to how we can understand control and its consequences in an interorganizational network context. Our data consists of several sources, about 70 interviews with individuals working at IKEA and its partners. We also had access to internal company material such as costing calculations. Our study has practical implications as it can help managers identify which types of control to use and how these can be matched with different innovations strategies on a network level.
•Target Costing can frame development efforts into either exploitative or explorative projects.•Accounting also mediates between an actor and other actors and resources in the network.•Accounting's framing and mediation affects the configurations and combinations of resources.•We identify which forms of control correspond to exploitative and explorative efforts.

Contemporary forms of “marketized” sustainable finance rely on the production, dissemination, and consumption of financialized ESG risk information. In this paper, we scrutinize this “risk transparency premise” in context of the TCFD's climate risk reporting framework. Adopting the lens of institutional theory and a mixed methods approach, we pursue two interrelated aims. First, we examine to which extent the climate risk disclosures of TCFD “supporters” from the European financial sector adhere to the information requirements spelled out in the TCFD framework. Second, we seek to uncover the organization level impediments that underlie substantive implementation of the TCFD framework and, in turn, the production and dissemination of the required climate risk information. Based on our findings, we argue that TCFD/climate risk reporting is prone to become a ‘ceremonial’ practice and that, at least as of now, the ‘institutional myth’ of risk transparency might rather serve to safeguard the ideals of the market as opposed to facilitate transformative change towards a more environmentally sustainable economy. Our findings complement research that has problematized contemporary forms of marketized sustainable finance as well as literature on climate risk reporting and TCFD more specifically.

This study traces the financialization of the Swedish telecommunications company Ericsson from 1990 to 2000. Previous research has explained financialization in terms of the influence of actors (e.g., fund managers and financial analysts) and accounting technologies (e.g., increased use of stock options and financially oriented incentive systems) associated with what Hopwood (1983) labelled the vertical axis of organizational action. Our case, however, shows that the horizontal axis of organizational action (Ericsson's inter-firm relationship with the lead firm Vodafone) played a pivotal role. This horizontal axis is theorized by drawing on accounting literature relating to inter-firm relations and more general literature concerning two types of supplier adaptations in global value chains: first, the design and exchange of products; and second, production processes and organizational structure. Horizontal pressure from Vodafone compelled Ericsson to adapt its product design and development processes, which in turn created conditions for vertical pressures to accrete. We found that actors (an Ericsson supply chain manager and Vodafone's purchasing director) and accounting technologies (a global price list) informing the horizontal axis of organizational action played vital roles in supplier adaptations. Such actors and accounting technologies are viewed as ‘purely operational’ in prior work, but our findings suggest they initiated and sustained a financialization process with far-reaching and long-lasting effects within Ericsson. Indeed, both actors and accounting technologies which, at first glance, may seem to have little connection to financialization processes, played a central role through the constitution of a horizontal axis of organizational action. © 2021 The Author(s)

This study examines the influence of cultural regions on the interdependence between delegation of authority and other management control (MC) practices. In particular, we assess whether one of the central contentions of agency theory, that incentive contracting and delegation are jointly determined, holds in different cultural regions. Drawing on prior literature, we hypothesise that the MC practices that operate as a complement to delegation vary depending on societal values and preferences, and that MC practices other than incentive contracting will complement delegation in firms in non-Anglo cultural regions. Using data collected from 584 strategic business units across three Western cultural regions (Anglo, Germanic, Nordic), our results show that the interdependence between delegation and incentive contracting is confined to Anglo firms. In the Nordic and Germanic regions, we find that strategic and action planning participation operate as a complement to delegation, while delegation is also complemented by manager selection in Nordic firms. Overall, our study demonstrates that cultural values and preferences significantly influence MC interdependence, and suggests that caution needs to be taken in making cross-cultural generalisations about the complementarity of MC practices. 

Digitalization has considerably transformed the finance functions of large multinational corporations. As researchers of the Stockholm School of Economics, the authors have been witnessing this transformation for several years and received insights into how companies expect digitalization to affect the finance function in the future.The last couple of decades have shown tremendous change with regards to the roles of the finance function and the way different tasks are organized. For instance, transactional accounting was first centralized and later outsourced, often to low cost countries. Also, the controller function was divided into a statutory dimension and a more business-oriented controller function. We have been following the development of the finance function for several decades as teachers, as researchers and as program directors of an executive education program for senior business and financial controllers in large Nordic multinational corporations. We understand that one of the major challenges the finance function is currently facing is the digital transformation, which many companies embrace as a do-or-die mantra. As a new set of skills is needed and new professions such as that of the data scientist emerge, the profession of the controller is increasingly questioned and challenged. The main question we examine is how the finance function, given its fundamental responsibilities, which we believe cannot change, will maneuver into new domains and into the unknown.

The aim of this study is to investigate whether certain configurations of management controls dominate in certain societies (socio-cultural contexts) and whether the effectiveness of a given archetype of management control systems (MCSs) varies depending on the socio-cultural setting the society in which it operates. The study focuses on three socio-cultural groups and the corresponding institutional contexts (an Anglo-Saxon group, a Central European group, and a Northern European group) and three MCS archetypes (delegated bureaucratic control, delegated output control, and programmable output control). We use unique data from a cross-national, interview-based survey encompassing 610 strategic business units from nine countries (seven European countries plus Canada and Australia). The idea that firms tend to adapt MCSs to the socio-cultural context does not gain empirical support in this study. No significant differences in the distribution of MCSs between the three socio-cultural groups are noted. However, we do find that programmable output control has a more positive impact on effectiveness in Anglo-Saxon cultures, while delegated output control has a more positive impact on effectiveness in Northern Europe. Taken together these findings indicate that distinct differences between societies make a particular MCS design more appropriate in a given society, but where such differences are not dramatic (as in the present case), multiple MCS designs can be found in the same society.

This paper has analysed the role of power in shaping internal/inter-firm control dynamics in the Ericsson-Vodafone relationship. While previous studies have tended to either neglect issues related to power, or focus on only one aspect of power, resource power, our contribution lies in detailing how the combination of resource, process and meaning power is key to understanding internal/inter-firm control dynamics. Vodafone mobilised resource power to bring about changes in inter-firm control, and subsequently mobilised process, meaning and resource power to implement additional inter-firm control as well as dictate changes needed in Ericsson's R&D structure, which resulted in more financially oriented internal control within Ericsson's R&D units. Our study also details how 'accounting talk' was important for determining the trajectory of internal/inter-firm control dynamics and the intimate relationship between such 'talk' and the mobilisation of power. In this respect, we extend the Hardy and Redivo (1994) power framework by showing that language is important not only in the mobilisation of meaning power (as Hardy and Redivo point out), but also resource power. (C) 2016 Published by Elsevier Ltd.

Open book accounting (OBA) is an accounting method that has been put forward as a tool for managing interdependencies across company boundaries. This paper investigates the role of OBA in creating and managing interdependences in supplier relationships. In particular, consideration is given to how OBA deals with the embedded relationships in which interdependencies are both potentially aligning and conflicting with interdependencies in other relationships. An in-depth case study on the role of OBA within the retail industry in Sweden has been conducted. The study shows that the company used the OBA to create and manage interdependencies in different inter-organizational situations. The company used it in managing the interdependencies with the first tier supplierand down in the supply chain influencing second and third tier suppliers. However, OBA plays a key role in creating and managing the embedded supplier relationships. OBA was used to influence indirect relationships and their technical and organizational interfaces. It was also decisive in new resource combination and in the identification of new interfaces. Furthermore, OBA was used when actors defined the network boundaries and find new temporary solutions.

This paper examines the role of accounting in the development of a biotech innovation, called the Pyrosequencing technology, intended for the scientific and commercial analysis of human DNA. Building on an extensive case study, we follow the development of this technology from its inception to the eventual downfall of the company built around the technology, Pyrosequencing AB. Using the concept of mediating instruments (Miller and O'Leary, 2007), we focus on how accounting calculations participated in shaping particular development trajectories by connecting and mediating between discrete domains and dispersed actors. We follow the development process in three different stages: first, when it was in the hands of the scientific founders; then when it became a commercial company, partially owned by a venture capital firm, HealthCap; and, finally, when Pyrosequencing AB became listed on the stock exchange. We find that different accounting calculations were used in each of these stages, and we analyse how these shaped the development process by forging particular linkages between scientific and economic ideas and different actors. Our study contributes to the literature on the relationship between accounting and product innovation in several ways: firstly, it provides an analysis of how certain accounting calculations enable particular development trajectories by mediating between different actors and domains. Secondly, our findings show the importance of attending to the shifting economic domains and economic ideas to which development processes may be linked. Finally, the results contribute to the discussion about the enabling or constraining role of accounting by showing how the enabling of particular development trajectories entails the constraining of alternative courses of action. This research adds a longitudinal perspective to the enabling/constraining question, which has often been examined using a cross-sectional design. We introduce the concept of calculative momentum as a way to increase our understanding of the role accounting play in this regard.

This study draws on interviews with corporate executives from four companies that went public and financial analysts involved in evaluating these firms. Top managers in all companies became more focused on short-term financial results than they had been when the companies were private. We contribute to existing research by analyzing, empirically and theoretically, the processes producing this focus. Following an IPO process offered a unique insight into a gradual increase in emphasis on accounting metrics through the outcomes of guided and restricted sensemaking. When preparing for the IPO, guided sensemaking produced an IPO prospectus incorporating quantitative and qualitative commitments. Quantitative commitments were based on accounting metrics, such as earnings per share and profit margin, which provided an important foundation for the financial focus. These commitments became the anchor for subsequent sensegiving and restricted sensemaking when the companies were listed. With the financial analysts as the social anchors, the richer communication in the prospectus was narrowed down to comprise an exclusive focus on the quantitative accounting commitments. The long-term accounting commitments in the prospectus were transformed into short-term targets that must be met when the financial measures served as specific and concrete extracted cues to quickly provide structure to the uncertain situation, gain the financial analysts’ confidence and sustain action. One year after the IPO, the financial focus was taken for granted and managers had accepted the rules of the game.