Table Of ContentJens Hutzschenreuter
Management Control in Small
and Medium-Sized Enterprises
GABLER RESEARCH
Entrepreneurship
Herausgegeben von
Professor Dr. Malte Brettel, RWTH Aachen,
Professor Dr. Lambert T. Koch, Universität Wuppertal,
Professor Dr. Tobias Kollmann, Universität Duisburg-Essen,
Campus Essen,
Professor Dr. Peter Witt, Universität Dortmund
„Entrepreneurship“ ist ein noch relativ junger Forschungszweig, der jedoch in
Wissenschaft und Praxis stetig an Bedeutung gewinnt. Denn Unternehmensgrün-
dungen und deren Promotoren nehmen für die wirtschaftliche Entwicklung einen
zentralen Stellenwert ein, so dass es nur folgerichtig ist, dem auch in Forschung
und Lehre Rechnung zu tragen.
Die Schriftenreihe bietet ein Forum für wissenschaftliche Beiträge zur Entrepre-
neurship-Thematik. Ziel ist der Transfer von aktuellen Forschungsergebnissen und
deren Diskussion aus der Wissenschaft in die Unternehmenspraxis.
Jens Hutzschenreuter
Management Control in Small
and Medium-Sized Enterprises
Indirect Control Forms,
Control Combinations and their Effect
on Company Performance
With a foreword by Prof. Dr. Malte Brettel
RESEARCH
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D 82 (Diss. RWTH Aachen, 2009)
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Foreword
Management control is one of the key management functions, but has been rarely addressed
in academic research. Amongst other reasons, this disinterest might be rooted in the typically
negative connotation of the term ‘control’. Academics rather prefer topics like strategy
development, planning or organizational topics over control. Paradoxically, academics and
managers both are highly interested and concerned with visions, strategies and plans;
however, the majority of them fail or are not implemented successfully. One of the key
reasons for this is the fact that the implementation and the subsequent control conducted by
managers are often neglected.
Managers could delegate the execution of plans and strategies to their subordinates; however,
they have to take into consideration which activities can be delegated and how the progress
should be controlled. Neither science nor practice has been able to provide acceptable answers
to this open issue; thus there is a significant research gap. The research gap in the context of
small and medium-sized enterprises (SMEs) is even larger – control here has been explored
only in a considerably small number of studies. In the setting of small and medium-sized
enterprises previous research has already demonstrated that management control is of greater
importance than planning activities. This highlights the relevance of the research problem on
how control should be executed in SMEs again.
The thesis of Jens Hutzschenreuter specifically addresses this research topic. For his research
he aims at “enhancing the knowledge about management control forms in general, with
special emphasis on SMEs” and achieves this in a very interesting way.
The thesis of Mr. Hutzschenreuter is not only theoretically well-founded, it also presents an
extensive empirical testing of the theoretically developed assumptions. The results are of
particular interest for both researchers and practitioners. Typically, managers employ direct
forms of control by defining results and processes for subordinates although these control
forms show only limited effectiveness. At the same time, the effect of indirect control
mechanisms like employee selection and the company culture's impact on the employees'
behavior is often neglected. The performance of indirect management control has shown a
consistently greater impact than direct forms of control. Moreover, the results show a broad
applicability also in other organizational settings.
V
Mr. Hutzschenreuter has not only written a thesis that is highly sophisticated from a
theoretical point of view which will guide future researchers in this domain, he also produced
very interesting findings which are helpful for the demanding managerial practice.
In this respect, I wish that this thesis will receive the broad audience it deserves.
Malte Brettel
VI
Preface
This study was accepted as a dissertation in the summer of 2009 at the Faculty for Business
and Economics of the RWTH Aachen University. I know that this would not have
materialised without the comprehensive support of various people.
In the first place, I would like to thank my doctoral father, Prof. Dr. Malte Brettel, for
accepting me as a research assistant. At his chair, he has developed an amazing working
culture that fosters individual development and at the same time provides guidance on how to
tackle the numerous difficulties in a doctoral thesis. By doing so, he significantly supported
this thesis. Secondly, I want to express my gratitude to Prof. Ian MacMillan, DBA, Professor
of Management at the Wharton School, University of Pennsylvania. I thank him for the
opportunity to participate in his Visiting Scholar Program in the year 2008. The discussion
with him and his team contributed significantly to deepen the understanding of the topic and
this thesis. Furthermore, I would like to thank Prof. Dr. Rüdiger von Nitzsch for taking over
the role of the second advisor.
My colleagues at the Chair of Business Administration for Engineers and Scientists also
contributed to this dissertation in various ways. The traditional "Lehrstuhltage" facilitated
great discussions and fun both during the day- and night-time activities. The work together
with my colleagues Tessa and Sebastian for the automotive innovation network car Aachen
e.V. was challenging but at the same time associated with a lot of fun and great results.
I would also like to thank all my friends in supporting me during the work on the dissertation.
It was great to have the assurance that I would have their support even during difficult times. I
particularly thank Andreas, Jens, Kathrin & André, Manuel and Thomas who were always
there to listen to my worries.
Above all, I am deeply thankful to my family: to my sister Anke who helped me with her
strong analytical focus in the statistics section and with her fruitful advice during the writing
phase, and to my parents, Brigitte and Paul Hutzschenreuter, who contributed with their
ability to motivate me and with their tremendous support throughout my education. Hence, I
dedicate this thesis to my family, with the conviction that it would have been impossible to
come this far without their timely help and support.
Jens Hutzschenreuter
VII
Overview of contents
Foreword..................................................................................................................................V
Preface...................................................................................................................................VII
Overview of contents..............................................................................................................IX
Table of contents.....................................................................................................................XI
List of figures.....................................................................................................................XVII
List of tables.........................................................................................................................XIX
List of abbreviations............................................................................................................XXI
1 Introduction.....................................................................................................................1
1.1 Problem statement....................................................................................................1
1.2 Relevant research......................................................................................................3
1.3 Research questions..................................................................................................10
1.4 Structure of this study.............................................................................................14
2 Conceptual basics..........................................................................................................17
2.1 Foundations and understanding of terms...............................................................17
2.2 Key concepts of management control and their applications.................................25
2.3 SMEs and their liabilities........................................................................................58
3 Theoretical framework..................................................................................................63
3.1 Potential frameworks and selection of a framework..............................................63
3.2 Agency theory..........................................................................................................67
3.3 Social control theory...............................................................................................75
3.4 Application of the research framework...................................................................80
4 Hypotheses and research model...................................................................................86
4.1 Direct effect of management control forms............................................................86
4.2 Control combinations..............................................................................................98
4.3 Moderating effects on management control forms...............................................102
4.4 Research model and summary of hypotheses........................................................111
IX
5 Preparation of empirical analysis..............................................................................112
5.1 Methodology.........................................................................................................112
5.2 Measures...............................................................................................................122
6 Survey design and sample...........................................................................................135
6.1 Preparation of the data sample.............................................................................135
6.2 Assessment of the data sample..............................................................................142
6.3 Determination of required significance level.......................................................152
7 Empirical results..........................................................................................................156
7.1 Main model...........................................................................................................156
7.2 Control combinations............................................................................................169
7.3 Moderating effects................................................................................................174
7.4 Results overview....................................................................................................183
8 Discussion and conclusion...........................................................................................185
8.1 Reflection on research questions..........................................................................185
8.2 Review of the findings of the study........................................................................187
8.3 Research implications...........................................................................................201
8.4 Managerial implications.......................................................................................213
9 Appendix.......................................................................................................................219
9.1 (A) Cover letter.....................................................................................................220
9.2 (B) Initial reminder...............................................................................................221
9.3 (C) Second reminder.............................................................................................222
9.4 (D) Questionnaire.................................................................................................223
9.5 (F) Tables..............................................................................................................228
10 Bibliography.................................................................................................................239
X
Table of contents
Foreword..................................................................................................................................V
Preface...................................................................................................................................VII
Overview of contents..............................................................................................................IX
Table of contents.....................................................................................................................XI
List of figures.....................................................................................................................XVII
List of tables.........................................................................................................................XIX
List of abbreviations............................................................................................................XXI
1 Introduction.....................................................................................................................1
1.1 Problem statement....................................................................................................1
1.2 Relevant research......................................................................................................3
1.3 Research questions..................................................................................................10
1.4 Structure of this study.............................................................................................14
2 Conceptual basics..........................................................................................................17
2.1 Foundations and understanding of terms...............................................................17
2.1.1 Management control...........................................................................................17
2.1.2 Small and medium sized enterprises..................................................................20
2.1.3 Distinction of management control from other terms........................................22
2.2 Key concepts of management control and their applications.................................25
2.2.1 Control strategies................................................................................................25
2.2.1.1 Goals of a control system...........................................................................25
2.2.1.2 Parameters of a control system..................................................................27
2.2.1.2.1 Control subject......................................................................................27
2.2.1.2.2 Control object........................................................................................28
2.2.1.2.3 Control relationships.............................................................................32
2.2.1.2.4 Control intensity....................................................................................34
2.2.1.2.5 Control techniques................................................................................35
2.2.1.3 Integration into the management process..................................................37
XI
