Contradictory Formalisation in a Management Control System
ACTION: This thesis conducts a case-study of Statoil who have recently introduced both an increase and a decrease in formalisation to their Management Control System (MCS).
By applying a qualitative research methodology, we study how employees have interpreted corporate’s intentions behind the two formalisations. Further, we compare how this has influenced their experience of the MCS in the different cases.
Overall, our study reveals that how the increased and decreased formalisations in Statoil have been interpreted has been a consequence of their inherent features. We find that corporate have designed and implemented enabling formalisations that have had a positive attitudinal influence on the users. Further, our study suggests that generating an understanding of the underlying rationales behind the formalisations is of particular importance in this process. Finally, we also find that the contradictory degrees of formalisation have induced different interpretations of support roles in the MCS.
For practitioners, this thesis contributes with a practical example of how an organisation can successfully introduce contradictory formalisations to the MCS. As previously argued by Adler & Borys (1996), we find that it is not the degree of formalisation that determines employee interpretation, but rather the distinctive features of the way rules and procedures are designed and implemented.