Assistant professor of Accounting Lucia Bellora-Bienengräber recently received the Honor Roll of Responsible Research in Business and Management together with two colleagues from Clemson University in the US. They received the award for their paper focused on how ethically focused management control systems influence counterproductive work behaviors and work climate. FEB Research talked to Bellora-Bienengräber about the study and the importance of finding instruments to generate better workplaces.

Lucia Bellora-Bienengräber’s research interests lie at the intersection of management control, management accounting, and disclosure quality. She uses insights from sociology, psychology, and strategy research to investigate the connections between these fields and the related behavioral outcomes. Apart from her position as assistant professor at the Faculty of Economics and Business, she is a regular visiting researcher at Clemson University (South Carolina, US), the university with which her co-authors associate professor Robin Radtke and professor Sally Widener are affiliated. Bellora-Bienengräber., Radtke and Widener noticed that prior studies in the field of management control raised attention to which dysfunctional behaviors and outcomes can result from certain control practices, but did not focus on how these undesirable behaviors can be decreased.

Main findings

The study by Lucia Bellora-Bienengräber and her colleagues is the first that shows how a management control system conceptualized as a combination of control practices can be designed to limit or decrease undesirable behaviors and outcomes. Bellora-Bienengräber: “Specifically, we show that, when department managers perceive the management control system imposed on them as being focused on ethical values, their counterproductive work behaviors decrease. This is not only positive in itself, but also results in a less self-focused (egoistic) work climate in the department that they lead.”

Teamwork, trust and integrity versus egoistic behavior

Management control systems (MCSs) are formal practices intended to direct the behavior of organization members toward the achievement of organizational goals. They include, for example, the use of performance measures and budgets, the communication of off-limits behaviors via codes of conducts, and the communication of core values of the organization. “We examined an ethically focused Management Control System. Hereby, we mean a control system that conveys ethical values to employees and motivates them to behave according to these values. Typical ethical values for today’s businesses are teamwork, trust, and integrity”, the assistant professor explains.

Counterproductive work behavior (CWB) is voluntary behavior that violates organizational norms and in so doing threatens the well-being of an organization, its members, or both. Bellora-Bienengräber: “We focus on counterproductive work behavior that primarily targets the organization, capturing behaviors like the misuse of a firm’s resources and missing work appointments without prior acknowledgement. We suggest that counterproductive work behaviors of managers are not only harmful per se, but also trickle down as they translate into the behaviors of employees in the managers’ departments, resulting in undesirable, self-focused work climates.” A self-focused work climate is the shared perception within an organizational unit that egoism or self-interest are the behaviors that an organization rewards, supports, and expects.

In sum, the authors learned that hiring, training, and retaining less egoistic managers, who are more likely to have their own best interests aligned with those of the organization as a whole, matters for the behaviors and work climate in an organization.

Societal relevance

According to Bellora-Bienengräber, just a glance at recent newspaper articles illustrates the urgency with which we should all strive to find effective instruments to curb undesirable behaviors and self-focused, selfish work climates among managers and employees across all levels of a firm. “An example of such a case is Deutsche Bank, think of the Libor interest rate scam, or the laundry of Russian money, or the sale of bad mortgage-backed securities. Think also of Wirecard, with its series of dysfunctional behaviors, including the set-up of an opaque corporate structure, the faking of cash reserves, as well as attacks on critics. Or Volkswagen’s cheating in pollution emissions tests, and many more.”

Bellora-Bienengräber, Radtke and Widener’s paper is one of only three in accounting that have been awarded the Honor Roll of Responsible Research in Business and Management for the years 2021 and 2022, out of a total of 77 studies in different disciplines of business and management. The Responsible Research in Business and Management Movement (RRBM) awards the Honor Roll. 24 leading business scholars from around the world initiated the movement and the Honor Roll 7 years ago, with a mission of promoting credible and useful research that contributes to responsible business practices and/or societal well-being. With this Honor Roll, RRBM aims to create a system to recognize research papers that reflects credible science that is useful to society. When selecting the award-winners, the selection board seeks research that is both rigorous and relevant. The board encourages research that provides service to society and has an impact on diverse stakeholders. It awards the honor roll to research that develops knowledge that is likely to benefit business and the broader society, locally and globally, for the ultimate purpose of creating a better world.  

Concrete recommendations for managers

In their paper, Bellora-Bienengräber, Radtke and Widener provide concrete design recommendations for current and future managers interested in capitalizing on their MCS to limit or decrease undesirable behaviors and outcomes. All in all, following these guidelines should help generating better workplaces, workplaces that are less dysfunctional and less egoistic. The authors stress that it is important to infuse ethical values in the MCS. “It is not sufficient to monitor all performance dimensions when supervising employees; it is also indispensable to communicate that it matters how employees are meant to achieve these goals. That it, for example, matters whether goals are achieved at the cost of colleagues’ wellbeing, by manipulation, by harming stakeholders, et cetera, and that such behaviors will not be condoned”, Bellora-Bienengräber explains. How well this all goes, depends on the behavior of peers, the authors make clear. “For an ethical control system to function, it is key to understand that the type of managers hired and retained in the organization are crucial. Egoistic peers can make the ethical focus of the control system obsolete.”

Reference

Bellora-Bienengräber, L., Radtke, R. R., & Widener, S. K. (2022). Counterproductive work behaviors and work climate: The role of an ethically focused management control system and peers’ self-focused behavior. Accounting, Organizations and Society, 96(2022), 101275