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Competing on digitalization transformation: The relationship between enterprise resource planning, management control systems, and dynamic capabilities

Zhong, Lian 2022. Competing on digitalization transformation: The relationship between enterprise resource planning, management control systems, and dynamic capabilities. PhD Thesis, Cardiff University.
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This thesis examines the impact of enterprise resource planning (ERP) on the use of management control systems (MCS) in developing dynamic capabilities (DC) in China’s modern manufacturers. Over the recent ten years, China has been reforming its economic structure through the digital transformation that promotes productivity, expands the market size and customer bases, and stimulates economic growth. Existing accounting-IT studies have two major gaps that inhibit us from understanding the impact of digital transformation. First, they do not examine the strategic impact of digitalization-based accounting, but existing accounting research has recognized the importance of studying the strategic impact of accounting (e.g., Henri 2006; Marginson 2002; Mundy 2010; Pešalj et al. 2018). Second, they focus on outdated technologies, but the digital transformation that aims to source competitive advantage forces Chinese manufacturers to reconsider using new digital technologies (e.g., Clouding, Big data, and advanced ERP) and abandon the old ways. This thesis fulfils the gaps by addressing the three most critical frontier MCS research issues, namely, the strategic role of MCS at the capability level (e.g., Henri 2006), the effective MCS configurations (e.g., Grabner and Moers 2013; Sandelin 2008), and the MCS complementarity (e.g., Adler and Chen 2011; Chenhall and Moers 2015). Subsequently, I bring these three issues into the discussion of how manufacturers can steer the digital transformation by making an ERP upgrade in three core business contexts, respectively (i.e., customer relationship management, material resource management, and integration of production and research and design). An in-depth single case study is undertaken to explore the MCS change after an ERP upgrade in three core contexts of DC that academics consider necessary to theorize and analyze the digital transformation process: three building block routines of DC (i.e., sensing, seizing, and reconfiguring routines), resource reconfiguration, and resource orchestration. Further, the thesis adopts three theories to seek the generative process, ii forms, and relations of the MCS changes, and the relation between MCS changes, ERP and DC. Drawing on the organizational routine theory, I reveal that the MCS changes that improve the three routines are produced through enhancing information connection at the artifact aspect, action pattern abstraction at the ostensive aspect, and bottom penetration at the performative aspect. Adopting the notion of studying MCS as a package, I find that the MCS changes that support resource reconfiguration actions lie within three forms of MCS configurations producing varying levels of visibility, recognizability, and controllability of organizational actions and resources. Finally, guided by levers of control, I discover that the MCS changes involve shifting complementary relations between different MCS practices, and senior management involvement determines the leveraging effect of the shifting complementary relation on resource orchestration. This thesis empirically contributes to the critical understanding of how information technology is “simultaneously a challenge and a resource for management control” (Dechow et al. 2006, p. 625) by tracing the generative process, forms, and relations of the MCS changes in the context of growing demand in the ERP upgrade in China. Also, this thesis theoretically contributes to the theory of organizational routine, the notion of studying MCS as a package, and the theory of levers of control by further extracting the constructs involved within the routine-in-use in the accounting context, refining how the MCS configuration forms may vary, and identifying the shifting nature of the complementary relations between the control levers. Finally, the findings of this thesis provide practical implications of how accounting practices can support mobilizing organizational resources to materialize specific DCs effectively and benefit from the digital transformation.

Item Type: Thesis (PhD)
Date Type: Submission
Status: Unpublished
Schools: Business (Including Economics)
Subjects: H Social Sciences > H Social Sciences (General)
Uncontrolled Keywords: management control, enterprise resource planning, Chinese manufacturer, digitalization, digital transformation
Last Modified: 08 Sep 2021 08:47

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