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HELSINKI SCHOOL OF ECONOMICS (HSE) ABSTRACT Department of Accounting and Finance 3.9.2009 Joanna Tero

RE-EXAMINING THE LEVERS OF CONTROL-FRAMEWORK: FROM INTERACTIVE CONTROL TOWARDS “INTERACTIVE TRANSPARENCY” Case Rautaruukki Oyj.

Objectives of the study

The objective of this study is to critically re-examine Simons’ (1995) levers of control-framework, which has been widely used in previous research, but received only limited attempts of further refinement. More specifically, this study takes a critical perspective with the attempt to see how the constructs of interactive and diagnostic control fare against empirics in a contemporary organization, which faces the challenges of today’s business environment. The role of the controller in deploying interactive controls is also examined in this study.

Research method and data

The theoretical framework rests on literature concerning the use of interactive and diagnostic controls as well as the previous studies conducted on the role of the controller. In addition the study adopts new perspectives from action rationality (Brunsson 1982) and sensemaking in organizations (Weick 1995), when examining the role of the controller. The research method is a single-company case study. The empirical data was gathered by conducting ten semi-structured interviews mostly at corporate and divisional top-management level in March – May 2009.

Findings of the study

Based on the empirical evidence gathered in this study, contemporary organizations are characterized by data overload and transparency in accounting numbers. In this context the use of interactive controls is moving towards interactive transparency. In order to achieve organized action, the role of interactive controls rise as they offer the way of creating meaning around the abundance of accounting numbers. Diagnostic controls, on the other hand, may gradually become obsolete, as they remain too distanced form the organizational reality to prompt action. In this novel context of interactive transparency, the role of the controller can be understood as a sensemaker and a mobilizer. By selecting and framing important issues and encouraging the interpretation and sensemaking process, s/he builds the foundations for organized action.

Key words

Interactive control, diagnostic control, controller’s role, action rationality, sensemaking in organizations