The doctoral dissertation in the field of Financial Accounting will be examined at the Faculty of Social Sciences and Business Studies, Kuopio Campus.
What is the topic of your dissertation? Why is it important to study this topic?
The aim of the dissertation is to understand how planned financial accounting outsourcing (FAO) can be managed using interorganizational control (IOC). The research builds on case studies and uses management interventions, control archetypes, and formal and informal control mechanisms as theoretical lenses in interpretation and analysis.
The research topic is important because outsourcing is often introduced at an accelerated pace, which emphases the importance of operational management. Commanding, engineering, teaching and socializing interventions on both strategic and operational management levels set the appropriate pace of change to all individuals and teams.
Especially in the public sector, municipalities and municipally-owned corporations often outsource financial accounting. Related to these so-called affiliated units as FAO service provider, ownership structures are often hybrid from the perspective of municipally-owned corporations. In addition, when it comes to challenging outsourcing, ex-post control is often lacking, sometimes due to silencing.
What are the key results or observations of your dissertation?
In addition to the three previous implementation phases of outsourcing – contact, contract, and control – the study found a new phase of convergence. In particular, the capacity and importance of operative management are important. In financial accounting outsourcing, a properly planned change involving the operative management helps in the success of accelerated FAO. From the perspective of the accelerated outsourcing process, the dissertation shows the challenges and successes associated with balancing the rhythm of change through the timing, pacing and sequencing of management interventions. The growth of the service provider and rapid technical technological development increased silence. Also, operational-level managers were silenced during the implementation and control phases.
Municipally-owned companies use hybrid control archetypes, such as detailed contracts or, alternatively, rather non-specific contracts, where endogenous competition leads to performance that is balanced with goals or expectations. Development teams formed with the FAO service provider increase trust at the operational management level. This reinforces the importance of operational management. Joint development teams enable the use of shared expertise and knowledge in problem solving and facilitate collaborative solutions. Problems that arise can also be treated as collective responsibilities. The results of the study are in line with the findings presented in previous research literature.
According to the study, previous experience in outsourcing increases the importance of formal contracts. This, in turn, increases the strategic management's trust in the service provider's competence. In challenging outsourcing, officials at strategic management level opportunistically remain silent up and down the organizational hierarchy for their own benefit. Based on the research, officials do not share all the necessary information with managers at the operational level who are familiar with accounting processes. Opportunistic silence diminishes goodwill and trust in competence, both within and between organizations. In addition, the inoperability of technical processes and the resulting silence hinder the availability of financial reports, which, according to the study, made it difficult to monitor behavior ex-post.
How can the results of your doctoral research be utilized in practice?
The involvement of operational management in the change process and the appropriate pacing, timing, sequence and combination of management interventions affect the successful implementation of the FAO. The planned organizational change sets a goal for outsourced financial administration and creates active communication channels. Cooperation between individuals and organizations, as well as control between organizations, can effectively respond to the appropriation concerns and coordination challenges. However, silence can prevent the successful use of planned formal control.
What are the key research methods and materials of your dissertation?
The qualitative research method used in the study is suitable for exploring a complex phenomenon in its real context. For the case study carried out in the first essay of the dissertation, an international company was chosen because it was large enough to have all accounting processes in place. The second essay is a multi-case study that sought to gain a holistic understanding of the inter-organizational control between municipally-owned companies and the FAO service provider. Municipally owned corporations provided a good context for studying hybrid ownership structure. The third essay is a case study of two cities with challenges in their financial accounting outsourcing. They provided an opportunity to deepen the understanding of challenging financial management outsourcing.
Different methods were used in data collection. Concerning the first essay the whole FAO transition process was observed. Also, the informal discussions were conducted. The second and third essays interviewed representatives of both the outsourcer and the outsourcing service provider's strategic and operational levels. The interview material was supplemented with contracts and other archival material.
The doctoral dissertation of Arja Flinkman, LicSc (Econ and Bus Admin), entitled Inter-organizational control in financial accounting outsourcing – From the perspectives of management interventions, trust and silence will be examined at the Faculty of Social Sciences and Business Studies. The opponent will beProfessor Antti Rautiainen, University of Jyväskylä, and the custos will be Assistant Professor Henri Teittinen, from the University of Eastern Finland.
For further information, please contact:
Arja Flinkman, arja.flinkman(at)esedu.fi, 044 711 5691