Management Control Packages in a start-up context -an explorative study of start-up companies in the IT-industry

Abstract

Background and problem: Sweden gets extensive attention from the outside world for its lucrative business climate and entrepreneurial spirit. This makes Sweden a preferable environment for start-up companies to operate in. Being a start-up company is connected to many challenges, one of them being operating in a constantly changing surrounding. Having good control systems in these firms could in this case be crucial for becoming successful. According to Alvesson (2004) management control is necessary and needed to make an organisation work. In the last decades the fact that control systems affect each other and can not work as separate elements have become highlighted. With the article Management Control As a Package - Opportunities, Challenges and Research Directions Malmi & Brown (2008) brings up the meaning of management control package. With this article as a base, the research question for current thesis has been formulated;

“What elements of the management control package get most attention in start-ups?”

Purpose: The purpose of the thesis is to analyse the phenomenon of management control packages in start-ups. To answer the research question, companies within the IT industry has been studied. By investigating these start-up companies that operates in Sweden the foundation for further research will be laid.

Method: The study is of an explorative character and lays the ground of further research within the area. By using a qualitative approach the primary data is collected through four semi-structured interviews and the secondary data through a systematic search through eminent journals within the management accounting area.

Results and conclusions: Based on studied companies a number of indications can be seen. Firstly, the indication of culture control being of great importance as a control element within the firms is seen. There is also an indication of the firms being controlled through short-term planning and non-financial measures through a top-down concept but with a great deal of communication with the rest of the team. The motivation for the employees’ lies in other factors than the strictly financial compensations, instead the non-financial motivations are predominant. Over time, there is an indication of implementing a more formal structure and management control as well as an increased focus on financial measures. There is a general indication of the firms being controlled in a more informal way.