CIMA’s study warns against the temptation for management accountants to revert to traditional ways of exerting control, such as contracts, and instead urges them to consider the importance of using social networks to foster a sense of camaraderie between competitor alliances.
- Control mechanisms within alliances must maintain a delicate balance.
- Each firm must protect itself from appropriation threats while also co-operating with competitors in order to enhance its own opportunities for long-term success.
- The control mechanisms used to attain this balance between gains from coâ€‘operation and competitive threats encompass a range of formal and informal controls.
- These findings suggest that management accountants responsible for the design and use of inter-organisational controls must guard against the temptation to revert to traditional ways of thinking about control.
- Practising accountants should seek to understand the social relationships that exist between their firms and potential partners, and exploit these in order to capture gains from co-operation as well as to manage potential misappropriation concerns.
- Informal mechanisms, such as shared beliefs and trust between firms, are likely to be a more effective and efficient means than formal controls of monitoring the behaviour of partners.
- The use of such mechanisms is also more likely to facilitate collaborative activity over the longer-term and across other alliances.