The institutionalisation of a new management control system: a focus on situated rationality

Drawing on the literature about management control systems and adopting the new institutional theory, this study aims to investigate how the situated rationality of key actors influences the institutionalization of a new practice, from its adoption to its implementation within a large company. Based on a qualitative approach, this article presents a single case study investigating a multinational manufacturing firm located in Italy. Findings highlight the whole redesignation process of the enterprise performance management system in terms of motivations, activities and benefits underpinning the management accounting change project and the institutionalisation of the new management control system. Furthermore, they demonstrate the key role of three crucial actors – CEO, Co-CEO and CFO – driven by a mix of three different types of situated rationality – roots, experience, educational – that guide their actions and influence the enterprise’s decisions and behaviours, which then lead to a new performance management systems and processes. Implications for research and practice are discussed.