Research and practice in financial management

The conference was held on January 30-31 Nordic Workshop in Financial and Business Management which attracted over 60 researchers School of Business, Economics and Law at the University of Gothenburg. Ekan Management sponsored the event and was there to participate in the discussions. Here we summarize a summary of the results and discussions that filled two knowledge-intensive days.

Gap between needs and practices

Research and discussions show that financial management theory and practice are still largely based on stable business environments, while the reality for both companies and public enterprises is increasingly complex and unpredictable. How we pay is a good example. Here, studies show that almost all pricing literature focuses on costs while in today's business world it is more interesting to start from the market. As the mix of products and services increases, while new business constellations and relationships emerge in the increasingly global market, there is a great need for new innovative pricing models.

Non-decision and use of IT

The absence of decisions can have serious consequences if the actors affected are weak and the problems are serious. This is evidenced by research on decision making. Unfortunately, non-decision making in complex, profitable companies is common. One study showed, among other things, that employees in an organization still act as if decisions have already been made and business continues as usual, even if this is not the case. In cases where customers are adversely affected by these non-decisions, sales and profitability are in turn affected.

Linked to decision-making, a study of economists 'use of business systems (ERP systems) shows that the control and management systems are poorly integrated with the business systems and that most of the economists' analyzes are still done in Excel or equivalent. The business systems rarely reflected the business environment and are used by economists mainly for budget and financial measurement and control, not so much for strategic planning and analysis. So there is still a lot left to do to take advantage of the potential of information technology in terms of efficiency and decision quality.

The owner's influence and customer power in the public system

Another study showed that the ownership structure has a major impact on management's attention in financial and business management. With stable and long-term owners, competition for attention to other stakeholders (primarily customers) is released, while with many owners there is greater focus on the owners and less on the customers. With the long-term owner, the State, a study finds that better decision-making basis and increased transparency between parent and child organizations are needed. What is perceived as good or bad by superior units is not fed back into the control system. Lack of feedback leads to businesses continuing as they always have, which hinders business development.

Other public sector studies show that market mechanisms work poorly because individuals (customers) find it difficult to be well informed about the quality of suppliers and cannot possibly be sufficiently informed about what is fair distribution. Financial control and accountability in this complex quasi-funded business is particularly difficult, as the market is comprised of a mix of private and public providers, all funded by public funds.

Internal audit's task unknown and the benefit questioned

The role of internal audit was another topic that was raised during these busy days. It is found that the audit has found a role where they are both auditory and supportive and are acting more proactively, but are still perceived as quite toothless. The majority (> 50 %) of the unit managers surveyed in a study had no idea of the task of internal audit and more than 60 percent felt that internal audits did not lead to any benefit. The study presented shows that an internal audit can lead to a passive approach and thus reduced decision-making and action. The hypothesis is that the fear of criticism can go so far that no one wants to take responsibility and therefore preferably does nothing at all to avoid criticism. The study also showed that those responsible are often held accountable of late, while the act of paralysis, which in many cases leads to the audit, occurs immediately and becomes prolonged.

Knut Fahlén, Ekan Management

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