Post-Acquisition Management Accounting and Control Systems in an Islamic Bank: An Institutional Logics Perspective.

This thesis seeks to understand Management Accounting and Control Systems (MACS) in an Islamic bank after it had been acquired by a conventional bank in Kuwait. In particular, there was a concern of losing the religious identity and legitimacy in the Islamic bank, in respect to the stakeholders generally, and the customers specifically. Therefore, the study seeks to investigate MACS in this setting. The research adopted an interpretive paradigm as an epistemological approach and a qualitative methodology. The data collected through 26 semi-structured interviews and an inspection of internal and external archival documents. The study applied thematic analysis to the data, and as a theoretical basis, the case study employs the institutional logics perspective (ILP) of Thornton et al (2012). The analysis of the case study identifies many important MACS that the bank relied on post-acquisition such as, the Balanced Scorecards (BSC) and Budget. The acquired bank benefited from the parent bank expertise to change MACS (e.g. BSC). The study found that the BSC was the main MACS that the bank use to achieve the targeted financial (e.g. sales) and non-financial (e.g. service quality) objectives. On other hand, the acquirer bank realized the importance of Shariah before the acquisition occurred. As the acquisition was initiated by the conventional bank’s wish to benefit from those customers who prefer Islamic banking products. Shariah is a sensitive aspect in Islamic banks and there was a threat that the classification of the parent bank as a conventional bank might affect the Shariah identity and legitimacy. The study found that the bank applied multiple SCSs (Shariah Control Systems) such as a telephone hotline to answer Shariah enquiries, Shariah audit and Shariah training. Finally, the study found that there is an extensive conflict among religion and market logics in the organization, however, the management were able to manage the conflict with the Shariah-related social actors through pragmatic collaboration, therefore, the competing logics co-exist over time. The study contributes toward the literature on Merger and Acquisitions (M&A) and MACS, by investigating institutional logics in that context, and examining a case study that requires a religious legitimacy. The research also contributes in practical terms to the Islamic banking industry, whose growth is attracting more conventional banks to enter the sector to benefit from the market opportunities, with more M&A events expected.