The Use of Management Control in Decentralized Autonomous Organizations : A descriptive case study on the use of management control in three Ethereum blockchain based DAOs

Sammanfattning: Decentralized autonomous organizations, or DAOs, are spoken highly of in cryptocurrency spaces as a new way of organizing capital and labor. The basic concept is an organization with a shared vision or goal, where the participants and/or outside stakeholders own tokens that grant governing rights over resources through smart contracts. The smart contract usage allows the organization to govern resources without relying on any trusted third parties such as governments, banks, companies or other entities, at least in theory. It also allows the governing of resources without a legal entity. As the name suggests, DAOs have a large focus on decentralization, which raises the issue of how it moves in the right direction. Management control offers suggestions for how traditional organizations move in the right, or intended, direction, and this report tries to apply theory from that field to the DAO organization type. The purpose of this report is to investigate, describe and analyze how management control systems are used within DAOs. The report is an interpretive multiple case study, which gathers data from interviews, observations and a literature study. The data is analyzed by primarily using Malmi and Brown (2008), Olve and Nilsson (2018) and Simons (1994) to filter and identify management control systems. This report investigates three DAOs, DXdao, Index Coop and ENS DAO, that attempts to answer the question of how they use management control. DXdao develops products for the blockchain ecosystem, Index Coop creates index fund-like products that bundle together blockchain based assets and ENS DAO owns and furthers a product that lets users claim names on the Ethereum blockchain to be used as URLs, usernames or for other causes. The report identifies that many management control systems, such as budget, planing and values, are used in similar ways as in traditional companies. While some other systems such as rewards and compensation, and governance structure seem to have unique aspects to them though the use of tokens for compensation, and a governance process through blockchain based voting. Furthermore, the report identifies the different definition of Decentralization between the management control field and the blockchain industry. Where the blockchain industry focus on the distribution of decision-making and control, whereas in Management Controlthe focus is on the division of responsibility to managers. The report concludes that one can view decentralization as a position on a scale, between complete individual decision making to a completely collective decision-making, where most DAOs lay in between these two extremes.