Management Control of New Product Development and Perceived Environmental Uncertainty: Exploring Heterogeneity Using a Finite Mixture Approach

Abstract

ABSTRACTResults regarding the association between perceived environmental uncertainty (PEU) and management control (MC) of new product development (NPD) are ambiguous and sometimes contradictory. Based on survey data for 276 firms, we first contribute to MC research by finding that firms have two completely different responses regarding their MC of NPD when facing high PEU. Whereas the first group of firms increases all MCs when PEU increases, the second group responds with a loosening of MC. The first group consists of slightly larger and older firms than the second group, with relatively emergent innovation strategies, greater innovation capabilities, and weaker perceived complexity of their environment. Second, we reveal these two contrary groups of firms behind an aggregated sample by introducing finite mixture partial least squares (FIMIX-PLS) as a new approach to MC research. Our study may inspire future researchers to control for previously unobserved heterogeneity in structural models by using FIMIX-PLS.JEL Classifications: D81; L60; M11; M40; O32.