Interactive Use Of Management Control Systems Research Articles

Performance implications of exploratory and exploitative innovation: the role of management control systems

Drawing on prominent theories of innovation, this study investigates the inter-relationships between the use of management control systems (MCS), exploratory innovation, exploitative innovation, and firm performance in Vietnam, an emerging market. The research hypotheses were empirically tested using a partial least squares-structural equation model. Data were collected by survey questionnaires from a sample of 238 top-level and middle-level managers in Vietnamese firms. The results confirm that the diagnostic use of MCS has a significant positive effect on exploitative innovation and the interactive use of MCS has a significant positive effect on both exploratory innovation and exploitative innovation. The results also reveal that exploitative innovation and exploratory innovation partially mediate the relationship between the interactive use of MCS and firm performance. Understanding these relationships can assist Vietnamese firms to invest appropriately in MCS that is able to promote innovation actions, thereby achieving outstanding performance.

Management control systems and real earnings management: Effects on firm performance

We examine an unexplored side of management control systems (MCS): their links with real earnings management. We propose that interactive use of MCS supports management in identifying, evaluating, selecting, and implementing real actions that conceptually would be classified as real earnings management (REM). Interactive MCS use is predicted to enhance managerial REM actions that retain the focus of the organization on its strategic objectives, leading to higher future performance. We test our research model empirically with survey and archival data. The results support our predictions. Finally, we explore the role of other levers of control.

INFLUENCE OF CONTROL SYSTEMS AND SLACK TIME ON PROCESS INNOVATION

ABSTRACT Purpose: This study analyzes the influence of the interactive and the diagnostic use of Management Control Systems (MCS) and slack time on process innovation in incubated companies. Originality/value: Organizational characteristics are associated with processes innovation in organizations with contemporary configuration. The study brings evidence to the contrasting findings of the MCS literature with slack time and process innovation. Design/methodology/approach: A survey was conducted with managers of companies listed on websites of incubators associated with the Associação Nacional de Entidades Promotoras de Empreendimentos Inovadores (National Association of Entities Promoting Innovative Enterprises), obtaining a sample of 106 valid responses. To analyze the data, the Structural Equation Modeling technique was applied to analyze the data. Findings: The results indicated that the interactive use of MCS promotes slack time at work, and the diagnostic use inhibits its creation. However, slack time was not significantly associated with processes innovation, which reveals a dysfunctional role of the slack. The interactive use of MCS had a significant influence on processes innovation. It is concluded that the interactive use prevails when the purpose is to promote processes innovation, as it favors contacts between different hierarchical levels and learning, while the diagnostic use highlights its relevance by inhibiting the creation of slack time, understood as a dysfunction for not leading to processes innovation. This denotes that the interactive and the diagnostic use of MCS are complementary in incubated companies.

The effect of diagnostic and interactive uses of management control systems and managerial coaching on reflection in teams

PurposeThe purpose of this study was to investigate the effects of managerial coaching, as well as interactive and diagnostic uses of management control systems (MCS), on reflection and critical reflection, which are important for team learning.Design/methodology/approachData were collected using a questionnaire survey. Hierarchical regression analyses were performed to test hypotheses using data from 235 employees in 50 teams from a Japanese automotive supplier.FindingsThe results indicated that: MCS used interactively have a positive influence on critical reflection in teams; MCS used diagnostically have no significant effect on reflection or critical reflection in teams; and managerial coaching has a positive influence on team reflection.Research limitations/implicationsThese findings suggest that the interactive use of MCS should be combined with managerial coaching in promoting reflection and critical reflection within teams. Because this study used data from employees of a Japanese automotive supplier, the results may have been influenced by the Japanese management style.Practical implicationsOrganizations need to implement interactive MCS at the team level, while coaching programs should be provided for managers to enhance team learning.Originality/valueThis study extends the existing literature by examining the effect of MCS at the team level, and identifying that managerial coaching plays a complementary role, supporting the interactive use of MCS in promoting reflection within a team.

The Role Of Agility In The Relationship Between Use Of Management Control Systems And Organizational Performance: Evidence From Korea And Japan

This study investigates the role of agility in the relationship between use of management control systems (MCS) and organizational performance by proffering the association of agility, use of MCS, and organizational performance. Using survey data collected from 185 large Korean and Japanese manufacturing companies, we analyze proposing relationships with partial least squares (PLS) structural equation approach. The result shows that diagnostic use of MCS shows no significant relationship with agility, while interactive use of MCS is positively associated with agility. Agility positively affects organizational performance, which implies that characteristics of agility are necessary to overwhelm rivals under rapidly changing environment. This study is one of the first studies that empirically examine the role of agility as an organizational capability in the relationship between MCS and organizational performance with data collected from two different countries.

The Use of Management Control Systems and Operations Management Techniques

It is well known that both management control systems (MCSs) and operations management (OM) are related to firm performance; however, an integrated study that involves MCS and OM within the context of firm performance is still lacking. This research aimed to examine the relationships among the use of MCSs and OM techniques and firm performance in the Brazilian auto parts industry. Simons’ levers of control framework was used to characterise the uses of MCSs, and OM techniques, such as total quality management (TQM) and continuous improvement programmes, were adopted. The results obtained through the structural equation modelling indicated that the diagnostic use of MCSs is positively associated with the goals of cost reduction. In addition, the interactive use of MCSs is positively associated with the objectives of introducing new products, which is consistent with previous research. Additionally, OM techniques are positively related to cost reduction but have no direct relationship with the introduction of new products.

An exploratory study of the reciprocal relationship between interactive use of management control systems and perception of negative external crisis effects

The use of management control systems (MCS) is shaped by perceptions of the environment. Next to this traditional view, some studies suggest that MCS use simultaneously shapes environmental perceptions. In other words, there is a reciprocal relationship between MCS use and environmental perceptions. We investigate this relationship in the 2008–2010 economic crisis. This study examines whether the perception of negative external crisis effects affects the interactive use of MCS on the organizational level. It also explores whether an interactive use of MCS during an economic crisis influences the perception of negative external crisis effects. The direction of causality is difficult to assess from cross-sectional data. Thus, we apply a cross-lagged panel design using data from two (time-lagged) surveys. The results show that perception of negative external crisis effects leads to more interactive use of MCS. Moreover, our findings support a positive effect of the interactive use of MCS on senior managers’ perception of negative external crisis effects. Furthermore, we provide practitioner statements that illustrate the interactive use of MCS in times of economic crisis.

Management Control Systems and Organizational Learning in Innovative Firms: Shaping Innovation Benefits

In contemporary management research academics have recurrently analyzed the innovation process from an Organizational Learning (OL) approach. Several empirical studies also suggest a close relationship between the interactive use of Management Control Systems (MCS) and OL. The incremental contribution of this article lies in adopting the OL perspective to examine how interactive use of MCS can shape two recognized innovation benefits: generation of new innovations and impact on organizational performance. An important result of our empirical study is that interactive use plays a dual role. On the one hand some features of this use promote the explorative OL generated during the innovation process that enhances the development of new innovations. On the other hand, different features of the interactive use of MCS promote explorative OL that enhances the effect of existing product innovations on organizational performance. Hence, formalised control tools play a significant role in the production, distribution and memory of the knowledge intrinsic to the OL process.

Interactive and diagnostic uses of management control systems in IS projects: Antecedents and their impact on performance

We attempted to determine how formal management control systems (MCS) are used by project managers in IS development (ISD) contexts. This involved investigating the antecedents of two types of project MCS use (interactive and diagnostic), and their direct and moderated impact on project performance. PLS analysis of data collected in a survey of 93 projects indicated that project managers’ level of discretion positively affected their level of interactive use of project MCS but did not influence their diagnostic use. Our findings also showed that interactive use of MCS enhanced performance when task uncertainty (task novelty and complexity) of an ISD was high, but worsened it when task uncertainty was low. Finally, diagnostic use of MCS apparently increased project performance when an ISD task uncertainty was low, but did not reduce it when task uncertainty was high. Overall, these results were stable across different size projects.

El efecto mediador y moderador de la internacionalización en la relación entre los sistemas de control de gestión y el compromiso con la innovación

The accounting literature reveals contradictory results when the effect that the different uses of management control systems (MCS) have on innovation has been evaluated. Following the theoretical framework established by Simons (1995), this paper test the direct, mediating, and moderating influences that internationalization has on the relationship between an interactive use of MCS and businesses’ commitment to innovation. Taking a sample of 231 organizations in the Spanish food sector, the results obtained reveal no direct relationship between using the set of MCS tools interactively and commitment to innovation. Similarly, no mediating relationship between MCS use and internationalization is found. In addition, results indicate an absence of moderating effects when the MCS are used interactively between internationalization and commitment to innovation.

Radicalness of Product Innovations and Performance in International Markets: Roles of the Interactive Use of Management Control Systems

Previous literature presents diverse results regarding the role played by Management Control Systems (MCS) in successful product innovation settings. This divergence can be explained by the fact that previous research concentrated mainly on the level of product innovation as measured by the number of products launched to the market, ignoring the potential influence of MCS on the degree of radicalness of product innovation (RPI). The aim of this paper is to provide a better understanding of the potential roles of MCS in innovation settings by exploring how the interactive use of MCS influences successful RPI in terms of organizational performance. Using data collected from 231 Spanish organizations, the results from a Partial Least Squares analysis support the following: First, interactive use has a positive direct effect on RPI, i.e, it acts as an enabler of radicalness. Second, the interactive use of MCS moderates the relationship between RPI and organizational performance. Understanding how MCS shape and manage innovation activities that involve different levels of certainty, risk, routines and complexity offers a complementary and more precise perspective of the roles of control within innovative firms.

The moderating role of the interactive use of Management Control Systems (MCS) on the relation between knowledge management types and marketing project performance

This study integrates the contingency concept to inspect the moderate effects of the interactive use of management control system (MCS) on the relation between knowledge management (KM) types and marketing project performance. One hundred and eighty five companies in Taiwan were surveyed for the analysis data with the respondent of marketing project managers. The empirical results showed that: (1) Based on the internal and external knowledge, this study derived four types of KM (knowledge creator, knowledge introducer, knowledge integrator, and non-KM); (2) When the marketing project department dedicated more on the interactive use of financial MCS or multiple dimensions MCS, the three types of KM mechanism (knowledge creator, knowledge introducer, and knowledge integrator) would have a positive effect on marketing project performance; (3) When the marketing project department emphasized on the interactive use of interpersonal MCS, the KM application of knowledge integrator would have a positive effect on marketing project performance. Key words: Management control system (MCS), the interactive use of MCS, Knowledge management (KM), marketing project performance.

The effects of the interactive use of management control systems on product innovation

Simons' `levers of control' framework indicates that an interactive use of management control systems (MCS) contributes to fostering successful product innovation. However, his work is ambiguous in not specifying whether the relationship between interactive controls and innovation is a mediating or a moderating relationship. This paper examines the relationships among variables embedded in Simons' framework of levers of control, explicitly distinguishing the different types of effects involved and testing their significance. The results of the survey-based research do not support the postulate that an interactive use of MCS favours innovation. They suggest this may be the case only in low-innovating firms, while the effect is in the opposite direction in high-innovating firms. No evidence is found either in favour of an indirect effect of the interactive use of MCS on performance acting through innovation. In contrast, the proposition that the impact of innovation on performance is moderated by the style of use of MCS is supported, with results indicating that the explanatory power of a model that regresses performance on innovation is significantly enhanced by the inclusion of this moderating effect.