Results 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.
Purpose
This study aims to synthesize qualitative research in the accounting and management literature that builds on the concept of enabling formalization. The framework for the meta-synthesis integrates formal management control system (MCS) design applying the package typology and two modes of MCS use, namely, diagnostic and interactive.
Design/methodology/approach
The meta-synthesis is based on 34 case studies gathered by a systematic literature search. Qualitative research mining software (Leximancer) was used to facilitate an initial analysis, upon which an in-depth manual analysis was conducted.
Findings
The findings indicate that the generic features of enabling formalization – specifically, flexibility and repair – help employees better deal with inevitable contingencies in their daily work through continuous self-improvement. In many circumstances, there is a need to change common organizational practices, which sometimes requires realignment to direct employee behavior toward goal congruence. The (temporary) coercion of employees does not seem to cause dysfunctional behavior or resistance as long as the broader MCS package follows the design features of enabling formalization – specifically, transparency. The interactive use of personnel/cultural controls appears to play a crucial role within the whole MCS package in balancing tensions between coercion and enabling formalization.
Originality/value
This study adds to the understanding of formal MCS design characteristics perceived by managers and employees as enabling. Furthermore, it shows how managers of these organizations use formal MCS under enabling formalization.
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