Management control system, organizational learning, and firm’s performance: An empirical study from developing economy

Abstract

Even though it is widely accepted that effective design of management control system (MCS) has the ability to stimulate organizational learning, which ultimately will enhance the organizational performance, empirical research analysis on such relationship in the context of the developing economy, in comparison to the existing literature of the developed economy, is still scarce. In particular, the influence of each of levers of control (LOC) components (belief, boundary, diagnostic, and interactive control) on the organizational learning still lacking with conflicting results. Based on a survey of 129 top managers of the Palestinian listed firms, we examine how different MCS have different influence on organizational learning and how organizational learning ultimately influences the organizational performance. The evidence suggests that neither beliefs system, nor the boundary system facilitates learning. In addition, an interactive control system also has no significant influence on organizational learning, which unlike the case of the developed economy. By contrast, diagnostic control system is the only control system that has significance influence on organizational learning. In addition, the result indicates that organizational learning has a positive influence on firm's performance. This paper contributes to stream of literature from the perspective of the developing economy and provide suggestions for potential directions of future MCS research in the context of the devolving economy.

Mediating effect of innovative culture and organizational learning between leadership styles at third-order and organizational performance in Malaysian SMEs

“…In addition, organizational learning has a significant influence on organizational performance and gives the idea that Malaysian SMEs have a learning culture in the organizations that boost up their performance. The work is similar to the previous work (Nafei, 2015;Shurafa & Mohamed, 2016) that reveals that organization learning plays an important role in enhancing organizational performance. Moreover, leadership styles have a significant and positive influence on innovative culture that tells the story that leader in Malaysian SMEs has an influence in developing an organizational culture in terms of innovativeness.…”

“…Organizational learning is considered a crucial factor within organizations in explaining their performance (Kim, Watkins, & Lu, 2017). Various studies demonstrate that researchers pay much attention on organizational learning in determining their performance (Nafei, 2015;Shurafa & Mohamed, 2016). Organizational culture cannot be ignored in determining organizational performance (Ahmed & Shafiq, 2014;Gochhayat, Giri, & Suar, 2017).…”

The mediating role of organizational capabilities between organizational performance and its determinants

“…In Pakistan, textile industry issues related to strategic management capabilities exists such as the poor planning (Iqbal et al 2010) issues related to operational capability such as poor state of technology and process (Iqbal et al 2010) and issues regarding external stakeholder capabilities exist such as the relationship with suppliers' relationship with customers. Organizational capabilities that have much attention boost up the relationship between organizational resources and organizational performance (Barney, 1991;Obeidat et al 2017;Rehman et al 2018;Shurafa and Mohamed, 2016). Furthermore, the internal strengths of organizations that are organizational capabilities determine how an organization get an advantage over other organizations and the ending result is improved performance (Barney, 1991;Penrose, 1959).…”

Interactive control capability, effective organizational learning and firm perfor-mance: An empirical study of milling and metal industry in Tegal

“…Effective organizational learning is a good way to find out the individual mindset of how to be able to understand and solve problems well. Shurafa and Mohamed (2016) and Tippins and Sohi (2003) reveal that organizational learning is positively related to performance. Simons et al (2000) explained that there are two possible reasons for top managers to use control interactively.…”