Management Control Systems and Innovation: a levers of control analysis in an innovative company

Abstract

Purpose Building on the growing body of research that has addressed management control systems and innovation, the purpose of this study is to assess the extent and nature of the use of controls in an innovative setting and how they work together unveiling the relationships and tensions amongst the Simons’ levers. Design/methodology/approach This study resorts to an in-depth and single case study in a company that has both a strong orientation to innovation and stable control practices in place. Evidence was collected from 32 interviews, visits to the company and internal documentation. Findings At the case company, it was possible to find the presence of controls according to all the levers of control. Likewise, joint effects of controls used according to interactive and beliefs approaches and diagnostic and boundary controls showed a consistent reinforcement that push the organization in a single direction. Signs of some countervailing reinforcement between these pairs were also detected, creating tensions. This in general shows that innovation can be weighed against the necessity of goal achievement taking place within fields in which the company can exploit the effort developed. Originality/value This study documents the collective use of controls in a context in which innovation is needed and how the combination of the levers of control with their inner workings and tensions allow the company to have a corporate environment of innovation that is friendly.

Management control systems and the strategic management of innovation

“…We contribute to the literature by examining the relationship between MCS and the operational activities during the strategic change process in an innovation [3] setting. We know that many MCS are commonly used in innovation settings to accomplish organizational goals (Akroyd and Maguire, 2011; Akroyd et al , 2016; Barros and Ferreira, 2019, 2021; Davila, 2000; Feeney and Pierce, 2018; Frare et al , 2021; Henri and Wouters, 2020; Müller-Stewens et al , 2020; Pan Fagerlin and Lövstål, 2020). The management accounting literature has also shown that MCS can facilitate the implementation of strategy (Kober et al , 2007; Otley, 2016), which are necessary to support changes to innovation activities (Bisbe and Malagueño, 2009).…”

How managerial capabilities of cognitive and behavioural complexity enable dynamic tension between management controls

“…managers must perform “purposeful interventions” to create dynamic tension. However, some companies struggle to do this (Barros and Ferreira, 2022; Bedford, 2015; Curtis and Sweeney, 2017). While we know that managers are central to this task, the extant research provides little insight into why some managers successfully create dynamic tension (Biswas and Akroyd, 2022; Lövstål and Jontoft, 2017; van der Kolk et al , 2020).…”

“…However, diagnostic controls are a management-by-exception mode of control, where the managers focus on deviations from established goals and standards and only occasionally intervene when exceptions arise that need to be addressed (Bisbe et al, 2007;Simons, 1995). However, some managers fail to engage in this balancing act (Barros and Ferreira, 2022;van der Kolk et al, 2020). Behavioural complexity is a core element of a manager's ability to support the organisation in various ways depending on the task.…”

“…However, some organisations fail to apply MCs in this manner. Instead, they design mutually reinforcing MCs that create a biased organisational focus, which can crowd out specific organisational aspirations (Barros and Ferreira, 2022; Bedford, 2015; Henri, 2006). Ultimately, managers are the ones that design and implement MCs (Bertz and Quinn, 2022; Biswas et al , 2023; Biswas and Akroyd, 2022).…”

The relationship between management control systems and innovativeness in start-ups: evidence for product, business model, and ambidextrous innovation

“…Innovation can be considered the raison d’être of start-ups, and a growing body of research has shown that management control systems (MCSs) can foster innovation (Akroyd and Maguire, 2011; Barros and Ferreira, 2021; Henri and Wouters, 2020; Lill et al , 2021) and contribute to the success of start-ups (Davila et al , 2010; Gomez-Conde et al , 2021). However, the existing MCS literature has largely neglected the multifaceted nature of innovation.…”