Impacts of Interactive and Diagnostic Control System Use on the Innovation Process

Abstract

This research explores the innovation process in organizations based on the Management Control System (MCS). We examined the link between the diagnostic and interactive uses of management control systems and their association with the intensity of the innovation process. Motivations for the research are: (a) enhance the potentiality of the model by including variables that are external to the organization, and (b) offer an empirical emergent country perspective on innovation. The study is quantitative and the data were collected by means of a survey questionnaire involving a sample of 121 Brazilian companies. The analysis was supported by structural equation modeling. The contributions are: (a) enhancement of the model by including the influences exerted by external stimuli on the intensity of innovation, (b) confirmation of the utility of the model in an emergent country, and (c) despite the controversial literature, highlighting the importance of the interactive use of the Management Control Systems process, by offering an empirical perspective on innovation control. A positive implication of the findings relates to the use of a broader and not exclusively internal model to increase its potentiality, reflecting the organizational reality by including the dynamism of external stimuli and the innovation control perspective.

Relação Entre Ambidestralidade E Sistemas De Controles Gerenciais Em Ongs Brasileiras

“…Desta forma, para se tornar tangível um Sistema de Controle Gerencial faz-se uso de modelos que possam ser utilizados para descrever uma estrutura (Flamholtz, 1996). Pesquisas recentes (Bedford, 2015;Bedford, Malmi, & Sandelin, 2016;Frezatti, Bido, Cruz & Machado 2017) abordam diversos modelos, pois os Sistemas de Controles Gerenciais não são plenamente apropriados para todas as empresas e o mesmo modelo não deve ser aplicado a todas as empresas e em todos os cenários (Merchant & Van der Stede, 2007;Otley, 1980). Os modelos abordados de maneira significativa pela literatura, relacionando o Sistema de Controle Gerencial e inovação, são os modelos de Simons (1995) e de Malmi e Brown (2008).…”

Mediating effect of strategy on competitive pressure, stakeholder pressure and strategic performance management (SPM): evidence from HEIs in Indonesia

“…The existence of a sound strategy is crucial in a good governance process. Good governance and strategy require a solid management control system for both diagnostic and interactive uses (Arjali es and Mundy, 2013;Frezatti et al, 2017). One of the crucial elements of management control is SPM, which is the focus of this study.…”

Levers of control, complementariness, tensions and budget use: a case study

“…There is a stream of LOC framework inspired survey studies premised upon the relationship between interactive and diagnostic use, their link to performance, etc. [Henri (2006), Widener (2007), Sheehan (2006), Rezania et al (2016), Naro andTravaillé (2011), Su et al (2017), Arachchilage et al (2013), Frezatti et al (2017), Naranjo-Gil (2016, Makoto and Matsuo (2017), Kruis et al (2016), Bedford (2015), Ali Abadi et al (2016), Hofmann et al (2012]. However, such studies do not provide an in-depth understanding of the use of these twin levers in a particular organisational context.…”

“…Besides, the role of the BSC as a tool of interactive and diagnostic control in the design and the use phase has also been subjected to enquiry by Naro and Travaillé (2011). Adding to this has been the association between interactive and diagnostic approaches in organisational life cycle stages in Australian manufacturing organisations (Su et al, 2017) as well as the link between these two uses of MCS and innovation processes in Brazilian organisations (Frezatti et al, 2017). Furthermore, how different LOC complement each other in crafting realised strategies in Spanish hospitals (Naranjo-Gil, 2016), as well as the moderating effects created by diagnostic use and interactive use on strategy-performance (Arachchilage et al, 2013) have captured research interest.…”

“…Ever since its introduction in 1995, Simons' LOC framework has received significant attention from researchers. While there is a considerable body of literature premised on various facets of LOC, it has also been used as a theoretical frame of reference in the arena of management accounting research [Widener (2007), Henri (2006), Tuomela (2005), Widener (2007), Henri (2006), Baird et al (2019), Hoque and Chia (2012), Sheehan (2006), Rezania et al (2016), Naro and Travaillé (2011), Kruis et al (2016), Frezatti et al (2017), Su et al (2017), Makoto and Matsuo (2017)]. In spite of the extensive focus on Simons' framework and the four levers in isolation, studies founded upon the interrelationships, complementariness and tensions in the simultaneous use of diagnostic and interactive levers, although important, have been rather limited [see the review paper by Martyn et al (2016)].…”