Management Control in New Product Development: The Dynamics of Managing Flexibility and Efficiency

Abstract

Several studies in management control have drawn upon the concepts of coercive and enabling forms of bureaucracy (Adler and Borys 1996) to discuss how the features of a control system may affect employees' attitudes toward control. This question is relevant because enabling forms of control allow organizations to better manage tensions between efficiency and flexibility, which is arguably a key issue in many organizations today. Our paper contributes to this stream of research by detailing how enabling control functions in the particular setting of new product development. To this end, we draw upon empirical material collected through an in-depth field study carried out in a manufacturing organization. We use data from interviews, participant observation, and internal documentation in this firm to demonstrate how the combination of different control mechanisms helps the organization balance efficiency and flexibility. In addition, our paper sets out to explore how strategic change can influence the operation of enabling control. Focusing on the introduction of a new product strategy in our case organization, we describe employees' repair efforts in adapting the control system to their own needs. We find that these repair efforts are perceived as not wholly satisfactory, which suggests that, in the case of important strategic changes, repair may require more top-down management intervention.

Terminological distinctions of ‘control’: a review of the implications for management control research in the context of innovation

“…The article by Jørgensen and Messner (2009) is the only empirical study listed in Table 3 which was neither part of the Cat1 nor Cat2 studies.…”

“…They achieve their functionality not before practice, they are enacted and adapted there and undergo at best continuous modification to suit innovat-ing activities-taking into account that a once assumed ideal fit of MCS for a certain task environment at a certain point in time can be prejudicial in the future. Jørgensen and Messner (2009) deliver an example and report from repair efforts (Adler and Borys 1996) of engineers in a company for automated analytical solutions to adjust management control systems to their needs, to understand the origin of production costs, to satisfy top managers' expectations and finally to make a good case for their products. The example illustrates an implication of a 'quasi fit' understanding of MCS: it could fix MCS failures or to intervene if misuse of MCS becomes apparent.…”

Les dispositifs de pilotage de la performance en environnement innovant et incertain : étude comparative de huit startups

“…Certains auteurs estiment que les outils de contrôle de gestion sont peu adaptés aux besoins de ces entreprises (Abernethy et Brownell, 1997 ;Davila, 2000) mais d'autres (ou les mêmes parfois) pensent qu'ils peuvent être d'un apport important (Ditillo, 2004 ;Revellino et Mouritsen, 2009). Quelques synthèses ont été faites pour tenter d'expliquer la diversité des points de vue et l'ambigüité des résultats du terrain (Jorgensen et Messner, 2009 ;Alder et Chen, 2011).…”

PRODUCT LAUNCH PERFORMANCE IN HI-TECH SMEs: NEWNESS TO THE FIRM AND THE ROLE OF MANAGEMENT CONTROLS

“…Formal controls that require decisions relating to product launch activities to be sanctioned from higher levels of management may incur delays and involve an unnecessary bureaucracy that slows down the product launch schedule. However, the hypothesized direct effect of formal control through an improved flow of information may be more relevant when the level of newness is higher: in this case, higher levels of uncertainty require more information exchange (Bisbe and Otley 2004;Jørgensen and Messner 2009;Turner and Makhija 2006). Furthermore, in the case of SMEs formal controls may involve less bureaucratic delays.…”