Management Control in UK Innovation Companies

Luther, Robert; Haustein, Ellen; Webber, Gail

Abstract

The management control systems (MCS) of innovative companies is a topic of ongoing relevance, as MCS are expected to encompass a broader set of instruments in innovative settings (Davila 2000). This study builds on Merchant and Van der Stede’s (2012) framework to investigate the extent of use of MCS in innovative companies. The study investigates direct forms of control, namely Results and Action Control, and indirect forms: Personnel and Cultural Control. The theoretical framework builds upon existing management control theory literature, mostly focused on R&D, product development and innovation settings, extended by field observations. Nine variables are identified as potentially influential factors for the use of MCS in innovation companies. We investigate the extent to which these innovation companies’ characteristics influence the intensity of use of the four MCS categories and their impact on company success. In addition we report the relationships between the company characteristics and 22 individual control instruments.
Data from 78 UK based innovation companies were collected by online and postal surveys. We present detailed descriptive statistics on the usage of individual controls and their perceived contribution to innovation performance. The report concludes, inter alia, that individual Personnel and Cultural Controls are particularly effective in these companies. Action Controls, presumably constraining employee behaviour, are only of general importance for companies with a cost leadership strategy; the use of Action Controls, as currently practised, has a negative effect on overall company success. Results Controls are intensively used in innovation companies and their overall impact on company performance seems to be positive, but some individual instruments are less effective in terms of their contribution to innovation performance.

Citation

Luther, R., Haustein, E., & Webber, G. (2018). Management Control in UK Innovation Companies. CIMA

• Book Type: Authored Book
• Publication Date: Jan 1, 2018
• Peer Reviewed: Peer Reviewed
• Volume: 14
• Series Title: CIMA Research Executive Summary
• Series Number: 3
• ISBN: 9781859718667
• Publisher URL: http://www.cimaglobal.com