Does business strategy and management control system fit determine performance?
Year of publication
2023
Authors
Jukka, Tapio
Abstract
Purpose This study examines the relationship between business strategy, management control system (MCS) type and performance. Does the alignment of organisation business strategy and MCS fresult in better performance? Design/methodology/approach This study draws on the business strategy and MCS type literature to identify business strategies and MCS types. A scoring method was used to identify business strategy types and cluster analysis to identify MCS types from a sample of 80 firms and 621 firm-years of data. Analysis of variance was used analyse the differences. Findings Four types of MCS were identified and were labelled clan, adhocracy, market and hierarchy. The sample was split into defender, analyser, prospector and reactor strategies. The results showed defender strategies performed better with hierarchy or market type MCSs while prospector strategies performed better with clan or adhocracy MCS types. Analysers performed acceptably with all MCS types. Practical implications The results of this study suggest that organisations should align their business strategy with a certain MCS type to achieve good performance. Also, alignment of top management and business strategy is supported as the top management properties differ between the MCS types. Originality/value This research contributes to the management control and strategy literature by demonstrating how the alignment between organisation business strategy and organisation-level MCS type determines organisational performance. The results suggest that differing business strategies yield better performance when aligned with the appropriate management controls represented by an MCS type.
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Publication type
Publication format
Article
Parent publication type
Journal
Article type
Original article
Audience
ScientificPeer-reviewed
Peer-ReviewedMINEDU's publication type classification code
A1 Journal article (refereed), original researchPublication channel information
Publisher
Volume
72
Issue
3
Pages
659-678
ISSN
Publication forum
Publication forum level
1
Open access
Open access in the publisher’s service
Yes
Open access of publication channel
Partially open publication channel
Self-archived
Yes
Other information
Fields of science
Business and management
Keywords
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Publication country
United Kingdom
Internationality of the publisher
International
Language
English
International co-publication
No
Co-publication with a company
No
DOI
10.1108/ijppm-11-2020-0584
The publication is included in the Ministry of Education and Culture’s Publication data collection
Yes