How Control Fosters Learning

Table of Contents

1 Introduction

2 Literature review

2.1 An introduction to the theory of management control systems

2.1.1 Definitions of management control

2.1.2 Classifications of management control systems

2.1.3 MCS as a package

2.1.4 Contextual variables influencing MCS

2.1.5 MCS and learning

2.2 An introduction to the resource-based view theory

2.2.1 Background

2.2.2 Definition of key terms

2.2.3 Strategic recourses as source of competitive advantage

2.2.4 From competitive advantage to superior performance

2.2.5 Limitations of the traditional RBV

2.3 An introduction to the dynamic capability theory

2.3.1 Background

2.3.2 What are dynamic capabilities?

2.3.3 The development of dynamic capabilities

2.3.4 The dynamic capability theory as extension of the traditional RBV

2.3.5 Limitations of the dynamic capability theory

2.4 Management control systems and firm capabilities – State-of-the-art

2.4.1 MCS as valuable, rare, inimitable and non-substitutable resources

2.4.2 MCS and strategic resources as related variables

2.4.3 MCS as antecedents of dynamic capabilities

3 Theory development and hypotheses

3.1 Definition of key variables

3.1.1 Operationalizing MCS

3.1.2 Operationalizing dynamic capabilities

3.1.3 Operationalizing performance

3.2 The association between certain types of MCS and certain dynamic capabilities

3.2.1 Management control systems and the development of dynamic capabilities

3.2.2 The association between results controls and market-oriented capabilities

3.2.3 The association between cultural controls and innovation capabilities

3.2.4 The association between action controls and DC

3.3 The association between packages of MCS and certain dynamic capabilities

3.4 The concept of fit in contingency research

3.5 Gaining sustained competitive advantage through matching dynamic capabilities and MCS

3.6 Empirical design overview

4 Data set and measures

4.1 Overview of the manufacturing industry

4.2 Sample

4.3 Variables

4.4 Cronbach alpha and factor analysis

4.5 Avoidance of bias

4.6 Descriptive statistics

4.7 Correlation matrix

5 Hypotheses 1-3: Analyzing the association between certain types of MCS and certain DC

5.1 An introduction to regression analysis

5.2 Method

5.3 Results

6 Hypothesis 4: Analyzing the association between packages of MCS and certain DC

6.1 Step 1: Deriving MCS clusters

6.1.1 An introduction to cluster analysis

6.1.2 Method

6.1.3 Results

6.2 Step 2: Comparing the DC of the two clusters

6.2.1 An introduction to ANOVA/MANOVA

6.2.2 Method

6.2.3 Results

7 Hypothesis 5: Comparing the performance of firms with matching / non-matching MCS and DC

7.1 Step 1: Deriving actual DC clusters

7.1.1 Method

7.1.2 Results

7.2 Step 2: Deriving predicted DC clusters

7.2.1 An introduction to logistic regression analysis

7.2.2 Method

7.2.3 Results

7.3 Step 3: Building two groups of firms: firms with matching/non-matching MCS and DC

7.3.1 Method

7.3.2 Results

8 Summary of findings

9 Discussion

10 Conclusion and implications for future research

11 References

Objectives and Topics

The primary objective of this dissertation is to examine the interrelationship between management control systems (MCS) and firm capabilities. It explores how specific configurations of control mechanisms can foster organizational learning and knowledge management processes, thereby supporting the development of dynamic capabilities. The research aims to demonstrate that a strategic match between MCS and dynamic capabilities contributes to sustained competitive advantage and superior firm performance.

• Theoretical integration of management control systems, resource-based view, and dynamic capability theory.
• Identification of management control systems as antecedents to organizational learning and dynamic capabilities.
• Empirical analysis of the association between specific MCS configurations (results, cultural, and action controls) and market-related as well as innovation capabilities.
• Investigation of the contingency fit between MCS and dynamic capabilities in relation to firm performance.

Excerpt from the Book

Chapter Summaries

1 Introduction: Provides an overview of the research background, the motivation for investigating the relationship between management control systems and dynamic capabilities, and outlines the structure of the dissertation.

2 Literature review: Presents a comprehensive review of existing theories on management control systems, the resource-based view, and the dynamic capability theory, setting the stage for the research hypotheses.

3 Theory development and hypotheses: Develops the core arguments and theoretical framework by linking specific management control systems to dynamic capabilities and formulating hypotheses regarding their interrelationship and impact on firm performance.

4 Data set and measures: Describes the empirical research design, the selection of the manufacturing industry sample, the survey methodology, and the operationalization of variables and constructs used in the study.

5 Hypotheses 1-3: Analyzing the association between certain types of MCS and certain DC: Details the empirical testing of the relationship between specific MCS configurations and market-related as well as innovation capabilities using regression analysis.

6 Hypothesis 4: Analyzing the association between packages of MCS and certain DC: Explores the grouping of management control systems into clusters and examines how these distinct MCS packages differ in their association with dynamic capabilities.

7 Hypothesis 5: Comparing the performance of firms with matching / non-matching MCS and DC: Investigates whether firms with a consistent alignment between their management control systems and dynamic capabilities achieve superior performance compared to non-matching firms.

8 Summary of findings: Synthesizes the empirical results obtained across the study and provides a discussion on the support for the formulated hypotheses.

9 Discussion: Evaluates the theoretical and practical implications of the findings, positioning the research within the context of current academic literature and offering management insights.

10 Conclusion and implications for future research: Concludes the dissertation by summarizing the core findings, acknowledging study limitations, and proposing directions for future empirical and theoretical research.

11 References: Contains the full bibliography of academic literature and sources cited throughout the dissertation.

Keywords

Management control systems, MCS, Dynamic capabilities, DC, Resource-based view, RBV, Organizational learning, Competitive advantage, Strategic capabilities, Market orientation, Innovation capabilities, Contingency theory, Strategic management, Firm performance, Manufacturing industry

Frequently Asked Questions

What is the core focus of this dissertation?

The research focuses on the interrelationship between management control systems (MCS) and the dynamic capabilities of firms. It examines how specific control systems influence the development of strategic capabilities to gain a competitive advantage in changing environments.

What are the central thematic fields?

The core themes include management control theory (specifically results, cultural, and action controls), the resource-based view (RBV), the dynamic capability theory (DC), organizational learning, and strategic fit.

What is the primary research question?

The study investigates how certain configurations of management control systems foster organizational learning and whether matching combinations of MCS and dynamic capabilities lead to superior firm performance.

Which scientific methods were applied?

The research uses a multi-method empirical approach, including descriptive statistics, correlation analysis, multiple regression analysis, cluster analysis, ANOVA/MANOVA, and logistic regression to test the hypotheses.

What does the main body address?

The main body systematically explores the theoretical foundations, develops hypotheses linking MCS to specific dynamic capabilities (market-oriented and innovation capabilities), and conducts an extensive empirical investigation using survey data from 238 medium-sized manufacturing firms.

Which keywords characterize this work?

Key terms include management control systems, dynamic capabilities, resource-based view, organizational learning, competitive advantage, and contingency theory.

Does the study distinguish between different types of innovation capabilities?

Yes, the research differentiates between radical innovation capability and incremental innovation capability when analyzing the impact of cultural controls on organizational development.

How does the dissertation contribute to the "MCS as a package" literature?

It addresses the research gap regarding how different types of control systems interact with one another. It empirically demonstrates that results controls and cultural controls function as complements, whereas action controls may act as substitutes.