Role of Management Control Systems in Organizational Transformation
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The aim of the study is to examine what is the role of management control systems (MCSs) in organizational transformation. Traditionally, MCSs are seen to have an important role in strategy implementation and primarily reflect the outcome of the organizational strategy. Even though prior research has increasingly started to acknowledge the dynamic two-way relationship between MCSs and strategy, limited empirical insights exists on how MCSs and particularly different control mechanisms are used and adapted in practice during large-scale transformation- and strategic renewal process. Therefore, this study focuses especially on the relationship between MCSs, different levers of control and strategy process.
The literature review focuses on management control systems in organizational transformation context and further combines MCS and strategy relationship literature. As a result, theoretical framework illustrates the role of MCSs within strategy process that comprises strategic initiative, strategy formulation, strategy implementation and finally, strategic learning and outcomes. Primary data for empirical part was collected through semi-structured interviews in a multinational listed company that has recently undergone a major strategic renewal and organizational transformation. The analysis follows thematic abductive approach as it is theoretically informed by the Simons Levers of Control framework but applies also a data structure inspired by the Gioia method.
The findings show that MCSs are used as a traditional tool to implement strategy defined at top-management level, but at the same time it has an interactive and iterative role that sup-ports making strategic adjustments and learning during transformation. Furthermore, the findings demonstrate heavy focus on organizational design that determines responsibilities, decision rights and information flows, and confirms that the interaction between MCSs and structure is an important driver of strategic change. Aligning with prior literature, the study shows heavy emphasis on diagnostic and interactive control systems, however without belief systems and new organizational culture, the transformation would not have been successful. The findings also highlight the practical complexity of MCS adaptation as it requires extensive changes to master data, reporting processes and systems integration.
This study extends prior literature on the relationship between MCSs and strategy and pro-vides empirical insights into the evolving role of MCSs in strategic change and organizational transformation context. It also offers practical implications for managers on the role of MCSs in supporting successful strategic renewal and how MCSs are adapted and reconfigured during the transformation.