An empirical analysis of the levers of control framework

The purpose of this paper is to use the levers of control framework to explore the antecedents of control systems – various facets of strategy that drive the use of controls; to explore the relations among control systems; and to explore the costs and beneWts of control systems – costs in terms of consumption of a constrained resource (i.e., management attention) and beneWts (i.e., learning). Using data from a survey of 122 Chief Financial OYcers, this study tests a structural equation model that relates strategic risk and uncertainty to control systems (i.e., beliefs, boundary, diagnostic, and interactive control systems), which in turn are hypothesized to aVect learning and attention, and ultimately Wrm performance. The evidence suggests that there are multiple inter-dependent and complementary relations among the control systems. I Wnd that strategic risk and uncertainty drive both the importance and use of performance measures in diagnostic or interactive roles. Moreover, it appears that in certain strategic conditions information processing needs are such that Wrms use performance measures both interactively and diagnostically. Finally, I conclude that although there is a cost of control, there is a positive eVect on Wrm performance. © 2007 Elsevier Ltd. All rights reserved.