Management Control Systems and Strategy: What’s Been Happening?

The point of departure of this paper is the agenda for further research advanced by Langfield-Smith (1997) in her critique of studies investigating the relationship between management control systems (MCS) and strategy. In considering the ways in which subsequent MCS-strategy research has advanced our knowledge according to Langfield-Smith’s initial observations, the present paper proposes a revised agenda for continuing research in this area. It is contended that current knowledge of the relationship between MCS and strategy can be encapsulated within three independent but mutually related propositions. First, the extent of influence that MCS have on both strategy formulation and strategy implementation varies depending on the way in which MCS are designed as well as the way in which MCS are used; second, the design of MCS is dependent upon the particular strategic orientation adopted by the organisation; and third, there is a match between particular strategic orientations and particular MCS designs which enhances performance. In order to extend our understanding as distinct from our knowledge of this complex relationship beyond these propositions, it is suggested that avenues for further research include; developing explanatory frameworks which incorporate alternate strategic typologies previously used; adopting a broader approach that has previously been proposed in operationalising the key constructs of MCS and strategy, examining MCS-strategy relationships using non-linear and non-recursive models, adopting a longitudinal approach to studying the interaction of MCS and strategy, so as to evaluate the implications of appreciable changes in both strategy or the use or design of MCS over time, and explicitly exploring the interface and inter-relationship between the content and process of strategy, and the design and use of MCS.