The Impact of Strategy on the Control 'Package': Complementarity Versus Substitution of Budgets and Hybrid Measurement Systems
19 Pages Posted: 15 Jan 2011
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The Impact of Strategy on the Control 'Package': Complementarity Versus Substitution of Budgets and Hybrid Measurement Systems
Date Written: January 14, 2011
Abstract
This paper examines the impact of strategy on the control “package,” which in our study, comprises the budgeting system and the hybrid measurement system (HMS). Using a structural equation model, we show that budgeting systems and HMS do not substitute for each other, but rather complement each other. We then demonstrate that company strategy determines the design of the budgets/HMS’ package. Our paper contributes some of the first empirical results about how strategy influences the management control package.
Keywords: Budgets, Non-Financial Measurement Systems, Management Control Systems, Contingency Theory, Strategy
JEL Classification: M40
Suggested Citation: Suggested Citation