Is the Interactive Use of Management Control Systems Really Driven by Strategic Uncertainties? The Interaction Effect of Organizational Context in a Hospital Setting

57 Pages Posted: 9 Aug 2011 Last revised: 24 Sep 2015

See all articles by Yannick de Harlez

Yannick de Harlez

SKEMA Business School - Lille Campus

Date Written: August 1, 2011

Abstract

When quantitative empirical studies in management accounting test the influence of strategic uncertainties on the use of formal management control systems (MCS), results are often mixed (and sometimes contradictory). To provide a potential explanation for these prior results, this study predicts and finds that the organizational context wherein the firm operates (e.g, change in strategy or, its counterpart, stability in strategy) affects the relationship between strategic uncertainties and the use of formal MCS. Relying on economic and psychology arguments, the top-level managers operating in a context of change in strategy cope with more severe pressures (e.g., increasing managerial time scarcity, cognitive limit to process more information) than top-level managers in a context of stability in strategy. In response to these pressures, the top-level managers limit (or amplify) the extent to which strategic uncertainties have an effect on the use of formal MCS. In addition, this study predicts and finds that the specific context of stability in strategy is a more appropriate organizational context (than the context of change in strategy) to test the relationships between strategic uncertainties and the interactive use of formal MCS. These two findings reveal (and confirm the predictions) that examining the organizational context helps to better understand the link between strategic uncertainty and the use of formal MCS.

Keywords: interactive control systems, strategic uncertainty, stability in strategy, change in strategy

Suggested Citation

de Harlez, Yannick, Is the Interactive Use of Management Control Systems Really Driven by Strategic Uncertainties? The Interaction Effect of Organizational Context in a Hospital Setting (August 1, 2011). AAA 2012 Management Accounting Section (MAS) Meeting Paper, Available at SSRN: https://ssrn.com/abstract=1907113 or http://dx.doi.org/10.2139/ssrn.1907113

Yannick De Harlez (Contact Author)

SKEMA Business School - Lille Campus ( email )

Avenue Willy Brandt, Euralille
Lille, 59777
France

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