An Exploratory Study of the Reciprocal Relationship between Interactive Use of Management Control Systems and Perception of Negative External Crisis Effects

Abstract

The use of management control systems (MCS) is shaped by perceptions of the environment. Next to this traditional view, some studies suggest that MCS use simultaneously shapes environmental perceptions. In other words, there is a reciprocal relationship between MCS use and environmental perceptions. We investigate this relationship in the 2008-2010 economic crisis. This study examines whether the perception of negative external crisis effects affects the interactive use of MCS on the organizational level. It also explores whether an interactive use of MCS during an economic crisis influences the perception of negative external crisis effects. The direction of causality is difficult to assess from cross-sectional data. Thus, we apply a cross-lagged panel design using data from two (time-lagged) surveys. The results show that perception of negative external crisis effects leads to more interactive use of MCS. Moreover, our findings support a positive effect of the interactive use of MCS on senior managers’ perception of negative external crisis effects. Furthermore, we provide practitioner statements that illustrate the interactive use of MCS in times of economic crisis.

Keywords: economic crisis, interactive use of management control systems, cross-lagged effect model

JEL Classification: M4