The Management Control Systems of Growth Stage Firms and Their Impacts on the firms’ Dynamic Capabilities and Performance, According to Life-Cycle Stages
Posted: 8 Mar 2018
Date Written: March 2, 2018
Abstract
Our questions are: [1] Do small and medium-size manufacturing enterprises adopt their management control systems (less-bureaucratic versus more-bureaucratic MCS) according to their life cycle stages (growth and maturity stages)? [2] Does the less-bureaucratic MCS in growth-stage firms favorably impact their organizational dynamic capabilities (market orientation, entrepreneurship, innovativeness, and absorptive capability) and their performances? The primary sources of data are the questionnaire responses from TMTs of 192 KOSDAQ–listed manufacturers and their financial disclosures. Our findings are: [1] KOSDAQ–listed firms on growth-stage utilize less-bureaucratic MCS, while those on maturity-stage more-bureaucratic MCS. We support Auzair & Langfield-Smith(2005) study of Australian service firms.
[2] The MCS of those firms on growth-stage exercises significantly positive impact on dynamic capabilities except entrepreneurship. In turn, all dynamic capabilities of theirs, except potential absorptive capability, impact their financial and non-financial performances positively. The MCS of growth stage firms impacts their performance indirectly. We support Henri (2006b) and Widener (2007) study of North-American large firms.
Keywords: MCS, Corporate life-cycle, Dynamic capabilities, Performances
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