Authors: Nirosha Dilhani, Kapu Arachchilage, Malcolm Smith
Page: 9
In recent years there has been an increased interest in examining the relationships among management control systems (MCS), business strategy and organizational performance. In this study, the moderating effects created by two uses of MCS (diagnostic use and interactive use as per Simon’s ‘levers of control’ framework) on strategy-performance relationship are examined.
The results of the survey-based research support the postulate that these two uses moderate the relationship between business strategy and performance. However, it is found that the moderating effect created by the diagnostic use of MCS is more significant when the cost leadership strategy is used for performance.
No evidence is found in favor of Porter’s proposition on mutual exclusiveness of business strategies for better performance. Consequently, the results of this study have important implications for both management practice and the academic literature.
