Management control systems, Innovation and Institutional Logics: Insights from an innovative company
BRU Research Seminar Series
Prior research on the role of management control systems (MCS) in innovation has asserted the importance of these systems to initiate and motivate the innovation effort. However, how and why MCS are able to exert such an influence remains broadly unanswered. To provide a new viewpoint on this matter, this study introduces into the equation the institutional logics perspective of institutional theory to provide a stronger theoretical background and enlightenment of the power of MCS over actors’ actions. More specifically, this study resorts to the thinking and understanding of the dichotomy of action/structure and the microfoundations of institutional logics. Furthermore, to obtain a holistic picture that is rich in understanding, an exploratory case study was conducted on Alpha, an innovative branch of a large Portuguese industrial group. The results were supported by 32 interviews, direct observations and an internal documentation of the company. The case of Alpha shows that MCS, being a structural mechanism embedded in the innovation logic of the company, promotes more innovative behaviour of actors though an orienting effect associated with institutions and consistent with recent theorization in the institutional logics literature. In fact, the characteristics, routines and procedures of Alpha’s MCS are able to influence internal actors’ behaviours. MCS, through patterns of communication, guidance and focus, end up shaping individuals’ cognition, sensemaking and decision-making around innovation. This way, individuals become more oriented towards engaging in proactive behaviours and activities perceived as necessary to guarantee a continuous flow of innovation.