Materializing Innovation Capability: A Management Control Perspective
Posted: 16 Aug 2016 Last revised: 20 Feb 2018
Date Written: February 6, 2018
Recent research in strategic management claims that firms need appropriate structures for capabilities to materialize into performance. Following this argument, we posit that the design of management control systems influences a firm’s ability to exploit innovation capability and translate it into innovation performance. While we argue for value communication and employee selection as suitable control practices in this context, we expect performance monitoring and behavior monitoring to obstruct the materialization of innovation capability in organizations. Moreover, we elucidate the role of perceived environmental uncertainty as a relevant contextual factor that influences the costs and benefits of management control practices and the extent to which they can support or hinder the innovation process. We empirically test our hypotheses by combining survey data with patent information of the firms in our sample. In sum, our study contributes to the innovation literature within and beyond the field of accounting by highlighting the crucial role of management control in translating a firm’s innovation capability into actual innovation performance.
Keywords: innovation capability, value communication, employee selection, performance monitoring, behavior monitoring, innovation performance, resource based view
JEL Classification: M41
Suggested Citation: Suggested Citation