Introducing the First Management Control Systems: Evidence from the Retail Sector

49 Pages Posted: 30 Aug 2006 Last revised: 24 Nov 2009

See all articles by Tatiana Sandino

Tatiana Sandino

Harvard Business School - Accounting and Control


Focusing on a sample of US retailers, I study the management control systems (MCS) that firms introduce when they first invest in controls, and identify four categories of initial MCS, which are defined in terms of the purposes these MCS fulfill. The first category, Basic MCS, is adopted to collect information for planning, setting standards, and establishing the basic operations of the firm. The other three categories are contingent on more specific purposes: Cost MCS focus on enhancing operating efficiencies and minimizing costs; Revenue MCS are introduced to foster growth and be responsive to customers; and Risk MCS focus on reducing risks and protecting asset integrity. I hypothesize and find that the choice among these categories reflects the firms' strategy, and that firms that choose initial MCS better suited to their strategy perform better than others.

Keywords: management control systems, corporate strategy, entrepreneurial organizations, firm growth

JEL Classification: D92, L21, M13, M41, M46

Suggested Citation

Sandino, Tatiana, Introducing the First Management Control Systems: Evidence from the Retail Sector. Accounting Review, January 2007. Available at SSRN:

Tatiana Sandino (Contact Author)

Harvard Business School - Accounting and Control ( email )

367 Morgan Hall
Soldiers Field
Boston, MA 02163
United States
617-495-0625 (Phone)

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