Rethinking enterprise flexibility: a new approach based on management control theory

Abstract

Purpose The purpose of this paper is to draw attention to a void in the literature on enterprise flexibility: The Management Control Systems’ (MCS) role in the enterprise flexibility and stability discussion. MCS can be instrumental in securing an organization’s strategic performance objectives, far beyond the mere managerial control and accounting perspectives of traditional MCS’ roles. Design/methodology/approach This study is qualitative in nature, and presents a theoretical approach with a conceptual model to address enterprise flexibility and stability jointly; arguing that both should be part of the MCS’ design and implementation with a distinct strategic outlook. Several theoretical and practical arguments are presented which reinforce this thesis. Findings To operate optimally, enterprises must be able to manage their limited resources in efficient and effective manner. This is especially so when dealing with uncertainty and contingencies on an ongoing basis, while following a defined strategic choice. Such choices are expected to mirror enterprise flexibility types and measures without neglecting enterprise stability requirements, linking both to strategic performance measurement indicators. Research limitations/implications Further work is needed to explore not only how different types of enterprise flexibility and stability measures can bring additional benefits to the firm but also how best to apply such types in accordance with business and operations strategies, organizational stability requirements and management control strategies. Practical implications MCS can and should take part of an organization’s strategic performance measures but these are to be understood from a systemic design perspective of the enterprise system’s metacontrollability, addressing flexibility and stability jointly. Social implications There is a need to reevaluate the role of MCS and their strategic potential. The approach presented can have valuable potential ramifications and insights for management and information sciences as well as for the enterprise management practitioners as a whole. Originality/value This paper provides original research on enterprise flexibility and stability analysis, covering all aspects of MC and its role on the enterprise’s metacontrollability. Design and coordination of the seven basic elements which comprise MCS are analyzed, as well as how they influence one another. The paper includes two tables to illustrate the approach being proposed. Table I presents a classification of the literature reviewed in the paper while Table AI presents the choice of the theoretical lens on enterprise flexibility from other authors which contrasts with the model proposed. The role of MCS in the enterprise is also included.