Relevance and Usage of Management Control Systems with Reference to Strategy Formulation and Control

Abstract

Management control systems (MCSs) can undoubtedly support organizations' strategic processes as they help coordinate and align personnel behaviour to organizational goals, verify the validity of the organization's strategic plan and contribute to better formulate future plans. However, past research indicates that SMEs scarcely adopt MCSs. With the aim to update past research, the present chapter explores the current role and quality of MCSs used by SMEs in relation to strategic processes. Moreover, it evaluates whether MCSs adoption is associated to specific SMEs owner-managers' beliefs and other contingency factors. A survey conducted in Italy in 2012 indicates that SMEs attribute an important role to MCSs in supporting strategy formulation, its control and subsequent reformulation, but this strategic role is not associated with the adoption of advanced MCSs. SMEs still rely on traditional accounting-based control systems or perform some ad hoc analysis to obtain information useful for top managers strategic decision making.