External complexity and the design of management control systems: a case study

Abstract

Increasing complexity and dynamism in technologies and markets are putting new demands on management control systems beyond those that these systems traditionally address. This longitudinal case study traces the experience of a real estate fund management company in addressing the need to make sense of increasing external complexity and its effort to design a management control system to support top management in this task. Our findings indicate that internally-focused systems used interactively fail to fulfill this role because of their paucity in terms of information on external complexity. As a result, the company experimented with various designs and developed a management control system that relied on information external to the organization and mostly qualitative. This system became the infrastructure for continual discussions on strategic but also tactical implications of external events. The system that the company developed relied on the wisdom of crowds, structured meetings, and information technology to gather and process qualitative information to enhance peripheral vision. Overall, the case study illustrates the challenges and potential responses to the design of management control systems for the strategic surveillance of external complexity.