The Role of Strategic Flexibility in The Associations between Management Control System Characteristics and Strategic Change

Abstract

This study explores the associations between management control system (MCS) characteristics, strategic flexibility and strategic change. The literature has largely focused on the role of MCS characteristics in directly shaping strategic change. This study contributes to the literature a more comprehensive theory of strategic management based on an empirical insight into the role of strategic flexibility as a product of MCS characteristics, an enabler of strategic change and a mediating variable in the relationship between MCS characteristics and strategic change. Data were collected through a mail-based survey of strategic business units in Australian manufacturing organisations. The results of structural equation modelling indicate that two MCS characteristics (the timeliness and interactive use of information) lead to strategic flexibility, that strategic flexibility leads to two types of strategic change (operational change and marketing change), and that strategic flexibility mediates the relationships between these two MCS characteristics and two dimensions of strategic change.