Management control systems and dynamic capabilities as antecedents to financial performance

Thiago Bruno de Jesus Silva, Cristian Bau Dal Magro, Joséilton Silveira da Rocha and Carlos Eduardo Facin Lavarda

European Journal of Management Studies, 2024, vol. 30, issue 1, 57-74

Abstract: Purpose - The resource-based theory (RBT) explains that the management control system (MCS) represents a resource that complements dynamic capabilities by steering employees toward strategies, leading to superior performance. This study aims to identify the impacts of the MCS and dynamic capabilities such as entrepreneurship, innovation, organizational learning and market orientation on financial performance. Design/methodology/approach - The research sample included 200 managers from grain-producing agribusiness organizations in Brazil. Partial least squares structural equation modeling (PLS-SEM) was used to conduct a symmetric analysis, while fuzzy set qualitative comparative analysis (fsQCA) was applied for an asymmetric analysis. Findings - In the symmetric analysis, the linear association model did not fully explain how the use of MCSs and dynamic capabilities drive financial performance. However, the findings indicate that diagnostic and interactive MCSs positively affect dynamic capabilities. In the asymmetric analysis, the results suggest that the high financial performance of the analyzed organizations can be achieved without considering the need for Entrepreneurship or Innovation. Research limitations/implications - The study broadens and complements the interpretive scope of previous studies and allows for comparisons. Practical implications - MCSs must be used in a balanced and synergistic manner (diagnostic and interactive), with an emphasis on monitoring goals and discussions with managers. This is important and contributes to developing internal capabilities, which are embodied in decisions and actions, potentially impacting financial performance. These results are crucial for Brazilian agribusiness organizations, as they provide actionable insights into how the strategic use of MCSs can directly enhance financial performance. By revealing that the balanced and synergistic use of diagnostic and interactive MCSs fosters dynamic capabilities such as innovation and market orientation, the study offers practical guidance for managers aiming to boost organizational effectiveness. This research not only informs management practices but also positions Brazilian agribusinesses to remain competitive in a global market. Originality/value - This study has generated new discussions based on possible combinations and interactions between MCSs and dynamic capabilities to predict high organizational performance. In practical terms, MCSs and dynamic capabilities can be designed in various manners to reach optimal performance levels.

Keywords: Management control systems; Dynamic capabilities; Organizational performance; Agribusiness; M21; M4; M49 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ejmspp:ejms-08-2023-0061

DOI: 10.1108/EJMS-08-2023-0061

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