Between cost and benefit: investigating effects of cost management control systems on cost efficiency and organisational performance

Ulf Diefenbach (), Andreas Wald () and Ronald Gleich ()
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Ulf Diefenbach: EBS Universität für Wirtschaft und Recht
Andreas Wald: University of Agder
Ronald Gleich: EBS Universität für Wirtschaft und Recht

Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, 2018, vol. 29, issue 1, No 4, 63-89

Abstract: Abstract Although the importance of cost management for organisational performance is frequently stressed in the literature, attempts to develop an integrative framework for a cost management system remained on a conceptual level without empirical validation. Additionally, previous research on cost management systems fails to draw on findings from another, theoretically more pronounced stream, i.e. management control systems. To fill this gap, this paper develops a model for a cost management control system (CMCS) relying on both, cost management and management control systems literature. Based on a sample of 251 European companies, we investigate the impact of CMCS on cost efficiency and organisational performance using structural equation modelling. Our results indicate that CMCS increase organisational performance and that this effect is mediated by cost efficiency. For the relative importance of the individual components of CMCS we find statistical differences between the weights. Five elements are important for the establishment of a CMCS, but two groups can be separated. Creating a cost-conscious culture and the right set of CM-methods both have the highest impact on the formation of a CMCS. A moderation analysis further reveals that the effects of CMCS on organisational performance and cost efficiency are higher for radically than for incrementally innovative firms.

Keywords: Cost management; Management control system; Cost management control system; Cost efficiency; Performance (search for similar items in EconPapers)
JEL-codes: C31 M40 M41 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00187-018-0261-5

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