Management Control Systems and Strategy Change in Buyouts

Hans Bruining, Marcel Bonnet and Mike Wright

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: The impact of management buy-outs (MBO) on strategy and management control systems (MCS) is little understood. Previous research by Jones (1992) focused on efficiency-enhancing buy-outs that were a feature of the early development of the market. However, MBOs are heterogeneous and more recent developments have involved ownership changes that stimulate entrepreneurial practices. The novel contribution of this paper is to use Simons' (1995) classification of beliefs systems, boundary systems, diagnostic and interactive control systems to extend Jones' study to these newer forms of MBO. Within-case analysis and cross-case comparisons from four buyout firms are used to capture the interaction between management control systems and competitive strategy formulation, implementation and modification. This evidence supports arguments that buy-out managers undertake efforts in balancing the traditional feedback systems with the newer systems that stimulate opportunity seeking and learning.

Keywords: management buyouts; management control systems; strategy change (search for similar items in EconPapers)
JEL-codes: L2 M M10 (search for similar items in EconPapers)
Date: 2002-01-10
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