Complexity and Control

Measuring and managing a firm's performance in complex settings are at the center of the debate in business management studies in recent years. The causal ambiguity condition that affects the dynamics of value creation makes it difficult to achieve a clear understanding of the mechanisms underpinning economic value. Thus, a conceptualization of the firm as a complex entity and a complexity management model are proposed, with the aim to contribute towards improving the disentanglement of the messy nature of the process of economic value creation. Finally, building on the assumption that financial and quantitative measures should always be the end goal of the process of the firm's economic value measurement, the most important models and metrics of value creation are reported.

Management Control Systems

This chapter examines issues about key concepts and aims of management control. Based on a review of relevant academic literature, the chapter provides an overview of some among the most popular definitions of management control, summarizes different approaches to management control and describes some influential theoretical frameworks.

Complexity

Complexity theory provides a new perspective to address the transformative and evolutionary nature of organizational phenomena, as well as system dynamics. After reviewing the most influential studies of complexity science, this chapter reflects on the application of the conceptual framework of complexity theory on business management by providing the “3Vs model” for interpreting both the structuralist and post-structuralist view of complexity in organizations.

Management Control Systems

This chapter is focused on a fundamental theoretical approach to management control system research, the contingency theory. Reviewing the most prominent research works over the past 30 years, the main insights on the relationships between contingency factors and the appropriate design of MCS are illustrated and discussed. In particular, this chapter assumes the conventional view that considers MCS as passive tools designed to support managerial decision-making and summarizes the effects of endogenous and exogenous variables on the design of MCS and firm's performance for the achievement of equilibrium conditions.

Complexity and Control

The aim of this chapter is to illustrate forecasting, planning, and budgeting as managerial activities involving decisions on a deliberate set of future actions aimed at pursuing strategic objectives. The chapter starts by emphasizing the importance of complexity in managerial decision-making and its implications on predicting future. The discussion then moves to forecasting, highlighting forecasting process, main methods, goals, and the selection of the techniques. Next, the chapter focuses on planning, depicting the traditional approach to strategic planning cycle, its role in firms, main limitations, and alternative frameworks developed to support strategic decisions under uncertainty. Finally, budgeting is considered, describing the steps involved in the preparation of the master budget, main criticisms, and discussing the use of budgets in uncertain contexts.

Strategy in Action

Recently performativity has emerged as a new conceptual and methodological tool in management and accounting research. This concept emphasizes the process view of organisational phenomena by drawing attentions to the provisional ontology of managerial practices in complex settings. Building on the performativity turn in accounting, this chapter provides insights in the active role that a special kind of management control tools, strategy maps, plays in exploring new strategic patterns. A qualitative case study of strategy renewal in an Italian professional service firm was undertaken. Preliminary findings confirm that strategy maps enact knowledge production in strategic change processes by figuring concerns, negotiating meaning and discovering new patterns.

The Effect of Business Strategy and Stock Market Listing on the Use of Risk Assessment Tools

This chapter includes an empirical study aimed at exploring the effect of business strategy and stock market listing on the use of risk assessment tools. The study is based on a sample of large manufacturing firms. First, drawing from academic literature, the chapter provides an overview of risk management, regarded as the set of principles, frameworks and processes for managing risk, and considered as a critical aspect of MCS. Then, following a congruence approach as a form of contingency fit, research hypotheses are developed, focusing on two separate relationships: the relationship between business strategy and the use of risk assessment tools and the relationship between stock market listing and the use of risk assessment tools. Results reveal that the use (and the perceived usefulness) of risk assessment tools are not affected by business strategy, while an association is found between the use of risk assessment tools (and the perceived usefulness of risk maps) and stock market listing.