What is the role of management control in knowledge-intensive firms? One study explored this issue. Starting from the limitations of the definition of uncertainty, especially when applied to contexts characterized by knowledge intensity, the study investigated the relationship between knowledge complexity and management control systems. This relationship is analyzed in the realm of knowledge-intensive firms’ teams where it is particularly critical due to the double coordination and knowledge integration role played by management control systems. A field research conducted in three project teams of a software firm supported the relevance of knowledge complexity in explaining the variation of management control systems.
The comparison of the projects should highlight the impact of knowledge complexity on the coordination and knowledge integration modes consistently incorporated in the management control systems. Therefore, management control systems play a double role in knowledge-intensive firms in that, on the one hand, they help coordinate activities and, on the other hand, foster a specific mode of knowledge integration. It is therefore their capability to perform this double role that makes them effective mechanisms in knowledge-intensive firms.
|Knowledge integration||Management control (object)|
|Technical complexity||Output/performance report||Result|
|Cognitional complexity||Informal/oral/face-to face communication||Competencies/values/beliefs|
(Source: Ditillo, 2004, p. 410)
The analysis suggests that, according to the type of knowledge complexity faced by teams—whether computational, technical or cognitional—knowledge integration tends to be centered around documentary sources, output exchange or informal communication, and coordination around action, results or values/beliefs.
Management control systems as knowledge integration mechanisms
Management control mechanisms are to be designed to coordinate individuals and support knowledge integration at the same time. It is, therefore, the capability to play both the coordination and knowledge integration roles that makes management control mechanisms effective in knowledge intensive firms. If they were useful mechanisms only to coordinate individuals’ action but prevented the appropriate integration of knowledge they would be detrimental to the health and functioning of knowledge-intensive firms’ teams.
Ditillo, A., 2004. Dealing with uncertainty in knowledge-intensive firms: the role of management control systems as knowledge integration mechanisms. Accounting, Organizations and Society 29 (3-4), 401–421.
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