Control systems and business unit performance: A conceptual framework and empirical evidence.

• Main Author: Krish, Rajan.
• Other Authors: Jaworski, Bernard
• Language: en
• Published: The University of Arizona. 1995
• Online Access: http://hdl.handle.net/10150/187261

This dissertation develops a conceptual framework that elucidates the role of control systems in an organization. The conceptual framework developed in this dissertation effectively integrates the diverse theoretical perspectives in the literature. The framework identifies: (1) the effects of control systems on the performance of a Strategic Business Unit (SBU), (2) the moderating effects of environment and strategy on the control systems-SBU performance linkages, and (3) the effects of a particular mix of controls on performance. To validate the conceptual framework, a series of hypotheses were developed and a national survey of managers was conducted. The research empirically supports the notion of direct effects of control systems on profits, market share, and satisfaction of the customers served by a SBU. The study fills the void in the marketing literature by examining the link of control systems and SBU performance. The framework also advanced a contingency perspective with regard to the role of control systems. Briefly, the framework suggested that the positive impact of control systems on the performance of a SBU will depend on its appropriateness to the environmental context of the SBU, and the competitive strategy pursued by the SBU. The results, however, do not support the proposed contingency relationships. The research also advanced and developed a typology of control combinations and tested its effects empirically. The empirical results support the notion that a high control environment, i.e., a high proportion of both formal and informal controls yield positive results. The research augurs well for the role of implementation and control and thus corrects an imbalance in the strategy literature.