The introduction of innovative performance measurement and management control systems: the role of financial investors and their acquired companies

Abstract

Purpose – This study aims to investigate the role of private equity and venture capital (PE/VC) operators in the introduction of innovative and sophisticated performance measurement and management control systems (MCSs) within their acquired companies.

Methodology/approach – Contingency theory suggests that PE/VC operators represent an important factor of change in a company's control system as they set the motivation for change and facilitate the transformation process within management systems. This study uses an explorative case study to verify this hypothesis. Data are derived from interviews with managers and public information.

Findings – Results demonstrate that PE funds promote the adoption of advanced MCSs such as the Tableau de Bord. Their aim is both to monitor and guide the acquired companies while sustaining their managers' decision-making process. However, company managers can be a critical variable in the process of change. At the same time, the case study confirms that PE/VC funding is positively correlated with the growth of acquired companies.

Research limitations/implications – Results are limited to the analysis of a single case study, representing a starting point for further research in other industries and countries.

Originality/value of paper – This study sheds light on the role of PE/VC operators in promoting the adoption of MCSs. Moreover, it suggests that despite their supposed short-term orientation these operators invest in the implementation of time-consuming and expensive MCSs.

Citation

Aureli, S. (2010), "The introduction of innovative performance measurement and management control systems: the role of financial investors and their acquired companies", Epstein, M.J., Manzoni, J.-F. and Davila, A. (Ed.) Performance Measurement and Management Control: Innovative Concepts and Practices (Studies in Managerial and Financial Accounting, Vol. 20), Emerald Group Publishing Limited, Leeds, pp. 81-114. https://doi.org/10.1108/S1479-3512(2010)0000020007