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Strategic adaptation in complex environments with frequent changes must balance the search for innovative opportunistic ventures and conscious pursuit to achieve established goals and outcomes. This creates a tension between attempted efficiency gains from tight strategic controls that avoid diversion of corporate resources and the facilitation of dispersed initiatives in search for business opportunities. To assess this conundrum, the authors present an interactive strategic control model that combines planning and participative strategy-making with interactive control processes. This combination of management practices arguably creates an adaptive system that drives the upside performance outcomes from a guided adaptation of opportunistic insights. Various hypotheses are developed and tested based on survey data from among the 500 largest firms in Denmark. The results suggest a direct relationship between interactive controls, strategic planning, and participative leadership on upside performance outcomes. Moreover, the positive effect from interactive controls on the upside potential is enhanced by participative decisions.

This paper aims to unpack the relationship between the interactive use of project control systems (PCS) and project performance by examining the role of stakeholder analysis effectiveness in enacting this relationship. A conceptual framework was developed based on the stakeholder theory and the levers of control framework.

Partial least square-structural equation modelling analysis was conducted on the cross-sectional questionnaire data collected from 109 information technology (IT) projects.

The interactive use of PCS enables project managers to effectively deal with the stakeholders-related uncertainty, and stakeholder analysis effectiveness partially mediates the positive relationship between the interactive use of PCS and IT project performance.

This study extends the project control literature by explaining the positive relationship between the interactive use of PCS and project performance. The findings contribute to the stakeholder analysis literature by operationalizing the stakeholder analysis effectiveness construct and identifying it as a new mediator between the interactive use of PCS and project performance.

Recent accounting research has connected the coercive and enabling types of formalisation (C/E) (Adler and Borys, 1996) with the distinction between diagnostic and interactive controls (D/I) proposed by Simons (1995, 2000) to tackle research questions on complex control situations involving both the degree of employee autonomy and patterns of management attention. The diverse conceptual approaches used for connecting C/E and D/I have led to fragmentation in the literature and raise concerns about their conceptual clarity. In this paper, we assess the conceptual clarity of various forms of connection between C/E and D/I. Firstly, we conduct an in-depth content analysis of 59 recent papers, and inductively identify three points of conceptual ambiguity and divergence in the literature (namely, the perspective from which a phenomenon is studied; whether categories capture choices driven by design or by style-of-use; and the properties of control systems). We also observe that the literature proposes various forms of connection (i.e. coexistence, inclusion, and combination approaches). Secondly, we use the three detected points of ambiguity and divergence as assessment criteria, and evaluate the extent to which conceptual clarity is at risk under each form of connection. Based on this assessment, we provide guidelines to enhance the conceptual clarity of the connections between C/E and D/I, propose several research models, and indicate opportunities for future research in this area.

The purpose of this paper is to identify the complementariness and tensions in the use of management control systems diagnostically and interactively, using a budgetary control example, drawing empirical evidence from a clustered firm, “Pattern On”, which is engaged in the manufacture of apparels.

This paper uses the qualitative methodology and case study approach. Face-to-face in-depth interviews were carried out as the main source of data collection, supplemented by an analysis of internal documents.

The field data from this study shows that both diagnostic and interactive controls appear in the clusters of PatternOn. However, the extent of use, the way they are perceived by employees, consequences, complementariness and tensions differ among the clusters. It further suggests that interactive and diagnostic controls have their own positive and negative implications on organisational activities. Therefore, rather than ruling one type as superior; what is best depends on the particular organisational circumstances.

This paper is a useful addition to the current body of management accounting literature, particularly to budgeting and to the levers of the control framework and highlights the use of a domain theory in a research study.

It provides insights to practitioners regarding the simultaneous use of controls, diagnostically and interactively, and how any resulting tensions are managed.

Using a budgetary control example, this paper shows how controls are used diagnostically and interactively while emphasising the complementariness and tensions created by such levers. This is important as most prior research has explored diagnostic and interactive use in isolation, while budgetary control, as well as the role of domain theory has not been their focus.

This paper aims to examine the association between the interactive and diagnostic approaches to using controls and Miller and Friesen’s (1984) organizational life cycle (OLC) stages (birth, growth, maturity, revival).

Data were collected from a random sample of 343 general managers in Australian manufacturing organizations.

The results indicate that both approaches are used to a greater extent in the growth and revival stages than the birth and maturity stages, whereas the interactive and diagnostic approaches are used to a similar extent in each of the four OLC stages.

This study contributes to the management control system literature by examining the use of the interactive and diagnostic approaches from an OLC perspective. The findings highlight that the complementary nature of the interactive and diagnostic approaches applies in each OLC stages, and suggest that similar attention should be placed on the use of both the interactive and diagnostic approaches in each OLC stage.

The study provides managers with an insight into the prevalence of the use of interactive and diagnostic approaches across the birth, growth, maturity and revival stages.

This study contributes to the management control system literature by adopting the configuration approach to examine how multiple contingent variables simultaneously affect the approach to using controls. Specifically, this study examines how organizations adjust their emphasis on Simons’ (1995) interactive and diagnostic approaches to using controls as they move across different development stages. These development stages were labelled as OLC stages and are determined based on the simultaneous consideration of multiple contingent factors.

This study examines the association between management control systems (MCSs), specifically the interactive and diagnostic use of controls, with the corporate social responsibility (CSR) disclosure-action portrayal gap (i.e. the disparity in employees’ perception of their organisation’s emphasis on CSR disclosures relative to CSR actions) and the subsequent impact on employees’ perceptions of organisational performance, both operational performance and corporate social performance. Data were collected using a survey of US lower-level managers, with the data obtained from 209 respondents and analysed using structural equation modelling (SEM). The results reveal that the interactive and diagnostic use of controls both exhibit a significant negative association with the CSR disclosure-action portrayal gap, that is, the use of these controls reduces the gap. In addition, the various dimensions of the CSR disclosure-action portrayal gap exhibit a significant negative association with both operational and corporate social performance, that is, lower gap, higher performance. The study contributes to the CSR literature by providing the first empirical insight into employees’ perception of both CSR disclosures and actions, and hence, the CSR disclosure-action portrayal gap. In addition, the study contributes to the MCS and organisational performance literature by providing the initial empirical insight into the role of MCSs in mitigating the gap through enhancing the interactive and diagnostic use of controls, and the negative association between the gap and employees’ perceptions of organisational performance.

Simons (1995) identified two main kinds of controls: diagnostic and interactive. Nevertheless he did not study the possibility of the evolution of these concepts from one kind to the other. We have researched the possibility of this evolution and its reasons. We have studied the case of a ceramic company. Before 2000 the control system of this Company was based on large and exhaustive reports that were discussed every month by the board of directors. Simons defined this kind of control as diagnostic. After suffering a crisis in 2000 the board of directors created new reports based on non‐financial indicators. The board of directors monitored these data weekly spending long hours analysing both the outcomes and the questions arising from them. Most of middle managers of the firm were involved in this reporting system. This kind of control is the one defined by Simons as interactive.

The purpose of this paper is to analyze the effect of management accounting and control systems (MACS) on environmental innovation practices and operational performance. Specifically, this study relies on Simons’ levers of control (LOC) framework to investigate how managers implement environmental innovation practices. This paper hypothesizes that a forward-looking use of MACS (i.e. interactive use) triggers the implementation of environmental innovation practices, resulting in higher operational performance. Furthermore, the authors argue that the monitoring role of MACS (i.e. diagnostic use) combined with environmental training improves the effect of environmental innovation practices on operational performance.

Hypotheses are examined through a questionnaire survey. The analyses are based on responses in an empirical study from 89 Brazilian hotels.

Empirical findings from a hierarchical moderated regression analysis support the hypothesized links.

This study contributes to the environmental management and management control literature by providing novel evidence on the roles MACS play in the field of sustainable development. Based on the LOC framework, the authors shed light on the understanding of how managers introduce and monitor environmental innovation practices, as well as also outlining the key effects of environmental training in enabling the novel abilities of managers and employees to better understand environmental data and identify novel potential environmentally friendly solutions in the case of deviations. This paper also adds to Wijethilake et al. (2017), providing new empirical evidence on how firms design, implement and use MACS that capture institutional pressures for sustainability from multiple stakeholders.

Team performance frequently is not reached because of motivation losses. The individual identified motivation best fits in team contexts. However, management control systems research has mainly focused on the external motivation. This chapter analyses how identified motivation and team performance can be enhanced through the interactive use of management control systems and the team identity.

An experimental study is conducted among 144 postgraduate students. We manipulate the interactive use of management control systems and the team identity. We controlled its effects on team members’ motivation and performance.

The results show an indirect effect of the interactive control systems on team performance via team members’ identified motivation. Furthermore, the effect of team identity on team performance is also mediated by the identified motivation.

Managers can increase employees’ motivation by using the control information interactively. Controls focused on socialisation processes and shared values best fit with collaborative environments.

The results provide empirical support for the recent calls about the effect of interactive control systems at individual levels. Despite the considerable attention to the relation between the design of management control systems and team performance, this chapter provides empirical evidence of the positive relation between the style of use of management control systems and individual behaviour in team-based settings.

This study aims to examine the role of organisational dynamic capabilities (strategic flexibility and employee empowerment) in mediating the relationship between management control systems (MCSs), in particular the interactive and diagnostic approaches to using controls, with organisational change and performance.

Data were collected based on a mail survey of public sector organisations in Australia and analysed using structural equation modelling (SEM).

The findings indicate that strategic flexibility and employee empowerment mediate the association between the interactive approach to MCSs with organisational performance, and strategic flexibility mediates the relationship between the interactive approach to MCSs with organisational change.

The study’s findings inform public sector practitioners as to how to enact change within and enhance the performance of public sector organisations. Specifically, managers are advised to focus on the use of interactive controls and the development of two dynamic organisational capabilities, strategic flexibility and employee empowerment.

The study provides an initial empirical insight into the relation between controls and dynamic capabilities and their role in enacting change and performance within the public sector. The findings suggest that the achievement of new public management ideals is reliant upon the organisational environment, with change and performance facilitated by the interactive use of controls and strategic flexibility and employee empowerment.