Management Control Systems Framework for R&D Organisation: A new approach

Abstract

The Research and Development (R&D) organisation deals with higher level of uncertainty than a non-R&D organisation. This affects the
organisational goal setting (Chenhall, 2003), planning system (McCaskey, 1974), and control systems (Hopwood, 1972; Simons, 1987; Williams
et al, 1990; Chenhall, 2003, Bisbe and Otley, 2004). Therefore, question had been raised regarding the suitability of existing management control
systems for such organisations (Cooper et. al., 1981; Abernethy & Stoelwinder, 1991; Chenhall, 2003). In recent years there has been an
increasing interest on investigating the management control systems (MCS) in relation to R&D activities (Rockness & Shields, 1984; Tatikonda
and Rosenthal, 2000; Ditillo, 2004). The study proposes a MCS framework for R&D organisation in the light of four key elements, Desired Ends,
Actors, Control Implementation, and Control Tools. The study concludes that the use of those elements may differ between low and high level
of uncertainty. Two sub-elements of Desired Ends (Directional and Yardstick) are found to be complementary in a low level of uncertainty while
the emphasis needs to be placed on Directional under a high uncertainty situation. The study identified five sub-elements of the Actors—
Behavioural, Motivation, Domination, Decision Space, and Power Source that are also different along the level of uncertainty. In addition, the
timing and the use of formal and informal control type are found to be different along the level of uncertainty as well. Finally, the dimension and
the value of control tools are used differently in those two distinctive situations.