The theoretical foundations of management control systems: A critical analysis

Abstract

The intensification of competition, globalization of trade, economic instability, and the rise of competitive markets have led to a substantial expansion of the management control function. It now encompasses a more comprehensive perspective on organizational performance. In the present context, the management control function confronts an environment characterized by turbulence, dynamism, and complexity. This environment offers numerous growth opportunities for businesses but also presents risks for those unable to effectively compete. This transformation has ushered in a new paradigm in management control, surpassing traditional approaches to adopt a systemic and integrated perspective. This contemporary paradigm takes a holistic view of business management by integrating both financial and non-financial aspects. Its aim is to promote sustainability, agility, and long-term value creation. This shift reflects the imperative for businesses to adapt continually to a changing environment. In this dynamic landscape, management control plays a pivotal role in informed decision-making and the achievement of organizational objectives. The contemporary paradigm of management control acknowledges that businesses operate within complex ecosystems, engage with a multitude of stakeholders, and navigate dynamic and uncertain environments. It recognizes the importance of flexibility and adaptability in response to evolving market dynamics.

Our research aims to offer an extensive and critical examination of the theoretical foundations of management control systems, providing a contemporary and insightful viewpoint. We emphasize the significance of enhancing traditional management control practices with new, complementary, and dynamic approaches that align with the current business landscape. By doing so, organizations can better position themselves to thrive in this ever-evolving and challenging business environment, where effective management control is indispensable for achieving sustainable success and creating long-term value for all stakeholders.

Keywords: Critical approach, management control, theoretical foundations of management control systems, theoretical foundations of management control.

JEL Classification: M40

Paper type: Theoretical Research