The Transformation of Management Control in the Era of Artificial Intelligence: An Exploratory Factor Analysis of Organizational Determinants

Abstract

Artificial Intelligence (AI) has fundamentally transformed business and industry in many ways, one of which appears to be the Management Control System (MCS). While the evolving role of management controllers as a result of digital technologies has been researched extensively prior, the specific organizational, technological and human drivers behind this transformation remain scarce. This research addresses the void by identifying the key elements that drive MCS transformation resulting from AI integration. Authors conducted exploratory factor analysis (EFA) on a sample of 220 respondents working within the fields of management control and performance management to delineate the major determinants of MCS in AI.

Four primary drivers of MCS transformation were identified as data quality, digital skills, managerial support and the use of AI. Each of these drivers has been confirmed as fundamental to MCS's evolution from traditional to more analytical, predictive and strategic focus.This research contributes to theoretical literature by providing an empirical map of the organizational implications of AI on MCS transformation. From a practitioner perspective, this study offers concrete prescriptions regarding governance and data quality, developing analytical capabilities, and enhancing management support for AI-based initiatives.

Classification JEL: M41, M15, O33, M40

Paper type: Empirical Research