Organizing Innovation: Do Management Control Systems Contribute to Knowledge Management?

In markets with increasing complexity and intensity of competition, innovation is becoming one of the most relevant means to continuously outperform competitors. The sequence runs from diversifying and adapting to re-positioning and even re-inventing the organization. One important stream of research has emerged that focuses on how enterprises manage the processes of acquiring and sharing new knowledge to sustain the competition challenge. Likewise, literature recognizes that Management Control Systems (MCS) play an important role in supporting the “problem finding” and “problem solving” processes. This establishes a close link between MCS and knowledge production. From these lines of research, the aims of our exploratory paper are to: i. determine which clusters of enterprises correspond to a theoretical framework that describes where and how companies acquire, produce and select knowledge for sustaining innovation strategies, and provide a statistical evidence. The theoretical framework encompasses the origin of knowledge (where) and the knowledge creation process (how); ii. identify such theoretical and statistically proven clusters that correspond to a description of how companies use their MCS to produce knowledge and sustain innovation strategies; iii. detect and prove, within these clusters, the existence of a link between MCS and knowledge management processes in terms of coherence between how companies manage the knowledge process and how they use MCS. In order to get a wider perspective, the paper analyzes the knowledge management process during innovation. The research is based on a survey conducted on a sample of 40 enterprises working in the North East of Italy that carry out pertinent innovation processes. A structured questionnaire was delivered to the CEO of each company, to the Financial Manager and to the Innovation Manager (a total amount of 120 questionnaires). The managerial implications of this paper will be: i. to assist managers in developing strategic, tactical and operative activities related to innovation, and to facilitate the respective knowledge processes; ii. to offer guidelines for projecting more useful MCS in order to facilitate innovation processes.