The Interplay Between Management Control Systems and Innovation: The Moderating Influence of Transformational Leadership

Abstract

Manuscript type: Research article
Research aims: This research is based on Resource-Based View (RBV)
and Dynamic Capability Theory (DCT) to explain the influence of
Belief Systems (Bs) and Interactive Control Systems (ICs) on Innovation
Capability (IC) and Innovation Performance (IP). It also explores the
moderating effect of Transformational Leadership (TL) in enhancing these
relationships.
Design/Methodology/Approach: The results show that Bs and ICs have a
significant positive impact on IC, which in turn has a significant positive
impact on IP. Moreover, the relationships between management control
systems (MCSs), and IC are directly and positively moderated by TL,
which strengthens these relationships.
Theoretical contribution/Originality: This study extends the RBV
and DCT by showing how MCSs, IC, and TL interact to impact IP.
Considering these perspectives in the context of Chinese manufacturing
SMEs, the study offers fresh perspectives on mechanisms by which
resources and leadership practices enable innovation.
Practitioner/Policy implications: The results indicate that managers
should adopt both belief-based and interactive control mechanisms
and also encourage TL behaviors to enhance IC and IP. This can offer
manufacturing SMEs the necessary competitiveness and flexibility in the
rapidly changing markets.