Exploring management control in radical innovation projects

This paper seeks to endorse the management control system taxonomy by Robert Simons to explore whether, how and why different approaches to management control are more intensely employed: in different phases of the radical innovation process; and in innovation projects showing different degrees of radicalness. Moreover, it aims to discuss the influence exerted by some contextual variables.

Case studies concerning four innovation projects (two radical in nature and two incremental) implemented by two companies operating in the home automation industry in Italy were conducted.

It is found that radical innovation projects, especially in the early stages of development, are characterized by a stronger reliance on flexible and social control management systems, while diagnostic control mainly emerges in late development and commercialization. Moreover, the moderating effect of the hypothesized contingent variables is widely discussed.

The work shows that Simons' taxonomy of the management control systems is a useful framework for exploring management control in radical projects at a strategic level, but also that it should be refined, as evidence shows a systematic hybridization of the systems adopted. An important implication is the great reliance on interactive systems, especially in the early stages. In this perspective, a deeper analysis on the nature and the proper management of interactivity could represent an interesting development of this study.

The recurrent features in the two cases provide practitioners with a useful benchmark about management control of radical innovation projects in two successful companies. Case histories suggest the great importance of information sharing among the functions, and the need to properly develop interface structures between the involved functions to favor it in radical innovation processes.

The paper is one of the first works on management control in radical innovation projects, and it contributes to the literature debate in two main ways: it tests Simons' taxonomy of management control systems for innovation projects, and it highlights the areas of improvement for analyzing “radicalness” in innovation processes.