The role of managerial control in innovation processes: An empirical analysis among Italian firms

This paper investigates the link between the managerial control system (MCS) and product/service innovation. The aim is to provide an empirical analysis of MCS role in innovative firms, highlighting MCS characteristics that better support the innovation processes. The sample consists of 104 Italian manufacturing firms belonging to those sectors featuring the largest number of registered patents. The results show that an MCS can enhance innovation but it can also inhibit it depending on the role it plays. Indeed, an MCS may hamper innovation if it is limited to pursuing diagnostic functions. Conversely, innovation is positively associated to an interactive use of the MCS. The results of this study may have major implications for practitioners. Organisations hoping to enhance their innovation performance should develop an MCS able to stimulate free thinking and search for opportunities, while avoiding a strict compliance with rules and rigid performance evaluation.