Innovation Strategy and Management Control: The Link Between Knowledge Management and Management Control Systems

In the light of the increasing complexity and intensity of competition there is a growing sense that innovation is a relevant key to continuously out perform competitors, to diversify, adapt and, even, re-invent the organization. Understanding how enterprises manage the process for acquiring and sharing new knowledge has emerged as an important stream of research for supporting the enterprises' competition challenge. Likewise, the literature recognizes that Management Control Systems (MCS) play an important role for supporting the "problem finding" and "problem solving" process. Thus, MCS becomes a tool for producing knowledge. Focusing on these lines of research, the aims of this exploratory paper are to: i) identify such theoretical and statistically proven clusters that describe where and how companies acquire, produce and select knowledge for sustaining innovation strategies. A theoretical framework is adopted which encompasses the origin of knowledge (where) and the knowledge creation process (how); ii) identify such theoretical and statistically proven clusters that describe how companies use their MCS for producing knowledge and sustaining 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 have a wider perspective, the paper analyzes the knowledge management process during innovation processes. 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 the company, the Financial Manager and the Innovation Manager for a total amount of 120 questionnaires. The managerial implications of this paper could be: i) to help managers in the development of tactical and operative activities related to innovation strategies, in order to facilitate knowledge processes; ii) to offer guidelines for projecting more useful MCS in order to facilitate innovation processes.