Exploring the Influences of Cybernetic and Dynamic Controls on Flexibility and Performance

This paper investigates the influence of cybernetic and dynamic controls on strategic and operational flexibility and, consequently, on monetary and non-monetary performance indicators. Even though business and operation strategies have been the object of many studies, management accounting studies on how management control systems could contribute to flexibility are scarce. We conducted a survey with 89 professionals who work in Brazilian companies and employed structural equation modeling (SEM) to test the relationships included in the theoretical model. Our findings indicate that the relationship between monetary cybernetic control and strategic flexibility is not statistically significant. The results support the positive association between non-monetary and dynamic controls on strategic flexibility. Finally, the findings also support the mediating role of operational flexibility in the relationship between strategic flexibility and performance. This paper’s main contribution to the management control literature is its explanation of the impact of management control systems on strategic flexibility, operational flexibility, and organizational performance. For practitioners, the results highlight the importance of role management control and business strategy to leverage performance.