eThesis - School of Business electronic theses

This study aims to explore how management control systems (MCS) are applied in incremental innovative settings. In order to form a conclusive picture of the context, also the factors influencing the design of both formal and informal MCS are studied. Furthermore it is examined how MCS evolve during the product development process. Two novel research angles of Guidance and Enhancement are established to study MCS particularly in innovative settings.

The literature review explores the theoretical discussion related to the MCS, the concept of innovation and its specific characteristics. Especially the findings of earlier research on MCS in both innovative settings and product development projects are presented. Two separate frameworks summarizing the discussion in the relevant theoretical literature are constructed to support the empirical research.

The empirical study follows a tradition of multiple-case study encompassing three Finnish mobile games companies and specifically four different product teams. The empirical evidence was analyzed by using a thematic network tool and against the earlier literature. Based on the discussion, the two initially constructed frameworks were revised to reflect the findings.

Findings demonstrate that the case organizations apply MCS mainly informally yet the formal MCS provide necessary support for the teams to set the direction for the project and to keep track on its progress. The emphasis of the MCS is on the project team level due to the decentralized organizational structure. The product teams appear efficient as a result of their independence which is also made possible by the meticulous recruitment. Organizational culture in all of the case organizations is characterized foremost by the employees' strong intrinsic motivation and flat hierarchy. Additionally it was noted that the design of MCS is mainly influenced by management background, the needs set by creativity and the industry specific requirements. The evolvement of MCS during the different phases of the project appeared fairly subtle with the key MCS being present throughout the project.

This study reinforces the earlier findings on the importance of organic innovative culture and its application together with the formal MCS in the innovation projects. In contradiction to the previous studies, the findings of this study show that incremental innovation projects can be managed effectively without strong reliance on diagnostic control systems. The novel research angles were as well found to be beneficial for the study. Additionally the findings underline the relevance of the project-level perspective despite the challenge of distinguishing the project level from the organizational level.