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Management
Management Control Systems and Control
Innovation: a levers of control Systems

analysis in an innovative company

Rúben Silva Barros and Ana Maria Dias Simões da Costa Ferreira 571
Instituto Universit
ario de Lisboa (ISCTE-IUL),
Business Research Unit (BRU-IUL), Lisboa, Portugal Received 9 September 2020
Revised 31 March 2021
8 July 2021
Accepted 7 August 2021

Abstract
Purpose – Building on the growing body of research that has addressed management control systems and
innovation, the purpose of this study is to assess the extent and nature of the use of controls in an innovative
setting and how they work together unveiling the relationships and tensions amongst the Simons’ levers.
Design/methodology/approach – This study resorts to an in-depth and single case study in a company
that has both a strong orientation to innovation and stable control practices in place. Evidence was collected
from 32 interviews, visits to the company and internal documentation.
Findings – At the case company, it was possible to find the presence of controls according to all the levers of
control. Likewise, joint effects of controls used according to interactive and beliefs approaches and diagnostic and
boundary controls showed a consistent reinforcement that push the organization in a single direction. Signs of
some countervailing reinforcement between these pairs were also detected, creating tensions. This in general
shows that innovation can be weighed against the necessity of goal achievement taking place within fields in
which the company can exploit the effort developed.
Originality/value – This study documents the collective use of controls in a context in which innovation is
needed and how the combination of the levers of control with their inner workings and tensions allow the
company to have a corporate environment of innovation that is friendly.
Keywords Innovation, Management control systems, Simons’ framework, Case study, Levers of control
Paper type Research paper

1. Introduction
Management accounting and control literatures have enquired into and advanced our knowledge
on management control systems (MCS) and innovation with several recently published papers
(Bedford, 2015; Curtis and Sweeney, 2017; Aaltola, 2018; Healy et al., 2018; Barros and Ferreira,
2019; Bellora-Bienengräber, 2019; Müller-Stewens et al., 2020; Rathnasekara and Gooneratne, 2020).
This has allowed considerable knowledge to be accumulated, but there remains the “need to

The authors would like to thank the editor, Professor Zahirul Hoque, and the two anonymous
reviewers for their helpful comments and suggestions. Also, we gratefully acknowledge comments
and suggestions from Robert Scapens, Grazianno Coller, Jonas Oliveira, João Oliveira and Ricardo
Barradas, participants at the conference “Researching Management Accounting and Control:
Reflections on its impact and implications for the future” held in Groningen, the XVII conference
grudis and doctoral colloquium held in Porto and two anonymous reviewers of the 41st annual
congress of the European Accounting Association. We are also grateful to interviewees for their time, Journal of Accounting &
help and sympathy and the case company to allow the development of this work. Rúben Silva Barros Organizational Change
Vol. 18 No. 4, 2022
also gratefully acknowledge the financial support of Fundação para a Ciência e Tecnologia under the pp. 571-591
doctoral grant SFRH/BD/104181/2014. The authors are also grateful for the financial support of this © Emerald Publishing Limited
1832-5912
institution under the grant UID/GES/00315/2013 and UIDB/00315/2020. DOI 10.1108/JAOC-09-2020-0137

1
JAOC undertake further research into how management accounting and control practice realized by the
18,4 managerial actors jointly and individually can contribute and relate to innovation” (Major et al.,
2018, p. 154). Additionally, as Van der Kolk et al. (2020) recognize, the inner workings of
combinations of controls are an area quite unexplored and considering that control in innovative
settings is an especially complex matter, with various aspects to considerer, much has yet to be
understood. As posed by Feeney and Pierce, “the complex, non-linear nature of innovation requires
572 the use of a range of styles of control” (Feeney and Pierce, 2018, p. 271).
A common way that researchers have addressed this topic is by resorting to the levers of
control (LOC) framework. The LOC framework is widely used as the framework for both
quantitative and qualitative studies (Martyn et al., 2016). Regarded as a practice-informed
framework (Martyn et al., 2016), LOC reflects the use of multiple controls and different styles
of their use (Chenhall and Moers, 2015). Consequently, this study builds on this background
recognizing the core principle proposed by Simons (1995) that all levers must work together.
Specifically, we explore the extent and nature of the use of controls according to the Simons
framework and how the controls used work together amongst the Simons’ levers. This will
also allow us to explore the interrelationships and possible tensions that may surface
between these levers. To do this, we conducted an in-depth case study at Amorim Cork
Composites (ACC), a Portuguese enterprise that produces granulates and agglomerates of
cork.
The organization that is the subject of this case study is an innovative branch of a
Portuguese industrial group that has implemented a performance measurement system
(PMS) for a considerable time and has a strong orientation toward innovation. We used
semi-structured interviews as the main data source, complemented with internal documents
and direct observations. A total of 32 interviews were conducted, having an average
duration of 60 min. ACC continuously engages in product innovation driven by customers’
requests or needs. Innovation at the case company most often takes the form of new cork
products, new developments of existing products, a new application for an existing cork
product or the transfer of an existing product to another and completely different market
segment. Therefore, this will be the concept of innovation adopted throughout the study.
Also, we adopt Simons’ (1995) definition of MCS: “management control systems are the
formal, information-based routines and procedures managers use to maintain or alter
patterns in organizational activities” (Simons, 1995, p. 5).
This work contributes to research in several ways. The main contributions are to the
literature on management control and innovation. First, with the aims of this research it is
possible to explore the inner workings of the control elements according to the LOC
framework. The presence at the case company of controls according to all the levers leads to
a consistent reinforcement within the inspirational levers (interactive and beliefs levers) and
within the constraining levers (diagnostic and boundary levers). This results in having both
pairs pushing in different directions. These combinations create countervailing
reinforcement that allows the environment to be controlled and simultaneously innovative.
The latter pair pushes for proactivity, debate and forums, whereas the first provides
some constraint, without a crowding out effect. This reveals tensions, which in light of Van
der Kolk et al.’s (2020) developments comprise a two-dimensional relationship having the
marks of complementarity and competition effects. The control solution in place reveals
different intensities in the use of the levers (diagnostic and interactive use of systems are
more emphasized than boundary systems) and stronger presence of some (diagnostic and
interactive) over others (beliefs and boundary).
In line with the contribution mentioned, the present study also contributes to the
literature on the simultaneous use of different control practices. Instead of focusing on only a

2
single isolated system, this study looks at MCS in a holistic and comprehensive way, as Management
recommended by several authors (Malmi and Brown, 2008; Ferreira and Otley, 2009; Control
Grabner and Moers, 2013). A range of practices and how the managers at the case company
mobilize them is reported, including a Balanced Scorecard (BSC) model, a stage-gate model,
Systems
formal meetings, mission and values.
Third, the results contribute to literature by showing that the case company can provide
an environment in which innovation flourishes, side by side with structured processes at a
corporate level that do not make it necessary to trade innovation for control [extending 573
Speklé et al.’s (2017) conclusion about control and creativity]. The control tools implemented
and the way managers use them allow us to assess more than the weight of innovation
against the necessity of goal achievement and confirm that it can take place within fields in
which the company can appropriate the expected benefits of new solutions. This also makes
space for a practical contribution in the sense that insights are offered to practitioners
regarding the design and use of MCS in companies that have a strategy strongly oriented to
innovation.
With these contributions this study responds to several calls to dig deeper into issues
related to control and innovations (Moll, 2015; Fried, 2017; Major et al., 2018; Baird et al.,
2019) and calls to address this line of research with qualitative approaches (Henri, 2006;
Barros and Ferreira, 2019).
The remainder of the paper is organized as follows. Section 2 presents a synthesis of the
research that has been developed on MCS and innovation. The research methods adopted
are described in Section 3, as well as the data collection and the data analysis procedures.
Section 4 introduces the case company. Section 5 provides a description of how management
control tools are used according to the LOC framework and then describes the combination
of the levers regarding innovation. Section 6 provides a discussion of the results, the
conclusions, limitations of the study and some avenues for future research.

2. Literature review
As stated by Chenhall and Moers (2015), nowadays MCS encompass more complex
calculative practices owing to the challenges that managers encounter in managing under
uncertain conditions in which innovation gains greater importance. The literature on
innovation and MCS reports different approaches followed to analyse the role of MCS in
innovation. Authors have resorted to a variety of frameworks upon which to base their
findings. Both in management accounting literature in general [see Martyn et al. (2016) for a
review of empirical research studies on LOC] and in this stream of research, a common
framework used is Simons’ levers of control. As Aaltola (2018) mentions, Simons’ levers of
control framework has offered a new perspective for management control. Indeed, the LOC
framework represents a comprehensive way of balancing innovation and efficiency and
since the publication of Simons’ works, some authors have re-examined the role of MCS and
PMS on innovation (Moll, 2015). The LOC framework has the distinct feature of considering
the use of multiple controls as well as different ways of using management accounting
(Chenhall and Moers, 2015) – and in this new paradigm, as some authors put it (Moll, 2015;
Barros and Ferreira, 2019), a common theme is the use of a multiplicity of controls.
Analysing more than isolated systems has been well grounded in the literature (Malmi and
Brown, 2008; Ferreira and Otley, 2009; Grabner and Moers, 2013).

2.1 Simons’ levers of control framework

Conceptually, the LOC framework proposes that to successfully implement strategy,
managers must considerer four levers of control: diagnostic, interactive, beliefs and

3
JAOC boundary systems (Simons, 1995, 2000). Diagnostic controls are the more formal information
18,4 systems that managers rely on to monitor outcomes and correct deviations (Simons, 1995,
2000). To operate diagnostic levers managers must set goals, align performance measures,
design incentives and review and follow exceptions (Simons, 2000). Interactive systems are a
two-way process of communication (Mundy, 2010) that allow managers to involve
themselves in the decisions of subordinates on a regular basis (Simons, 1991, 1995, 2000).
574 Bisbe et al. (2007) engage in an in-depth examination of what defines an interactive control
system and provide five properties for it. It arises from these properties that using MCS
interactively comprehends an intensive use by top management and operating managers,
face-to-face challenges and debates focused on strategic uncertainties and a facilitating and
inspirational involvement (Bisbe et al., 2007). Belief systems, which are reported to be a key
control lever in companies with a flexible culture (Heinicke et al., 2016), are a set of
definitions for communicating core values, purpose and direction within the organization
(Simons, 1995). Boundary systems establish “the acceptable domain of activity for
organizational participants” (Simons, 1995, p. 39). These systems limit the opportunity-
seeking behaviour of the employees considering the risk that should be avoided (Simons,
1995).

2.2 Previous research in the interplay of the levers of control and innovation
Research until now has allowed us to perceive the importance of interactive control in
facilitating internal and external information flows (Lopez-Valeiras et al., 2016), in providing
guidance for search, legitimacy to autonomous initiatives and stimulus in low innovative
companies (Bisbe and Otley, 2004), in providing open forums for debate (Bedford, 2015) and
in helping the critical reflection in teams (Matsuo and Matsuo, 2017). Diagnostic control
systems are credited with importance in the success of projects (Rezania et al., 2016), a
beneficial role in new product development (Müller-Stewens et al., 2020) and even with
providing space for necessary experimentation in the case of companies seeking to exploit
existing markets and technological capabilities (Bedford, 2015). For the two remaining
levers, boundary systems have been said to have a positive role (McCarthy and Gordon,
2011; Bedford, 2015), whereas belief systems have collected very little evidence.
Notwithstanding, a core feature of the framework is that the four levers work on the
proposition that only by being used together is it possible to achieve control of the business
strategy (Simons, 1995, 2000). Indeed, “to be most effective in balancing innovation and
efficiency, the LOC framework was envisaged to operate with the four levers working in
combination” (Chenhall and Moers, 2015, p. 7).
Previous research supports the importance of the combined use of the four levers and has
gone beyond analysing them in isolation (Hoque and Chia, 2012; Bedford, 2015; Curtis and
Sweeney, 2017; Baird et al., 2019; Zarzycka et al., 2019). Hoque and Chia’s (2012) findings
suggest that all the levers work together to help the organization achieve effectiveness.
Widener (2007) concludes about the complementarity and interdependence of controls in the
LOC framework, with interactive systems influencing both boundary and diagnostic
systems and belief systems influencing the other three systems. Supporting this idea of joint
operation amongst the levers, Tuomela (2005) concludes that PMS can be used as both a
diagnostic and an interactive system and that their use could also have an impact on the
belief and boundary systems. Mundy (2010) stresses the importance of using the four
systems together to gain a broader understanding of the interaction between managers and
MCS in the former’s attempts to guide, direct and control organizational activities. Speklé
et al. (2017) also build on this idea of combined work and compute a measure of intensity on
the use of the levers and find a positive effect of that measure with creativity.

4
 In fact, the levers have specific features and ways of manifesting their presence in Management
practice, and it is in their interdependencies, which warrant consideration, that relevant Control
aspects reside. Similarly, the emphasis that managers put on the use of controls could be
Systems
different depending on different circumstances. Kruis et al.’s (2016) empirical findings reveal
different patterns of control whereby units place different emphasis on each of Simons’
levers. This allowed the authors to conclude that balance can instead be achieved through
various combinations of these levers. 575
Bellora-Bienengräber (2019) suggests that different emphasis is given to the levers
within different degrees of innovativeness and the emerging product development
strategy. Moreover, it has been found that interactive and diagnostic approaches are
used to differing extents according to the stages of the organizational life cycle (Su
et al., 2017) or according to different innovation modes (Bedford, 2015). Guo et al. (2019)
express their expectation that the relationship between MCS and innovation will be
specific to the context. Ditillo (2004) suggests, as well, that MCS may vary amongst
companies of different industries and between hierarchical levels. For instance, in this sense of
variation, Aaltola (2018) found no presence of diagnostic controls in their case study. Indeed,
the LOC framework can have different roles across different aspects of innovation and in
integrating them (Chenhall and Moers, 2015).
Furthermore, in the realm of innovation, Curtis and Sweeney (2017) found strong mutual
reinforcement between control systems, distinguishing between consistent reinforcement
and countervailing reinforcement MCS, with the latter creating dynamic tensions. Tensions
are a central and largely unexplored area. As expressed by Van der Kolk et al. (2020), doubts
remain about what tensions really entail and the processes that create them. Certainly,
previous studies offer some evidence and research has continued to grow in recent years,
especially in the LOC framework territory.
Mundy (2010) mentions that managers’ efforts to balance interactive and diagnostic uses
create dynamic tensions. In Henri’s (2006) survey research, it is concluded that the balanced
use of interactive and diagnostic systems creates a dynamic tension that contributes in a
positive way to innovativeness in highly uncertain environments and in cultures with
flexible values. In the same line, Müller-Stewens et al. (2020) find that the combination of
interactive and diagnostic uses complement each other and are positively related to both
innovation rate and product newness. Dynamic tension may also be beneficial in organizations
with contradictory strategic agendas or with pressures for creativity, flexibility and change
(Bedford, 2015), and attention should be given to both diagnostic and interactive uses of MCS in
each stage of the organizational life cycle (Su et al., 2017). Zarzycka et al. (2019) reveal through a
case study in management accounting services that Simons’ levers are mutually reinforcing,
having found that all levers give support to the others to achieve their aims. Baird et al. (2019)
explore the impact of the enabling (interactive and belief) and constraining (diagnostic and
boundary) levers, determining that they facilitate an active environment in which management
innovation can be developed.
In turn, Van der Kolk et al. (2020) provide conceptual clarification on the notion of
tensions, identify them as “being relations that can involve positive (complementarity)
effects simultaneously (tension complexity) and can change over time (tension dynamics)”
(Van der Kolk et al., 2020, p. 2). Furthermore, the authors propose three key characteristics to
mark a tension between elements: balance, balance tendency and intensity. The first is the relative
presence of the elements that constitute the tension. The second characteristic is the oscillation of
the tension over the time. The third, as the name suggests, is the strength of the elements that are
in the tension being analysed.

5
JAOC In sum, given this background of literature, in which different solutions, emphases, uses
18,4 of systems in practice could surface and interrelations could appear, the current study turns
to an innovative industrial company to explore:
 the extent and nature of the use of controls according to the LOC framework; and
 how these controls work together to address the relationships and tensions amongst
Simons’ levers.
576
In this way, it is possible to analyse the interrelationships that may exist between the levers
and how they work and engage with one another, making use of the conceptual
developments advanced by Van der Kolk et al. (2020).

3. Research methods
3.1 Research approach
Yin (2018) clarifies that the case study is an appropriate method for “How” and “Why”
research questions, allowing the researcher to understand holistically complex social
phenomena. With this in mind, an in-depth single case study approach was followed to
understand the nature and extent of MCS use according to the LOC framework in an
innovative company and how they work together. The case site for this study is ACC, an
industrial company dedicated to the production of granulates and agglomerates of cork for a
variety of applications.
Scapens (2008) points out that the selection of case studies should be made in such a way
that the researcher can focus on the research questions to be addressed. In this sense, the
case firm gathers two important characteristics for the purposes of this study. First, it has a
strong culture and history of innovation. The company is today considered the innovative
branch of a larger Portuguese group with an agenda and strategy very connected to
innovation. Also, the case company is constantly engaging in product development projects and
at the moment of the study had several ongoing projects. In second place, the case company has a
well-known orientation to results supported by the use of performance measurement and control
practices based on a BSC methodology in continual use since approximately 2003. The use of the
BSC at the company has been previously studied by Ferreira (2010).

3.2 Data collection and analysis

Yin (2018) mentions that evidence in case studies can come from multiple sources. By means
of triangulation, whenever possible, multiple sources of evidence were used in two phases
between November 2015 and September 2016. Also, this use of multiple sources obtains
richness in descriptions and explanations and a more in-depth understanding of what really
is going on in the field.
First, a pilot study was conducted with the goal of gaining insights and a basic
understanding of the company, especially in their management control practices and
innovation processes. An initial interview was done to present the project and to clarify practical
aspects of the work to be developed. Five interviews were done thereafter with key collaborators
in the area of management control and innovation to obtain an early understanding of the
company and update the information coming from a previous study undertaken in the same
company (see Table A1 for a list of the interviews conducted – Appendix). Although prepared in
advance with a set of questions/themes, a free approach was followed that allowed pursuing new
issues and ideas as they emerged (Scapens, 2008). Also, visits including guided tours to the
facilities and the observation of an alignment meeting in the company were conducted (see
Table A2 for a list of the visits – Appendix). These visits to the showroom and production

6
facilities provided a better understanding of the production processes, the raw materials qualities Management
and potentialities, the products, etc. Control
After this first phase, lines of inquiry and the full range of employees to interview were
established. As they are especially helpful to obtain explanations for events and the
Systems
perspective of participants (Yin, 2018), interviews were our main source of evidence and 26
more interviews were conducted (see Table A2 for a list of the interviews – Appendix). To
triangulate the insights collected and to include the perspective of as many levers of
management involved in the PMS as possible, we decided to interview collaborators from all 577
of the departments. In addition to interviewing all of the department heads (except one) in
these 26 interviews, in the case of the departments having more than five employees, two more
employees in the second line of management were chosen. In the specific case of the production
department, which includes most of the employees in the company, all of the second-line
managers were interviewed (see in Figure 1 the organizational chart of the company). These
interviews covered topics related to the control practices in place, their use, the company’s
positioning toward innovation and processes of innovation.
In the end a total of 32 interviews were conducted, with an average duration of 1 h.
Except for the first one, all interviews were recorded and then transcribed for further
analysis. In the visits made to the company, as recording was not feasible, notes were taken
and extensive reports were written soon thereafter.
The data collected in the interviews in both phases were complemented with internal
documents of the case company. In addition to the publicly available documentation,
throughout the whole period we were given access to internal information such as internal
reports, organizational charts, PowerPoint presentations of the strategic map, information
about the goals to achieve and their evaluation measures, employee performance evaluation
examples and examples of monthly reports of results.
Concerning data analysis, with the help of the qualitative software package MAXQDA
12 the transcripts were searched and marked, grouping similar thoughts that allowed the
identifications of Simons’ levers (diagnostic, interactive, belief and boundary systems) and
how the case company MCS were being mobilized. Data were analysed according to
operational definitions of these levers, which had been previously delineated based on
previous studies or theoretical references about Simons’ levers and in examples that they
provide. This allowed the coding process to progress in a consistent way throughout the
interviews (Miles et al., 2014). During this process it was possible to start understanding
how the systems were working together and what they possibly represented to innovation.

CEO

CEO Assistant

Finance Human Resources

Markeng Quality and enviroment

Global segment
Innovaon Footwear Europe Sales
North America
Asia sales
management and
Operaons
Figure 1.
sales Business
development Company
organizational chart
(main departments)
Source: Company finance department

7
JAOC 4. Setting the scene
18,4 4.1 A Glimpse of the company and its attitude toward innovation
With the base of its operations centralized in Portugal, ACC is a company integrated within
a major cork group that has a worldwide presence and different business units. ACC is one
of these business units and has as main activities the production of granulates and
agglomerates of cork and cork with rubber, as well as their subsequent commercialization.
578 This commercialization may be in the form of the granulates, agglomerates or by further
transforming these into a wide range of products. The granulates and agglomerates
produced have thermic, acoustic, sealant, aesthetic and insulation qualities that allow the
subsequent production of numerous products. For example, these agglomerates may be
used as components for footwear, bulletin boards, home accessories, joint seals for cars,
transformers, expansion joints, anti-vibrators for trains and thermal and acoustic insulation
for floors, amongst other products. Regarding its products, a document collected in the
company website mentions:
Internationally renowned for its R&D credentials, the company’s pioneering spirit – coupled with
cork’s unique properties – has made it possible to deliver a remarkable range of high-
performance, state-of-the-art products (ACC website).
As noted in the passage, ACC is renowned for its innovativeness. Indeed, innovation is of
paramount importance and is perceived as crucial to enhance the potentialities of its raw
material, cork. This attitude and posture have made ACC the most innovative business unit
of the group and the starting point of most innovation projects, as noted in this remark:
[. . .] the quantity of new applications that come out, the reinvention of products and their
applications leave from here [The company] (Head of Innovation).
The same interviewee continues:
If there is innovation in the group, it is here that you find it for sure.
Another illustration of the company’s innovative commitment is this excerpt from the
description of this business unit in the group’s annual report for 2015:
The launch of new products on the market and the development of new applications, two central
goals of the BU’s strategy, also made an important contribution to sales growth as well as helping
to create value in the market (Holding 2015 report).
Therefore, the company also has a strategy with innovation as a core element:
[Speaking about the company ambitions] And, then the turnover and, also, the component of new
products, new applications, new turnover and its weight. These are the big three, the big three
objectives or the big three goals that we are going to use as a beacon (Head of Management
Control).
Also, a signal of the importance of this focus on innovation, shortly before the beginning of
this work, an internal restructuring of the company introduced a greater alignment of
innovation activities and a better use of resources to develop new solutions more quickly.
These changes led to the creation of a specific department dedicated to innovation. Figure 1
presents the organizational chart at the time of data collection.
Along with the structural change the company implemented an innovation system based on
a stage gate approach. The model is a classic stage gate with decision gates that
compartmentalize the entire process and allow for monitoring the projects under development.
At each gate decisions are made by the management team, while the projects are guided by a

8
manager who works together with a multidisciplinary team of internal elements of the Management
company. This implementation also signalled to the workforce the importance of innovation. Control
Systems
4.2 Amorim Cork Composites’s management control practices
Regarding management control practices, the company has maintained some stability over
time (Ferreira, 2010; the author analysed the BSC model in this company). The main visible
feature of the case company’s management control practices is still a well-structured and 579
fully integrated PMS. By indication of the holding, since 2003 the business unit has used a
BSC methodology that now has a well-defined cycle and is in a very mature state (Ferreira,
2010). At the end of each year a review is conducted of the strategic objectives and a strategy
map is prepared with the normal four BSC perspectives and guidelines that make a double
input matrix forming the map. Having a three-year window (for the period 2016–2018) the
strategic map comprehends three strategic guidelines: growth, value and efficiency. For this
period, a total of 23 objectives could be counted and are divided between the perspectives of
the BSC and the strategic guidelines. In the strategy map, the causal relationships are also
presented. Notwithstanding, a set of indicators, strategic initiatives, the persons responsible
for the strategic objectives and the initiatives, milestones, resources needed and actions to be
taken during the following year, are considered and established. Then, a strategic scorecard
is designed for the business unit itself and for each of the strategic guidelines. The strategic
objectives, strategy map and initiatives are then communicated throughout the organization
with some alignment sessions.
Moving beyond the corporate level, these strategic objectives are decentralized to all of
those involved in the system by individual contracts of objectives. The drill down process of
the objectives is done in a top-down perspective so that all of these contracts are chained
amongst the various hierarchical levels of the organization. Usually these contracts consist
of five or six objectives agreed upon by the department head and each collaborator. The
contract between each manager and collaborator is then finalized and the weighting of each
objective is negotiated for the final evaluation computation that is used in the company’s
incentive system.
Apart from some very specific uses, such as the planning of raw material consumption,
the company disregards budgeting practices.
The importance that the company gives to innovation is visible throughout the BSC
system. While the company has a serious commitment to deliver remuneration on invested
capital, which is emphasized in the strategy map, it is clearly in the minds of all employees
that innovation is the North Star. Furthermore, the model also incorporates measures and
objectives related to innovation that then end up in the individual contracts created, even
though this effort is not divided (or subdivided) equally amongst all those involved. Some
persons end up with more responsibility in this than others. As expected, the person
responsible for the innovation department has an individual-objectives contract that is more
centred on the strategic objectives related to this area, but as new product development is
very market oriented, salespersons of the various sales departments themselves have in
their individual-objectives contracts goals of sales for new products:
It is one of the goals that the segment managers have. Development of new products. Then the
objective is based on the number of products that are developed and their sales volume (Head of
the Global Segment Management and Business Development Department).
This feature thus reinforces the attention of the sales team on the sale of new products
already developed and on paying constant attention to the search for new ideas. A similar

9
JAOC idea applies as well to the global segment management and business development
18,4 department.

5. Levers at the case company

5.1 Diagnostic use of management control systems
With the practices clarified earlier it was perceived that managers used the BSC model in a
580 diagnostic way, but also in an interactive way. Diagnostically, the strategic scorecard is
used for the basic functions of tracking the achievement of the established objectives and the
analysis of indicators seen to be fundamental for the accomplishment of the strategy.
Consequently, there is a formal routine that allows the management control department to
undertake a monthly monitoring of all company objectives as well as those of the individual-
objectives contracts. This monitoring is then communicated to all those who intervene in the
system through a software created for the company that automatically sends reports to
those evaluated and to their respective superiors. This process and the extension of the
analysis is evident in several of the interviews conducted:
[. . .] Then the monitoring, which is monthly, is done in this software. And, this software
automatically sends, when the monitoring is closed, an email with the monitoring in pdf format to
the people, to the person in charge and to his/her superiors and to other people that can be
parameterized in the system. [. . .] They have the details and why they have reached or not [the
objectives]. Both the boss and the collaborator (Head of Management Control).

Therefore, we, on a monthly basis, always look at this [BSC] and see what is better and what is
worse. To deepen, too, to correct ourselves by changing what is needed (CEO).
Associated with this tracking process, the company also has an incentive system for all of
those that have an individual-objectives contract. As mentioned by Simons (2000), extrinsic
motivation in the form of bonuses and incentives can be made contingent upon performance
reported in diagnostic control systems. In the case company, a financial bonus is awarded
according to some predefined stages of achievement of the objectives.
The monitoring process analysed above is quite extensive and detailed and later serves
as the basis for monthly meetings held between the managers of this business unit and the
managers of the holding:
But monitoring is just the trigger of a discussion process and it is the basis for us to define our
strategic or more operational guidelines (Head of Human Resources).
After the close of the monitoring process the executive committee has a period of a few days
to ask questions about any of the results presented. These questions are often forwarded to
the various departments, which have a few more days to respond. This process is explained
by the person in charge of management control:
[The monitoring report] is sent to the board of directors and the executive board who,
traditionally, have two business days to ask questions. Therefore, they read the folder, the
documents and say: I did not realize this, I did not quite understand that. Or, it may not be a
matter of not realizing it, it may be a matter of: I would like to approach and drill down a bit of
this. [. . .] We internally distribute these issues and find who is responsible for answering these
questions.
From here, interactive control processes start to be perceived in which the managers guide
the rest of the organization to search for new opportunities by focusing on strategic
uncertainties (Simons, 2000).

10
5.2 Interactive use of management control systems Management
Although it cannot be separated from diagnostic control in the sense that it also reveals Control
tracking the progress, the search for dialogue that ends up arising from the questioning
phase shows signs of interactive control. Managers encourage the subordinates of various
Systems
hierarchical levels to engage in searching, analysing and discussing the monthly
information (Simons, 2000), which helps to improve the present plans or the strategy. The
procedure therefore represents a form of involvement of the top managers with the
subordinates and a form of exchanging information. Internal communication and
581
involvement are promoted while the meetings become more productive about the strategic
reflection, the actions, the measures necessary to consider in light of the results obtained and
the uncertainties regarding the achievement of the intended strategy. As posed by the head
of management control:
[. . .] This was a great gain, indeed, in the dynamic of the process. In addition to all the
involvement it brought from all executive direction.
Also, the managers pay constant attention to the information produced by the system. At
the case company, the monthly meetings conducted within the top management and
managers of the holding represent a moment of exchange that can be understood as
interactive control. In addition to serving as an opportunity to analyse the monitored results,
these monthly meetings are also used to examine the specific state of each strategic
guideline and the implications. The strategic themes are discussed at these meetings and as
Ferreira (2010) mentions, the managers at the company end up using the BSC to bring up
new plans and strategic initiatives. Therefore, with this positioning the managers have face-
to-face discussions, challenging what has been achieved and what the strategic uncertainties
are that the future will bring, with a facilitating, inspirational and intensive involvement of
all the top management. These are essential properties according to Bisbe et al. (2007).
Thereafter, additional time is spent in the various departments to discuss and interpret
the results of regular monitoring, which is another signal of an intensive use by middle
managers:
Monthly, all sales managers hold meetings with their teams to measure gaps and to see what action is
taken to ensure that goals are met. The same goes for the marketing and segment management teams
(Head of the Global Segment Management and Business Development Department).

The department holds monthly meetings [. . .] about the measurement of the objectives with the data
that we obtain from the management control. We have a monthly meeting and see if there are
deviations in the fulfilment of certain types of indicator, which can be done to reverse some negative
trend and act in consonance (Project manager).
There is also a participatory process regarding innovation. As reported by the head of the
innovation department, the company has established a committee in which the projects,
decisions and aspects related to innovation are discussed:
Then, we have the governance of the innovation system that is done by a committee. The
innovation executive committee [. . .] all that has to do with project status, with innovation
initiatives, is discussed and approved in this executive committee of innovation, where the
administration of the company of all the areas is.
Another signal of the participatory process is also the projects teams that are assigned by
the executive committee and that engage collaborators from various departments in the
development of that project:

11
JAOC And then, we have all the projects that are done, they are multidisciplinary projects and, therefore,
they have transversal teams in the organization that are appointed in executive direction, by the
18,4 executive committee. They are part of the project, with a project leader and then this transversal
team is managed in the organization (Head of Innovation).
In sum, there is a clear involvement of top management around the pillars of strategy and
innovation is given a primary focus of discussion and debate. This debate is not restricted to
582 the executive management, as more moments exist for innovation issues with a more open
internal population, especially amongst the sales, innovation and global segment
management teams. These processes thus fall into the category of what is meant by
“interactive control.”

5.3 Boundary and Belief systems

It is also possible to identify the presence of elements comprehended in what is classified as
boundary and belief systems. At the case company, these systems are used to communicate
and promote the involvement of the organization with innovation. It is well established that
the company’s strategy is founded on innovation. The mission, short and simple, makes it
clear that what is wanted is to promote an attitude oriented to new developments. In the core
values of the company “innovation and creativity” clearly indicate what the company stands
for. There is also a set of mottos constantly repeated by the entire population of the
organization. As an example, an institutional PowerPoint presentation of general
information about the company has as heading the following expression:
Together toward innovation
Another example comes from the expression that is the beginning of the company’s
presentation taken from its website:
Innovation is our attitude and driving force
This innovation message is also communicated in some elements of the MCS and other
internal documents:
[. . .] We have, for example, a commercial manual in which in the first chapter it has the strategic
positioning of the company and in which X% of the growth in the triennium must result from
innovative products. New products (Head of Human Resources).

We, in the strategy map say that we want to have a certain sales volume, but that we also want to
have new products and that we also want to have priority segments (Head of Management Control).
Then, there is the boundary system. By definition, the company’s boundary system
encapsulates acceptable activities. Although elements could be found here and there at the
case company, they were less visible. The boundaries of strategic action are communicated
through the principles and pillars of the strategy, giving guidance on various aspects such
as financial performance and market positioning. This finding is also present in the study
developed by Ferreira (2010).
Also, in relation to innovation, the model gives some guidance on the field to which the
development effort should be directed. In this sense, the person responsible for innovation
also spoke about the determination of the challenges within each strategic segment. This
represents a way of guiding the innovation effort and ensures that it also acts as a domain of
acceptable activities:
[. . .] What are the areas of strategic challenges for innovation in all these segments that are
important for the company? We are now finishing this process of clarification to give us clues.
Then we have to go after concepts and begin to develop.

12
These limits are then more specifically materialized in the stage gate system. The “go” or Management
“no go” to the next phase is given with decision-makers having in mind these defined limits. Control
For example, in the first decision gate the ideas are set in a referential based on these limits, Systems
which will indicate if it is worth continuing the development or not:
Then we have here a way to measure which projects fall into this definition [strategic alignment].
And it is the entry point of all the value propositions we have developed. [. . .] They will be
classified in these referentials so that we can give a sense of priority to develop (Head of 583
Innovation).
Simons (2000) states that a set of prescriptions and rules must be linked to a credible degree
of punishment. In the case company, it cannot be strictly stated that there is a punishment
for misbehaviour, although it is implicit that failure to meet the objectives of individual
contracts will mean that the annual incentive bonus will not be awarded. Innovation
objectives are included in some of the contracts, so not achieving these objectives could
jeopardize an end-of-year bonus.
In summary, Table 1 presents the main visible features of the control practices according
to Simons’ levers.

5.4 Combined use of the four systems

As expected, at the case company the four levers end up acting in combination, and it is in
their combined work that innovation can coexist with innovation. On the one hand, all the
dialogue, debate and discussion promoted by the interactive use of control systems (as
discussed in Section 5.3) create the necessary forums to generate ideas:
We perceive the trends, we perceive how the market is evolving. And then we try in advance to
develop products that are likely to be used in that segment of activity (Head of the Global
Segment Management Department and Business Development).
Indeed, this represents a positive and inspirational force that ties all the organization around
the innovation issues, giving way to the emergence of new products and/or new applications
of existing ones. However, this emergence promoted by interactive use of MCS is
counterbalanced by the diagnostic uses of MCS and the boundary control systems. They
come into play to guarantee the alignment with the strategy and objectives of the company:
It is good that the company has implemented a set of processes that ensures that we have, on the one
hand, processes of attracting opportunities and ideas. [. . .] but, we have to leave some opportunities

Levers of control Practice

Diagnostic – Objectives defined to keep track on progress

– Drill down of the strategic objectives to employees
– Establish routines to track progress monthly
– Incentive system attached to objective contracts Table 1.
Interactive – Involvement and constant interactions between the hierarchical levers Authors’ summary of
– Regular meetings and moments to promote debate and discussion
the levers of control
– Regular debates between the top management and the managers of the holding to
assess implication and, therefore, strategic uncertainties framework based on
Boundary – Communication of the strategic boundaries by the pillars of the strategy the one presented by
– Limits could also be seen in the decision gates of the innovation model Hoque and Chia
Beliefs – Mission, core values and mottos around the company (2012)

13
JAOC behind [. . .] for opportunities that we perceived to be more oriented with the strategic alignment of the
company and to be more attractive (CEO).
18,4
Innovation is a panoply and a very large field. We cannot say: look, let’s innovate! Let’s innovate!
We need to have a strategy. We need to know what it is that we want to innovate. Which way do
we want to go? What alternatives do we want to explore? And the best way to do this is with a
contract of objectives (Head of Production).
584
The use of systems in both diagnostic and interactive ways also signals the importance of
the profitability of new developments:
[. . .] The focus of the organization is that being new is not enough. Only innovate is not enough.
We must innovate and bring in two very important components: One, we have to bring value. We
must innovate and bring value. And, bring sales volume (Global Segment Manager).
This need of profitability is important to the case company considering their past, in which
new products appeared but most were unable to generate sales. The use of the BSC in a
diagnostic way reinforces the need for new developments to be able to generate value and
sales. The setting of sales targets of the new products developed on the various teams
involved in the innovation processes ends up ensuring this. This was commented on by the
projects’ managers:
If I have a sales goal it means that I will do the development thinking that has to be really
developed and I will not simply deliver a report that will be the best possible. [. . .] It is an
objective [the sales objective] that really has a more concrete way of measuring and that has an
impact on the objectives of the company. Because, in practice, the company does not only want to
do projects (Project Manager 1).

It makes sense that the objectives cover a real value associated with the product whose clear
objective is to put it on the market and make sales and results (Project Manager 2).
Also, through the monthly monitoring that is done on the achievement of these sales
objectives there is a constant reminder of the need to generate sales volume in the new
developments. These two concerns regarding the innovation effort and the need for
profitability of the new developments are also present in the objectives of sales of new
products in the Innovation department and the Global Segment Management and Business
Development department. Although sales are not in the hands of these employees, this
objective once again reinforces that these departments must maintain an innovation flow:
[. . .] And if we have as one of our goals to have X% of the sales volume in new products, there
must necessarily be this permanent concern. Add products to the portfolio, create new products,
find new products for new applications, replicate best practices [. . .] (Head of the Global Segment
Management Department and Business Development).
In both cases, we should keep in mind that monitoring is linked to an incentive system that
rewards the accomplishment of these objectives. Furthermore, internal management control
also monitors a set of indicators that are considered necessary for the attainment of these
goals, and the strategy map very clearly indicates that the primary purpose of the company
is to create value for the capital invested.
However, to guarantee the profitability of the new developments, the company also uses
its stage gate system. As reported by Jørgensen and Messner (2010), the stage gate process
also plays a role in calling the attention of project managers and their teammates to product
profitability. Throughout the various decision gates, expected costs, market potential and

14
other metrics of interest are considered, which allows assessing the return and size of the Management
potential businesses for the product that is being developed: Control
Another thing here [the projects in the pipeline] is the strategic alignment of the projects. Here are Systems
the segments that are strategic for ACC. It is one of the ways of screening when a value
proposition arrives [. . .], we see if business potential is gathered, capacity, strategic alignment
[. . .] and, we have a set of terms defined that we cross with product management (Head of
Innovation).
585
When talking about the set of projects under development, the head of innovation points out
another important concern in the above comment: the need to align the new developments to
the strategic alignment of the company by considering the strategic segments defined.
These strategic segments are framed within the boundary system and are reflected in the
stage gate model, in which they end up as screening criteria.
Subsequently, elements of belief systems come into play:
Usually at meetings, we always talk about goals and performances. And so, it is not possible not
to talk about innovative products. We give them a lot of importance [. . .] We always talk about it.
In every communication, we talk about it (CEO).
Hence, belief systems help to maintain awareness and adherence to the core values, thereby
supporting and complementing the work done by the interactive system.

6. Discussion and concluding remarks

Depending on the needs of each organization, managers choose the control tools to be used.
Inevitably, these controls end up working together, meaning that they do not work in
isolation but instead complement one another. It is therefore not unexpected that the
balancing of Simons’ levers of control differs from one organization to another. This case
study report has sought to describe how managers mobilize the MCS at their disposal
through the lens of Simons’ levers of control framework. From the data collected it is seen
that ACC uses a BSC model, a stage-gate model, meetings, mission, value statements and
internal communications to mobilize the levers of control.
The control environment of the case company suggests that all levers should be involved
in the management of innovation and that each and all collectively have a role to play. Signs
of all the Simons’ levers were found, and these ended up working in combination. Diagnostic
and boundary systems work closely with each other, providing the strategic direction for the
innovation effort and reducing the uncertainty of results, while the inspirational forces of
interactive and belief systems create the needed proactivity. Beliefs and interactive control
work together and in a complementary way along with the complementarity work of
boundaries and diagnostic control. The combined presence of the Simons’ levers
demonstrates that consistent and countervailing reinforcement exists between them,
according to the distinctions enunciated by Curtis and Sweeney (2017). At first, it is possible
to perceive that the inspirational levers (interactive use of controls and belief systems) and
the constraining levers (diagnostic use of controls and boundary systems) provide a
consistent reinforcement within these pairs. This is consistent with the principle that guided
Baird et al. (2019) to group these levers into enabling and constraining levers, respectively.
This strengthens the argument that the levers mutually reinforce each other (Curtis and
Sweeney, 2017; Bedford, 2015).
On the other hand, some signs of countervailing reinforcement also exist. With our
results it is possible to point out that the combination of interactive/beliefs use of control
systems and the combination of diagnostic/boundary use of control systems allows

15
JAOC expanding the positive effects of the first group without jeopardizing benefits to the
18,4 company. By drawing an analogy with a car, as did Simons (2000), the inspirational forces
are the accelerator providing speed while the more constraining forces of the model are the
steering wheel, which permits reaching the destination. Without this steering wheel,
probably the inspirational forces would result in a deviation of attention from the more
general objectives of the company. This may reveal the presence of countervailing
586 reinforcement. As posed by Zarzycka et al. (2019), countervailing reinforcement occurs when
levers that provide constraints are combined with levers that push employees’ creative
thinking toward new solutions.
This push in different directions causes tensions to emerge. Building on Van der Kolk
et al.’s (2020) conceptual developments, the results make it possible to perceive the
complexity attributed to tensions by these authors, who point that competing and
complementary forces may exist simultaneously. This is what our findings point to, as
described above. Controls used according to LOC both complement and compete to
guarantee a flow of product innovations while profitability and alignment are achieved.
Likewise, it is possible to analyse the presence of two of the characteristics they enunciate:
balance and intensity [1].
Regarding balance, it is possible to see from our findings that the presence of control
systems mobilized diagnostically and interactively is stronger, while those mobilized by
beliefs and boundary systems are weaker. Regarding intensity, the case shows that the
intensity of use differs depending on the lever analysed. Boundary systems are less
emphasized than the others (lower intensity), with diagnostic and interactive systems
having a greater intensity of use. Nevertheless, a solution is still achieved despite the
different emphases and is effective in the case context. Moreover, in line with Kruis et al.
(2016), it is not implicated that each lever is used to the same extent as the others. The levers
can be used in differing degree. However, in opposition to Van der Kolk et al. (2020), our
results seem to point that organizations can have control practices and systems implemented
and running that do require managers to make conscious and active alterations to the intensity
of use of one control element over another. The control environment can have specific moments
at which it is normal that the intensity of certain control elements manifest more than others,
while overall they are able to remain intertwined.
Furthermore, these uses of control show that it is possible to have structured control
processes that do not hinder the innovation effort, while at the same time allowing
management to better exploit them. Aligning with the conclusions of Speklé et al. (2017) in
relation to creativity and control, our grounded study shows that managers do not need to
make a trade-off between innovation and control. Structured control systems can ensure the
strategic fulfilment of the objectives to which an organization commits without needing to
sacrifice innovation. Indeed, the negative forces do not constrain innovation acting in the
bottom line in reducing the uncertainty of the innovation results. This reinforces the
importance of this role of control, which Akroyd and Maguire (2011) had already revealed in
the specific case of innovation projects. Also, ACC reveals a greater use of feedback and
measurement systems. Curtis and Sweeney (2017) attribute a protective role of feedback and
measurement systems to innovation, which is endorsed by the role they perform in the
alignment of innovation with the strategy and the proactivity they cause amongst the
company’s collaborators.
The case study findings also show some signs of a way of managing the control problem
mentioned in the study of Bellora-Bienengräber (2019). The author speaks about two control
demands that conflict with each other in the product development function: the need for
opportunity-seeking and creativity and the need to avoid risk-seeking that can ultimately

16
endanger goal achievement. At a firm level this conflict seems to appear in the case Management
company and the combined use of levers identified ends up addressing it. Control
With this background in mind, the present study contributes to both literature and
practice. Although a growing number of studies have accumulated in the literature about
Systems
management control and innovation, the need remains to dig deeper into the control
practices to extend our knowledge about innovation processes (Major et al., 2018) –
especially on how control systems can relate to innovation in a joint way and how tensions
are enacted and managed between control and innovation. 587
First, the results of this study allow us to dig into the inner workings of the levers of
control, bringing into the discussion the recent work of by Van der Kolk et al. (2020). Indeed,
consistent reinforcement within the inspirational and constraining levers creates, as
expected, a push in different directions [as Curtis and Sweeney (2017) showed], followed by
countervailing reinforcement that also seems to be present. This may create tensions in a
two-dimensional relationship as explained by Van der Kolk et al. (2020), with signs of
competition and complementary effects. Although the levers are all present, different
relative presences (balance characteristic) are seen and controls within these levers are used
with different intensities.
Second and in parallel, the theoretical framework and methodological approach
followed in this study has allowed us to shed light on the simultaneous use of different
control practices. For quite some time the management accounting and control
literature has recognized the need to not look at systems in isolation (Malmi and Brown,
2008; Ferreira and Otley, 2009; Grabner and Moers, 2013). The case study of ACC
provides evidence on how managers mobilize the MCS at their disposal to maintain a
strong strategic emphasis on innovation in the specific context of an industrial
company. As mentioned in the first paragraph of this discussion, a range of practices
were found and described in the findings.
Third, as the results show signs of the presence of all the levers of control, it is possible to
contribute to the literature by showing how a controlled environment may still be
innovation friendly. Similarly, this study allows us to better understand how organizations
can manage and maintain innovation within their control practices using useful systems.
This case study can give practitioners insights regarding the design and use of MCS in
companies that have a strategy strongly oriented to innovation.
These contributions respond to several calls to dig into these matters of the role of control
in innovation (Moll, 2015; Fried, 2017; Major et al., 2018; Baird et al., 2019) and to address this
line of research through qualitative approaches that enrich the debate (Henri, 2006; Barros
and Ferreira, 2019) and allow for the capturing of more finely-grained evidence.
Amongst these contributions, there are several possibilities for future research.
First, as this study reports the example of only one company, generalization is
restricted (Mundy, 2010; Miles et al., 2014). Furthermore, different companies, sectors
and management styles may need to use different levers and the choice of the way in
which an MCS is used ultimately depends on the managers. As Simons (1991)
suggested, there are fundamental differences in how managers use control systems.
Thus, the literature would benefit greatly from more case studies and even multiple
case studies. This is even truer if one takes into consideration the idea of Revellino and
Mouritsen (2009) that innovation and controls are co-developed. Against this, it will be
valuable to use longitudinal case study approaches to study the role of MCS in
innovation, how tensions evolve over time, what strategies managers use to deal with
them and how they deal with their outcomes [see Lövstâl and Jontoft (2017) for a review
on tensions].

17
JAOC Note
18,4 1. Balance tendency is not possible to analyze given the nature of the data collected. The present
case study is unable to capture the oscillations of the tensions over time.

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Corresponding author
Rúben Silva Barros can be contacted at: rasbs@iscte-iul.pt

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Appendix Management
Control
Systems
Duration
Responsibility area Interviewee (min)

First phase: pilot case study 591

Various – Member of the Holding 40
– Head of Innovation Department
– Head of Management Control
Finance – Head of Management Control 95
– Head of Management Control 52
– Head of Management Control 32
– Head of Management Control 77
R&D – Head of innovation 65
Second phase: main case study
CEO – Chief Executive Officer/Head of Europe sales 60
department
Finance – Chief Financial Officer 60
– Finance manager 55
Quality and environment – Head of the department 46
Marketing – Head of Marketing department 50
Human Resources – Head of the department 73
R&D – Head of Innovation department 55
– Project Manager 1 59
– Project Manager 2 53
– Laboratory Manager 47
Global segment manager and business – Head of the department 80
development – Global segment manager 60
– Global technical manager 62
Footwear department – Head of Footwear department 80
Sales departments – Head of Asia sales department 58
– Segment Manager 1 – Europe 60
– Segment manager 2 – North America 45
– Segment Manager 3 – North America 37
– Market developer 1 – Asia 68
– Market developer 2 – Asia 50
Production – Head of the department 43
– Production responsible 1 65
– Production responsible 2 70
– Production responsible 3 45
– Logistics responsible 73 Table A1.
– Maintenance responsible 70 List of interviewees
Total 1,885 and their duration

Direct observations Duration (min)

1. Tour of the showroom 60 Table A2.

2. Tour of the production facilities 130 List of direct
3. Alignment meeting with all the employees 60 observations and
Total 250 their duration

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