The Cost of Flexible Control: Interdependencies and Coordination Problems in Adaptation

A key tenet in management control system literature is that flexible control system elements are critical for ensuring adaptability and coping with uncertainty. Despite their vital role in management control system design, only scant attention has been directed towards understanding the costs of flexible control system elements. We use an in-depth case study to explore flexible control system elements in a manufacturing firm providing a more nuanced view of their effects and interdependencies with other control elements in the organisation. The present paper contributes in several ways. First, it provides more insight into the trade-offs involved in using flexible control elements in the management control system and how these trade-offs emerge in organisational practices. Often flexible control systems are said to improve coordination in organisations as they facilitate adaptations. Our study demonstrates, however, some of their more subtle coordination costs, which have not received much attention in research before. Second, we are interested in understanding how these costs can be managed and reduced. We used a counterfactual analysis of the control system elements, which could have mitigated the negative effects of the flexible control but were not implemented (called non-occurring preventions), which provides additional insights into what makes flexible control systems work and their interdependencies with other control system elements. Thereby we add to the literature on the interdependencies between control system elements and demonstrate the importance of studying flexible control system elements not in isolation but in combination with other control elements at stake in the individual organisational setting.