An Exploratory Study on the Emergence of Management Control Systems : Formalizing Human Resources in Small Growing Firms

Adoption of management control systems (MCS) is a key element in managing the tension imposed by the growth of young growing firms. Building on existing management control theory and on existing predictions based on field observations, how these systems are adopted within growing firms is explored. The paper also draws from entrepreneurship and life cycle literatures. Four variables are identified as drivers of the emergence of MCS: size, age, a new CEO, and existence of venture capital. Interviews were conducted with 95 small, high-technology-oriented firms in Silicon Valley about their MCS. Statistical analysis of the data showed the four variables were associated with the adoption of MCS. Initial results are presented on how the emergence of various types of MCS depends on which systems the organization had already employed. (TNM)