Change in Strategy and Mcs : A Match Over Time

While contingency research has highlighted the importance of achieving a match between strategy and an organisation's management control system (MCS), much of the literature to date has concentrated on cross-sectional analysis. This has resulted in a static representation of the relationship, and precluded an assessment of the relationship when a strategic change occurs.This study progresses research in this area by adopting a longitudinal analysis of a public sector organisation. Public sector reforms in Australia caused the organisation to change its strategy. The analysis was conducted through the use of a questionnaire, documentation review and interviews with management. For the time periods studied, indications of the perceived strategy, perceived environmental uncertainty, information requirements and supply, MCS characteristics, and performance were analysed. The results showed that, as strategy changed (from Reactor to Prospector), the MCS changed. Furthermore, performance improved, suggesting that there was a 'fit' between the MCS and strategy. There was an increase in the use of both formal and informal control mechanisms, and the manner in which most controls were used changed from being diagnostic to interactive