Management Control Systems and Strategy Change in Buyouts

The impact of management buy-outs (MBO) on strategy and managementcontrol systems (MCS) is little understood. Previous research by Jones(1992) focused on efficiency-enhancing buy-outs that were a feature ofthe early development of the market. However, MBOs are heterogeneousand more recent developments have involved ownership changes thatstimulate entrepreneurial practices. The novel contribution of thispaper is to use Simons' (1995) classification of beliefs systems,boundary systems, diagnostic and interactive control systems to extendJones' study to these newer forms of MBO. Within-case analysis andcross-case comparisons from four buyout firms are used to capture theinteraction between management control systems and competitivestrategy formulation, implementation and modification. This evidencesupports arguments that buy-out managers undertake efforts inbalancing the traditional feedback systems with the newer systems thatstimulate opportunity seeking and learning