Management control as a dynamic capability: Changes in operational capabilities for innovation

Abstract

This thesis examines how management control contributes to the creation, extension, and modification of operational capabilities in dynamic contexts characterised by innovation, uncertainty, and changing business conditions. Particular attention is given to market and technical capabilities. Grounded in the dynamic capabilities framework, the study focuses on sensing, seizing, and transforming. Based on a multiple longitudinal case study of four entrepreneurial firms and eight change events involving technical and business model innovations, it draws on in-depth interviews and secondary data to analyse how management control contributes to capability change over time. The findings show that management control supports dynamic capability processes by contributing to organisations’ ability to sense changes in their business ecosystem, seize emerging opportunities, and transform their resource base. Management control is analysed through six elements: MC-functions, MC-applications, MC-tools, descriptive objects, measurements, and time perspectives. Across the cases, these elements display recurring characteristics, but their occurrence and relative emphasis vary across sensing, seizing, and transforming, and across market and technical capabilities. The analysis also identifies recurring configurations, understood as combinations of elements, that differ across phases and capability types. Building on these empirical patterns, the thesis develops a taxonomy of six roles of management control as a dynamic capability: surveilling, exploring, discovering, learning, aligning, and orchestrating. The thesis contributes to the management control literature by integrating the dynamic capabilities framework into management control research and showing how management control supports strategic renewal through changes in operational capabilities. More specifically, it advances understanding of management control at the levels of elements, configurations, and roles, deepens insight into the MCS–strategy interface, and highlights its importance in early and innovation-oriented phases of organisational development.