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The Effect of Strategic Fit between Management Control Systems and Information Technology Structure on Management Performance

Kim, Munsik · Jung, Junsu

Published: January 1999 · Vol. 28, No. 1 · pp. 185-221
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Abstract

While business strategies formulated in response to environmental changes are important, the internal management systems that implement these strategies are equally important. However, given that firms have limited resources, they cannot invest indefinitely in internal management systems and must selectively invest to an appropriate level in internal management systems that fit their business strategies. The purpose of this study is to investigate whether business performance improves when management control systems and information technology architecture for strategy implementation achieve fit with the strategy. Specifically, it analyzes the effects on business performance of the fit between business strategy and management control systems, the fit between business strategy and information technology architecture, and the fit between management control systems and information technology architecture. It then analyzes the effect of the integrated fit among business strategy, management control systems, and information technology architecture on business performance, and compares it with the former results. In this study, Miles and Snow's strategic typology was applied as the business strategy variable, the components of management control systems were classified into behavior control and outcome control, and the degree of data processing centralization and the level of communication and data sharing were selected as information technology architecture variables. The data analysis results showed that among the hypotheses regarding the effect of bivariate fit on business performance, only the hypothesis concerning the fit between defender strategy and management control systems was supported. However, the hypothesis regarding the effect of the integrated fit among the three variables—business strategy, management control systems, and information technology architecture—on business performance was supported.