The influence of an initial public offering on the management control system of an innovation organization: An exploratory case study in a medical devices firm
Abstract: This thesis explores whether the management control system (MCS) of an innovation firm is influenced by an initial public offering (IPO). In academic literature, effective management control in an innovation firm has traditionally entailed less formalization and greater employee autonomy. However, an innovation firm is often required to go public to acquire the capital needed to sustain continued research and business development; a significant change commonly associated with increased formalization, bureaucracy and decreased management flexibility. These seemingly contradictory demands have been increasingly challenged in contemporary studies; additionally, whereas MCS and innovation has been the subject of extensive academic research, very few studies have examined MCS in post-IPO companies. This exploratory study merges these topics by adapting Hales’ framework for MCS and comparing our theoretical propositions with case study data from a recently listed innovation firm. In terms of focus of control, input, process and value control are proposed being positively associated with innovation but not influenced by an IPO, whereas output control is neither associated with innovation nor influenced by an IPO. All styles of control, except informal, were positively associated with innovation, with formal and external control being influenced by an IPO. The empirical findings largely support our propositions, providing a solid starting point for future research within this integrated area.
AT THIS PAGE YOU CAN DOWNLOAD THE WHOLE ESSAY. (follow the link to the next page)