The Application of LOC in Innovative Project Selection A Case Study

Abstract: In order to gain competitive advantages in the global market, innovation has become a key part of organisational strategy, leading to a series of challenges in project selection. As effective tools for decision making, the management control systems (MCS) may provide a holistic approach to this management uncertainty. The study took a leading company in the field of measurement instruments as a case to investigate how MCS were enacted in the project selection. The aim of this analysis is to provide practical insights and empirical data on MCS' role in the project selection in the context of innovation. The study was conducted by applying the framework of Simons' four levers of control (LOC). Based on the current situation analysis of project selection at the target company, how the four levers of control were enacted in the practice of project selection were examined from two aspects: the major challenges that need to be addressed and the multiple criteria for project evaluation. Afterwards, the dynamic tensions caused by those four levers which were important for the achievement of business strategies were also explored. By examining the role of MCS in project selection in an empirical way, the study found that project selection criteria could be shaped through different sorts of controls and that balancing the use between different controls to generate dynamic tension is of great importance as over-reliance on one set of controls can create challenges for an organisations project selection process.