The Effects of Strategy-Management Control System Misfits on Firm Performance

Lindawati Gani, Johnny Jermias

Research output: Contribution to journalArticlepeer-review

16 Citations (Scopus)


The purpose of this study is to investigate the effects of misfits between business strategy and management control systems on performance. We address the following research question: Do firms that align their management control systems with the specific requirements of their business strategy perform significantly better than those that do not achieve the required match? We define a misfit as the degree to which management control systems deviate from empirically derived optimal configurations for a given type of business strategy. We use the two-stage approach proposed by Ittner and Larcker (2001) to measure misfit and to investigate the impacts of misfit on performance. Based on a questionnaire survey of executives from 109 banks, we hypothesize and find that the strategy-control systems misfit has a significantly negative correlation with both self-rated and publicly available performance measures.

Original languageEnglish
Pages (from-to)165-196
Number of pages32
JournalAccounting Perspectives
Issue number3
Publication statusPublished - Sept 2012


  • Business strategy
  • Management control system
  • Misfit
  • Performance


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