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

Lindawati Gani, Johnny Jermias

Research output: Contribution to journalArticle

7 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 - 1 Sep 2012


  • Business strategy
  • Management control system
  • Misfit
  • Performance

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