Impact of external stimuli and management control systems on radical innovation and startup performance
-
DOIhttp://dx.doi.org/10.21511/ppm.23(1).2025.50
-
Article InfoVolume 23 2025, Issue #1, pp. 673-684
- 41 Views
-
7 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The rapidly changing business environment and fierce competition necessitate startups to innovate continuously. External stimuli such as market trends, technological advancements, and competition are critical in influencing a startup’s ability to innovate and enhance performance. This study aims to explore the role of these external stimuli, along with management control systems, specifically diagnostic and interactive systems, in promoting radical innovations and improving startup performance. A quantitative approach using partial least squares structural equation modeling (PLS-SEM) was applied to data collected from 250 startup managers in Indonesia. The results show that external stimuli significantly influence diagnostic (p < 0.001, t = 3.647) and interactive control systems (p < 0.001, t = 5.452). Diagnostic and interactive systems positively affect radical innovation (p < 0.001, t = 3.362). Radical innovation significantly enhances performance (p < 0.001, t = 3.453). Such evidence shows that external stimuli and control systems should be aligned to facilitate radical innovation and increase startup performance. The study offers valuable information for managers on how to achieve operational control but retain strategic flexibility in rapidly changing situations. The findings present both theoretical and practical contributions to strategic management and innovation processes in startup companies.
- Keywords
-
JEL Classification (Paper profile tab)031, 032, M13
-
References44
-
Tables7
-
Figures2
-
- Figure 1. Research framework
- Figure 2. Factor loading
-
- Table 1. Data collection
- Table 2. Respondent data profile
- Table 3. Demographics of respondents
- Table 4. Average variance extracted, composite reliability, and Cronbach’s alpha
- Table 5. Discriminant validity according to the Fornell–Larcker criterion
- Table 6. Model validation results
- Table A1. Questionnaire items
-
- Baird, K., Su, S., & Munir, R. (2019). Levers of control, management innovation and organisational performance. Pacific Accounting Review, 31(3), 358-375.
- Barba-Aragón, M. I., & Jiménez-Jiménez, D. (2020). HRM and radical innovation: A dual approach with exploration as a mediator. European Management Journal, 38(5), 791-803.
- Barros, R. S. (2019). Bridging management control systems and innovation: The evolution of the research and possible research directions. Qualitative Research in Accounting and Management, 16(3), 342-372.
- Bastian, E., Piliang, A., & Meutia. (2024). Effect of learning culture and management control system on innovation performance: Evidence from startup companies in Indonesia. Problems and Perspectives in Management, 22(3), 251-262.
- Bellora-Bienengräber, L., Derfuss, K., & Endrikat, J. (2022). Taking stock of research on the levers of control with meta-analytic methods: Stylized facts and boundary conditions. Accounting, Organizations and Society, 106, Article 101414.
- Bernd, D. C., & Beuren, I. M. (2022). Do enabling management control systems stimulate innovation? Business Process Management Journal, 28(2), 461-480.
- Bresciani, S., Rehman, S. U., Alam, G. M., Ashfaq, K., & Usman, M. (2023). Environmental MCS package, perceived environmental uncertainty and green performance: In green dynamic capabilities and investment in environmental management perspectives. Review of International Business and Strategy, 33(1), 105-126.
- Bulut, C., Kaya, T., Mehta, A. M., & Danish, R. Q. (2022). Linking incremental and radical creativity to product and process innovation with organisational knowledge. Journal of Manufacturing Technology Management, 33(4), 763-784.
- Dzvinchuk, D., Orliv, M., Janiunaite, B., & Petrenko, V. (2021). Creating innovative design labs for the public sector: A case for institutional capacity building in the regions of Ukraine. Problems and Perspectives in Management, 19(2), 320-332.
- Endenich, C., Lachmann, M., Schachel, H., & Zajkowska, J. (2022). The relationship between management control systems and innovativeness in start-ups: Evidence for product, business model, and ambidextrous innovation. Journal of Accounting & Organizational Change, 19(5), 706-734.
- Fazlan, M., & Zulkarnain, Z. (2023). The impact of information technology (IT) on modern accounting systems. Anggaran: Jurnal Publikasi Ekonomi Dan Akuntansi, 1(4), 75-81.
- Frare, A. B., Cruz, A. P. C. da, Lavarda, C. E. F., & Akroyd, C. (2022). Packages of management control systems, entrepreneurial orientation and performance in Brazilian startups. Journal of Accounting & Organizational Change, 18(5), 643-665.
- Frezatti, F., de Souza Bido, D., da Cruz, A. P. C., & Machado, M. J. C. (2017). Impacts of interactive and diagnostic control system use on the innovation process. BAR - Brazilian Administration Review, 14(3), 1-24.
- Hair, J.F., Hult, G.T.M., Ringle, C., & Sarstedt, M. (2022). A primer on partial least squares structural equation modeling (PLS-SEM).Sage Publishing.
- Hair, J.F., Risher, J.J., Sarstedt, M., & Ringle, C. M. (2019). When to use and how to report the results of PLS-SEM. European Business Review, 31(1), 2-24.
- Hallioui, A., Herrou, B., Santos, R. S., Katina, P. F., & Egbue, O. (2022). Systems-based approach to contemporary business management: An enabler of business sustainability in a context of industry 4.0, circular economy, competitiveness and diverse stakeholders. Journal of Cleaner Production, 373, Article 133819.
- Hanandeh, A., Mansour, A., Najdawi, S., Kanaan, O., Abualfalayeh, G., & Qais, K. (2024). The effect of the comprehensive quality management strategies on environmentally responsible activities and the performance of the organizations. Uncertain Supply Chain Management, 12, 1379-1390.
- Henri, J. F. (2006). Management control systems and strategy: A resource-based perspective. Accounting, Organizations and Society, 31(6), 529-558.
- Ismail, T. (2015). Strategy and management control system in a manufacturing industry in selected cities in Indonesia. Aceh International Journal of Social Sciences, 4(1), 21-32.
- Ismail, T., & Sudrajat, D. (2012). Interactive control system, intended strategy, implemented strategy dan emergent strategy. Journal The Winners, 13(2), 93-105.
- Janka, M. (2021). Enabling formal MCS design and use: A meta-synthesis of qualitative research. Journal of Accounting & Organizational Change, 17(2), 133-163.
- Kim, K. K., Ryoo, S. Y., & Lee, H. (2016). Environmental uncertainty and interorganizational information sharing: Accommodating manufacturer and supplier perspectives. Information Development, 32(5), 1485-1502.
- Le, T. T., & Le, P. B. (2023). High-involvement HRM practices stimulate incremental and radical innovation: The roles of knowledge sharing and market turbulence. Journal of Open Innovation: Technology, Market, and Complexity, 9(1), Article 100006.
- Li, C., Han, S., Kumar, S., & Feng, W. X. (2019). The influence of senior executive support informatization on radical innovation performance. Industrial Management & Data Systems, 119(4), 821-839.
- Lill, P. A., & Wald, A. (2021). The agility-control-nexus: A levers of control approach on the consequences of agility in innovation projects. Technovation, 107, Article 102276.
- Luiz, T. T., & Beuren, I.M. (2023). Does environmental uncertainty drive the use of management control systems and innovation? Business Process Management Journal, 29(3), 671-689.
- Lyu, Y., Zhu, Y., Han, S., He, B., & Bao, L. (2020). Open innovation and innovation “Radicalness” – the moderating effect of network embeddedness. Technology in Society, 62(January), 101292.
- Mariano-Hernández, D., Hernández-Callejo, L., Zorita-Lamadrid, A., Duque-Pérez, O., & Santos García, F. (2021). A review of strategies for building energy management system: Model predictive control, demand side management, optimization, and fault detect & diagnosis. Journal of Building Engineering, 33, Article 101692.
- Müller-Stewens, B., Widener, S. K., Möller, K., & Steinmann, J. C. (2020). The role of diagnostic and interactive control uses in innovation. Accounting, Organizations and Society, 80, Article 101078.
- Pan Fagerlin, W., & Lövstål, E. (2020). Top managers’ formal and informal control practices in product innovation processes. Qualitative Research in Accounting and Management, 17(4), 497-524.
- Piliang, A., Meutia, & Bastian, E. M. (2025). (2025). Driving Radical Innovation. The Sciences, 20(2025), 1-19.
- Piliang, A., Meutia, Bastian, E., & Muchlish, M. (2023). Use of enabling levers and constraining levers to radical innovation: Intervention of knowledge sharing and technological turbulence. Journal of Law and Sustainable Development, 11(12), Article e2302.
- Ringle, C. M., Sarstedt, M., & Sinkovics, N. R. R. S. (2023). A perspective on using partial least squares structural equation modelling in data articles. Data in Brief, 48.
- Severo, E. A., & De Guimarães, J. C. F. (2022). The influence of product innovation, environmental strategy and circular economy on sustainable development in organizations in Northeastern Brazil. Journal of Law and Sustainable Development, 10(2), Article e0223.
- Shmueli, G., Sarstedt, M., Hair, J. F., Cheah, J. H., Ting, H., Vaithilingam, S., & Ringle, C. M. (2019). Predictive model assessment in PLS-SEM: Guidelines for using PLSpredict. European Journal of Marketing, 53(11), 2322-2347.
- Shurafa, R., & Mohamed, R. (2018). National Culture and Management Control Systems Using Levers of Control Framework: An Empirical Analysis. Journal of Islamic, Social, Economics and Development, 3(10), 37-53.
- Su, S., Baird, K., & Schoch, H. (2015). The moderating effect of organisational life cycle stages on the association between the interactive and diagnostic approaches to using controls with organisational performance. Management Accounting Research, 26, 40-53.
- Thneibat, M. (2021). The effect of perceived rewards on radical innovation: The mediating role of knowledge management in Indian manufacturing firms. Heliyon, 7(5), Article e07155.
- Thneibat, M. M., & Sweis, R. J. (2023). The impact of performance-based rewards and developmental performance appraisal on innovation: The mediating role of innovative work behaviour. International Journal of Productivity and Performance Management, 72(6), 1646-1666.
- Wang, D. S. (2020). Association between technological innovation and firm performance in small and medium-sized enterprises: The moderating effect of environmental factors. International Journal of Innovation Science, 11(2), 227-240.
- Wang, L., Jin, J. L., Yang, D., & Zhou, K. Z. (2020). Inter-partner control, trust, and radical innovation of IJVs in China: A contingent governance perspective. Industrial Marketing Management, 88, 70-83.
- Wang, T., Yang, J., & Zhang, F. (2021). The effects of organizational controls on innovation modes: An ambidexterity perspective. Journal of Management and Organization, 27(1), 106-130.
- Yang, W., Cao, G., Peng, Q., & Sun, Y. (2021). Effective radical innovations using integrated QFD and TRIZ. Computers & Industrial Engineering, 162, Article 107716.
- Zhang, F., Lyu, C., & Zhu, L. (2022). Organizational unlearning, knowledge generation strategies and radical innovation performance: evidence from a transitional economy. European Journal of Marketing, 56(1), 133-158.