Article | Accounting Review | January 2007

Introducing the First Management Control Systems: Evidence from the Retail Sector

by Tatiana Sandino


Focusing on a sample of US retailers, I study the management control systems (MCS) that firms introduce when they first invest in controls, and identify four categories of initial MCS, which are defined in terms of the purposes these MCS fulfill. The first category, Basic MCS, is adopted to collect information for planning, setting standards, and establishing the basic operations of the firm. The other three categories are contingent on more specific purposes: Cost MCS focus on enhancing operating efficiencies and minimizing costs; Revenue MCS are introduced to foster growth and be responsive to customers; and Risk MCS focus on reducing risks and protecting asset integrity. I hypothesize and find that the choice among these categories reflects the firms' strategy, and that firms that choose initial MCS better suited to their strategy perform better than others.

Keywords: Management Control Systems; corporate strategy; entrepreneurial organizations; firm growth; Corporate Strategy; Entrepreneurship; Management Systems; Growth and Development Strategy;


Sandino, Tatiana. "Introducing the First Management Control Systems: Evidence from the Retail Sector." Accounting Review 82, no. 1 (January 2007): 265–293. (Awarded the Outstanding Doctoral Dissertation Award, 2005, Management Accounting Section, American Accounting Association; Awarded the Emerging Scholar Competitive Manuscript Award, 2011, Foundation for Applied Research, Institute of Management Accountants.)