Levers of control : analysis, comparison and evaluation of the use of management conrol systems in biotechnology firms

Abstract

This master thesis investigates how management control systems are used in three small and medium-sized (SMEs) biotechnology companies. More specifically, Simons’ (1995) Levers of Control framework is applied. Practical examples of the four levers, namely beliefs systems, boundary systems, diagnostic control systems and interactive control systems are elaborated in the course of the thesis. Additionally, the influencing factors on those levers, firm size and biotechnology industry, are examined. Management control systems are an interesting topic for research as well as for practice. Because Simons’ (1995) framework has many strengths, it became well-known and is therefore also applied in this work. The motivation to conduct this thesis in the frame of SMEs and the biotechnology sector arose from the fact that research on management control systems in this context is still scarce nowadays. For this thesis, a multiple case study approach was chosen as research method. In the frame of it, six semi-structured interviews were conducted with participants from Diagenode, Ncardia and AmplyCell, which are all biotechnology SMEs mainly based in Belgium. Data from the interviews were complemented with data from documents like websites and observations. Results of the thesis are a description of a broad range of control practices which show how the four levers of control are used in the case companies. Formal as well as informal types of control systems are considered. Furthermore, the findings point out in what kind of way the firm size (SMEs) and the biotechnology industry influence how the management control systems are used: smaller firms use less formal control systems than larger enterprises. However, this is only true for three of the levers and not for the beliefs system. The biotechnology industry strongly influences how the beliefs systems and interactive control systems look like and to a smaller extent the other two control systems. In addition, the results show that the four levers are interdependent which is in line with the literature. Limitations of this thesis are that no direct comparison could be done between SMEs and large enterprises. Also other influencing factors, like the impact of the family in family firms should be investigated further. With its findings, the thesis contributes to a better understanding of management control systems especially in the frame of SMEs.