Interactive profit-planning systems and market turbulence: A dynamic capabilities perspective |
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| Authors: | Matt D. Peters Siegfried Gudergan Peter Booth |
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| Affiliation: | 1. Accounting Cluster, The University of Queensland, Brisbane, QLD 4072, Australia;2. Newcastle Business School, University of Newcastle, University Drive, Callaghan, NSW 2308, Australia;3. Waikato Management School, University of Waikato, Private Bag 3105, Hamilton 3240, New Zealand;4. Vice-Chancellery, University of Technology Sydney, PO Box 123, Haymarket, NSW 2007, Australia |
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| Abstract: | This article describes, theorizes and empirically investigates the concept of interactive profit-planning systems (PPS) through the lens of the dynamic capabilities logic. With this conceptualization: interactive PPS capabilities comprise budgeting, forecasting and results-reporting routines, in which top and middle managers interact to create knowledge for sensing, seizing, and business model reconfiguring (to manage strategic business change). Survey data from 331 Australian firms is analyzed employing partial least squares structural equation modeling. The data provides support for two hypotheses: (1) greater market turbulence strengthens the positive effect of interactive PPS capabilities on business unit performance; and (2) greater market turbulence strengthens the positive effect of flexibility values (of organizational culture) on interactive PPS capabilities. Our findings show that interactive PPS capabilities function according to the salient tenets of the dynamic capabilities logic, and clarify the beneficial roles of formal cybernetic control systems and the intertwined involvement of top and middle managers in using dynamic capabilities. |
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| Keywords: | Corresponding author. Business performance Cybernetic management control systems Dynamic capabilities Hyper market turbulence Interactive profit-planning systems Organizational (culture) flexibility values |
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