In the last few years, the attention of practitioners and scholars has increasingly been devoted to understanding if and how management controls in Knowledge Intensive Firms (KIFs) can act as levers of knowledge transfer and therefore become relevant mechanisms for coordination and learning.
The study by Angelo Ditillo (Department of Accounting, Università Bocconi and SDA School of Management) Designing Management Control Systems to Foster Knowledge Transfer in Knowledge-Intensive Firms: A Network-Based Approach recently published in European Accounting Review (Volume 21, Issue 3, 2012, pp. 425-450, doi: 10.1080/09638180.2012.661939) deepens the understanding of management controls in KIFs and their impact on knowledge management activities. To illustrate how and when management controls act as means of knowledge circulation in KIFs, Ditillo generates filed-based data using an in-depth case study of a leading computer software firm with the headquarter located in UK. On the one side, the author highlights the role of management controls in facilitating the circulation and sharing of knowledge; and, on the other side, he offers an interesting reflection on ‘which’ controls a KIF should adopt. A key feature of the work is the adoption of a network perspective that allows considering and matching the knowledge type (defined along the level of causal ambiguity and relatedness) and the relationships between individuals, with the management controls. In this way, Ditillo can also address the ‘how’ dimension by suggesting that different management control mechanisms activate direct or indirect, strong or weak relations between individuals; and therefore, are suitable means for transferring different forms of knowledge between diverse agents in different contexts and circumstances. In this work, the author refers to three management controls: action control, personnel control, and results control. The first category includes accountabilities and evaluation procedures, the second one refers to selection and training processes, while the last one relates to goal setting and measurement tools.
Empirical evidence stresses that the use of action controls in the forms of manuals and procedures is suitable to transfer process-related knowledge typically characterized by low causal ambiguity and high knowledge relatedness. Differently, outcome-related knowledge, which is very causal ambiguous and knowledge related needs to be transferred and diffused by results controls. Furthermore, personnel controls enable the circulation of technology-related knowledge generally characterized by high causal ambiguity and low knowledge relatedness. Finally, opportunities-related knowledge, low causal ambiguity and relatedness, requires the activation of action control in the forms of systems of accountability in order to be transferred. In this way, management controls can support multiple knowledge networks essential for knowledge sharing, and this is possible if they are designed according to the principles of enforceability of manuals and procedures, scalability of reviews and decisions, mobility induction of individuals, and multiplicity of roles and accountabilities.