Interdependence of management control practices for product innovation: The influence of environmental unpredictability

Evidence for the relationship between management control practices and innovation is somewhat mixed, notably because of the insufficient attention devoted to the type of information management control practices provide. This study examines to what extent the interdependence of management control practices providing a mix of information for decision-making supports or impedes product innovation. We investigate whether the diversity of nonfinancial performance indicators and the functionality of cost information specifically and jointly contribute to product innovation. We also investigate whether environmental unpredictability moderates those effects. Survey data collected from a large sample of manufacturing firms show the specific effect of these management control practices on product innovation. More importantly, the functionality of cost information and diversity of nonfinancial performance measures are complements (substitutes) under high (low) levels of environmental unpredictability, and thus contribute to (impede) product innovation.