THE EFFECT OF BUSINESS STRATEGY AND EXTERNAL ENVIRONMENT ON MANAGEMENT CONTROL SYSTEMS: A STUDY OF MALAYSIAN HOTELS
Sofiah Md Auzair

Abstract
This study was undertaken to investigate the use of Management Control Systems (MCS) in Malaysian hotels. MCS was conceptualized as Action/Results controls, Formal/Informal, Tight/Loose controls, Restricted/Flexible, Impersonal/Interpersonal controls and Financial/Non Financial information to represent management control bureaucracy. The framework also recognizes business strategy and external environment (perceived environmental uncertainty - PEU) as factors associated with organizations choice of MCS. A survey methodology was employed. Questionnaires were administered to the top management of the hotels in Malaysia. The findings indicate that hotels pursuing cost leadership strategy was positively associated with a more bureaucratic MCS while hotels pursuing differentiation strategy was associated with less bureaucratic MCS. PEU is negatively associated with less bureaucratic MCS which indicates tighter control when environment is perceived as unpredictable. Overall, the data demonstrates that type of MCS utilized by hotels is associated with the business strategy pursuit and the PEU.

Full Text: PDF