Interactive profit-planning systems and market turbulence: a dynamic capabilities perspective

Peters, Matt D., Gudergan, Siegfried P., and Booth, Peter (2019) Interactive profit-planning systems and market turbulence: a dynamic capabilities perspective. Long Range Planning, 52 (3). pp. 386-405.

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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.

Item ID: 70778
Item Type: Article (Research - C1)
ISSN: 1873-1872
Keywords: Business performance, Cybernetic management control systems, Dynamic capabilities, Hyper market turbulence, Interactive profit-planning systems, Organizational (culture) flexibility values
Copyright Information: © 2018 Elsevier Ltd. All rights reserved
Date Deposited: 20 Jan 2022 02:09
FoR Codes: 35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3507 Strategy, management and organisational behaviour > 350718 Strategy @ 100%
SEO Codes: 15 ECONOMIC FRAMEWORK > 1503 Management and productivity > 150304 Productivity (excl. public sector) @ 100%
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