ACTA WASAENSIA

ABSTRACT

Ylinen, Mika (2004). Management control systems in technical and administrative development projects:

The effects of interactive and diagnostic use of project feedback and measurement systems on project

innovativeness – Moderating effects of project manager tolerance for ambiguity. Acta Wasaensia No.

126, 179 p.

This survey-based empirical study focuses on the interactive and diagnostic use of project feedback and

measurement systems as defined by Simons as the central constructs of interest. The responses of 119

project managers, drawn from technical and administrative type development projects, to a questionnaire

survey were analysed by using the partial least squares approach to structural equation modelling. Based

on previous findings it is suggested in this study that formal project management control systems (MCS)

may present a negative or a positive effect on innovation at the project level depending on the style of use

of formal project MCS. It was argued that variety in the use of interactive and diagnostic styles of formal

project MCS explains some of the inconsistencies of the previous studies. Interactive use of feedback and

measurement systems has an important role on expanding opportunity seeking, learning and enhancing

innovativeness. This suggestion of Simons was confirmed in technical type development projects, as

results indicate a significant positive relationship between interactive style of use project MCS and

innovativeness in project.

These findings supported, also, some arguments from the dual-core theory, which claims that an organic

structure is needed when changes in organizational products, services and technology are necessary and

thus, high professionalism, low centralization and low formalization facilitate the bottom-up process of

technical innovation. Results of this study indicated that there is significant positive effect of interactive

use of formal project MCS on innovation in technical type development projects but not in administrative

type projects. However, the results indicated that in administrative type development projects diagnostic

use of formal project MCS has an important role in achieving and keeping projects on track with project

performance targets. This suggests that in administrative type development projects diagnostic use of

formal project controls provide discipline that may motivate action and drive efficiency.

The findings of this study are consistent with previous arguments that to achieve effective outcomes,

tasks with high uncertainty must be executed differently from tasks with low uncertainty. The results also

provide support for previous research evidence that personality has a moderating effect on the

characteristics of information perceived to be useful in uncertain environments. Specifically, this study

provides some support for the proposition that the extent to which individual project manager use

interactive or diagnostic type formal project controls under highly uncertain conditions is a function of

their personality variable of tolerance for ambiguity.

In summary, these results suggest that while innovation requires a high degree of flexibility in the

structural and communication processes, formal project MCS also has an important role in project

management. Project type, also, affects how different control strategies to manage development projects

are best achieved when facing uncertain conditions. Additionally, the project manager’s personality

characteristic of tolerance for ambiguity seems to play an important role in determining the use of

interactive and diagnostic type project controls under task uncertainty.

Mika Ylinen, University of Vaasa, Faculty of Business Studies, Department of Accounting and Finance,

P.O. Box 700, FIN-65101 Vaasa, Finland.

Key words: project control systems, innovation, task uncertainty, tolerance for ambiguity.