Intellectual capital based management control systems

Abstract

Management control systems (MCS) are formal, information-based routines and procedures (Simon, 1995) applied in strategic management practice. They are developed to help management balance the tension between organisational strategy and human behaviour. However, recent studies (Galabova, 2011, 2014) have shown that along with tangible, intangible assets impact on organisational performance. The aim of the paper is to propose a theoretical framework on how intangibles, and more specifically intellectual capital elements: human, structural and relational capital can be embedded as a part of a contemporary management control system. To examine these, we present a literature review together with data from former empirical studies. The paper will present a conceptual model on how human, structural and organisational capital could be monitored and controlled as an important part of MCSs.