Chapter 11: Management control in creative firms
Pillars of the Future Global Economy
This chapter investigates the role of management control instruments to stimulate creativity in an organizational context. Creativity and the resulting innovations are of utmost importance for enterprises today (Amabile and Khaire, 2008). Innovation is the process which follows on creativity, and it can thus be seen as the implementation of creative ideas. Creativity is thus a critical step in the innovation process (Shalley, 1991). The results of the creative process can take different forms, ranging from administrative versus technical innovation, product versus process innovation, and radical versus incremental innovation (Damanpour, 1991). Innovating, however, is a risky activity, which needs to be carefully monitored by the management of the organization. This implies that accounting can play an important role to inform internal and external parties about the success of creative activities and the innovative outcomes reached. The earliest studies on the role of accounting for innovation used to focus on firm-wide innovation (West and Farr, 1989) as measured by expenditures on research and development (R & D) activities (Sougiannis, 1994, Lev and Sougiannis, 1996). The financial accounting literature investigates how intangible value drivers and intellectual capital are valued for external reporting reasons (for example Basu and Waymire, 2008; Cañibano et al., 2000; Van der Meer-Kooistra and Zijlstra, 2001). The management accounting and control literature, however, has only recently started to study how innovation and creativity are affected by the design and use of the management control system (MCS) (Davila et al., 2009a).
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