SYNERGISING RESOURCES AND CONTROL: THE INTERACTION OF MANAGEMENT CONTROL SYSTEMS AND INTELLECTUAL CAPITAL IN PUBLIC SECTOR PERFORMANCE

K. T. C. Priyangani, G. A. T. Kaushalya, Ananda K. L. Jayawardana

Abstract


This theoretical paper explores the synergistic relationship between Management Control Systems (MCS) and Intellectual Capital (IC) in driving public sector performance. Despite their individual importance, the interaction between MCS and IC remains understudied, particularly in public institutions. The study argues that specific MCS levers dynamically interact with core IC elements, creating a synergy that enhances organizational performance. Grounded in the Resource-Based View (RBV), this research investigates how the integration of MCS and IC influences public sector performance, addressing a critical gap by examining their interactive relationship. The primary theoretical contribution extends the RBV into the public sector context, demonstrating how organizations integrate MCS to translate IC into sustainable performance. This bridges the theoretical divide between control and knowledge-based strategic assets. The paper aims to enhance public organization performance through MCS by leveraging the interaction of IC components: human, structural, and relational capital. The research will help managers identify weaknesses in their MCS and optimize resource utilization in terms of efficiency, effectiveness, and economics. It offers practitioners a validated framework for designing MCS tailored to the unique value-creation processes of public organisations. The findings have significant implications for public sector policy-making and management practices, providing evidence-based strategies for optimizing organizational performance through the strategic alignment of MCS and IC. By uncovering the complex relationship between MCS and IC, this study contributes to a more nuanced understanding of performance drivers in public organisations. It highlights the importance of considering both control systems and intellectual assets in tandem, rather than as separate entities. The insights gained from this research can guide public sector leaders in developing more effective strategies for leveraging their organization's intellectual resources through appropriate control mechanisms, ultimately leading to improved public service delivery and organizational effectiveness. Further, this offers practitioners a validated framework for designing MCS that tailors to the unique value-creation processes of public organisations.

 

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management control systems, intellectual capital, public sector performance, resource-based view

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References


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