Examining Management Control System in Virtual Organisation at Research and Development Department of an Indonesian State-Owned Enterprise
Yuliani Rachma Putri, A.K. Siti Nabiha, Zubir Azhar
Telkom University
Universiti Sains Malaysia
Abstract
The purpose of this paper is to examine the management control system (MCS) in virtual organisation at a Research and Development (R&D) de-partment. This virtual organisation has been developed as a respond to industrial era 4.0 and in order to face the society 5.0 which is marked by digital culture that lead the research and development activities to be more flexible, technological and digital friendly also structured the organisation based on project in form of virtual mode. However, the MCS which is known as a routine-based and formal system sometimes argued as a rigid system and potential to be a hindrance to flexibility. Hence, MCS needs to be adapted to facilitate the changes inside the project-based virtual organisation while still enable the control system inside it. As such, this paper will try to explain how MCS is implemented and adapted to be aligned with the changing organisation. A qualitative case study was conducted at a R&D department of an Indonesian state-owned enterprise with the data gathered from some interviews with several key organisational members and also from internal and external documents. The finding shows that the changing organisation at R&D department was created as a response to the environmental, societal and technological forces which leads to the adaptation in the implementation of the MCS. Consequently, the informal adapted MCS was implemented to be aligned to the virtual organisation structure of the R&D department. This informal MCS consists of project-based indicator with revolving targets used for senior manager-s decision making and reward evaluation purposes. The report was conducted more often, quarterly report was chosen to adjust with the dynamic situation in virtual organisational mode.
Keywords: management control system, virtual organisation, research and development
Topic: Strategic Management, Entrepreneurship and Contemporary Issues