The Impact of Digitalization on Management Control Systems: A Framework for the Future

Abstract

Digitalization is revolutionizing the business landscape, fundamentally impacting how organizations operate and manage. Management control systems (MCS) are no exception, facing significant challenges and opportunities in the face of this technological revolution. This article explores the impact of digitalization on MCS, highlighting key trends, challenges, and opportunities. We propose a framework for the future of MCS that leverages digital technologies to enhance performance management, decision-making, and organizational agility. The rapid advancement of digitalization has transformed the business landscape, necessitating a reevaluation of traditional management control systems (MCS). This paper explores the profound impact of digitalization on MCS and proposes a comprehensive framework for adapting to the evolving business environment. We examine the key dimensions of digitalization, including data analytics, artificial intelligence, and interconnected technologies, and their influence on organizational processes. Through an in-depth analysis, we identify the challenges and opportunities posed by digitalization for management control and highlight the need for a strategic shift in the design and implementation of MCS. Our proposed framework integrates traditional control mechanisms with agile, technology-driven approaches, fostering adaptability and responsiveness. By leveraging digital tools, organizations can enhance decision-making, improve efficiency, and navigate the complexities of the digital era. This paper contributes to the literature by offering a forward-looking perspective on the integration of digitalization into management control, providing practitioners and scholars with valuable insights for shaping the future of MCS.