New Paradigms of Management Control for Start-ups: A Conceptual Understanding and Prescription for Future Research

Abstract

Start-ups face unique challenges in managing and controlling their operations, including limited resources, rapid technological changes and uncertainty. Start-ups can choose from a variety of management control systems (MCS) based on their specific objectives, strategy and context. A judicious combination of several instruments of MCS tailored to the particular context might be key to their success. However, start-ups and other small firms may not have resources to implement MCS. In recent years, new paradigms of management control have emerged to address these challenges and support success of start-ups in the long term. This article aims to explore the existing literature on management control in start-ups and to use conceptual model to discuss three new paradigms of management control in start-ups: The lean start-up approach (LSA), the agile start-up approach (ASA) and the design thinking start-up approach (DTA). These paradigms emphasise importance of rapid experimentation, adaptability and user-centred design in management of start-ups. The article concludes by highlighting importance of finding the right approach or combination of approaches for the specific needs and goals of the start-up. Future researchers will benefit from this study by identifying research opportunities related to the implementation and effectiveness of different management control paradigms in start-ups and developing a comprehensive framework for selecting and implementing these paradigms.

Keywords

Management control systems start-ups lean start-up agile methodology design thinking

Introduction

Start-ups are small, early-stage businesses typically focused on developing and bringing new products or services to market (Baker & Nelson, 2005). The number of start-ups has increased significantly in recent years, with more and more entrepreneurs seeking to turn their ideas into successful businesses (World Bank, 2020). These businesses often operate in fast-changing and dynamic environments and face various challenges as they try to establish themselves and grow (Bahrami et al., 2021). These challenges may include limited resources (Bedford, 2015), rapid growth (Davila & Foster, 2007) and uncertainty (Baker & Nelson, 2005). To address these challenges, start-ups may choose from various management control systems (MCS) based on their specific target, strategy and context (Simons, 1995). MCS can involve the development of strategies and policies to guide decision-making, establishing performance measurement systems (PMS) and implementing plans for monitoring and controlling operations (Malmi & Brown, 2008). Research has shown that start-ups with solid MCS are more likely to achieve long-term success (Baker & Nelson, 2005). A judicious combination of several management control instruments tailored to the specific context might be the key to the success of business firms (Strauss et al., 2013) as it ensures efficient use of resources and keeping the business on track with goals and objectives. Also, studies indicate start-up companies that adopt MCS can demonstrate to financiers their superior financial performance and decision-making abilities (Schachel et al., 2021). Even so, small firms, including start-ups, may lack the resources required to effectuate MCS to the same extent as larger organisations (Adler & Borys, 1996).

Recent years have witnessed the emergence of new paradigms of management control to address the challenges faced by start-ups and support their long-term success and sustainability (Kärreman & Alvesson, 2004). These paradigms include the lean start-up approach (LSA) (Ries, 2011), the agile start-up approach (ASA) (Beck et al., 2001) and the design thinking start-up approach (DTA) (Brown & Wyatt, 2009). These approaches emphasise the importance of rapid experimentation (Bocken & Snihur, 2020), adaptability (Chengbin, 2022) and user-centred design (Kurek et al., 2023) in the management of start-ups. The current scenario presents good opportunities for start-ups to innovate and prosper substantially while subjecting numerous challenges. Effective adoption of MCS can be crucial in capacitating start-ups to navigate these challenges and accomplish long-term success.

The objective of this study is to scrutinise the past literature on management control in start-ups and explore and develop a conceptual understanding of new paradigms of management control in business start-ups. This article is further organised as follows. The forthcoming section contains an extensive review of past studies on MCS with particular reference to start-ups, followed by a section presenting the conceptual understanding of new control paradigms in start-ups. The final section incorporates prescriptions for future research and conclusion.

Review of Literature

MCS

Malmi and Brown (2008) note that MCS are challenging to define, indicating some debate or uncertainty surrounding the concept. Despite the difficulty in defining the concept of MCS, researchers have attempted to define the term. According to Simons (1995), MCS are tools that managers use to monitor and adjust the activities of an organisation through the use of formalised information and procedures. MCS are systems that help organisations allocate resources and achieve their goals (Bedford & Malmi, 2015). MCS provide financial and non-financial information that managers can use for several purposes, including decision-making, control, signalling to external parties, acquiring new knowledge and conveying information (Simons, 2000). They also provide managers with critical information and help them focus on essential issues (Davila & Foster, 2007). MCS can serve as a tool for inspiring employees and management by establishing challenging goals and holding them responsible for meeting those goals. Additionally, MCS can help to create an internal database of information that can be applied to make decisions in a business organisation (Strauss et al., 2013). In summary, for this study, MCS is defined as the tools that organisations use to manage and control their resources and activities to achieve their objectives.

Typologies of MCS

There have been various conceptualisations of MCS over the years. Some early examples include social control, described by Hopwood (1976) as a type of control that employees inwardly embrace, and clan control proposed by Ouchi (1979) as a form of informal control that emerges without direct management influence. ‘Levers of control framework’ by Simons (1995) looks at the use of different types, focusing on formal control but also acknowledges the influence of social and cultural factors. According to Simon’s (1995) framework, managers can use ‘belief systems, boundary systems, diagnostic control systems and interactive control systems’ as four control levers to manage and govern organisations. This framework primarily looks at the use of MCS, instead of their design. Adler and Borys (1996) developed the idea of coercive and enabling bureaucracies, with coercive controls intended to enforce compliance and enabling controls facilitating responses to natural work contingencies through best practices. The term ‘socio-ideological control’ was first used by Alvesson and Kärreman (2004) to describe efforts to persuade people to adhere to specific values and norms regarding organisational life and work. Anthony and Govindarajan’s (2007) framework for MCS outlines a process for managing control in a cybernetic way, but it does not differentiate between types of control. Instead, it primarily focuses on control instruments related to achieving results and does not consider personnel or cultural control.

Malmi and Brown (2008) developed a model that aims to understand the various control systems used by organisations. The model includes five types of control and strongly emphasises informal control. However, it does not focus explicitly on MCS but instead looks at the tools and practices managers use to influence employee behaviour. Ferreira and Otley (2009) expanded Otley’s (1999) framework for PMS by adding 12 dimensions, most of which relate to formal control. Eight of these dimensions focus on the PMS’s essential parts and their relationships to means and ends, while the remaining address enabling mechanisms and features of the system. A few ideas from Simon’s (1995) framework of levers of control are included in this framework, but social factors are not considered. Merchant and Van der Stede’s (2007) ‘object of control framework’ segregates control into four classes: ‘Results, action, personnel and cultural control’. Management initiates all of these categories, which are considered formal types of control. This framework also incorporates ideas from other frameworks, such as ‘administrative control framework’ (Hopwood, 1976) and bureaucratic and market control framework (Ouchi, 1979). Furthermore, the control framework object includes enabling control instruments, which may be strategies and guidelines regarding selecting and retaining human resources and disciplinary courses of action. Over the years, the various conceptualisations of MCS have provided valuable insight into the different types of control managers use to govern organisations. Different controlling frameworks highlighted the vitality of formally and informally controlling the firm. They have also recognised the substantial impact exerted by MCS on socio-cultural factors. While these control frameworks have effectively explained the concept of MCS, they are not mutually exclusive, facilitating the usage of a blend of different frameworks for governing organisations efficiently.

MCS in Start-ups

The study of management control in start-ups has caught the interest of researchers quite recently (Davila et al., 2009). The implementation of MCS in start-up companies has sparked heated debate (Schachel et al., 2021). Some earlier studies argue that MCS can inhibit creativity and the spirit of venture creation (Amabile, 1998; Lukka & Granland, 2003). Although recent research has shown that MCS may be necessary for start-ups facing growth challenges and can even enhance firm value and support growth (Davila et al., 2010, 2015). Davila et al. (2010) state that MCS in start-ups can bring several benefits. These include improved coordination and planning, a more systematic analysis of information, clearer company goals, increased transparency and the ability for managers to focus on more critical tasks due to alert systems. The value of start-up companies is positively correlated with MCS intensity in an entrepreneurial setting (Davila et al., 2015). At the same time, a wrong choice of MCS can result in issues such as incorrect pricing, poor investment choices and inaccurate cost estimates, which can negatively impact firm performance (Laitinen, 2011).

According to the available literature, start-ups can choose from a diverse set of MCS based on their specific goals and other factors, such as their strategy and context (Bedford & Malmi, 2015). However, start-ups could choose certain MCS to align with the practices of other successful companies or comply with laws and regulations (Chenhall, 2003). The results of MCS choices are influenced by the compatibility among MCS attributes and context (Burkert et al., 2014; Gerdin & Greve, 2008). The interaction between MCS and contextual components can vary significantly in start-ups compared to other businesses due to unique contingencies (Amezcua et al., 2013). These studies show the connection of MCS literature on the contingency approach. It suggests that the best managerial approach to a situation or problem depends on the specific circumstances and context in which it occurs, which means that the factors at play in the business environment can influence the most effective managerial approach (Battilana & Casciaro, 2012). There is also wider evidence for the application of contingency theory to management control, where it suggests that the practices and methods used for management control will vary from one organisation to another, depending on the context in which they operate. In this regard, a significant amount of research explored contingency variables that contribute to the implementation of MCS in start-up ventures. These factors include strategy (Crespo et al., 2019; Davila et al., 2015; Pavlatos, 2021; Samagaio et al., 2018; Sandino, 2007), structure (Crespo et al., 2019; Hill & Birkinshaw, 2008; Pavlatos, 2021; Samagaio et al., 2018), life cycle (Akroyd & Kober, 2020; Davila et al., 2015; Kallunki & Silvola, 2008; Sandino, 2007; Strauss et al., 2013; Ylinen & Gullkvist, 2014), entrepreneurial orientation (Frare et al., 2022) and environment (Pavlatos, 2021; Samagaio et al., 2018).

Prior research has shown a wide belief that MCS can cut back the risk of failure. The same consensus exists in case studies-based research, which specifies that MCS can effectively reduce the level of uncertainties, risks and failure (Davila et al., 2010; Jørgensen & Messner, 2010). A more recent empirical study by Frare et al. (2022) also provides evidence for the capability of MCS to tackle the vulnerability of failing start-ups. Kaplan and Atkinson (1998) asserted that MCS are shaped in such a way that gives correct data and information for tactical decision making and ensures the goals of the organisation are adequately met without any time failure. MCS can also assist in making company objectives clear and promoting transparency, which can be particularly valuable when making decisions in alignment with the company’s strategy in an uncertain environment (Malmi & Brown, 2008; Pasch, 2019). The built-in alert systems of MCS enable managers to fulfil expectations while giving them more time and flexibility by automating routine tasks and keeping track of performance (Davila et al., 2010). Thus, it is clear that MCS tools got wider acceptability for minimising risk and uncertainties in business ventures (Davila & Ditillo, 2017; Otley, 2016).

Researchers have a broader consensus that an effective and efficient mix of MCS tools will result in increased firm performance (Bedford, 2015; Davila & Foster, 2005). A recent study by Frare et al. (2022) fortifies this point by providing empirical evidence for the interconnection of MCS package and start-up performance. Nevertheless, some research suggests that the context of start-ups moderates the association between MCS and performance. This indicates that a tailored mix of MCS tools, specific to the context of the firm, is more likely to lead to improved performance than a standardised approach. In other words, the effectiveness of MCS in enhancing firm performance depends on the fit between the MCS package and the specific context in which it is implemented. Therefore, firms are likely to harmonise their MCS choices with their tactical targets in order to achieve phenomenal performance (Chenhall, 2003). A recent research by Gomez-Conde et al. (2023) also affirms the same consensus through providing empirical evidence of the configuration among MCS and innovation strategy of start-ups to make a push to the performance.

Earlier researchers also focused on the influence of MCS on start-up funding. To get adequate and prompt financial support, start-ups must simultaneously minimise information asymmetries and demonstrate a high likelihood of success to investors or financial institutions (Schachel et al., 2021). In this context, MCS is able to perform a significant role. MCS can inspire the managerial and operational staff by establishing challenging goals, holding them responsible for meeting those goals and assisting in creating a dependable database to facilitate rational decision-making (Strauss et al., 2013). Ostensibly, the dependable database can also be used by investors to reduce information asymmetries and make better decisions regarding investment in start-ups. A recent study by Schachel et al. (2021) examined the significance of MCS in start-ups from the viewpoint of external financiers and revealed that MCS on the ground of finance and strategy is substantially significant while MCS on HR ground is abstemiously important. Earlier researchers also show the same belief in the capability of MCS to support the financing of start-ups. Rahaman and Zaman (2013) stated that improvement in management quality leads to an increase in the company’s ability to acquire funding. Another study suggests that financiers of start-up companies perceive formal MCS as a means of making rational decisions or as an indicator of organisational efficacy and progress (Davila et al., 2015).

Despite being aware of all the benefits of MCS, start-ups still struggle to implement proper MCS due to the dearth of resources needed to adopt formal mechanisms of control (Malagueño et al., 2018). Large companies around the globe shell out millions of dollars to implement MCS to enhance performance (Rigby, 2001). Compared to large companies, small firms encounter several challenges, including limited access to knowledge, smaller product lines and market size, lack of economies of scale, informal organisational structures and limited leadership capabilities (Benyayer & Kupp, 2017; Nielsen et al., 2015). Thus, it makes difficult for small firms, such as start-ups, to implement formal mechanisms of control (Thakur, 1999). Although, several experts agree that small size can have advantages in the industry, including more flexibility, greater agility in making strategic decisions and more opportunities for innovation (Arbussa et al., 2017; Vossen, 1998). However, earlier studies failed to consider the new approaches of control that leverage the distinctive benefits of small firms, and this can be used by start-ups in their initial stage itself. Therefore, it is relevant to study the new approaches of control mechanisms that are viable and affordable for small businesses to reduce the risk of uncertainty and flourish in their field.

Concept of New Paradigms of Management Control for Start-ups

LSA

Ries (2011) drafted LSA based on inferences drawn by him from his own start-up experiences. However, this effort was considered just as an improvement over the concept propagated by Murray and Tripsas (2004) by making it more appealing for adoption by the software industry. Though Blank (2007) propounded the incorporation of design thinking principles in entrepreneurial ventures, his contribution failed to catch the attention of the academic world and gain due acknowledgement and fame as managed by Ries. The popularity of LSA increased swiftly among entrepreneurs and entrepreneurial experts and attained extensive global recognition in a very short notice. More experts such as Blank and Dorf (2012), Furr and Ahlstrom (2011) and Maurya (2012) started writing about the concept by incorporating fresh gradations and texture. To date, the LSA can be described as the most widely accepted method of entrepreneurship, catching the acceptance of large audience engulfing incubators, entrepreneurs and accelerators. The fact that the contents of most entrepreneurship development programmes are derived from this methodology serves as a testimony to its immense popularity.

The LSA is a management control paradigm that has gained widespread adoption among start-ups in recent years (Osterwalder & Pigneur, 2010; Ries, 2011). This approach emphasises the importance of rapid experimentation and learning in developing new products or services, focusing on customer discovery and validation (Ries, 2011). By continuously gathering customer feedback and iterating on their offerings, start-ups can quickly identify and address any issues or concerns with their products, improving their chances of long-term success (Osterwalder & Pigneur, 2010). One key aspect of the LSA is the use of minimal viable products (MVPs). MVPs are stripped-down versions of a product or service designed to be quickly developed and tested in the market. By gathering customer feedback on an MVP, start-ups can validate their product’s value proposition and identify any necessary improvements before fully committing resources to its development (Ries, 2011). Studies have shown that the use of MVPs can significantly improve the chances of success for start-ups (Blank, 2013; Tracey et al., 2011). For example, a study by Tracey et al. (2011) found that start-ups using MVPs achieve better product-market fit and attract more funding than those not using MVPs. Another study by Blank (2013) found that MVPs can help start-ups identify and validate their assumptions about the market and customers, leading to development of highly successful products and businesses. In addition to its focus on rapid experimentation and customer validation, the LSA emphasises the importance of agility and adaptability in changing market conditions (Osterwalder & Pigneur, 2010; Ries, 2011). By continuously testing and iterating on their products and processes, start-ups can quickly respond to changes in the market or industry and remain competitive (Ries, 2011). Overall, the LSA is a valuable management control paradigm for start-ups looking to effectively allocate their resources, prioritise their initiatives and respond to changes in the market. By adopting this approach, start-ups can successfully navigate the challenges of early-stage growth and development and achieve long-term success.

ASA

Even the agility concept was initiated by Iacocca Institute of Lehigh University on 1991 (Kidd, 1995), it was the Agile Manifesto, created by a group of software developers in 2001, that popularised the idea of agility in the start-up philosophy. The Agile Manifesto was a response to the limitations and inefficiencies of traditional software development methodologies (Clutterbuck et al., 2009). It emphasised the need for flexibility, collaboration and iterative development, all of which were central to the concept of agility introduced by the Iacocca Institute a decade earlier. As a supplement to the LSA, the ASA also gained some name and fame in the management discipline. After the propagation of the concept, it has also gained immense popularity in the business and academic world. Agility may be described in the following manner: Time-oriented competition (Stalk & Hout, 1990), improvement over lean principles (Womak et al., 1990) and comprehensively integrating all management aspects to accomplish the organisational objectives and mission (Kidd, 1995). Agility may be described as the capability of an enterprise to promptly react to vicissitudes posed to it by the dynamic and inexact environment. Agility may also be described as creating furthermore vicissitudes in the enterprise to strengthen it (Zhang & Sharifi, 2000). Putting in a nutshell, agility is related to the spontaneous and prompt implementation of flexible and effective business principles rather than the orthodox way of fixing conformist plans well in advance and focussing attention towards the accomplishment of such plans.

The ASA is a management control paradigm that is based on the agile software development methodology. This approach emphasises the importance of adaptability and flexibility in the face of changing market conditions and encourages start-ups to adopt a ‘fail fast, learn fast’ mentality (Highsmith, 2002). Key characteristics of the ASA are the use of frequent and iterative product releases and lean flexibility. By continuously releasing small updates and improvements to their products, start-ups can sharply respond to changing customer needs and market conditions and remain competitive (Loforte Ribeiro & Timóteo Fernandes, 2010). This approach also emphasises the importance of rapid experimentation and customer feedback with a focus on continuously gathering and incorporating customer insights into product development (Highsmith, 2002; Schwaber & Beedle, 2002). Studies have shown that the ASA approach can be effective in helping start-ups navigate the challenges of early-stage growth and development (Schwaber & Beedle, 2002; Silva et al., 2020). Agile methods prioritise involving customers in the initial stages of product development, resulting in a highly customer-centric approach (Cram & Newell, 2016; Nerur et al., 2005). Brown and Bessant (2003) suggest that agile methods strengthen an organisation’s internal capabilities to rapidly and continuously adapt to change. Trimi and Berbegal-Mirabent (2012) have exposed the substantial contribution that agile practices can make in driving novelty, resulting in the springing of many products though with shorter life cycles. Hence, agility execution results in immense value addition for business firms. In addition, a study by Schwaber and Beedle (2002) found that the agile approach can help start-ups improve the quality and speed of their product development, leading to increased customer satisfaction and success in the market. Despite potential costs associated with constant adaptation changes proposed by experimentation, implementing agile methods still results in lower costs in contrast to traditional business models (Clutterbuck et al., 2009). Putting in a nutshell, the ASA is a valuable management control paradigm for start-ups looking to prioritise adaptability and flexibility in the face of changing market conditions. By adopting this approach, start-ups can effectively allocate their resources, prioritise their initiatives and respond to changes in the market or industry, helping them navigate the challenges of early-stage growth and development.

DTA

DTA gained popularity since 2006 as a series of management principles (Rauth, 2015). Tim Brown, Roger Martin and David Kelly, associated with Stanford Business School and IDEO, a globally renowned firm for designing, advocated the concept of applying design thinking on business and entrepreneurship framework (Mansoori & Lackéus, 2020). It was claimed that design thinking can contribute to a drastic transformation in educating management philosophy (Dunne & Martin, 2006). The concept of DSA started exerting profound impact on the business world, such that even the larger enterprises like Procter & Gamble started adopting its ideologies in their routine business practices (Leavy, 2010). With time, even start-up firms began to follow the footsteps of their larger counterparts in integrating the principles of DTA to their business framework (Sonalkar et al., 2016).

The DTA is a management control paradigm that emphasises the importance of understanding the demands and perspectives of target market and using this understanding to design innovative solutions (Brown, 2008). This approach encourages start-ups to adopt a user-centred approach to product development, focusing on creating solutions that fulfil the needs and desires of their target market (Brown, 2008). To facilitate this process, the DTA encourages the use of a variety of tools and techniques such as prototyping and user testing to validate and iterate on ideas (Liedtka, 2018). By continuously gathering feedback from customers and incorporating it into the design process, start-ups can ensure that their products and services meet the needs and expectations of their target market (Kurek et al., 2023). Studies have shown that the DTA can be effective in helping start-ups achieve success in the market (Brown, 2008; Liedtka, 2018). For example, a study by Brown (2008) found that the DTA can help start-ups create innovative and differentiated products that meet the needs of their customers, leading to increased competitiveness and success in the market. In addition, a study by Liedtka (2018) found that the DTA can help start-ups identify and solve complex problems, leading to increased innovation and success. In general, the DTA is a valuable management control paradigm for start-ups looking to understand and meet the needs of their customers. By adopting this approach, start-ups can effectively allocate their resources, prioritise their initiatives and create innovative solutions that meet the needs and expectations of their target market. This can lead to increased customer satisfaction, competitiveness and long-term success in the market.

Discussion and Conclusion

Discussion

Prior literature highlighted that start-ups often have limited resources and a need to move quickly to establish a foothold in the market. This means that traditional management control methods may not be as effective as more flexible approaches. LSA, ASA and DTA can all be effective for management control in start-ups. The LSA focuses on rapid experimentation and iteration to identify and validate a viable business model. The ASA emphasises flexibility and adaptability, allowing the start-up to respond quickly to changes in the market. DTA involves understanding the needs of customers and designing solutions that meet those needs. DTA and LSA approaches fall under the category of prescriptive theories of action (Mansoori & Lackéus, 2020) that help people to make better decisions and judgments in a given context (Cross & Sproull, 2004). Given their prescriptive nature, these approaches are well-suited to the unique context of start-ups, where decision-making can be complex and challenging. Start-ups face a significant challenge in dealing with uncertainty, both in current and future situations. Our study has identified evidence from previous research suggesting that experimentation can be an effective solution for mitigating the associated risks. This finding is consistent with the opinions of Fiet (2002) and Pfeffer and Sutton (2006), who argue that systematic experimentation can lead to more precise decisions based on carefully gathered information, ultimately reducing uncertainty. With experimentation being a critical component of LSA, ASA and DTA, it is clear that these methods have the potential to serve as effective tools for managing the uncertainties that start-ups encounter. However, when it comes to resource management, DTA appears to offer few specific recommendations. In contrast, LSA and ASA approaches advise that caution and frugality should be exercised during testing to avoid committing significant resources to a venture idea prematurely. Creating a new venture is a highly complex and lively course that demands flexibility and adaptability (Bruyat & Julien, 2001). However, the optimistic scenario is that new approaches enable start-ups to react dynamically and iteratively to changing information and business conditions. To quote Ries (2011) as an instance, implementation of lean principles by new and young enterprises enables them to rationally utilise limited resources and faster production process to capacitate them to deliver the products desired products to end users at a greater pace. Putting in a nutshell, we can conclude that LSA, ASA and DTA are designed to help start-ups quickly identify and validate a viable business model while also being responsive to changes in the market.

Prescription for Future Research

There is a significant opportunity for further research to enhance the understanding of management control in start-ups. As start-ups seek to stay competitive in fast-changing markets, they must constantly adapt to new technologies and platforms (Behl et al., 2019). One area of future research could be exploring how start-ups are using new technologies such as artificial intelligence and big data analytics to improve their MCS and achieve better results (Dehbi et al., 2022; Wang et al., 2020). This could include examining how these technologies are being used to streamline processes, make more informed decisions and track and gauge performance.

The leadership of start-ups plays a crucial role in shaping the direction and culture of the business (Cheffi et al., 2023). Future research could investigate how different leadership styles and approaches to management control influence the success of start-ups. This could include studying the impact of transformational leadership, servant leadership or other leadership styles on management control practices in start-ups. Start-ups often rely on external stakeholders such as investors, customers and partners for gaining access to the resources and support they need to succeed (Lerner, 2012). Future research could explore how start-ups interact with and manage their relationships with these stakeholders and how these relationships influence management control practice. This could include examining how start-ups engage with stakeholders to gather feedback, how they communicate with stakeholders about their performance and goals and how they manage stakeholder expectations.

The culture of a start-up can have a significant impact on how it approaches management control (Alharbi et al., 2022). Future research could investigate how different cultural influences such as national culture or industry culture shape management control practices in start-ups. This could include studying how cultural values and norms influence decision-making, communication and other management control practices in start-ups. Start-ups face unique challenges and opportunities depending on the development stages, sector and region in which they operate (Kumbhat & Sushil, 2018). Future research could compare management control practices in start-ups on different developmental stages and across different sectors and regions to identify commonalities and differences and identify best practices for success. This could include studying developmental stages and management control for start-ups in a variety of industries, such as technology, healthcare or retail, as well as start-ups operating in different regions of the world.

Agile management practices such as lean start-up and agile software development have gained widespread attention in recent years due to their potential to help start-ups respond quickly and effectively to change (Silva et al., 2020). Future research could explore how start-ups are using agile management practices to improve their MCS and achieve better results. This could include studying the impact of agile practices on decision-making, communication and other management control practices in start-ups. Further research on start-up MCS could provide valuable insights into the evolving nature of management control in start-ups and help start-ups navigate the challenges and opportunities they face as they seek to succeed in today’s fast-changing business environment.

Conclusion

Our literature review indicates that MCS can support growth and improve various aspects of start-ups, such as coordination, information analysis, goal clarity and transparency. MCS also help reduce the risk of failure and assist organisations in achieving their objectives. It can improve decision-making and be viewed as a sign of management quality and growth potential by financiers. MCS adoption is essential for start-ups as they grow and face increasing needs for information. The conceptual understanding clearly indicates benefits offered by new approaches of management control such as LSA, ASA and DTA. Through this understanding, we can infer that incorporating new approaches allows start-ups to enjoy the full benefit of MCS by reducing risk and uncertainty and managing available resources efficiently to achieve the goals and objectives. However, to reap the fullest value of MCS, due consideration should also be given for finding the right approach or combination of approaches that fit with the contingency factors to achieve specific needs and goals of the start-up. We identified several potential areas for future research, including exploring the impact of new technologies and agile management practices on management control practices, how leadership styles influence management control, how stakeholder relationships are managed, the role of cultural influences and comparing management control practices across a variety of developmental stages, sectors and regions.

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

ORCID iD

M. K. Ebrahim

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