Financial control and business strategy in start-up companies: An empirical analysis

Author/s Franco Cescon, Luca Grassetti
Publishing Year 2021 Issue 2021/suppl. 2
Language English Pages 26 P. 189-214 File size 287 KB
DOI 10.3280/MACO2021-002-S1009
DOI is like a bar code for intellectual property: to have more infomation click here

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

This article focuses on the relationship between financial control (FC) techniques and business strategies (BSs). The context of the study is start-up companies in Italy, and the main motivation to consider this context is the very limited extant literature. The authors performed a survey to collect quantitative data from start-up companies, and they also complemented the survey with a series of interviews to collect qualitative data. Results show that the use of different FC techniques does not depend on BSs. As a strategic risk factor, the authors also show that reputation risk differs significantly between the two strategy-based groups, differentiation strategy group and focus strategy group. The interviews conducted with expert entrepreneurs aimed at determining the importance of specific FC techniques and the benefits of adopting them in start-up companies. Overall, the article provides new evidence for the debate about the role of FC techniques in the BSs of the firm.

Keywords: Start-up company, Business strategy, Financial control, Strategic risk.

  1. Agresti A. (2007), An Introduction to Categorical Data Analysis (2nd Ed.), New York, NY, John Wiley & Sons.
  2. Atkinson A.A., Kaplan R.S, Matsumura E.A., Young S.M. (2012), Management Accounting, Information for Decision Making and Strategy Execution (Sixth Edition), England, Pearson Education Limited.
  3. Baines A., Langfield-Smith K. (2003), Antecedents to management accounting change: A structural equation approach, Accounting, Organization and Society, 28, pp. 675-698.
  4. Bhimani A. (2017), Financial Management for Technology Start-ups, London, U.K., Kogan Page Limited.
  5. Bhimani A. (2013), Strategic Finance. Achieving High Corporate Performance, London, UK, Strategy Press.
  6. Cadez S., Guilding C. (2008), An explanatory investigation of an contingency model of strategic management accounting, Accounting, Organization and Society, 33, pp. 836-863.
  7. Cassar G. (2009), Financial Statement and Projections Preparation in Start-Up Ventures, The Accounting Review, 84(1), pp. 27-51.
  8. Cassar G. (2010), Are Individuals Entering Self-Employment Overly Optimistic? An Empirical Test of Plans and Projections on Nascent Entrepreneur Expectations. Strategic Management Journal, 31, pp. 822-840.
  9. Cescon F., Costantini A., Grassetti L. (2019), Strategic Choices and Strategic Management Accounting in Large Manufacturing Firms, Journal of Management and Governance, 23, pp. 605-636.
  10. Chenhall R.H., Langfield-Smith K. (1998), The relationship between strategic priorities management techniques and management accounting: an empirical investigation using a system approach, Accounting, Organizations and Society, 23(3), pp. 243-264.
  11. Davila A., Foster G. (2007), Management Control Systems in Early-Stage Startup Companies. The Accounting Review, 82(4), pp. 907-937.
  12. Davila A., Foster G., Jia N. (2015), The Valuation of Management Control Systems in Start-Up Companies: International Field-Based Evidence, European Accounting Review, 24(2), pp. 207-239.
  13. Davila A., Foster G., Oyon D. (2009), Accounting and Control, Entrepreneurship and Innovation: Venturing into New Research Opportunities, European Accounting Review, 18(2), pp. 281-311.
  14. Govindarajan V., Gupta A.K. (1985), Linking Control Systems to Business Strategy: Impact on Performance, Accounting, Organizations and Society, 10, pp. 51-66.
  15. Greiner L.E. (1998), Evolution and revolution as organizations grow, Harvard Business Review, May-June, pp. 1-11.
  16. Gupta A.K., Govindarajan V. (1984), Business Unit Strategy, Managerial Characteristics, and Business Unit Effectiveness at Strategy Implementation, Academy of Management Journal, 7(1), pp. 25-41.
  17. Hope A.C.A. (1968), A simplified Monte Carlo significance test procedure, Journal of the Royal Statistical Society Series B, 30, pp. 582-598.
  18. Invernizzi G. (2005), Lo Strategic Management Accounting. In G. Invernizzi (Ed.), Strategic Management Accounting. Una ricerca sui sistemi di supporto alla gestione strategica (pp. 7-18). EGEA, Italy.
  19. Johnson G., Whittington R., Scholes K., Angwin D., Regnér P. (2014), Exploring strategy. Text and cases (Tenth Edition), United Kingdom, Pearson Education Limited.
  20. Kim J-B., Simunic D.A., Stein M.T., Yi C.H. (2011), Voluntary Audits and the Cost of Debt Capital for Privately Held Firm: Korean Evidence. Contemporary Accounting Research, 28(2), pp. 585-615.
  21. Miles R.E., Snow C.G. (1978), Organizational Strategy, Structure, and Process, New York, McGraw-Hill.
  22. Nicotra M., Corrente S., Romano M., Schillaci C.E., Greco S. (2018). The Italian Entrepreneurial Ecosystem: A Comparison with G7 Countries using Stochastic Multicriteria Acceptability Analysis, in C.E. Schillaci (Ed), Tendenze nuove negli studi economico-aziendali. L’evoluzione dei rapporti azienda-società, (pp. 79-109), Italy, il Mulino.
  23. Nixon B. (1998), Research and Development Performance Measurement: A Case Study, Management Accounting Research, 9, pp. 329-355.
  24. Porter M. (2004), Competitive Advantage. Creating and Sustaining Superior Performance, New York, Free Press Export Edition.
  25. R Core Team (2017), R: A language and environment for statistical computing. R Foundation for Statistical Computing. --
  26. Rokness H.O., Shields M.D. (1988), An Empirical Analysis of the Expenditure Budget in Research and Development, Contemporary Accounting Research, 4(2), pp. 568-581.
  27. Sandino T. (2007), Introducing the First Management Control Systems: Evidence from the Retail Sector. The Accounting Review, 82, pp. 265-293.
  28. Scott T,. Tiessen P. (1999), Performance measurement and management teams, Accounting, Organizations and Society, 24, pp. 263-285.
  29. Seal, W., Garrison, R.H. & Nooren, E.W. (2009). Management Accounting, Thirt Ed., UK, McGraw-Hill Education.
  30. Simons R. (2014), Performance Measurement and Control Systems for Implementing Strategy, Pearson Education Limited, England.
  31. Tervala E., Laine T., Korhonen T., Suomala P. (2017), The role of financial control in new product development: empirical insights into project managers’experiences, Journal Management Control, 28, 81-106.
  32. Weston J.F. , Copeland T.E. (1986), Managerial Finance, , Florida, USA, 8th Ed. The Dryden Press
  33. Wooldridge B., Floyd S.W. (1990), The strategy process, middle management involvement and organizational performance, Strategic Management Journal, 11, pp. 231-241,

Franco Cescon, Luca Grassetti, Financial control and business strategy in start-up companies: An empirical analysis in "MANAGEMENT CONTROL" suppl. 2/2021, pp 189-214, DOI: 10.3280/MACO2021-002-S1009