Relationship of planning and control systems with strategic choices: A closer look

Abstract

The study finds that relative to others, firms pursuing the Prospector-like strategy (high innovation) have lower financial results uncertainty, a more long-term orientation for decision making, and more decentralized control. As well, the tightness of budgetary control is found to be negatively correlated with financial results uncertainty. Thus, we are able to reproduce in our study the result that Prospector type firms have tighter budgetary control, which many have found puzzling previously, and point to the relation between strategy and financial results uncertainty as an explanation for the result. Based on a sample of large firms in Singapore, the study also finds the impact of the 1997-1998 Asian crisis is correlated with the intensity with which the Prospector-like strategy was pursued. © 2001 Kluwer Academic Publishers.