MCS package and entrepreneurial competency influence on business performance: The moderating role of business strategy

• Published in: European Journal of Management and Business Economics (EJM&BE) Vol. 32; no. 1; pp. 1 - 23
• Main Authors: Ur-Rehman, Shafique, Elrehail, Hamzah, Nair, Kiran, Bhatti, Anam, Taamneh, Abdallah Mohammad
• Format: Journal Article
• Language: English
• Published: Leeds Emerald 28.02.2023; Emerald Group Publishing Limited; Emerald Publishing
• Subjects: Business performance; Compensation; Competitive advantage; Cost leadership strategy; Cultural competence; Culture; Cybernetics; Decision making; Developing countries; Differentiation; Differentiation strategy; Emerging markets; Entrepreneurial competency; GDP; Gross Domestic Product; LDCs; Leadership; MCS package; RBV theory; Small & medium sized enterprises-SME; Strategic management; System theory; Malaysia
• ISSN: 2444-8451; 2444-8494; 2444-8494
• DOI: 10.1108/EJMBE-04-2020-0088

Purpose - This paper draws on resource-based theory (RBV) to examine the impact of the management control system (MCS) package on business performance through the mediating role of entrepreneurial competencies and the interaction role of business strategy in small and medium-sized enterprises (SMEs). Design/methodology/approach A total of 372 questionnaires were used in this research for analysis purposes using partial least square-structural equation modelling. Cluster sampling was used and nine states out of 16 states were selected randomly, including Kelantan, Johor, Sarawak, Selangor, Kedah, Kuala Lumpur, Penang, Perak and Sabah, because the nine states cover 84.4% of the total SMEs. Findings The results revealed that only cultural and administrative control has no relationship with business performance. Moreover, in the MCS package, all elements have a significant and positive influence on entrepreneurial competencies. Furthermore, business strategy (cost leadership and differentiation strategy) significantly moderates, while entrepreneurial competencies mediate between, cultural, planning, cybernetic, rewards and compensation, administrative control and business performance. Originality/value SMEs in Malaysia are contributing 36.6% to gross domestic product. Further, as this sector is important, less attention has been paid to this area of MCS package with business strategies to determine organisational performance. This study fills these gaps, and the recommendations and findings for further research are discussed in detail accordingly. Moreover, the findings of the current research provide guidelines for the management of SMEs.