The Effect of Management Control Systems on Company Performance

Abstract

This study aims to analyze the effect of the Management Control System (MCS) on firm performance. The research was conducted in manufacturing companies located in West Java, Indonesia, involving 73 respondents from various managerial levels. The data were analyzed using Structural Equation Modeling with the Partial Least Squares approach (SEM-PLS). This study was conducted because, although MCS is widely acknowledged as a crucial tool for aligning operational activities with strategic objectives, there is limited empirical evidence on how its implementation directly affects firm performance in Indonesian manufacturing companies, particularly in coping with dynamic market conditions, operational uncertainties, and the need for continuous innovation.The results indicate that the implementation of MCS plays a positive and significant role in improving firm performance. These findings highlight the importance for management to design, implement, and continuously refine adaptive, well-structured, and effective control systems that not only enhance operational efficiency and informed decision-making but also foster employee engagement, innovation, accountability, and long-term organizational resilience in a highly competitive and rapidly changing business environment.