The moderating effect of organisational life cycle stages on the association between the interactive and diagnostic approaches to using controls with organisational performance

• Approaches to using controls are associated with performance across OLC stages.
• More interactive use of controls increases performance in the growth stage.
• More interactive use of controls decreases performance in the revival stage.
• More diagnostic use of controls increases performance in the revival stage.
• More diagnostic use of controls decreases performance in the maturity stage.

This study examines the moderating effect of organisational life cycle (OLC) stages on the association between the approach to using controls (interactive versus diagnostic) with organisational performance. Analysis is conducted in respect to Miller and Friesen's (1984) organisational life cycle (OLC) stages (birth, growth, maturity, and revival). Data were collected by a survey questionnaire from a random sample of 343 General Managers in Australian manufacturing business units. The results indicate that the interactive approach was positively (negatively) associated with organisational performance in the growth (revival) stage. The use of the diagnostic approach was positively (negatively) associated with organisational performance in the revival (maturity) stage. The study contributes to the literature linking management control systems and OLC stages by providing knowledge regarding the suitability of interactive and diagnostic approaches to using controls for business units within specific OLC stages.