Linking energy-related strategic flexibility and energy efficiency - The mediating role of management control systems choice

For many industrial companies a rising tension between efficiency considerations on the one hand and the promotion of strategic flexibility on the other is visible within the last years. Various studies in different contexts have confirmed that management control can mitigate the tradeoff between efficiency and flexibility to a considerable extent, but no research in this regard was conducted in the field of energy management so far. Based on data of 236 German manufacturing companies this paper empirically examines the impact of energy-related strategic flexibility of firms on the design of their management control system (MCS) and their corresponding energy efficiency. Using structural equation modeling, we examine primary data that captures the energy-related strategic flexibility as well as the design of management control elements and longitudinal secondary data that was used to calculate energy efficiency. The results indicate that the importance of formal as well as informal management controls increases in those firms with a high energy-related strategic flexibility. Furthermore, there is in general a positive relation between the use of formal management controls and energy efficiency, whereas the emphasis companies place on informal management controls does not result in a significant effect on energy efficiency. This study contributes to a general understanding of how organizations balance formal and informal controls in the simultaneous pursuit of efficiency and flexibility.