The Influence of Economic Volatility on the Effectiveness of Management Control Systems

Abstract

This study examines the impact of economic volatility on the effectiveness of management control systems through a systematic literature review. Economic volatility, characterized by unpredictable fluctuations in macroeconomic indicators, presents significant challenges for organizations in achieving their strategic objectives. This study synthesizes findings from various previous studies conducted over the last five years to understand how unstable economic conditions affect design., implementation, and performance of management control systems. Particular attention is given to the organizational adjustments made in response to volatility, the implications for managerial decision-making, and the role of management control systems in enhancing organizational resilience. The findings indicate that economic volatility often necessitates the development of management control systems that are more adaptive, flexible, and forward-looking. These systems are not only essential for coping with external uncertainty but also for supporting continuous strategic alignment and learning within organizations. The insights generated from this study are particularly valuable for both practitioners and scholars seeking to develop robust management control systems capable of performing effectively in dynamic and unpredictable business environments.