Management Control System and Performance of Public Sector Organizations
Keywords:
Management Control Systems; Public Sector Performance; Levers of Control; Contingency Theory; Institutional Theory; Dynamic Capabilities; Public Value.
Abstract
Management control systems (MCSs) have increasingly become important mechanisms for public sector organizations facing accountability requirements, efficiency pressures, service-quality demands, environmental uncertainty, digital transformation, and sustainability challenges. Nevertheless, empirical evidence concerning the relationship between MCSs and public sector organizational performance remains fragmented because control effectiveness depends on organizational context, control use, institutional pressures, organizational capabilities, and environmental conditions. This study aims to synthesize the development of research on MCSs and public sector organizational performance by integrating Contingency Theory, Agency Theory, Institutional Theory, Levers of Control, the Resource-Based View, Dynamic Capabilities Theory, and Public Value Theory. A Systematic Literature Review (SLR) approach was adopted using the PRISMA 2020 reporting principles, while journal articles were verified through publisher metadata, DOI records, and academic repositories. Forty core articles were used as the evidence base, consisting of empirical studies, systematic reviews, and relevant conceptual studies. The synthesis indicates that MCSs should not be understood as a single control mechanism but as a control package integrating performance measurement, diagnostic control, interactive control, boundary systems, belief systems, risk management, information systems, and organizational learning. Contingency Theory suggests that MCS effectiveness depends on the fit between control design and organizational context. From the Levers of Control perspective, simultaneous diagnostic and interactive uses enable public organizations to maintain control while supporting learning and adaptation. Institutional Theory explains that some MCS practices are adopted because of legitimacy pressures, whereas the Resource-Based View and Dynamic Capabilities Theory explain how MCSs can become mechanisms for developing organizational capabilities that contribute to performance. The review further identifies research gaps concerning the integration of MCSs with risk management, digitalization, institutional pressures, organizational resilience, and public value. Future research should develop multi-theoretical models and empirically examine the MCS–capability–performance relationship in Indonesian public sector organizations, particularly local governments.
References
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Bauer, P., & Greiling, D. (2025). Management controls for contributing to the promotion of sustainable development in public sector organizations—Status quo and further research. Sustainable Development, 33, 3246–3265. https://doi.org/10.1002/sd.3292
Beuren, I. M., et al. (2023). Does environmental uncertainty drive the use of management control systems and innovation? Business Process Management Journal, 29(3), 671–689. https://doi.org/10.1108/BPMJ-10-2022-0491
Bracci, E., Mouhcine, T., Tallaki, M., Rana, T., & Wickramasinghe, D. (2022). Risk management and management accounting control systems in public sector organizations: A systematic literature review. Public Money & Management, 42(6), 395–402. https://doi.org/10.1080/09540962.2021.1963071
Bracci, E., Bruno, A., D'Amore, G., & Ievoli, R. (2024). The integration of performance management and risk management in the public sector: An empirical case. Journal of Management Control, 35, 137–163. https://doi.org/10.1007/s00187-024-00369-2
Castelo, S. L., & Gomes, C. F. (2024). The role of performance measurement and management systems in changing public organizations: An exploratory study. Public Money & Management, 44(5), 399–406. https://doi.org/10.1080/09540962.2023.2204400
Chenhall, R. H. (2003). Management control systems design within its organizational context: Findings from contingency-based research and directions for the future. Accounting, Organizations and Society, 28(2–3), 127–168. https://doi.org/10.1016/S0361-3682(01)00027-7
Chowdhury, A., & Shil, N. C. (2022). Management control systems as the protagonist in public sector reforms: Observations from worldwide selected literature. RUDN Journal of Public Administration, 9(3), 302–315. https://doi.org/10.22363/2312-8313-2022-9-3-302-315
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160. https://doi.org/10.2307/2095101
Elbashir, M. Z., Sutton, S. G., Arnold, V., & Collier, P. A. (2022). Leveraging business intelligence systems to enhance management control and business process performance in the public sector. Meditari Accountancy Research, 30(4), 914–940. https://doi.org/10.1108/MEDAR-04-2021-1287
Felicio, T., Samagaio, A., & Rodrigues, R. (2021). Adoption of management control systems and performance in public sector organizations. Journal of Business Research, 124, 593–602. https://doi.org/10.1016/j.jbusres.2020.10.069
Funck, E. K. (2025). Management control under post-NPM: Replacing performance evaluation with trust-based management. Financial Accountability & Management, 41(2), 346–363. https://doi.org/10.1111/faam.12420
Gomez-Conde, J., Lopez-Valeiras, E., Rosa, F. S., et al. (2023). The effect of management control systems in managing the unknown: Does the market appreciate the breadth of vision? Review of Managerial Science, 17, 2769–2795. https://doi.org/10.1007/s11846-022-00601-0
Haron, N. H., Alias, N., Tuan Mat, T. Z., Mohd Ali, M., & Johan, N. (2024). The role of management control system in mitigating corruption: The levers of control perspective. Information Management and Business Review, 16(3(I)), 166–173. https://doi.org/10.22610/imbr.v16i3(I).3962
Husnan, L. H., Manan, A., Jufri, A., & Muhdin. (2023). Effects of government internal control system, accessibility financial report, local financial management transparency, local financial management accountability toward local government performance. European Journal of Theoretical and Applied Sciences, 1(6). https://doi.org/10.59324/ejtas.2023.1(6).63
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Král, M. (2022). 20-year history of performance measurement in the local public sector: A systematic review. International Journal of Public Administration, 45(9), 726–740. https://doi.org/10.1080/01900692.2021.1891425
Maharani, R. (2021). The impact of management control on public sector organizations in Indonesia. Indonesian Journal of Accounting and Finance, 18(1). https://doi.org/10.21002/jaki.2021.06
Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2), 340–363. https://doi.org/10.1086/226550
Mitter, C., Kuttner, M., Duller, C., et al. (2024). Does national culture impact management control systems? A systematic literature review. Review of Managerial Science, 18, 209–257. https://doi.org/10.1007/s11846-023-00661-w
Modell, S. (2022). New developments in institutional research on performance measurement and management in the public sector. Journal of Public Budgeting, Accounting and Financial Management, 34(3), 353–369. https://doi.org/10.1108/JPBAFM-04-2021-0070
Muhtar, M., Winarna, J., & Sutaryo, S. (2023). Internal control weakness and corruption: Empirical evidence from Indonesian local governments. International Journal of Professional Business Review, 8(6). https://doi.org/10.26668/businessreview/2023.v8i6.1278
Nuhu, N. A., Baird, K., & Appuhami, R. (2019). The impact of management control systems on organisational change and performance in the public sector: The role of organisational dynamic capabilities. Journal of Accounting & Organizational Change, 15(3), 473–495. https://doi.org/10.1108/JAOC-08-2018-0084
Oppi, C., Campanale, C., & Cinquini, L. (2022). Ambiguity in public sector performance measurement: A systematic literature review. Journal of Public Budgeting, Accounting and Financial Management, 34(3), 370–390. https://doi.org/10.1108/JPBAFM-09-2020-0167
Otley, D. (1980). The contingency theory of management accounting: Achievement and prognosis. Accounting, Organizations and Society, 5(4), 413–428. https://doi.org/10.1016/0361-3682(80)90040-9
Page, M. J., McKenzie, J. E., Bossuyt, P. M., et al. (2021). The PRISMA 2020 statement: An updated guideline for reporting systematic reviews. BMJ, 372, n71. https://doi.org/10.1136/bmj.n71
Pham, Q. H., & Vu, K. P. (2025). Management accounting control system and risk governance in public sector organizational resilience enhancement. Cogent Social Sciences, 11(1), 2444473. https://doi.org/10.1080/23311886.2024.2444473
Phan, T., Baird, K., Bhuyan, M., & Tung, A. (2023). The associations between management control systems, organisational capabilities and performance. Journal of Management Control, 34(4), 435–462. https://doi.org/10.1007/s00187-024-00365-6
Prayudi, M. A., Nurkholis, N., Saraswati, E., & Rusydi, M. K. (2023). Do vision and mission really matter? The management control experiences of reformed public hospitals in Indonesia. International Journal of Professional Business Review, 8(3). https://doi.org/10.26668/businessreview/2023.v8i3.1092
Rahmasari, A., & Setiawan, D. (2022). Maturity of internal control system, the capability of internal auditors, and performance accountability in local governments. Journal of State Financial Governance and Accountability, 8(2), 159–176. https://doi.org/10.28986/jtaken.v8i2.830
Rana, T., Steccolini, I., Bracci, E., & Mihret, D. G. (2022). Performance auditing in the public sector: A systematic literature review and future research avenues. Financial Accountability & Management, 38, 337–359. https://doi.org/10.1111/faam.12312
Rosalina, K., & Jusoh, R. (2024). Levers of control, counterproductive work behavior, and work performance: Evidence from Indonesian higher education institutions. SAGE Open. https://doi.org/10.1177/21582440241278455
Safkaur, O., Rombe, L., & Bleskadit, N. H. (2024). The influence of internal control systems, information technology utilization and organizational commitment on the performance of local government institutions. Indonesian Journal of Education Research, 10(1), 103–111. https://doi.org/10.29210/020242388
Sari, D. N., & Darmastuti, D. (2023). Internal control weaknesses: Its relationship with local government characteristics and follow-up on audit results. Indonesian Journal of Accounting and Auditing, 27(1). https://doi.org/10.20885/jaai.vol27.iss1.art10
Simons, R. (1995). Levers of control: How managers use innovative control systems to drive strategic renewal. Harvard Business School Press.
Sofyani, H., Utami, T. P., & Yani, I. (2024). Management control system in higher education institutions and its role on performance: Does gender matter? APPSAI Accounting Review, 4(2). https://doi.org/10.26418/apssai.v4i2.116
van der Kolk, B. (2022). Performance measurement in the public sector: Mapping 20 years of survey research. Financial Accountability & Management, 38(4), 703–729. https://doi.org/10.1111/faam.12345
Vakkuri, J. (2022). PMM and beyond—Reflections on the paper "new developments in institutional research on performance measurement and management in the public sector." Journal of Public Budgeting, Accounting and Financial Management. https://doi.org/10.1108/JPBAFM-12-2021-0168
Weber, M. M., Pedell, B., & Rötzel, P. G. (2024). Resilience-oriented management control systems: A systematic review of the relationships between organizational resilience and management control systems. Journal of Management Control, 35, 563–620. https://doi.org/10.1007/s00187-024-00385-2
Winarna, J., Muhtar, M., Sutaryo, S., & Amidjaya, P. G. (2021). Government internal control system and local government administration performance: Evidence from Indonesian local governments. Public Finance Quarterly, 66(S2), 88–107. https://doi.org/10.35551/PFQ_2021_s_2_5
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Barros, R. S., & Ferreira, A. M. D. S. C. (2023). Management control systems and innovation: A case study grounded in institutional theory. Journal of Management Control, 34, 109–133. https://doi.org/10.1007/s00187-023-00351-4
Bauer, P., & Greiling, D. (2025). Management controls for contributing to the promotion of sustainable development in public sector organizations—Status quo and further research. Sustainable Development, 33, 3246–3265. https://doi.org/10.1002/sd.3292
Beuren, I. M., et al. (2023). Does environmental uncertainty drive the use of management control systems and innovation? Business Process Management Journal, 29(3), 671–689. https://doi.org/10.1108/BPMJ-10-2022-0491
Bracci, E., Mouhcine, T., Tallaki, M., Rana, T., & Wickramasinghe, D. (2022). Risk management and management accounting control systems in public sector organizations: A systematic literature review. Public Money & Management, 42(6), 395–402. https://doi.org/10.1080/09540962.2021.1963071
Bracci, E., Bruno, A., D'Amore, G., & Ievoli, R. (2024). The integration of performance management and risk management in the public sector: An empirical case. Journal of Management Control, 35, 137–163. https://doi.org/10.1007/s00187-024-00369-2
Castelo, S. L., & Gomes, C. F. (2024). The role of performance measurement and management systems in changing public organizations: An exploratory study. Public Money & Management, 44(5), 399–406. https://doi.org/10.1080/09540962.2023.2204400
Chenhall, R. H. (2003). Management control systems design within its organizational context: Findings from contingency-based research and directions for the future. Accounting, Organizations and Society, 28(2–3), 127–168. https://doi.org/10.1016/S0361-3682(01)00027-7
Chowdhury, A., & Shil, N. C. (2022). Management control systems as the protagonist in public sector reforms: Observations from worldwide selected literature. RUDN Journal of Public Administration, 9(3), 302–315. https://doi.org/10.22363/2312-8313-2022-9-3-302-315
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160. https://doi.org/10.2307/2095101
Elbashir, M. Z., Sutton, S. G., Arnold, V., & Collier, P. A. (2022). Leveraging business intelligence systems to enhance management control and business process performance in the public sector. Meditari Accountancy Research, 30(4), 914–940. https://doi.org/10.1108/MEDAR-04-2021-1287
Felicio, T., Samagaio, A., & Rodrigues, R. (2021). Adoption of management control systems and performance in public sector organizations. Journal of Business Research, 124, 593–602. https://doi.org/10.1016/j.jbusres.2020.10.069
Funck, E. K. (2025). Management control under post-NPM: Replacing performance evaluation with trust-based management. Financial Accountability & Management, 41(2), 346–363. https://doi.org/10.1111/faam.12420
Gomez-Conde, J., Lopez-Valeiras, E., Rosa, F. S., et al. (2023). The effect of management control systems in managing the unknown: Does the market appreciate the breadth of vision? Review of Managerial Science, 17, 2769–2795. https://doi.org/10.1007/s11846-022-00601-0
Haron, N. H., Alias, N., Tuan Mat, T. Z., Mohd Ali, M., & Johan, N. (2024). The role of management control system in mitigating corruption: The levers of control perspective. Information Management and Business Review, 16(3(I)), 166–173. https://doi.org/10.22610/imbr.v16i3(I).3962
Husnan, L. H., Manan, A., Jufri, A., & Muhdin. (2023). Effects of government internal control system, accessibility financial report, local financial management transparency, local financial management accountability toward local government performance. European Journal of Theoretical and Applied Sciences, 1(6). https://doi.org/10.59324/ejtas.2023.1(6).63
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Král, M. (2022). 20-year history of performance measurement in the local public sector: A systematic review. International Journal of Public Administration, 45(9), 726–740. https://doi.org/10.1080/01900692.2021.1891425
Maharani, R. (2021). The impact of management control on public sector organizations in Indonesia. Indonesian Journal of Accounting and Finance, 18(1). https://doi.org/10.21002/jaki.2021.06
Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83(2), 340–363. https://doi.org/10.1086/226550
Mitter, C., Kuttner, M., Duller, C., et al. (2024). Does national culture impact management control systems? A systematic literature review. Review of Managerial Science, 18, 209–257. https://doi.org/10.1007/s11846-023-00661-w
Modell, S. (2022). New developments in institutional research on performance measurement and management in the public sector. Journal of Public Budgeting, Accounting and Financial Management, 34(3), 353–369. https://doi.org/10.1108/JPBAFM-04-2021-0070
Muhtar, M., Winarna, J., & Sutaryo, S. (2023). Internal control weakness and corruption: Empirical evidence from Indonesian local governments. International Journal of Professional Business Review, 8(6). https://doi.org/10.26668/businessreview/2023.v8i6.1278
Nuhu, N. A., Baird, K., & Appuhami, R. (2019). The impact of management control systems on organisational change and performance in the public sector: The role of organisational dynamic capabilities. Journal of Accounting & Organizational Change, 15(3), 473–495. https://doi.org/10.1108/JAOC-08-2018-0084
Oppi, C., Campanale, C., & Cinquini, L. (2022). Ambiguity in public sector performance measurement: A systematic literature review. Journal of Public Budgeting, Accounting and Financial Management, 34(3), 370–390. https://doi.org/10.1108/JPBAFM-09-2020-0167
Otley, D. (1980). The contingency theory of management accounting: Achievement and prognosis. Accounting, Organizations and Society, 5(4), 413–428. https://doi.org/10.1016/0361-3682(80)90040-9
Page, M. J., McKenzie, J. E., Bossuyt, P. M., et al. (2021). The PRISMA 2020 statement: An updated guideline for reporting systematic reviews. BMJ, 372, n71. https://doi.org/10.1136/bmj.n71
Pham, Q. H., & Vu, K. P. (2025). Management accounting control system and risk governance in public sector organizational resilience enhancement. Cogent Social Sciences, 11(1), 2444473. https://doi.org/10.1080/23311886.2024.2444473
Phan, T., Baird, K., Bhuyan, M., & Tung, A. (2023). The associations between management control systems, organisational capabilities and performance. Journal of Management Control, 34(4), 435–462. https://doi.org/10.1007/s00187-024-00365-6
Prayudi, M. A., Nurkholis, N., Saraswati, E., & Rusydi, M. K. (2023). Do vision and mission really matter? The management control experiences of reformed public hospitals in Indonesia. International Journal of Professional Business Review, 8(3). https://doi.org/10.26668/businessreview/2023.v8i3.1092
Rahmasari, A., & Setiawan, D. (2022). Maturity of internal control system, the capability of internal auditors, and performance accountability in local governments. Journal of State Financial Governance and Accountability, 8(2), 159–176. https://doi.org/10.28986/jtaken.v8i2.830
Rana, T., Steccolini, I., Bracci, E., & Mihret, D. G. (2022). Performance auditing in the public sector: A systematic literature review and future research avenues. Financial Accountability & Management, 38, 337–359. https://doi.org/10.1111/faam.12312
Rosalina, K., & Jusoh, R. (2024). Levers of control, counterproductive work behavior, and work performance: Evidence from Indonesian higher education institutions. SAGE Open. https://doi.org/10.1177/21582440241278455
Safkaur, O., Rombe, L., & Bleskadit, N. H. (2024). The influence of internal control systems, information technology utilization and organizational commitment on the performance of local government institutions. Indonesian Journal of Education Research, 10(1), 103–111. https://doi.org/10.29210/020242388
Sari, D. N., & Darmastuti, D. (2023). Internal control weaknesses: Its relationship with local government characteristics and follow-up on audit results. Indonesian Journal of Accounting and Auditing, 27(1). https://doi.org/10.20885/jaai.vol27.iss1.art10
Simons, R. (1995). Levers of control: How managers use innovative control systems to drive strategic renewal. Harvard Business School Press.
Sofyani, H., Utami, T. P., & Yani, I. (2024). Management control system in higher education institutions and its role on performance: Does gender matter? APPSAI Accounting Review, 4(2). https://doi.org/10.26418/apssai.v4i2.116
van der Kolk, B. (2022). Performance measurement in the public sector: Mapping 20 years of survey research. Financial Accountability & Management, 38(4), 703–729. https://doi.org/10.1111/faam.12345
Vakkuri, J. (2022). PMM and beyond—Reflections on the paper "new developments in institutional research on performance measurement and management in the public sector." Journal of Public Budgeting, Accounting and Financial Management. https://doi.org/10.1108/JPBAFM-12-2021-0168
Weber, M. M., Pedell, B., & Rötzel, P. G. (2024). Resilience-oriented management control systems: A systematic review of the relationships between organizational resilience and management control systems. Journal of Management Control, 35, 563–620. https://doi.org/10.1007/s00187-024-00385-2
Winarna, J., Muhtar, M., Sutaryo, S., & Amidjaya, P. G. (2021). Government internal control system and local government administration performance: Evidence from Indonesian local governments. Public Finance Quarterly, 66(S2), 88–107. https://doi.org/10.35551/PFQ_2021_s_2_5
Published
2026-09-26
How to Cite
Nurkamila, S., Arianti, D., & Sari, R. (2026). Management Control System and Performance of Public Sector Organizations. International Journal of Education, Vocational and Social Science , 5(04), 1934-1958. https://doi.org/10.63922/ijevss.v5i04.6705
Contact Person +6282139474255
Email : ijevss@citakonsultindo.or.id / editor.ijevss@gmail.com
