DRIVING COMPETITIVE ADVANTAGE THROUGH MANAGEMENT CONTROL SYSTEMS: STRATEGIC AGILITY AND INNOVATION AS MEDIATORS

Abstract

This study investigates the effect of Management Control System (MCS) as a package on competitive advantage, with strategic agility and innovation capability as parallel mediators, in manufacturing firms in Banten Province, Indonesia. Drawing upon the theoretical integration of Contingency Theory, Re-source-Based View, and Dynamic Capability Theory, this quantitative research employs a caus-al-explanatory design. Data were collected from 186 managerial-level respondents using structured ques-tionnaires, and the proposed hypotheses were tested using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4.0, incorporating bootstrapping procedures. The results reveal that MCS as a package exerts a positive and significant influence on strategic agility and innovation capability. Both strategic agility and innovation capability significantly enhance competitive advantage. Notably, MCS also directly contributes to competitive advantage. Mediation analysis confirms that strategic agility and innovation capability serve as partial mediators, collectively explaining a substantial portion of the total effect. The model demonstrates strong explanatory power, accounting for a considerable proportion of the variance in competitive advantage, innovation capability, and strategic agility. This study advances man-agement accounting literature by offering the first empirical evidence of the parallel mediating mechanisms of strategic agility and innovation capability in the MCS-competitive advantage nexus within the un-der-researched context of Indonesian manufacturing. The findings reconceptualize MCS as a strategic enabler that builds organizational capabilities for sustainable competitive advantage.

Keywords: Management Control System, Strategic Agility, Innovation Capability, Competitive Advantage, Manufacturing Industry