Combining system dynamics modelling and management control systems to support strategic learning processes in SMEs: a Dynamic Performance Management approach

Abstract

Traditional management control systems, mainly centred on accounting-based measures, are widely recognized as useful tools to support Small and Medium Enterprises (SMEs) managers and entrepreneurs in steering business development. However, due to the increasing turbulence and dynamic complexity that characterize today’s competitive arenas, such systems need to be combined with simulation-based methodologies in order to improve entrepreneurial learning processes and, as a result, better detect possible crisis symptoms and weak signals of change—emerging from the business environment—to promptly react. Therefore, the aim of this paper is to show how a combination of traditional management control mechanisms with system dynamics modelling can effectively lead to better results in terms of SMEs’ performance measurement and management. As a result, a Dynamic Performance Management approach will be illustrated and discussed, also through an empirical application to a real small business.