The purpose of this study is to describe and explain current management
control practices in new economy firms (NEFs). According to our
definition, NEFs include businesses targeting at fast growth or already
fast-growing firms that operate in the information and communications
technology business and biotech (life sciences) industry, and are
characterized by their R&D and knowledge intensity as well as
venture capital finance. There seems to exist a true lack of empirical
evidence of what the management control practices, their trends of
development, as well as the challenges facing them in NEFs actually are.
In order to fill this gap in the existing knowledge, we conducted an
explorative multi-organization study of nine NEFs. Our theoretical basis
is grounded on corporate life cycle models. Our observations indicate
that there exist, in addition to certain similarities, notable
differences between management accounting and control practices in NEFs
and firms operating in traditional operating environments. The most
notable findings relate in this regard to differences in temporal
orientation (time pressure), leading many times to prioritizing planning
over control. Also, the pressures to meet expectations placed by
certain external parties (venture capitalists and later on by stock
market players), to develop management control systems is characteristic
of the new economy environment. We elaborate these findings further
through a corporate life cycle analysis, and by linking them to issues
of strategic management and corporate culture.