Shaping innovation portfolios: The effect of interactive and diagnostic control use on organizational politics and agility

Innovation portfolio management (IPM) involves complex decision-making processes to achieve agility. However, although management control guides IPM, organizational politics often intersects with IPM. This study examines how management control moderates the relationship between organizational politics and IPM agility. Drawing on the literature on diagnostic and interactive control usage, we conducted a multiple-informant survey across 133 strategic business units. Results indicate that organizational politics are positively related with IPM agility, which, in turn, has a positive association with firm performance. Moreover, interactive IPM control use strengthens the effect of organizational politics on IPM agility, while diagnostic IPM control usage does not interact. Interestingly, the absence of interactive IPM control usage diminishes the effect of organizational politics on IPM agility. This research enhances understanding of how management control shapes the impact of politics on IPM agility and firm performance, contributing to both theoretical and practical domains.