Tracing the effects of business intelligence on management controls and organisational performance

Purpose There is little consensus on how the link between business intelligence (BI) systems and organisational performance should be modelled or which performance outcomes are most relevant for assessing the business value of BI. This study draws on the “IT value” framework to develop a research model linking BI use to financial and non-financial performance outcomes through its impacts on the formal and informal management control systems of the organisation. Design/methodology/approach The method was quantitative in nature. Survey data were collected from a sample of 195 South African companies with structural equation modelling used to test the model's hypotheses. Findings Results indicate that extent of BI use has a positive significant influence on the effectiveness of both formal and informal management controls, along with positive significant effects on financial and non-financial performance outcomes of organisations. Research limitations/implications Self-administered surveys are subject to selection and response biases. Results may not be generalisable to all organisations. Data were cross-sectional, which limits causal inference. Longitudinal research designs would need to be employed in future studies. Originality/value The study contributes a novel explanation of BI value to organisations by demonstrating that BI systems can improve the effectiveness of formal and informal management controls. Control effectiveness measures are partial mediators linking BI use to financial and non-financial organisational performance outcomes. While BI use is strongest in bureaucratic control firms, clan organisations can benefit significantly from greater BI use. Moreover, we demonstrated that the value of BI should be considered from the balanced scorecard perspective of organisational performance.