THE EFFECT OF MANAGEMENT CONTROL SYSTEM IN THE RELATIONSHIP BETWEEN LEADERSHIP AND ORGANIZATIONAL CULTURE ON ORGANIZATIONAL INNOVATION IN HIGHER EDUCATION INSTITUTIONS

Abstract

The Kingdom of Saudi Arabia has invested considerable resources in entrepreneurial development and holistic innovation, which has resulted in significant improvement in aspects such as business performance and human capital. This has led to an expansion in the number of public Higher Education Institutions (HEIs) to 28 public universities, most of which are emerging HEIs. This expansion may help promote innovativeness in society. Therefore, HEIS in Saudi Arabia face the task of promoting transformation in the country for the realization of Vision 2030. The present study examined the influence of transformational leadership (TL) on organizational innovation (OI), and organizational culture (OC) on organizational Innovation (OI) in HEIs of Saudi Arabia. Also, it is examined the mediating effects of a management control system (MCS) on the relationship between TL, OC, and OI. This study was conducted on the largest universities from different regions in Saudi Arabia. The study used online survey forms to collect data. In particular, 176 usable questionnaires were received from respondents, who comprised of vice-rectors and deans of Saudi Arabian HEIs. Descriptive analysis, measurement, and the structural model were done using SPSS and Smart-PLS software. The results reveal that the effect of TL on OI was not significant, while OC has a significant impact on OI, and the management control system (MCS) has a significant impact on OI. The effect of the MCS had no significant mediating effect on the relationship between TL and OI. However, the MCS has a significant mediating effect on the relationship between OC and OI. This study confirms the resource-based view (RBV) as an underpinning theory for the whole model and contingency theory by including the MCS as a mediator factor to examine the relationship between TL and OI, and the relationship between OC and OI in the HEIS context of Saudi Arabia. The findings are expected to have implications on the awareness of the mediating role of the MCS in supporting the relationship between TL, OC, and OI. It also provides a better understanding of these relationships in the HEIS environment within developing countries, like Saudi Arabia, a context that receives less attention in earlier studies. On the one hand, the study has detected that there is a mediating effect of MCS on the relationship between OC and OI. On the other hand, the mediating effect of MCS on the relationship between TL and OI was not supported. In relation to practical implications, the findings might help top managers in Saudi HEIS to know the critical factors that help them to boost OI in the respective organizations. The findings also show that OC is the most critical factor in HEIS in Saudi Arabia, and using the MCS as the mediating factor promotes the relationship between OC and OI. Future studies could expand the scope and depth of knowledge by researching different factors or organizations in other countries.