Driving Radical Innovation: External Stimuli, Organization Culture and MCS’s Role in Startup Success Moderated by Technological Turbulence
Authors: Piliang Arfah , Meutia Meutia , Bastian Elvin , Muchlish Munawar 
Published: February 2025

Aim/Purpose: This study investigates how external stimuli and organizational culture influence the development of a management control system (MCS) to foster radical innovation and improve organizational performance. Specifically, it quantifies the effects of constraining and enabling levers on interaction and Knowledge sharing while examining how radical innovation mitigates technological turbulence to enhance performance.

Background: This research was conducted on startup companies because many of them are closed due to a lack of visibility into the external environment and organizational culture in creating control system management and a lack of creation of radical innovation.

Methodology: This quantitative research includes 329 respondents who are managers at startup companies in Indonesia. Questionnaires were distributed to respondents at startup enterprises to conduct the study. Data collection was performed both in person and online. SEM-PLS was the instrument employed for the measurement.

Contribution: Startups are often in a dynamic environment with high uncertainty. This research offers insights into managing external influences and building an organizational culture that supports Knowledge and innovation to improve performance. The research can also provide input for policymakers, such as governments or business incubators, to create policies that support startup growth, especially in the face of technological challenges.

Findings: Sampling 329 startup managers from Indonesia, this quantitative research was conducted using a structured self-administered questionnaire, and the data was analyzed through SEM-PLS. The results show that external stimuli and organizational culture significantly influence the establishment of the MCS and foster the ability of the startup to respond to drastic changes in the environment. This system encourages the promotion of knowledge sharing, which brings about radical innovations that increase market share and improve organizational performance. Interestingly, the analysis shows that enabling and constraining levers, knowledge sharing, and radical innovation are the factors that determine 76.9% (R² = 0.769) of organizational performance.

Recommendations for Practitioners: Innovation remains the company’s main focus, and startups need to consider external stimuli, cultivate an organizational culture that supports innovation, and change the management control system so that the company can take advantage of fundamental changes and achievements, especially during the technological revolution.

Recommendation for Researchers: Research has the potential to simultaneously add variables such as leadership style, employee engagement, or market orientation to observe how they affect innovation and organizational performance. The study may encompass startups and other marketplaces, including large technology firms, small and medium-sized enterprises, and the creative sector, to ensure consistency in findings across diverse settings.

Impact on Society: With the improvement of the performance of startup organizations, people can enjoy high-quality products or services at more competitive prices. More innovative and well-performing startups will drive business growth, directly creating new job opportunities in various sectors. In addition, the growing emphasis on innovation means that people will be motivated to gain technological and creative skills, which in turn improves workforce efficiency.

Future Research: Further research could examine how changes in government policies, such as implementing digital taxes or restrictions on foreign investors, affect the interaction between radical innovation and a company’s performance. Future researchers may also focus on the impact of blockchain technology on the creation of facilitating mechanisms for improving performance and innovation in technology-based startups.