Management Control Systems as a Package: an application to Science & Technology Parks. The UPTEC Case Study

Management Control Systems as a Package: an application to Science & Technology Parks. The UPTEC Case Study Mohamed Salaheldeen Abdelfatah Rezk Dissertation Master in Management Supervised by: Prof. Dr. João Ribeiro 2015 i Biographic Note: The author of thesis is Egyptian. He is a master student of management in the faculty of economics, Porto University. He had a bachelor of Commerce (Business Administration) from Faculty of commerce, Menofiya University, Egypt. He is a teaching assistant in the same faculty. In 2013, he got an Erasmus Munds fellowship to have a full master degree in management from Porto University. ii Acknowledgments: I am profoundly grateful to my supervisor Prof. Dr. João Ribeiro Professor at the Faculty of economics, Porto University for his valuable guidance and his unbroken encouragement and support throughout this research. It honors me to work under his supervision. It’s not only for helping me throughout this research but also for his permanent support from my first day at Porto University till his efforts to have an Accepted Paper for publishing: “Management Control Systems as a Package in Science & Technology Parks”: The UPTEC Case Study. In 8 th Conference On Performance Measurement And Management Control in Nice, France, September 30-October 2, 2015 ( EIASM ) My thanks to Erasmus Mundus Foundation for supporting my study at Porto University in Portugal. I would also like to thank UPTEC team for accepting the study and their help and cooperation in interviews. I would like to thank Ms. Fatima São Simão Image and Communication & UPTEC PINC Manager for her cooperation and support. iii Abstract: Management Control Systems (MCS) in Science and technology parks are likely to assume specific characteristics, as on this type of setting we can find shared administration with different organizations with different visions and objectives. At stake is both the management of a network of relationships and the management of behaviors within the organizations belonging to that network. The idea of MCS working as a package is not a new one. In the course of recent decades, there have been a lot of calls to study this phenomenon Chenhall and Euske (2007), and various MCS frameworks have been proposed (Ferreira & Otley, 2009; Flamholtz, 1983; Flamholtz, Das, & Tsui, 1985; Malmi & Brown, 2008; Merchant & Van der Stede, 2011; Otley, 1980; Simons, 1995). These frameworks provide insights into what constitutes a MCS package. However, few studies have addressed why specific management control components work in the management of organizations in the context of networks. This is especially true in the case of STPs, whose managers seek to catalyse the arrangement of ties & networks between tenants (Boekholt & Thuriaux, 1999; Cooke, 1996; Hansson, Husted, & Vestergaard, 2005; Yang, Motohashi, & Chen, 2009). The exploration of MCSs in STPs has been scarce, a gap that the present dissertation aims to fill. In fact, a model of MCSs in STPs is provided, on basis of a case study conducted in UPTEC, which is the STP of the University of Porto, Portugal. It describes the package of controls used in UPTEC and the rationales for the specific features this package assumes. I found that the roles of personal relationships and informality networking are very important within STPs. I also found that cultural barriers are not a major problem in UPTEC, which seems to contradict literature that identifies ‘cultural barriers’ as a common problem within this type of organization. Furthermore, I found that the internal networking of STPs can be efficiently controlled if the level of heterogeneity among tenants (incubated startups) is high, since this leads to low levels of competition and high levels of cooperation between them. Key-words: Networks, Management Control Systems, Package of Management Control science and technology parks. iv Resumo: Os Sistemas de Controlo de Gestão (SCG) em Parques de Ciência e Tecnologia (PCTs) tendem a assumir características específicas, dada a administração partilhada de diferentes organizações com diferentes visões e objetivos, típica deste tipo de contexto. Em causa está a gestão de uma rede de relacionamentos e a gestão de comportamentos das organizações pertencentes à rede. A ideia de SCG como ‘pacote’ (package) não é nova. Em décadas recentes têm sido vários os autores que apontaram a necessidade de estudar este fenómeno (Chenhall e Euske 2007), e vários quadros teóricos foram desenvolvidos (Ferreira & Otley, 2009; Flamholtz, 1983; Flamholtz et al., 1985; Malmi & Brown, 2008; Merchant & Van der Stede, 2011; Otley, 1980; Simons, 1995). Estes quadros teóricos fornecem indicações sobre o que constitui um pacote de SCG. Porém, poucos estudos têm abordado esta questão no contexto de redes. Esta situação é especialmente verdadeira no caso de PCTs, cujos gestores procuram catalisar o estabelecimento de ligações e de redes entre inquilinos (Boekholt & Thuriaux, 1999; Cooke, 1996; Hansson et al., 2005; Yang et al., 2009). A exploração de SCG em PCTs tem sido escassa na literatura, sendo esta uma lacuna que a presente tese procura preencher. É apresentado um modelo de SCG em PCTs, com base nume studo de caso conduzido na UPTEC, que é o PCT da Universidade do Porto. É descrito o pacote de controlos utilizados na UPTEC e os fatores que justificam as características específicas que este pacote assume. Conclui-se que as relações pessoais e redes informalidade são muito importantes no context de PCTs. Conclui-se também que as barreiras culturais não constituem um problema nesta organização, ao contrário daquilo que a literature parece apontar. Finalmente, conclui-se que a rede de um PCT pode ser eficazmente controlada, nomeadamente se o nível de heterogeneidade entre os inquilinos (start-ups e incubadas) for elevado, dado que tal conduz a baixos níveis de competição e a altos níveis de cooperação. Palavras-chaves: Redes, Sistemas de Controlo de Gestão, Pacote de Controlos, Parques Científicos e Tecnológicos. v List of acronyms: MCS: Management Control Systems PMS: Performance Management Systems STP: Science and Technology Park UPTEC: Science & Technology Park of Porto University ISAP: International Association of Science Parks and Areas of Innovation vi Contents: Biographic Note: ....................................................................................................................... i Acknowledgments: ................................................................................................................. ii Abstract: ................................................................................................................................ iii Resumo: ................................................................................................................................. iv List of acronyms: .................................................................................................................... v Table of figures .................................................................................................................... vii List of tables ......................................................................................................................... vii Chapter 1 - Introduction ......................................................................................................... 1 Chapter 2 - Literature review: ................................................................................................ 2 2.1 Management control systems as a package: ................................................................. 2 2.2 Science and Technology parks (STPs) ....................................................................... 13 2.3 Management Controls in Science & Technology Parks: ............................................ 18 2.4 The proposed model of management controls in the Science and Technology Parks in the light of literature: ........................................................................................................ 21 Chapter 3 - Methodological Aspects: ................................................................................... 27 Chapter 4 - Case Study Analysis: ......................................................................................... 29 4.1 MCSs in UPTEC in the light of new model of Management Control Systems for STPs: .......................................................................................................................................... 32 Chapter 5 - CONCLUSIONS: .............................................................................................. 40 Limitation & Suggestion for further research: ................................................................. 40 References: ........................................................................................................................... 41 Annex ....................................................................................................................................1a Annex A.1 form of the interviews .....................................................................................1a vii Table of figures Figure 1: Typology of Management control systems as a package Malmi & Brown 2008 ... 4 Figure 2 Theoretical model of PMSs Ferreira and Otley (2009) ........................................... 7 Figure 3: model the formal links of STPs (Oh & Kang, 2009) .......................................... 14 Figure 4 : STP networks (Gatt, 2010) ................................................................................... 15 Figure 5: Description of STP (Oh & Obe, 2007). ............................................................... 17 Figure 6 New model of Management Control Systems for STPs ......................................... 21 Figure 7 : The structure of UPTEC networking ................................................................... 35 List of tables Table 1: Management control Gaps in STPs (Albahari et al., 2011) ................................. 19 Table 2: The Key Features of the Proposed Model .............................................................. 26 Table 3 : Performance Evaluation for UPTEC ..................................................................... 38 6 congruence between their goals and activities and those of the organization (Bonner & Sprinkle, 2002). Administrative controls: Administrative controls, direct employees’ behavior through organizing groups and individuals, monitoring behavior and employees, at the top of that this process is responsible for specifying how behaviors or tasks should or should not be performed. The typology considers three groups of administrative controls; organization design and structure, governance structures within the firm, and the procedures and policies. Organizational design is a very important control system, because it uses a particular structural type in which an organization can adopt certain types of relationships and contacts. The governance structure relates to the company’s board composition and structure, besides its various management and project teams. Governance includes the formal lines of accountability and authority. Besides the systems which are in place to ensure that representatives of the various organizational units and functions meet for coordinating their activities both horizontally and vertically. Meetings and meeting schedules, for example, create agendas and deadlines which direct the behaviors’ individuals. Finally Policies and procedures include: such approaches as standard operating procedures, practices, rules and policies. Cultural controls: are the set of social norms, values and beliefs which tend to be shared by its members and, in turn, influence their thoughts and actions (Flamholtz et al., 1985). The typology begins with the thought that control is about management which needs to guarantee the behavior of their workers (or any relevant party, for example, collaborating organization). All control systems should be in harmony with the firm’s goals and strategy. In order to achieve this, the organization needs to be in charge of control and its division. The organization needs to comprehensively map the instruments and frameworks so that managers in practice can direct behavior both formally and causally. Taking into consideration that the managers have to coordinate behavior, the typology contains 7 advancement in the MCS configuration. This configuration includes types of control that have less consideration of old researches, for example, social & cultural controls. In addition to that, this typology includes the different types of controls accessible to administrators, for example, administrative controls. Besides that, the typology incorporates the organizational structure. A lot of researchers have treated this as a contingent variable, however, it is considered to be a control mechanism here; as it can be used and modified by managers in the control process. MCS typology can't be excessively narrow as there is a risk that some controls may go unnoticed and existing connections to different controls may affect the research results. Although, the typology needs to be parsimonious enough to make limits for an empirical research (Malmi & Brown, 2008). The second model is proposed by Ferreira and Otley (2009) . They considered the model of Malmi and Brown (2008). The model gives a broad view of the performance management systems. It’s showed in the figure (2) Figure 2 Theoretical model of PMSs Ferreira and Otley (2009) 8 1) The model starts with the vision and mission of the organization: The vision and mission statements are very important to both shareholders and stakeholders. Do managers and employees pay attention to the vision and mission of the organization? What processes, mechanisms and networks are used to move the organization’s overarching purposes and objectives to its members? 2) Key success factors: what are these factors and how to make managers and employees pay attention to these factors? The key success factors (KSFs) are those attributes, activities, capabilities and competencies, that are considered as critical pre-requisites for the success of the organization in its industry or sector at a certain time (Thompson, Gamble, & Strickland, 2004) 3) Organization Structure: What’s the organization structure? What’s the effect of the organization structure of the performance management of the organization? Organizational structure is clearly a central control element, which has become the tool responsible for the change and improvement. Significantly, a lot of control systems work horizontally not vertically. And they aren’t measured financially. However, the literature focuses on the vertical view of control, rather than controls through chains or processes. 4) Strategies & plans: What’s the organization current situation? What does the organization stand for? And what does the organization want to do? These questions also draw out the nature of strategic management process by asking how strategies and plans are generated and communicated between managers and employees. The process may follow the traditional top-down approach where top managers undertake the strategic thinking, decision-making, planning, and then deliver it to the wider organization or it may follow a bottom-up approach where there is participation of all levels of management in the strategic process. Empowerment becomes very important with the rise of the ‘lean’, ‘delayed’, horizontal organizations, in place of vertical and hierarchical organizations (Otley, 1994) 9 5) Key performance measures: What are the organization’s key performance measures deriving from its key success factors, objectives plans and strategies? How are these communicated and specified and what’s their role in performance evaluation? 6) Key performance measures are the nonfinancial or financial measures (metrics) used at different levels in organizations to evaluate success in achieving their plans, objectives and strategies. Therefore, they are in charge of satisfying the expectations of different stakeholders. They are identified in the PMSs framework to reflect both the importance that relates to the performance measures in most organizations and the influence that such measures have on individuals´ behavior. 7) Target setting: What level of performance does the organization need to achieve for each of its key performance measures? How does it go about setting the appropriate performance targets for them, and how challenging are those performance targets? Target setting is a critical aspect of the performance management .It’s not a surprise that it is used for setting as well as rewarding and evaluating performance. 8) Performance evaluation: What processes, if any, does the organization follow for evaluating groups, individuals and organizational performance? Is the evaluation of performance primarily subjective or objective, or mixed and how important are informal and formal controls and information on these processes? The area of the performance evaluation represents a critical relationship in control activities. Both the informal performance evaluation activities and the formal indicators should be covered. It is particularly important to distinguish between performance evaluation routines (often done by the human resources) and those actually operated by senior managers. As the employees’ perception of the situation is even more important than the formal situation. Performance evaluations can be subjective or objective, or fall in-between these two extremes. 10 9) Reward systems: What rewards are non-financial and/or financial? Will employees and managers gain by achieving performance targets or other assessed aspects of performance (or, conversely, what punishments will they suffer from failing to achieve goals). The rewards are typically the outcome of the evaluation of performance. The rewards are considered broadly here and can range from expressions of recognition and approval by senior management (or lack of criticism), through financial rewards (salary increases and bonuses) the promotion and longterm progression. The area of non-financial rewards is worthy of further preparation as it may often include quite subtle attitudes and behaviors of superiors. Thus, informal criticism or praise and general attitudes about an employee’s progress within the organization can significantly influence the employees’ behavior and thus the workings of the PMSs. Issues of fairness, equity and inclusiveness between different managers also loom large in many organizations. 10) Information flows, systems and networks: Information systems, flows and networks are essential enabling mechanisms to any type of the performance management system. They are the binding tool that keeps the whole system together. They are like the nervous system in the body, transmitting information from the center to the extremities and from the extremities to the center. The undertaking of corrective and/or adaptive courses of action could be taken. Information systems enable the organization to learn from its experience, to generate new ideas and to recreate plans and strategies. How control information and performance is structured is an issue to be considered. Organizations are moving towards wider PMSs, such as balanced scorecards. There are also a lot of additional issues to be considered that are related to the characteristics of the information flows in the PMSs. These include issues such as timeliness (i.e. speed of reporting and frequency), information scope (i.e. broad scope or narrow scope ), integration (i.e. interactions between subunits and inter-relationships ) and aggregation (i.e. by functional 11 areas and by period ) (Chenhall & Morris, 1986).They also include issues such as selectivity, level of detail, orientation, and relevance. 11) PMSs use: What type of use is made of information and of the various control mechanisms in place? How do controls and their uses differ at different hierarchical levels? 12) PMSs change : How have the PMSs adapted in the light of the change dynamics of the organization and its environment? Have the changes in PMSs use or design been made in a reactive or proactive manner? PMSs need to change in order to sustain their usefulness and relevance. The idea of change in the PMSs applies to the management control techniques and the performance measures used and the way performance management information is used .However, the issue is not the process of change itself, but rather the extent and type of change that has taken place in the PMSs design. It is very important to consider the scope of strategic change in the increasingly competitive environment faced by contemporary organizations. 13) Strength and coherence: How coherent and strong are the links between the components of PMSs and the ways in which they are used? Like any other systems, a PMS is greater than the sum of its parts and there is a need for coordination and alignment between the different components for the whole to deliver effective and efficient outcomes (Ferreira, 2002). 12 Although Ferreira and Otley believe their PMSs framework provides an improved tool, they recognize that empirical evidence from case study research is needed to validate its adequacy. They also discussed some criticisms of their framework, and point out again that culture and contextual factors are not explored in the PMSs framework because these factors are outside the control of the organization. Managerial influence on organizational culture is controversial, but it might be an appropriate part of a broader framework. The performance management systems framework is based on inductive reasoning applied to various studies. It represents a powerful research tool for examining the structure of an organization's PMSs in a holistic manner 13 2.2 Science and Technology parks (STPs) The first science and technology park was innovated at the Stanford University campus more than 60 years ago. It has transformed the Silicon Valley area from one of the poorest regions in the United States into a global center of education, research, technology and finance. The definition adopted by the International Association of Science Parks and areas of innovation (IASP) is as follows: “A Science Park is an organization managed by specialized professionals, whose main aim is to increase the wealth of its community by promoting the culture of innovation and the competitiveness of its associated businesses and knowledgebased institutions. To enable these goals to be met, a Science Park: stimulates and manages the flow of knowledge and technology amongst universities, R&D institutions, companies and markets; facilitates the creation and growth of innovation-based companies through incubation and spin-off processes; and provides other value-added services together with high quality space and facilities”. According to the definition of ISAP. There are five key characteristics of STPs (Claire Nauwelaers, Kleibrink, & Stancova, 2014): 1. The economic development goal at the local level. 2. The focus on strengthening the links between science-industry relationships. 3. A priority placed on technology and innovative based activities. 4. The action of providing value-added services to companies. 5. A property-based initiative. Science and technology parks (STPs) try to facilitate networking among their tenants by (1) creating an appropriate ecology for cooperation through the selection of tenants and (2) by encouraging the formation of ties between these organizations through introductions and events. It has been found out that manager intervention as well as ecological characteristics have some effect on the prevalence of inter-organizations relationships. Tenants, whose 14 managers have a greater presence at the park have more equipment-sharing ties, and attendance at STP-organized events, which increases knowledge-sharing ties (Koçak & Can, 2014). STPs congregate highly technological firms. The idea is that the closeness to other companies and opportunities for networking can make those firms more successful and innovative .STPs seek to imitate the success of naturally occurring clusters by generating economies of agglomeration: trading with each other, sharing resources, working on collective projects, and benefiting from knowledge spillovers. Encouraging the forming of ties among these firms through introductions and event (Kocak & Can, 2013) . The model in Figure 3 provided by Oh and Kang (2009) illustrates the formal links with a university or other form of higher education and the research institutions, which can encourage the formation and growth of knowledge of the businesses . Management is usually responsible for transferring technology and business skills to the park. The science and technology parks usually create a value chain of the knowledge transfer. Transferring creative ideas into innovative products and then into industry. STPs usually have both regional and national objectives. Figure 3: model the formal links of STPs (Oh & Kang, 2009) 15 There are two sides: the supply side (the Science Park), and the demand side (tenants of the Science Parks).The network includes the linkages – formal and informal – between the head of the Science Park to the tenants, but also the linkages established between tenants and between the Science Park and its environment (universities, research centers). Science & Technology Parks : “are organizations managed by specialized professionals, whose main aim is to increase the wealth of its community by promoting the culture and diffusion of innovation and the competitiveness of its associated businesses and knowledge‐ based institutions” (Gatt, 2010) Figure 4 : STP networks (Gatt, 2010) The above image describes the science and networks of science and technology parks and their relations. STP management has a lot of networks not only inside the STP, but also outside it. There are a lot of networks with stakeholders, too. Generally, the most important network, is the network with the research entities such as universities, institutes of technology, public and private research entities. Secondly, the enterprises like industrial and service companies. If STP has a business incubator, the startups will be very important, as well. Thirdly, the network with finance like banks, investors and donors. Finally, the network 22 1) The Vision and Mission of STPs: Vision and mission are placed at the basis of the model. The vision is an aspirational description of what an organization would like to accomplish in long-term future. It is intended to serve as a clear guide for choosing current and future courses of actions. While the mission is a declaration of an organization's core purpose and focus that normally remains unchanged over certain time. Ferreira and Otley (2009) consider the vision and mission of the organization as managerial controls as they give information about how organizational purposes and values are communicated and established as the means of influencing the behavior of organizational participants. The vision and mission affect the behavior of managers at all levels. The vision and mission of any STPs are different from any other organizations. Achieving high growth profits may not be one of the goals of the STP. STPs have a lot of social responsibilities to achieve. The STP´s vision is to foster the creation of technology-based companies and capture national and international tenants. The mission of STPs should not only accept highly potential growth projects, but also create new jobs, add contribution to the national economic development and keep their social responsibilities. 2) Organizational design and structure: The organizational structure is considered as a form of managerial control which works through functional specialization and the design of a company affect different controls that can be applied (Flamholtz, 1983; Malmi & Brown, 2008). Albahari et al. (2011) considered the inappropriate infrastructure as a configuration gap that affects negatively the control systems in STPs. The design of the infrastructure of STP affects the use and success of different managerial controls. Consequently, the infrastructure of STP should consider control systems that are supposed to be applied. And the design of infrastructure that suits the desired control systems should be clear from the early planning stage for STP. 23 3) Cultural controls: Cultural controls are situated at the top of the typology of Malmi and Brown (2008). They are considered to be one of the most important managerial controls in any organization. Also Albahari et al. (2011) support this point of view in Science and Technology Parks and consider the cultural barrier as the first process gap in their model . As in STPs there are a lot of people who work together, they are often from different backgrounds and specializations and may be sometimes from different countries. Consequently, there is a fusion of different cultures that might complicate networking between people in STPs. Culture plays an important role in STPs as in this type of innovative organizations we mainly deal with new ideas and processes. For this reason, the relationships should go smoothly and easily among people and informal relationships should be strengthened at all levels. Bureaucracy, routines, restrictive formal relationships should be discarded. Managers should do their best to strengthen the trusted relationships among people inside STPs, moreover, they should build trusted relationships outside STPs with universities, researchers, markets, as well. 4) Strategies and plans: Strategy, long term planning, and action planning are managerial controls (Ferreira & Otley, 2009; Malmi & Brown, 2008). In STPs, action plans and strategies should take into consideration the opportunities of network formation among their tenants in two ways. Firstly, by shaping the ecology of the tenant population that they admit into the park and secondly, through the direct interventions aimed at introducing tenants to one another (Chan & Pretorius, 2007). 5) Information flows and networks: Information flows and networks are essential enabling mechanisms in any management control system. They are the binding tool that keeps the whole system together. They are like the nervous system in the body (Ferreira & Otley, 2009). Furthermore, according to Dekker (2004) the barriers regarding horizontal or vertical communication and collaboration between 24 different departments and actors are one of the most obvious control problems in managing networks of inter-organizational relationships. Albahari et al. (2011) considered the problem of lack of information as a process gap. The network coordinator of Science and Technology Park must facilitate, strengthen, build synergies and networking between startups, research centers, universities, intermediary organizations and public stakeholders. 6) Key success factors: In Ferreira and Otley (2009) model key success factors are considered to be one of managerial controls . The key success factors (KSFs) are those attributes, activities, capabilities and competencies, that are considered as critical pre-requisites for the success of the organization in its industry or sector at a certain time (Thompson et al., 2004). Also STPs may have different KSFs like networking with university, different funding options like loans, national or international support, and the most important one is the criteria used to select incubated startups. 7) Performance Evaluation: For the organization within networks the network coordinator has a lot of functions which together aim to achieve the predetermined or desired level of network performance (Marques et al., 2011). Budgets, financial measurement systems and non-financial measures are managerial controls for any type of organization according to (Ferreira & Otley, 2009; Malmi & Brown, 2008). According to Albahari et al. (2011) budget restrictions could cause a control gap in Science and Technology Parks . But STPs aren’t that type of organization aimed at profits. Usually STPs are owned by a state or university and have a big role in the society. Their role is to measure the performance according to social responsibility. Returning to the definition of International Association of Science Parks and Areas of Innovation and (Claire Nauwelaers et al., 2014) , the STPs contribute to economic development , strengthen the links between science-industry relationships , foster innovative ideas and take the action of providing value-added services to companies. Hence, we can evaluate the performance of STPs according to 1) Number of startups & big companies. 2) 25 Global and national awards. 3) Occupation ratios for startups and big companies. 4) Returns 5) Contribution to the economic development of the country. 8) Formality and coherence: The role of the framework is to help a ‘snapshot’ to be taken of the package of practices that are in operation at a particular point in time, and to gain some sense of how these practices have evolved into their current form. As such, it is believed that it can serve as a useful research tool to enable such practices to be documented and correlated with other (Ferreira & Otley, 2009) Coherence and strength of the links within MCS are critical for understanding all control operation. Although, the individual components of the MCS may be apparently welldesigned, evidence suggests that when they do not fit well together (either in use or design) control failures may occur (Ferreira & Otley, 2009; Ferreira, 2002).The MCS of STP should exist and be applied in a formal way. It’s not enough to have only some managerial controls. But the overall management control system should be in a formal shape. The Key Features of the Proposed Model of MCSs in STPs is shown in the table 2. 26 Table 2: The Key Features of the Proposed Model Dimensions of MCS Key distinguished Features in STPs Vision and Mission Vision is the contribution to the national economic development and fostering of the creation of technology-based companies Profits, shareholder value aren’t the key mission, Organizational design and structure The design of the infrastructure should suit the desired control systems Culture Controls Multiple cultures, high culture barrier Strategies and plans Taking the opportunities of networking formation among tenants Information flows and networks The horizontal or vertical communication and collaboration between different companies should be enhanced Key success factors 1) The criteria used to select incubated startups 2) funding options, 3) networking with university Performance Evaluation 1) Number of startups & big companies. 2) Global and national awards 3) Occupation ratios for startups and big companies. 4) Returns. 5) Contribution to the economic development of the country. Formality and coherence  The MCS of STP should be existed and applied in a formal way.  MCSs should fit together 27 Chapter 3 - Methodological Aspects: The main goal of the study is the description of MCSs in STPs as an example of an organization within networks. A new model of MCSs has been proposed in section 1.4. Qualitative methods are truly helpful in developing or creating hypotheses or reasonable structures or, to put it an alternate route, in producing theories. These techniques can likewise be utilized as a part of refining hypotheses and theories through testing (Sofaer, 1999). AS in-depth analysis, the phenomena will be examined, including aspects beyond formal rules and instructions: thus, case study analysis will be used. After applying and describing different components of the model in the case study. A matrix of founded gaps and proposed solutions will be presented. The case study is UPTEC, the Science and Technology Park of Porto University. The sources of data will be through semi-structured interviews, structured observations of events and interactions, collection of relevant documents and content analysis. While applying the new model on the UPTEC. The gathered documents and observations are compared with the interviewees’ explanations. Three open-ended interviews with the management team in UPTEC are going to be used together as well as the different informal discussions with different employees in companies inside UPTEC which were conducted between December 2014 and April, 2015. One comprehensive seminar, which was given by one of the board members of UPTEC in December 2014, is going to be used, too. 28 A complete list of the plan of the interviews together with the questions are shown in Annex. The used questions are open-ended. Some key issues are discussed in the research through documents and / or interviews: • Specification in detail of the network of UPTEC (formal and informal). • Identification of barriers to horizontal or vertical communication and collaboration between different departments and actors. • Discussion ‘configuration and process gaps’ (see table above). • Check whether the ‘optimal level of heterogeneity’ is an issue at stake in the organization and, if so, what are the concerns /mechanisms deployed in order to ensure that this optimal level is attained? • Examination of the deployed formal management control mechanisms, and their interrelationships with informal (trust-based) mechanisms? • Identification of the (formal and informal) means used to facilitate, strengthen or build relationships and synergies between enterprises, research centers, universities, intermediary organizations and public stakeholders. • Inspection of a formal structure of cooperation between faculties like FEP, FEUP and Research Centers in Universities to strengthen the relationships (or is it all informal)? 29 Chapter 4 - Case Study Analysis: UPTEC is the Science and Technology Park of Porto University. UPTEC aims to support the transfer of knowledge and technology from the University of Porto to the market. In essence, the UPTEC focuses on offering the shared resources and services, according to a strategy of clustering. UPTEC thus aims to be an important network of science, knowledge and technological innovation, with a strong presence in the Northern Portugal, particularly in Porto, a city that has played an important role in the development of science and knowledge. Firstly, we have the management of UPTEC which consists of a president and director. Then there are departments, namely: 1) Networks and Informatics, 2) Image and Communication, 3) Financial, 4) Legal, 5) Built Management, 6) Maintenance, and Logistics and Quality. UPTEC has four centers which are: 1) Creative Industries Center (PINC), 2) Technology center, 3) Biotechnology center and finally 4) sea center. Each center has incubated startups and innovation centers. The innovation centers are completely different from the incubated startups as in the Center for Business Innovation, the existing businesses find the space and mechanisms to host and operate their projects and activities, benefiting from the synergies that exist with the R&D Departments and other interface institutes of the university. For example, Microsoft has an innovation center in UPTEC. 1) Creative Industries Center: UPTEC PINC is the attraction and a meeting place for people who look for experience and want to explore and develop their creativity in entrepreneurial ways. Seeking to answer the new challenges of the creative economy, in 2010, UPTEC opened its Creative Industries Centre (UPTEC PINC) to accommodate and support companies that work primarily in areas such as design, audiovisual, communication, architecture, visual arts, performing arts and publishing. 30 Located in the city center of Porto among the main artistic and cultural structures and equipment in the city, UPTEC PINC currently hosts more than 30 creative business projects. Relying on the knowledge and expertise of the University of Porto and the other UPTEC clusters, this center really contributes to the development of truly creative ecosystem, in permanent liaison with the most diverse areas of knowledge and business. 2) Technology center: The Technology Center of the Science and Technology Park of University of Porto (UPTEC TECH) provides support, infrastructure and technological equipment that enhances the development and acceleration of technology-based projects. Currently, UPTEC TECH hosts over 60 startups and innovation centers in a wide range of technological areas of expertise, including: energy, web and mobile software, electronics, robotics, chemistry, polymers and composite materials, monitoring, etc…The center provides support for national and international companies focused on the development of innovative and market-oriented products and services, supported by knowledge and technology transfer and an active incorporation of highly qualified and skilled talent from the University of Porto. UPTEC TECH - the first and largest center of UPTEC - is located in the middle of Asprela’s Campus, next to the most important technological schools and R&D institutes of the University of Porto. 3) Biotechnology Center: The Biotechnology Center of the Park of Science and Technology of University of Porto (UPTEC BIO) is oriented to host business projects in the areas of life sciences and biotechnology. UPTEC BIO offers a range of equipment and technological infrastructure that promote the development and acceleration of the installed projects based on the knowledge and skills 31 generated within the University of Porto, and also resulting from the cooperation between the university and the market. At present, UPTEC BIO supports startups in a wide range of areas of expertise, including biotechnology, pharmaceutical and cosmetic industries, health care, chemistry, agri-food industry, etc. Like the other UPTEC centers, the location of UPTEC BIO takes a decisive role. This center is located near some of the most relevant schools and R&D institutes of the University of Porto in the areas of life sciences and biotechnology. 4) Sea Center: The Sea Center of the Science and Technology Park of the University of Porto (UPTEC MAR) is dedicated to the incubation of business projects related to science and sea technologies, benefiting from the proximity of structures and equipment of the Leixões Port and advanced research developed at the University of Porto. The project UPTEC MAR aims to explore the results of research arising from the activity of the various R&D centers from the University of Porto. Companies currently associated with UPTEC MAR aggregate several areas of activity in the sea economy, such as marine biotechnology, aquaculture, and energy of waves, marine robotics, software, environment, tourism and recreational boating 38 Overall performance of UPTEC is very good. There is a balance between returns and expenses. The occupation ratio is very high. Although, UPTEC is considered a new STP. It has been awarded a region`s star which is a unique award from the European Commission. Also UPTEC provides a push for economic development in Portugal as shown in table 3. Table 3 : Performance Evaluation for UPTEC Key performance measures Evaluation Number of companies, startups & big companies Accumulated increasing in the Number of companies from 5 in 2007 to 165 in 2015 Awards  Award of RegioStar : European award 2013 for smart growth because of connecting universities to regional growth  “Trabalhamos para si”: (we work for you ) Portuguese award in 2014 Occupation ratios for startups and big companies. It’s 90% occupation of all available spaces in UPTEC except Sea center 20 % of the occupation as It’s just started in March 2015 Returns There is a balance between expenses and gains as UPTEC has a social responsibility role Economic development 1,210 highly skilled jobs created till 2014, in 2011 it is estimated that revenues generated tax to the Portuguese State were approximately 79 thousand euros. 39 8) Formality and coherence: Distinction and detailed description of control models should facilitate decision making in the design and implementation of control systems in multi-business organizations (Nilsson & Olve, 2001). UPTEC already has some management controls and performance measures, but they aren’t organized in a perfect formal framework. The coherence and strength of the links within the control system frame are very weak. Although, the individual components of the MCS may be apparently well-designed, evidence suggests that when they do not fit well together (either in use or design) control failures may occur (Ferreira & Otley, 2009; Ferreira, 2002) There aren´t formal management control systems or complete performance measures framework. We can conclude that even though UPTEC already has some control systems and performance measures, there is a need to have a complete framework. 40 Chapter 5 - CONCLUSIONS: One first conclusion of this study concerns the nature of personal relationships and informality, a very important issue within science and technology parks. Based on the literature reviewed, I expected to find a lot of cultural barriers within the case organization studied – UPTEC – as it includes a lot of people working together, who come from different backgrounds and specializations and sometimes from different countries and languages. On the contrary, I found no significant cultural barriers in UPTEC. My interviewees justified this fact with the ideas that the world has become a ‘small village’, so there is a global culture and thinking. I also concluded that intranets and a center for information systems are of order in STPs. Furthermore, I found that the main control problem in managing the infrastructure is the dependency from the university to reduce costs. Hence, managers do not have a full authority, which in turn caused conflicts. I also found that the internal networking of an STP can be efficiently controlled if the level of heterogeneity among tenants (incubated startups) is very high. Indeed, the high level of heterogeneity among tenants implies that there is a low level of competition between them and that they can more easily cooperate together. Finally, I advanced a model of MCS in STP’s, derived from the literature, which allowed me to make sense of UPTEC’s case study. 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Web Sites: http://www.iasp.ws/ accessed on 3o, October, 2014 https://lbre.stanford.edu/realestate/research_park accessed on, 15, November 2014 http://uptec.up.pt/en/corporate/uptec accessed on 20, November, 2014 1 Annex Annex A.1 form of the interviews Plan of interviews with managers of different centers in UPTEC. My interview will be on two levels. First one the uptec as a whole entity. Second one will be up on the center itself . I am going to discuss all managerial control problems in the networks relations within uptec. After Greetings and thanks for her cooperation I will show her the table of configuration gaps and process gaps and I will going in details for explanations of any terms when it’s needed Organization acts as a network coordinator Configuration gaps : Process gaps : Inappropriate infrastructures Cultural barrier to networking Types of facilities not allowed Aptitude about learning Excessive distance from universities and research centers Too theoretical support Unavailability of venture capital Pedagogical issues Lack of business expertise Lack of information Budget restrictions Non-customized support Lack of interest/motivation and time restrictions