Diagnostic control systems and boundary systems: Pathway or barrier to SMEs’ entrepreneurial success

This study examines how “negative” management control systems condition the performance implications of entrepreneurial orientation (EO) in SMEs. Building on Simons’ levers of control framework, we focus on diagnostic control systems and boundary systems, conceptualized as negative forces, and theorize that the EO–performance relationship is shaped by their configurational rather than isolated use. Using survey data from 276 French SMEs and structural equation modeling, we test a three-way interaction between EO, diagnostic control systems, and boundary systems. Our results confirm a positive EO–performance relationship and show that this effect is preserved when SMEs rely on diagnostic control systems and boundary systems in a balanced way, whether at high or low levels, but largely disappears when one lever is overemphasized at the expense of the other. We thus uncover an entrepreneurship–control trap in which misaligned negative controls prevent SMEs from converting EO into superior performance.