ArticlePDF Available

A Conceptual Framework for Design of Organisational Control Mechanism

Authors:

Abstract and Figures

The problem of organization is the problem of obtaining cooperation among a collection of individuals or units who share only partially congruent objectives. When a team of individuals collectively produces a single output, there develops the problem of how to distribute the rewards emanating from that output in such a manner that each team member is equitably rewarded. If equitable rewards are not forthcoming, members will, in future cooperative ventures, adjust their efforts in such a manner that all will be somewhat worse off (cf. Simon [Simon, H. A. 1964. On the concept of organizational goal. Admin. Sci. Quart. 9 (1, June) 1–22.], Marschak [Marschak, Thomas A. 1965. Economic theories of organization. J. G. March, ed. Handbook of Organizations. Rand McNally, Chicago, Ill., 423–450.], Alchian and Demsetz [Alchian, Armen A., Harold Demsetz. 1972. Production, information costs, and economic organization. Amer. Econom. Rev. 62 777–795.). It is the objective of this paper to describe three fundamentally different mechanisms through which organizations can seek to cope with this problem of evaluation and control. The three will be referred to as markets, bureaucracies, and clans. In a fundamental sense, markets deal with the control problem through their ability to precisely measure and reward individual contributions; bureaucracies rely instead upon a mixture of close evaluation with a socialized acceptance of common objectives; and clans rely upon a relatively complete socialization process which effectively eliminates goal incongruence between individuals. This paper explores the organizational manifestations of these three approaches to the problem of control. The paper begins with an example from a parts distribution division of a major company which serves to give some flesh to what might otherwise be overly-abstract arguments. Through the example, each of the three mechanisms is explicated briefly and discussed in terms of two prerequisite conditions, one social and the other informational. The more concrete organization design features of the three forms are considered, along with some consideration of the unique costs accompanying each form.
Content may be subject to copyright.
A preview of the PDF is not available
... Control theory, discussed next, helps explain how organizational controls could enhance or suppress the key role of capable guardians in curtailing cyberbullying in the workplace (Eisenhardt, 1985;Kreutzer et al., 2015;Ouchi, 1979;Simons, 1991). ...
... Exercising formal control entails the specification of desired behaviors or outcomes, often in the form of formal documented procedures (Eisenhardt, 1985;Kirsch, 2004). These controls can limit controlees' opportunistic behaviors performed to serve their self-interest (Ouchi, 1979). In general, formal controls fall into two categories -behavior and outcome controls (Eisenhardt, 1985). ...
... These controls can be enacted by using people-oriented policies related to selection and training and by behavioral reinforcement strategies (Eisenhardt, 1985). These controls enable managers to perform a timely corrective intervention that can limit employees' undesirable behaviors (Ouchi, 1979). Outcome controls, on the other hand, attempt to influence employee behavior through the promise of consequences, such as future rewards (or punishments) and through the establishment and measurement of specific targets or metrics such as key performance indicators, project milestones and targets related to schedules, budgets, quality and satisfaction (Lange, 2008;Moody et al., 2016). ...
Article
Full-text available
Purpose This study aims to develop a unified theoretical framework that presents a cohesive picture of workplace cyberbullying to better understand the interplay between cyberbullying, its effects on organizations and organizational controls enacted to contain these effects. Design/methodology/approach The study conducts a theoretical review of the workplace cyberbullying literature between 2005 and 2021 drawing upon existing literature and two important theories, the routine activities theory and control theory. The final sample of 54 empirical papers represents a comprehensive body of literature on cyberbullying published across various disciplines. Findings A theoretical model of workplace cyberbullying is developed, which highlights major antecedents to workplace cyberbullying and its impact on individual employees as well as organizations. Originality/value As firms increasingly rely on information and communication technologies (ICTs), the misuse of ICTs in the form of cyberbullying is also increasing. Workplace cyberbullying severely hurts an organization’s employees and compromises the efficacy of its information systems. Fortunately, various controls can be utilized by firms to minimize workplace cyberbullying and its attendant costs. In all, eleven propositions are offered, providing a robust agenda for future research. The authors also offer insights for practitioners on how to minimize cyberbullying in the workplace and its damaging effects.
... MCSs embody all devices or systems that leaders or managers employ to ensure that employee behaviors and decisions are consistent with the organization's objectives and strategies (Merchant & Van der Stede, 2012). There are various frameworks and typologies of MCSs, such as output (outcomes of employees' work) and behavioral (influencing employees' behaviors) controls (Ouchi, 1979) and formal and informal controls (Davila et al., 2010;Malmi & Brown, 2008). However, the literature establishes that the levers of the control framework of Simons (1995Simons ( , 2000 have been the most popular in management control literature over the past two decades (Martyn et al., 2016;Tessier & Otley, 2012). ...
Article
Prior literature on the transition to a circular economy has focused primarily on societal, institutional, and technical levels and has paid less attention to people- and organization-driven factors such as leadership and management control. Further, few studies have considered the circular economy in the context of small and medium enterprises in emerging economies. Thus, through this empirical study, we aim to fill these research gaps by investigating the concurrent effects of ethical leadership and management control systems on the extent of the circular economy in small and medium-sized enterprises in the United Arab Emirates. The survey data were collected from 111 enterprises. We performed a confirmatory factor analysis to validate the instrument and tested the theoretical model through structural equation modelling. The findings support our theoretical propositions and show that both ethical leadership and management control systems are positively associated with the extent of circular economy practices in these enterprises. Interestingly, our findings demonstrate that management control systems fully mediate the relationship between ethical leadership and the extent of the circular economy. The results suggest that ethical leadership requires the support of management control systems to convey its positive effects in terms of circular economy practices. Overall, the findings help explain how ethical leadership and management control systems are important driving mechanisms for enabling small and medium enterprises to deploy a circular economy effectively. The implications of these findings for research and practice are also discussed.
Article
The subcontracting organizational arrangement has received limited attention in designing the control mechanism. This study has explored how managerial controls affect opportunistic behaviour and developed a contingency framework to investigate the moderating effect of subcontracting dispersion. By using survey data from 323 general contractors in the Chinese construction industry, this study reveals that both outcome control and clan control curb the occurrence of subcontractors’ opportunistic behaviours while behaviour control scarcely helps. Besides, subcontractor dispersion distinctively moderates these relationships. A high level of subcontractor dispersion amplifies the opportunism-curbing effect of outcome control, but attenuates that of clan control, which leads to more opportunistic behaviours. Only at a lower level of subcontractor dispersion will behaviour control mitigate subcontractors’ opportunistic behaviours. Our configurational analyses reveal the substitute and complementary relationship between different control modes with different levels of subcontracting dispersion. This study contributes to the literature on governing opportunism and managerial control. The findings guide managers of the general contractor to exploit appropriate managerial controls to curb opportunistic behaviours across different organizational designs.
Article
Objetivo: analisar o papel dos mecanismos de controle gerencial em relações de terceirização de serviços no setor público, considerando os desafios de cooperação e de coordenação de atividades. Método: pesquisa qualitativa, a partir de entrevistas, questionário e triangulação desses dados com documentos, apoiada na realização de estudo de caso em uma unidade descentralizada do Ministério Público do Trabalho, com análise de contratos terceirizados de serviços de limpeza e conservação. Resultados: os serviços analisados não utilizam ativos específicos, operam em ambiente de incerteza moderada, possuem tarefas fáceis de mensurar e pouco complexas, além de haver interdependência moderada entre a organização contratante e as organizações contratadas. Observou-se uso de instrumentos de controle formais e informais. Os resultados também sugerem que o ambiente burocrático dessas contratações pode influenciar a configuração dos mecanismos de controle gerencial, com pouca flexibilidade para que as atividades ou o relacionamento se desenvolvam além das previsões contratuais. Originalidade/Relevância: o estudo contribui no avanço do debate científico sobre o tema em organizações públicas e no contexto brasileiro. Contribuições teóricas/metodológicas: o trabalho agrega à literatura, ao abordar a configuração de mecanismos de controle gerencial em relacionamentos fornecedor-comprador em organizações públicas. Contribuições sociais/para a gestão: os resultados podem auxiliar as organizações do setor público a compreender os aspectos que influenciam a configuração do sistema de controle de seus contratos de serviços terceirizados, além de fomentar as discussões sobre os desafios dessas contratações.
Article
Full-text available
Este estudo investiga a influência dos controles organizacionais no desempenho de tarefas e no comportamento de cidadania organizacional mediada pela percepção de confiança dos indivíduos de uma instituição bancária federal. Para tal, com base no estudo de Verburg et al. (2018) realizou-se uma pesquisa descritiva com abordagem quantitativa, a partir de uma survey aplicada in loco, para 58 funcionários. Para o tratamento dos dados utilizou-se de estatísticas descritivas e da técnica de Modelagem de Equações Estruturais. Dentre os resultados obtidos constatou-se que o controle organizacional na sua dimensão processo influencia a confiança organizacional no ambiente da instituição bancária. No que tange ao papel mediador da confiança organizacional na relação entre os controles organizacionais e desempenho de tarefas e comportamento de cidadania, constatou-se que este não atua como interveniente. Em termos teóricos, os resultados da pesquisa ampliam o entendimento da posição do controle no escopo organizacional como antecedente ou consequente da confiança, do desempenho de tarefas e do comportamento de cidadania organizacional. Já em termos práticos, contribui-se com o ambiente bancário brasileiro, principalmente ao considerar que é um espaço altamente competitivo e que o trabalho em equipe é primordial para o desenvolvimento das atividades, tanto aquelas consideradas de Back Office quanto de Front Office. Com esses achados, a pesquisa sinaliza que em ambientes organizacionais há a necessidade de alinhamento entre desempenho, comportamento de cidadania organizacional e a confiança, lacuna a qual é fomentada nesta pesquisa.
Article
Information systems (IS) projects are notoriously difficult to control, especially under conditions of uncertainty. This difficulty is particularly pronounced for senior IS managers, such as CIOs and IT Vice Presidents, who tend to have scarce time and limited project-related knowledge but are ultimately held accountable for IS project performance. Focusing on this under-researched controller category, the study at hand contributes new insights into the enactment of controls by exploring how IS project uncertainty affects senior IS managers' control-style choices, as well as how it moderates the impact of such choices on process and product performance. Based on a survey of 150 senior IS managers, we find that IS project uncertainty increases managers' use of an authoritative control style but is unrelated to their use of an enabling control style. Further, in IS projects characterized by uncertainty, an authoritative control style is found to be effective for process performance, whereas an enabling style is found to be effective for product performance. Moreover, the results of a post-hoc analysis show that using the two control styles simultaneously under uncertainty delivers no discernible benefits, suggesting a decision-related control dilemma. Theoretical and practical implications are discussed.
Purpose Psychotherapy is often used to treat dysfunctional inter-personal relationships, but it is rarely used to treat dysfunctional B2B relationships. Yet many of the variables found in inter-personal relationships are also found in B2B relationships and both types of relationships have similar fail rates. The authors take a multi-disciplinary approach by adapting an instrument from marriage therapy into a new measure called the Business Relationship Health Index (BRHI). In the process we re-evaluate the drivers of B2B relationships. Design/methodology/approach The authors apply the Global Assessment of Relational Functioning (GARF) psychiatric system to B2B relationships. The GARF instrument incorporates three components: interaction/problem solving, organization/structure and emotional climate. Using US panel data of 500 B2B relationships based in the USA, the authors use partial least squares analysis and develop a structural equation model to test the validity and reliability of the BRHI with some well-known relationship measures including, satisfaction, trust, commitment and performance. Findings The findings support a strong link between the BRHI (emotion, interaction and organization) and relationship performance. The proposed measure shows a strong link between BRHI and relationship performance ( R ² = 0.54). Originality/value The GARF instrument has never been applied to a B2B context. BRHI is a holistic instrument used for assessing the specific relational characteristics of B2B relationships. The BRHI can benefit relationship stakeholders when used as a diagnostic tool to prioritize B2B investment strategies. Managers can use BRHI to determine the extent to which the relationship is healthy or needs repair, re-evaluation, re-commitment, or repositioning.
Article
Many formal organizational structures arise as reflections of rationalized institutional rules. The elaboration of such rules in modern states and societies accounts in part for the expansion and increased complexity of formal organizational structures. Institutional rules function as myths which organizations incorporate, gaining legitimacy, resources, stability, and enhanced survival prospects. Organizations whose structures become isomorphic with the myths of the institutional environment-in contrast with those primarily structured by the demands of technical production and exchange-decrease internal coordination and control in order to maintain legitimacy. Structures are decoupled from each other and from ongoing activities. In place of coordination, inspection, and evaluation, a logic of confidence and good faith is employed.