Designing management control in hybrid organizations: The role of path creation and morphogenesis

Abstract

Path-creating change in organizational form is proposed as an important element in achieving management control in hybrid organizations. Using case examples from large-scale projects in the architectural, engineering, and construction industry, as well as from joint ventures in the oil and gas industry, we highlight the role of mindfully synthesizing new organizational forms in the design of management control systems. A series of paradoxes is disclosed, in which attempts to achieve control through mimetic adoption of established management control techniques lead to reduced control. On the other hand, path-creating deviations from institutionalized practices, resulted in improved project and venture performance. It has been argued that the design of inter-organizational management control systems seeks to enable organizations to compete for resources and efficiency, and also to obtain institutional legitimacy. Institutional theory proposes that isomorphism permits organizations to obtain that legitimacy and explains their design. In this paper, we propose that path creation and morphogenesis, which deviates from isomorphism, is an additional consideration in explaining management control system design.