Enhancing and hindering relationships between informal and formal management controls in the voluntary sector

Prior literature stresses the importance for manufacturers to use formal and informal controls to coordinate collaborative new product development activities with suppliers. In doing so, the existence of trust between manufacturers and suppliers is believed to play a key role because it enables manufacturers to reduce investments in formal controls and rely more on less costly informal controls. Manufacturers and suppliers don't suddenly trust each other though: trust typically grows over time as the partners get to know each other. Trust may also decrease if manufacturers overuse formal controls or if suppliers underperform. These fluctuations in trust over the course of supplier–manufacturer relationships complicate the so‐called trust–control nexus and raise important questions about the impact of trust on the efficiency and effectiveness of formal and informal controls as coordination mechanisms. Therefore, this study examines how manufacturers should balance formal and informal controls over time to reap the full benefits of collaborative product development with suppliers. For that purpose, a conceptual and system dynamics model are developed, which incorporate the links among formal and informal controls, trust, and the supplier's development performance. In an empirical validation in the context of the shipbuilding industry, the results reject the notion that manufacturers must lessen formal controls and increase informal controls with trust. Instead, it is most efficient and effective to invest always in formal controls, particularly process control, to coordinate supplier involvement in new product development. These results have important theoretical and managerial implications: Informal controls are not as profitable as expected.

High-quality development has become one of the important goals pursued by Chinese enterprises at present, and innovation is an important channel to realize high-quality development. Effective collaboration stands out as a pivotal element for the success of new product development (NPD). There are a variety of control mechanisms applied to mitigate uncertainty and foster cooperation. Despite the importance of these controls, the interplay between formal and informal management controls in NPD has been underexplored in prior research. The goal of this study is to validate the relationship between formal and informal control in a new product development scenario, responding to the debate about whether there is a substitution effect or a complementary effect between the two. This study addresses this gap by initially employing ordinary least squares (OLS) regression analysis to examine the role of each management control. Subsequently, fuzzy set qualitative comparative analysis (fsQCA) is employed to identify strategies for achieving high NPD performance in Chinese manufacturing enterprises. The results from the OLS analysis demonstrate that all forms of management control, especially trust, are effective in the improvement of NPD performance, while the results from fsQCA confirm that there is a complementary effect between formal and informal control, suggesting that informal control cannot function well without formal control. This research illuminates the synergistic dynamics of management controls within an open innovation context and emphasizes the importance of integrating both formal and informal controls to optimize NPD performance.

Objective: this article examines the mediating role of formal and informal controls in the relationship between cooperative networks and business model innovation in companies located in technology parks. It draws on the resource-based view literature, assuming that the formal and informal controls of companies in such locations support the capture and use of resources from cooperation networks with other companies in the same location and their park. Methods: data were collected from 94 managers and analyzed using partial least squares structural equation modeling (PLS-SEM). Results: the findings indicate that formal controls mediate the relationship between cooperative networks and business model innovation, contrasting with the lack of statistical significance observed in informal controls. When combined, formal and informal controls exhibit a mediating effect. Conclusions: the research reveals the intervening role of formal controls, indicating a short-term perspective on the resources available in cooperation networks, in contrast to informal controls, which play this role in the long term only when combined with formal controls. These findings contribute to the literature and managerial practice and emphasize the importance of (re)designing managerial controls to enhance the benefits of networks in business model innovation.

Optimization efforts are increasingly applied to finance departments in organizations, particularly to routinized accounting processes. Mixed satisfaction levels related to performance outcomes hint at control issues in finance departments. Accounting activities are characterized by well understood task environments that are addressed by formal controls. Yet, these activities are also interrelated and people-intensive, which might require other controls complementing formal ones. While current evidence considers merely the role of formal controls, we examine the effect of formal and informal controls as well as their combined effects in accounting processes. Regarding formal controls, results from a cross-sectional survey indicate that process controls have a positive direct effect on information quality while we cannot show any effect for output controls. Among the informal controls, peer pressure accentuates the effect of process controls if the controls are combined. Third, an identification-inducing working environment has a positive impact on information quality. Yet, the positive effect of process controls deteriorates when applied in combination with a positive working environment. This contributes to the literature on at least two dimensions: First, we underline the role of informal controls in accounting processes; second, our data hints at complementary and substitutive effects of formal and informal controls in the accounting function.

ABSTRACTBackground: The debate on recreational use of cannabis, recently relaunched by the election of the Liberal Party of Canada that intends to legalize and regulate its use and access, implies a better understanding of social control mechanisms that are in place, and their influence on users' behaviors. Objective: This study addresses the issue of formal and informal controls by providing, first, a theoretical perspective of this concept, and, second, by illustrating its operation from the users' perspective. Methods: Semi-structured interviews were conducted with 164 regular, adult cannabis users recruited in four large Canadian cities (Vancouver, Toronto, Montreal, and Halifax). An initial qualitative analysis based on the principles of grounded theory was conducted. The main categories identified were then used to find and re-code relevant material on the respondents' experience with formal and informal control (secondary analysis). Results: The users' perspective shows that mechanisms of informal control play an important role in defining the social context of their use (when, where, and with whom cannabis is consumed). In contrast, formal control had no deterrent impact on the cessation or reduction of use, but affected their behavior by influencing them to change the context of their practices to avoid criminal legal consequences and stigmatization. Conclusions/Importance: The regulatory controls based in public health that the Canadian government plans to implement (replacing criminal ones), should be based on a better understanding of current practices and patterns of cannabis users, and in accordance with informal controls already in place. Legislative formal controls, in a regulatory model, that are better defined and consistent with social practices, will be more accepted and respected by the user population and thus likely to be more effective in reducing harm.

Formal and informal control views in China, Japan, and the U.S.

Trust and control are essential in inter-organization collaboration. This paper extends existing literatures by empirically testing the different effects of formal and informal control on cognition and affection trust and their impacts on service quality in IT offshore outsourcing. The results show that formal control and affect trust contribute to service quality. However, informal control negatively impacts service quality. Additionally, although both informal and formal control positively relate to trust, the effect of informal control on affect trust is stronger than that of formal control.

PurposeThe purpose of this paper is to investigate how middle managers utilize performance measurement information in their work. More specifically, the study gives understanding on the impact of performance measurement, policies and procedures (formal controls), and individual intuition and experiential knowledge (informal controls) on strategy implementation and decision making. The study also identifies hindrances to the use of measurement information.Design/methodology/approachThe study is carried out as a semi-structured interview study in Finnish companies representing five industries and 29 interviewees. Empirical data were analyzed deductively according to the research framework combining informal and formal management controls with two managerial processes.FindingsThe work of middle managers is clearly affected by informal controls. Much of the managerial work relies on individual intuition and judgment based on experience instead of performance information or formal instructions. The study also unveiled that top management sees the status of utilizing performance measurement information in a more positive light than do middle managers. This is the case especially in strategy implementation. Deficiency of measurement information was found to be a key factor hindering the use of measurement information but improper analysis of results is also a challenge.Research limitations/implicationsThis study examined the work of middle managers widely in different positions and industries which means that the findings are rather explorative. Simplification was required in order to operationalize the complex tasks of strategy implementation and decision making. Further, more contextually focused research is required in order to understand better the contextual causes of the findings and to provide more understanding on the appropriate ways of improving the utilization of performance measurement information.Practical implicationsThe practical contribution of this study lies in the detailed description of strategy implementation and decision-making processes based on observations in several large companies representing different industries. The study also suggests areas to which development efforts should be concentrated on in order to improve the use of performance information among middle managers.Originality/valueThis study contributes to the earlier literature by highlighting the usage of performance measurement information as opposed to developing new measures. In addition, the novelty value of the paper relates to the focus in the work of middle managers which has gained less attention in the previous research.

PurposeThe purpose of this paper is to examine the effects of retailers’ organizational controls and controls of their boundary personnel on manufacturers’ outsourcing performance. It further assesses the moderating impact of information symmetry in this context.Design/methodology/approachData were collected from 230 Indian apparel manufacturers engaged in outsourcing activities with two international retailers. Organizational control is scrutinized as formal and informal controls, and outsourcing performance is studied in terms of efficiency and effectiveness. The partial least squares approach is used to test the proposed research model.FindingsFirst, the retailers’ and the boundary person’s formal controls have a direct, positive effect on outsourcing efficiency. Second, although no significant effect of the boundary person’s formal controls on outsourcing effectiveness is identified, a significant effect of retailers’ formal controls on effectiveness is seen. Third, the boundary person’s informal controls are associated with a decrease in efficiency, whereas they have a positive effect on effectiveness. Fourth, although the retailers’ informal controls enhance outsourcing effectiveness, they negatively affect efficiency. Fifth, information symmetry is statistically significant in enhancing outsourcing efficiency and effectiveness.Practical implicationsThe results have important implications for retailers and retailers’ boundary persons who are keen to improve their relations with manufacturers. This paper offers practical insights into the ways that manufacturers, boundary personnel and retailers can exercise control mechanisms in order to achieve effective and efficient outsourcing outcomes.Originality/valueThe effect of organizational control and information symmetry on outsourcing performance in typical outsourcing practices in manufacturer‒retailer relationships is shown.

Development failures and runaway projects in the information systems (IS) area can result in substantial losses to organizations, either financially or to a company’s reputation. One important strategy in mitigating risk is the use of effective controls over IS projects. This research investigates the effectiveness of control mechanisms in IS projects, i.e., how they have been established, applied, and how they have evolved throughout the project. We conducted an in-depth study of six information systems projects with six different project managers. We found that formal controls were adopted on project elements with clearly defined project outcomes and informal controls were adopted mainly on project elements that were unclear and often related to people. Furthermore, formal controls were dominant at project initiation and in most cases these controls became less dominant over the project duration. These formal controls were more rigorously applied in external IS projects while informal controls increased in importance throughout the project duration in internally developed projects. We found the existence of informal controls to be very important in helping ensure successful project outcomes.

Formal and informal crime control is used to deter individuals from engaging in criminal behavior. Formal crime control relies on the law and official government agencies to curb criminal actions. Informal crime control relies on moral and social institutions (e.g., family or church) to promote lawful behavior. This study examined the importance of formal and informal crime control in Nigeria and the United States. Using the data collected from 758 college students, the study found that the Nigerian and U.S. respondents differed on most of the formal and informal control questions. Nigerian respondents were more likely to feel that the formal control mechanisms of the police and law deterred crime, whereas U.S. respondents were more supportive of the courts and prisons as effective forms of control. Nigerian students were more likely to feel that shame, neighborhood watches, and surveillance by neighbors were effective forms of informal social control. Both Nigerian and U.S. respondents felt that being rejected by family, neighbors, and peers was effective at deterring crime except for repeat offenders when formal punishment was viewed as being more effective. When asked to rank formal and informal crime control mechanisms, Nigerian students ranked family first, followed by corrections, courts, police, neighborhood, peers, and schools. U.S. students ranked family first, followed by police, corrections, courts, peers, schools, and neighborhood.

Sun Chemical focuses on product innovation for performance pigments

Purpose This paper aims to examine the relationship between control mechanisms and marketing performance based on a sample of marketing managers. To that end, this paper focuses on the relationship between the types of controls used in marketing and the market and business results. Methodology This study collected the data through a survey among marketing professionals with experience and decision-making capacity involving marketing budgets and plans, in practical terms a sample of 97 marketing managers and analyzed the data via a structural equation model using Smart PLS 3. Findings The findings confirm that marketing control mechanisms have a significant impact on business results, demonstrating the relationship of formal controls with market results and the relationship between informal controls with financial results. Likewise, the authors were able to prove that there is a relationship between formal and informal control. Practical implications The implementation of the control mechanisms should be based on the development of a detailed evaluation system of the activities carried out by the marketing employees and an analysis of their capabilities and abilities. In addition, managers should integrate formal control decisions into their marketing strategy to improve organizational results. Originality The results of this study help explain the relationship between marketing control mechanisms and organizational results and allow to understand what the level of influence is that marketing control mechanisms have on market and financial results.

Examining the link between marketing controls and firm performance: The mediating effect of market-focused learning capability

In the present study, the authors explore how small firms' human resource management (HRM) systems influence the effectiveness of their formal and informal management controls. Coinvestigations of broader control systems and HRM in small and medium‐sized enterprises (SMEs) are significantly lacking in the existing literature. A better understanding of the links between control and HRM will lead to better prescriptions regarding how control relates to performance in small firms. To address this gap, the authors develop a theoretical model based on reen and elsh's seminal application of resource dependence theory to management control and test its propositions using structural equation modeling on a sample of 317 SMEs. The empirical findings suggest that control has a stronger effect on SME performance if the firm emphasizes HRM. Managers should employ a portfolio consisting of both formal and informal controls. The paper closes with discussions of its implications for theory and managerial practice, highlighting limitations and potential future research avenues.