Abstract
AbstractIncreasingly, organizations have been employing self‐managing teams to circumvent bureaucratic controls and stimulate innovation. However, this goal is not easily achieved; in many situations, informal controls replace formal controls. This study develops a multi‐level perspective of control. We explicitly analyze control mechanisms at different levels of the organization and how they affect innovative team output. We theorize and empirically investigate a potential downside of horizontal social control mechanisms at the team level (i.e., peer pressure) affecting self‐managing teams’ innovative outcomes. We also discuss managerial control mechanisms at the organizational level (i.e., interactive and diagnostic management control systems) that may help to mitigate such negative effects. We theorize how they may influence the innovative output of self‐managing teams, both directly and interactively. We chose a multi‐level, multi‐source setting for our study and ran three parallel surveys with employees in a Fortune 500 firm where 248 team members, 126 internal team leaders, and 97 organizational leaders enabled us to create a unique database of 97 self‐managing software development teams. Our findings confirm that peer pressure is common among established agile teams and that it negatively influences the innovative output of the agile teams. Moreover, our findings show that the magnitude of the effect of peer pressure is contingent on control mechanisms at higher levels within the organization. This enables us to provide new theoretical insights regarding the paradoxical effect of managerial control systems when it comes to flat organizations and autonomous teams. Additionally, we provide practical guidelines for managers who increasingly adopt agile practices but at the same time face issues with regard to innovation.
Highlights
Today’s organizations need to innovate (e.g., Doran and Ryan, 2016; Volberda et al, 2021) to survive increasingly dynamic environments, and teams often become the locus of innovation (e.g., Weiss, Backmann, Razinskas, and Hoegl, 2018)
We build on the seminal work by Simons (1994) to identify key managerial control systems and group level social controls, and we explore how these factors influence the innovative outcome of agile teams
Our results suggest that peer pressure, focused on delivering and meeting deadlines, is linked to lower innovative team output
Summary
Today’s organizations need to innovate (e.g., Doran and Ryan, 2016; Volberda et al, 2021) to survive increasingly dynamic environments, and teams often become the locus of innovation (e.g., Weiss, Backmann, Razinskas, and Hoegl, 2018). Large firms increasingly reorganize themselves around self-managing work teams, such as agile teams (Cooper and Sommer, 2016; Grass, Backmann, and Hoegl, 2020). By combining elements of an organic structure (Burns and Stalker, 1961; Volberda, 1996; Slater, Mohr, and Sengupta, 2014) with new and more indirect forms of control (Heydebrand, 1989; Sewell, 1998), organizations aim to acquire more flexibility, creativity, and speed to overcome the inertia associated with bureaucratic control
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