The efficacy of organizational control interactions: External environmental uncertainty as a critical contingency

Abstract

We investigate the efficacy of organizational control interactions in contexts with varying levels of external environmental uncertainty. Specifically, we examine the contingent effect of external environmental uncertainty on the interactions of behavior and outcome control, behavior and clan control, and outcome and clan control on organizational performance. The empirical evidence draws from two temporally sequenced surveys of top executives in 203 firms. We theorize and find that these control combinations are complementary when the level of environmental uncertainty is low, and that this complementarity diminishes as environmental uncertainty increases. Further, in highly uncertain external environments, our findings reveal that higher performance is achieved through a high level of one organizational control type and a low level of the other, indicating a shift toward substitutive effects. Consequently, this study informs the complement-substitute debate in organizational control theory by explicitly investigating external environmental uncertainty as a contextual contingency.