Formal Control Mechanisms Research Articles

Management Control System Design and Innovation: A Systematic Literature Review

AbstractThe purpose of this study is to examine through a systematic review the management accounting research that focuses on the role of management control systems (MCS) in enhancing innovation within organizations. For that purpose, a total of 19 articles from publications spanning from 2000 to 2022 were selected using the keywords of management control system and innovation. The findings indicate that the Levers of Control (LoC) is the most widely studied topic. The next popular topic being examined is formal and informal control mechanisms. The aspect of innovation in that literature mainly focuses on product innovation, management and organizational innovation, and environmental innovation and sustainability. Future research can explore more the role of the MCS in the combined mechanism of LoC to encourage innovation. This paper contributes to the MCS literature by examining the suitable mechanisms affecting the success of innovation in a rapidly changing environment. Keywords:Management Control System, Innovation, Review Literature, Levers Of Control, New Product Development

Open strategy and the multinational firm

PurposeDistance has been a core concept and issue in international business and management research. While scholars argue that distance through internationalization is increasing costs, distance is also associated with positive implications such as the integration of more diverse knowledge. Still, many firms struggle to manage distance effectively and efficiently in their multinational contexts. The purpose of this study therefore is to propose Open Strategy – increasing transparency and inclusion in the strategy process – as an attractive concept for managing distance.Design/methodology/approachThis is a conceptual paper where the authors introduce Open Strategy to the IB community.FindingsThe authors argue that opening the strategy of multinational enterprises, enables firms to leverage diversity by re-combining the firms diverse and distant knowledge. It also reduces distance by moving beyond formal mechanisms of control and coordination to improve joint understanding, cooperative commitment and strategy implementation. The framework shows how firms can move beyond established dogmas in international business research by rendering their strategy processes more open.Originality/valueLeveraging the Open Strategy literature, the authors are able to find a way to respond to the challenge of increasing distance, in fact even arguing that distance can be beneficial if framed as diversity.

The role of group (in)efficacy in controlling deviance on group cohesion and on social identity management strategies: Social control identity motivated model

The social control identity motivated (SCIM) model proposes that perceived failure of group social control mechanisms in punishing deviance increases the threat associated with the emergence of deviance in groups. Based on this assumption, this model explains the psychosocial processes involved in the consequences for social cohesion and social identity management strategies of a match or mismatch between the implemented formal social control and the mechanisms that group members expect to be implemented based on social identity motivation processes. This model explains members’ commitment to the reinforcement of ingroup social order and status quo (in case of a match), or a need to cope with perceived inefficacy of ingroup formal social control (in case of mismatch). In response to perceived inefficacy of ingroup formal social control, individuals may engage in various identity-motivated processes, including disinvestment from the ingroup, informal social control responses, or efforts to strengthen the ingroup’s normative system through social innovation or social control mechanisms reinforcement. By accounting for the interplay between formal social control mechanisms and identity motivated social control expectations, the SCIM model intends to contribute to the understanding of social identity protective strategies in response to deviance, by highlighting that (in)efficacy of group social control mechanisms shapes this dynamic. This model is justified with both direct and indirect empirical support, and we discuss the potential of the model’s applicability, as well as the need for additional research to understand determinants of each type of response, thus leaving this model open to potential refinement.

Integrating sustainability in management control systems: an exploratory study on Italian banks

PurposeDrawing insights from institutional theory, this paper aims to examine whether and to what extent banks have reconfigured their management control systems (MCSs) in response to growing institutional pressures towards sustainability, understood as environmental, social and governance (ESG) issues.Design/methodology/approachThe authors conducted an exploratory study at the three largest Italian banking groups to shed light on changes made in MCSs to account for ESG issues. The analysis is based on 12 semi-structured interviews with managers from the sustainability and controls areas, as well as from other relevant operational areas particularly concerned with the integration process of ESG issues. Additionally, secondary data sources were used. The Malmi and Brown (2008) MCS framework, consisting of a package of five types of formal and informal control mechanisms, was used to structure and analyse the empirical data.FindingsThe examined banks widely implemented numerous changes to their MCSs as a response to the heightened sustainability pressures from regulatory bodies and stakeholders. In particular, with the exception of action planning, the results show an extensive integration of ESG issues into the five control mechanisms of Malmi and Brown’s framework, namely, long-term planning, cybernetic, reward/compensation, administrative and cultural controls.Practical implicationsBy identifying the approaches banks followed in reconfiguring traditional MCSs, this research sheds light on how adequate MCSs can promote banks’ “sustainable behaviours”. The results can, thus, contribute to defining best practices on how MCSs can be redesigned to support the integration of ESG issues into the banks’ way of doing business.Originality/valueOverall, the findings support the theoretical assertion that institutional pressures influence the design of banks’ MCSs, and that both formal and informal controls are necessary to ensure a real engagement towards sustainability. More specifically, this study reveals that MCSs, by encompassing both formal and informal controls, are central to enabling banks to appropriately understand, plan and control the transition towards business models fully oriented to the integration of ESG issues. Thereby, this allows banks to effectively respond to the increased stakeholder demands around ESG concerns.

Contrôle de gestion durable : Quels modèles de contrôle dans les grandes entreprises marocaines

Previous research has shown that management control is essential in helping an organization become more sustainable. However, skepticism has been raised about the existence of management controls in the context of sustainability, particularly regarding their role in promoting sustainability within organizations. Based on Malmi and Brown's (2008) management control framework, this article empirically explores the extent to which large companies have developed a set of formal and informal management control mechanisms and theorizes a sustainability control model. The results show that all companies studied deploy sustainability management controls. The document identifies two approaches to sustainable management control, formal or informal. The results also highlight the need for research to better understand the situations in which formal and informal management control in sustainability could be developed.

Defending Others Online: The Influence of Observing Formal and Informal Social Control on One's Willingness to Defend Cyberhate Victims.

This paper examines factors correlated with online self-help-an informal form of social control vis-à-vis intervention-upon witnessing a cyberhate attack. Using online surveys from 18- to 26-year-old respondents in the United States, we explore the roles of various types of online and offline formal and informal social control mechanisms on the enactment of self-help through the use of descriptive statistics and ordinal logistic regression. The results of the multivariate analyses indicate that online collective efficacy is positively related to self-help, as is having close ties to individuals and groups offline and online. Formal online social control, however, is not significantly related to engaging in self-help. Other findings demonstrate that personal encounters with cyberhate affect the likelihood that an individual will intervene when witnessing an attack, and that individuals with high levels of empathy are more likely to intervene to assist others. This work indicates that pro-social online behavior is contagious and can potentially foster online spaces in which harmful behaviors, such as propagating cyberhate, are not condoned.

Legal socialization, perceptions of the police, and delinquency in three Caribbean nations

Legal socialization is the process by which individuals obtain their attitudes and beliefs about formal social control mechanisms such as the police, including how these are formed through domains of social life. These attitudes and subsequent beliefs toward the police, whether positive or negative, have been found to impact individuals’ compliance with the law and cooperation with legal authorities. Despite research advancements on legal socialization, the theoretical hypotheses drawn from this perspective have not been tested in the Caribbean context, a high crime and violence setting where the police are often viewed as corrupt, untrustworthy, and ineffective. This study uses data from 4,293 youths to examine the effect of socializing agents (i.e., family, school, and peers) on youth perceptions of the police in three nations – Guyana, St. Kitts and Nevis, and St. Lucia – and whether these perceptions impact delinquency. We find that legal socialization domains and perceptions of the police are important factors that influence delinquency in the Caribbean. Implications are discussed in light of future research and policy.

Mecanismos de controle gerencial, imprevisibilidade ambiental e resiliência organizacional

Abstract This article analyzes the (formal and informal) role of control mechanisms in fostering (proactive and reactive) organizational resilience of financial technology startups (fintechs), considering the moderating effect of environmental unpredictability. First, there is little evidence on formal and informal control mechanisms in the context of organizational resilience. Second, studies on management controls focus on some resilience approaches, however, they do not address resilience from a proactive and reactive perspective. Third, the literature on the effects of environmental unpredictability on contemporary organizations, like the fintechs, is still scarce. On the one hand, new evidence is added to the literature on management control and organizational resilience, the understanding of antecedents of resilience in startups is expanded, and insights are provided on the effects of environmental unpredictability on the alignment of management controls and objects of control. On the other hand, insights are provided on control mechanisms that fintechs can benefit from to building organizational resilience, both to anticipate and prepare and to act and formulate responses in the face of business disruptions and uncertain times. The findings benefit the building and strengthening of resilience in fintechs, which becomes key for these startups to survive and consolidate themselves in the financial market. Data have been collected by survey and analyzed through structural equation modeling. Additional investigation has been conducted via fuzzy-set qualitative comparative analysis. The main results reveal that: (i) formal and informal control mechanisms foster proactive and reactive organizational resilience; (ii) in scenarios of high environmental unpredictability, greater attention given to informal controls results in higher proactive resilience levels; and (iii) there are four (five) organizational configurations that lead fintechs to high proactive (reactive) resilience.

Zelena kriminologija i kontrola kriminaliteta

Zelena kriminologija i kontrola kriminaliteta

Contracting out social care services to for-profit and not-for-profit organizations in Italy: Social categorization and governance choices

IMPACT This article explains the socio-psychological factors that influence public administrators’ governance choices when dealing with not-for-profit (NFP) and for-profit (FP) providers. In particular, it highlights the use of stereotypes in public administrators’ categorization of NFP and FP motives and expected behaviours, and whether they then prioritize the use of trust or control in the governance of the contractual arrangements. The main implication for public sector managers is that the tendency to social categorization and bias can be an issue in creating the proper mechanisms to ensure the delivery of effective services. In contracting out, the use of categorization by public administrators can reduce their propensity to trust those who are perceived as an outgroup, and hence result in them adopting more formal control mechanisms, while for those perceived as an ingroup their inclination to trust will result in the use of less formal control mechanisms.

How Do Digital Market Platform Hosts Exercise Control Over Sellers?

High speed connectivity, smart mobile devices, social media, and rapidly-proliferating end-user applications have given rise to digital markets. This paper investigates how digital market hosts exercise control over sellers. The authors propose that findings from prior empirical studies informed by control theory in other contexts might not fully apply to digital markets, since these platforms are loosely connected to participants. The three-case study revealed that, similar to controllers in other contexts, digital market hosts do utilize a mix of formal and informal control mechanisms, yet their seller control portfolios also differ importantly from control portfolios in other contexts. This paper presents the study findings, considers questions arising from the findings, and provides a useful foundation for further research that can consider why digital markets entail challenges that give rise to novel control portfolios.

Strategic alignment of enterprise architecture management – how portfolios of control mechanisms track a decade of enterprise transformation at Commerzbank

ABSTRACT Enterprise architecture management (EAM) is commonly employed by large organisations to coordinate local information system development efforts in line with organisation-wide strategic objectives while simultaneously avoiding redundancies and inconsistencies. Even though EAM tools and processes have become increasingly mature over the past decade, many organisations still struggle to generate impact from their EAM initiatives. To this end, we describe how enterprise architects at Commerzbank, a major international bank, employed a control mechanism portfolio perspective to more effectively anchor EAM within the organisation. This approach allows to purposefully combine a wide range of different formal and informal EAM control mechanisms, thereby going beyond the formal, top-down driven mechanisms predominantly discussed in EAM literature. Furthermore, such EAM control mechanism portfolios provide an effective means to purposefully realign EAM in reaction to major strategic shifts. The application of this perspective is demonstrated by tracing the evolution of EAM at Commerzbank for more than a decade (2008 to 2018) through a turbulent and challenging competitive environment, resulting in several major strategic realignments that required corresponding adjustments in EAM. We believe that such consciously designed and diversified EAM control mechanism portfolios also provide a useful means for other large organisations to more effectively conduct EAM.

Exploring marketing control mechanisms from a strategy perspective

PurposeManagement is constantly looking for ways to show how exactly the competitive advantage can be enhanced to achieve the desired results. As such, control mechanisms that are designed to ensure that the desired results are achieved play an important part in the successful implementation of a business strategy, which is why, in this study, the authors analyze how formal and informal control levels are deduced from the marketing decisions that operationalize the organizational strategy.Design/methodology/approachThe authors conducted a cross-section survey among 301 marketing managers. To determine which types of strategies are prevalent, the authors performed a hierarchical cluster analysis using the IBM SPSS Statistics 24 software and then constructed an ANOVA table to see whether there are differences in the characteristics of the different clusters. To determine the configuration of marketing control across strategy typologies, the authors conducted a mean difference test, aligning marketing control mechanisms with the strategies under study, significantly changing the intensity levels from one to another.FindingsIt is worth emphasizing that higher levels of control are related to prospector strategic business units (SBUs) and that informal control was significantly more prevalent than formal control for all the strategy typologies the authors' studied.Originality/valueThis research provides empirical evidence to gain a better understanding of the role marketing decisions play on formal and informal control mechanisms.

The Prevalence and Importance of Semiformal Organizations and Semiformal Control in Rural China: Insights from a National Survey.

This analysis of data collected from a nationwide survey in 2021 focused on the prevalence and importance of different forms of social control particularly semiformal social control in community order maintenance within rural China. Scholars have a growing interest in China’s semiformal control. However, prior studies lack quantitative research on the prevalence and importance of this semiformal control. Employing quantitative analysis, this study found that China uses a trinary (formal, semiformal, and informal) control system to maintain social order as contrasted with a Western binary (formal vs. informal) control system. Overall, semiformal organizations—village committees—are more prevalent and important than formal control mechanisms such as government and police and informal control mechanisms such as xiangxian or kin or kin-kind community leaders. Furthermore, the relative prevalence and importance of semiformal organizations and control are found to be associated with types of social order maintenance activities. These findings are meaningful for testing the generalizability of social disorganization theory and developing a China- or Asian-centric control theory.

Balancing knowledge sharing with protecting: The efficacy of formal control in open innovation projects

A key challenge in open innovation (OI) projects relates to the tension of facilitating open knowledge exchange processes while ensuring sufficient protection to avoid knowledge leakage. Although prior research has discussed several solutions to balance sharing with protecting, these practices either tend to lay too much or not enough emphasis on knowledge protection. In this article, we complement current research by examining whether the formal control mechanisms, prespecified behaviors and prespecified outcomes, may serve as more efficacious project management solutions. We investigate their effect on OI project performance and knowledge leakage and compare their influence with that of contracts, using a data set of 106 new product OI projects in high-technology industries. We find that prespecified behaviors influence project performance in the form of an inverted U-shape, while prespecified outcome increases project performance in a linear fashion. Contracts decrease knowledge leakage while having no influence on project performance. Our study contributes to a more elevated understanding of the role of project management in coping better with the inherent sharing-protecting tension in OI.

Formal salesforce control mechanisms and behavioral outcomes

PurposeThe current study aims to empirically examine the impact of formal salesforce control systems on salespeople and customer behavior.Design/methodology/approachData are collected from 704 salespeople and their respective visiting customers (704) in Ghana. The suggested hypotheses are tested through the structural equation (SEM) modeling technique.FindingsThe study results show that all three formal control mechanisms have positive and significant effects on customer-directed problem-solving and adaptive selling behaviors. Similarly, the study finds that salespeople's customer-directed problem-solving behavior increases, respectively, customer-directed opportunism and relationship continuity. Adaptive selling behavior also has significant positive effects on both customer-directed opportunism and relationship continuity, respectively.Practical implicationsThe study offers practical and theoretical insights into understanding salesforce control dynamics, customer-directed opportunism, adaptive selling behavior, customer-directed problem-solving behavior and continuity of relationships. The results also have significant consequences for sales organizations as they can help sales managers decide on the best form of salesforce control systems to deploy.Originality/valueThe current research demonstrates how control mechanisms can influence both adaptive selling and customer-directed problem-solving behaviors and how these could generate both customer-directed opportunism and relationship continuity.

Moderating effect of supply chain complexity in governance mechanisms and operational performance relationship: Evidence from a sub-Saharan African market

ABSTRACT This study draws on the tenets of transaction cost economics to examine the moderating effect of supply chain complexity on the relationship between formal control and social control mechanisms, and operational performance. The study argues that under conditions of increased supply chain complexity, the effect of formal control mechanism on operational performance is weakened while the effect of social control mechanism on operational performance is strengthened. These propositions are tested on a sample of 331 firms in a sub-Saharan Africa market, Ghana. Findings from the study show that at higher levels of supply chain complexity, formal control and social control have negative and positive effects on operational performance, respectively. These findings provide nuanced perspectives on how the performance consequences of formal and social controls vary under the same organizational circumstance. Theoretical and managerial implications are discussed.

Governing Intra-project Modular Interdependencies in ISD Projects: A Control Theory Perspective

Though information systems development (ISD) projects use modularization as an approach to better manage complex tasks by decomposing them into simpler intra-project modules, we lack clearly established modalities for managing such modularized ISD projects. Adopting a control theory perspective and leveraging a case study research approach, we unearth the underlying “control mechanisms” that an organization leveraged to manage eight modularized ISD projects. Specifically, we explore the intra-project modular dependencies that the projects’ business requirement documents indicated and use results from semi-structured interviews with project members to identify the corresponding control mechanisms. Our results indicate that, in scenarios with a low level of intra-project modular interdependencies, formal outcome and formal behavior constitute the preferred control mechanisms. However, specific situations related to flexible project practices and volatile client requirements may minimize the level of formal outcome and formal behavior control mechanisms in such projects. A low level of interdependencies between intra-project modules minimizes the need for informal clan control; nonetheless, informal clan-control mechanisms may help team members understand project requirements in a shared manner. Projects with a high level of interdependencies between intra-project modules have a high level of informal clan control. However, in some situations, projects with a high level of intra-project modular interdependencies have a low level of informal clan control often due to time pressures. Organizations may govern projects with a high level of intra-project modular interdependencies and poor structures through an enabling control style. Organizations can effectively govern projects with a low level of intra-project modular interdependencies through authoritative control style except in the projects where they assign team members to multiple projects simultaneously. By leveraging control theory to examine the intra-project modular dependencies, we add to the ongoing discourse on control theory and ISD project governance.

The influence of contractual complexity on opportunistic behaviour: moderating role of formal control

The main aim of this study is to assess the influence of contractual complexity on opportunistic behaviour in the construction industry. The opportunistic behaviour of the project participants/partners may inversely affect the project outcomes. In the current study, the contractual complexity has been conceptualised through contractual adaptation and contractual coordination. This study targeted the professionals from construction industries of Pakistan and data were collected from 208 professionals to measure the influence of contractual complexity on opportunistic behaviour. The results of the study reveal that contractual adaptation and contractual coordination are useful to curb opportunistic behaviour. In addition, the results also show that the relationship between, contractual coordination and opportunistic behaviour is moderated by the formal control. Furthermore, findings of the study provide significant insights for construction to curb opportunism and to formulate the complex contracts in the presence of formal control mechanisms.

Semiformal Organizations and Control During the COVID-19 Crisis in China.

Scholars often compare China and Western societies in terms of dichotomous forms of control—formal and informal. Recent research indicates a nuanced form of social control—semiformal. Using a survey data collected during the 2020 COVID-19 pandemic in China, this study investigated the prevalence and importance of semiformal organizations, formal organizations, and informal groups participating in social control and social service and the predictors of the perceived importance of these three forms of social control mechanisms. Findings from this study revealed that formal organizations, the semiformal organizations, and informal groups all participated in community control and service. Semiformal organizations had the highest level of participation. This study found that education and age are the two major predictors of the views on the importance of formal, informal, and semiformal control and control mechanisms.