Outcome Measurability Research Articles

Management-control-system configurations in medium-sized mechanical-engineering firms: an exploratory analysis

Purpose Interest has grown in how management controls operate together as a package of interrelated mechanisms. This study aims to contribute to the topic by focusing on a single industry in one country, addressing controls in medium-sized enterprises (MEs). It explores how accounting and other forms of control commonly combine and the associations these combinations have with firm characteristics and context. Design/methodology/approach This study used a cross-sectional sample of 242 firms. Data were collected in 2015 from a survey of the Italian mechanical-engineering industry. Findings The MEs studied used two different control configurations. One group relatively strongly emphasized most studied controls, except for centralizing decision-making and strong hierarchy; the other relied on centralization and emphasized other controls less. Size, task programmability, outcome measurability, complexity in terms of the extensiveness of the product range and environmental unpredictability can predict the configuration in use. Originality/value No broad-based empirical evidence on control configurations in MEs currently exists. Previous research has focused on to what extent control systems affect business effectiveness or efficiency, without assessing how, and in which contexts, they combine.

The debtor-friendly fallacy in business rescue: Agency theory moderation and quasi relationships

Tension often arises when Chapter 6 business rescue practitioners (BRPs) are appointed by directors to rescue their distressed businesses. Regulating by means of standard agency contracting becomes irrelevant in the resulting multiple relationships. Looking through the agency lens, using analytic autoethnography and compiling narratives, this paper explains the perceptions of what appear to be quasiagency relationships and obtains a better understanding of these. The findings suggest that the apparent principal-agent relationships suffer from asymmetries of goals, information access, informal power and diverging perceptions of moral hazard, transaction costs and adverse selection. As a solution, contracting has been shown to have limited value owing to outcome uncertainty and measurability. This is because the tasks of the BRP are non-programmable and term-dependent. The findings provide filing directors, shareholders, creditors, regulatory authorities and BRPs in this newly instituted regime, with enhanced understanding of how the relationships manifest in practice and overcome the non-contractibility of the newly formed relationships.

The Forest of Agency Relationships: The Market for Executive Contracts as an Alignment Mechanism

In this paper, in response to mixed empirical findings and theoretical criticism of Agency Theory, we raise a broader question: are there agency behaviors that are not considered within traditional renderings of Agency Theory? We argue that, because agents vary in their mobility, human market imperfections and their ex ante costs do not disappear with creation of a contract and cannot be assumed away. These costs are constantly redefined and must be included in the general model of agency that we develop. We define certain behaviors that are ex ante driven to be external agency behaviors. In this paper we define five aspects of agent mobility that facilitate ex ante driven external agency: 1) availability of alternative contracts; 2) heterogeneity in general human capital; 3) heterogeneity in social capital; 4) heterogeneity in agent’s charisma; and 5) outcome measurability. We develop a theoretical model of how agent mobility moderates the fundamental theoretical relationships in Agency Theory and develo...

The debtor-friendly fallacy in business rescue: agency theory moderation and quasi relationships

Tension often arises when Chapter 6 business rescue practitioners (BRPs) are appointed by directors to rescue their distressed businesses. Regulating by means of standard agency contracting becomes irrelevant in the resulting multiple relationships. Looking through the agency lens, using analytic autoethnography and compiling narratives, this paper explains the perceptions of what appear to be quasiagency relationships and obtains a better understanding of these. The findings suggest that the apparent principal-agent relationships suffer from asymmetries of goals, information access, informal power and diverging perceptions of moral hazard, transaction costs and adverse selection. As a solution, contracting has been shown to have limited value owing to outcome uncertainty and measurability. This is because the tasks of the BRP are non-programmable and term-dependent. The findings provide filing directors, shareholders, creditors, regulatory authorities and BRPs in this newly instituted regime, with enhanced understanding of how the relationships manifest in practice and overcome the non-contractibility of the newly formed relationships.

User liaisons’ perspective on behavior and outcome control in IT projects

Purpose– The purpose of this paper is to examine the extent to which user liaison behavior and outcome control influence the process performance of information technology (IT) projects and how the IT experience, behavior observability, and outcome measurability of user liaisons affect behavior and outcome control.Design/methodology/approach– A research model that integrates the IT experience, behavior observability, outcome measurability, behavior and outcome control, and performance from the perspective of user liaisons is developed. Quantitative data are obtained from 63 completed IT projects. Partial least squares technique is used to evaluate the measurement model. Hypotheses are tested through hierarchical regression analysis.Findings– User liaisons with high IT experience exhibit decreased behavior control but increased outcome control. The outcome control of user liaisons is effective in the process performance of IT projects, whereas their behavior control insignificantly affects performance. However, the behavior observability and outcome measurability of user liaisons strengthen the effectiveness of behavior and outcome control. The behavior and outcome control of user liaisons also vary across different industries and project types.Originality/value– The results of this study highlight the joint effects of the IT experience, abilities, and control decisions of user liaisons. Although the outcome control of user liaisons is an appropriate control mechanism in IT projects in consideration of the strengths of these liaisons in business knowledge and their control expenditures, the behavior control of user liaisons may also be effective in process performance if these liaisons possess high levels of behavior observability and outcome measurability.

Delivering complex engineering projects: Reexamining organizational control theory

The delivery performance of complex engineering projects, such as infrastructure projects, is poor and shows no sign of significant improvement. Most of these projects have been delivered by a contractor organization for a client—usually a public or statutory agency. To ensure expected outcomes, the client typically employs “control instruments”, such as specifying outputs, directing behaviors, selecting contractors and building relationships, to influence, or control, delivery by the contractors. The dominant literature informing the choice of control instruments is derived from organizational control theory, which primarily focuses on the exercise of control within a single organization and assumes that different types of control function independently. The persistent poor delivery performance of infrastructure projects suggests a need to revisit the recommendations of organizational control theory. While a number of papers have identified the potential of combining control instruments and the need to take into account the influence of operating in a client–contractor context the mechanics and influence of specific interactions remain little understood.A case study of the delivery of the Open Pool Australian Lightwater reactor (OPAL) Nuclear Research Reactor Project in Australia, documents how the various controls employed interacted and jointly impacted on the delivery outcome. The findings start the process of further developing control theory and offer a number of practical suggestions for combining control types for practitioners.There are two main contributions to theory by this study. First, it adds support to the view that the factors influencing the principal's choice of control modes are more complex than depicted by the control theory framework. Second, it enriches the emerging balance of control literature (Cardinal et al. 2004), suggesting that it is not only the number of control modes that determines performance but also the interactions between them. Thus not only is the appropriate choice of control modes based on more than task programmability and outcome measurability, it appears that interactions between control modes also play an important role. In the case studied a combination of input, output and clan control was seen as forming an effective combination. It was also assessed to be important to avoid behavior control due to the interaction effect between behavior control and output control when employing such a grouping.

The effect of CRM use on internal sales management control: An alternative mechanism to realize CRM benefits

This case study investigates how effective internal sales management control is achieved through CRM use and why enhanced control is beneficial to firms, which are largely overlooked by the extant literature. The main theoretical lens is organizational control theories. Results show that CRM use strengthened formal control and informal control simultaneously. Formal control was significantly boosted by enhanced outcome measurability and process visibility of sales work. CRM use also facilitated informal control, by serving as the carrier of new institutional processes and sales philosophy, which bolstered clan control, and by functioning as tools for self-control.

Toward an Enhanced Concept of Disaster Resilience: A Commentary on Behalf of the Editorial Committee

This Special Issue (Part 2) expands upon the theme “Building Local Capacity for Long-term Disaster Resilience” presented in Special Issue Part 1 (JDR Vol­ ume 5, Number 2, April 2010) by examining the evolving concept of disaster resilience and providing additional reflections upon various aspects of its mean­ ing. Part 1 provided a mixed set of examples of resiliency efforts, ranging from administrative challenges of integrating resilience into recovery to the analysis of hazard mitigation plans directed toward guiding local capability for developing re-

Agency theory and quality fade in buyer‐supplier relationships

PurposeThe purpose of this paper is to propose using agency theory for assessing the likelihood of quality fade in buyer‐supplier relationships and prescribing contractual mechanisms for reducing quality fade. In this paper, quality fade, an element of supply chain vulnerability, is defined as the unforeseen deterioration of agreed to or expected quality levels with respect to product and/or service requirements. The use of outcome‐based, behavior‐based, or mix contracts can be used to reduce the likelihood of quality fade and illustrate preferred scenarios for buyer and suppliers.Design/methodology/approachThis paper proposes a conceptual model for using agency theory to explain and address a type of supply chain vulnerability called quality fade. A 2×2 matrix is proposed that contrasts outcome measurability with outcome uncertainty to illustrate buyer and supplier vulnerability and to suggest contractual mechanisms that can be used to mitigate vulnerability for both parties.FindingsA typology of governance mechanisms is presented and described with the use of a manufacturer third‐party logistics provider example to illustrate the theoretical framework. Four different scenarios are discussed and described. Contractual mechanisms are provided to mitigate vulnerabilities and reduce quality fade.Originality/valueQuality fade is a term that has not been described extensively in academic literature but is a term that is relevant in the broader discussion of supply chain vulnerability. Given that quality fade is a behavioral, as opposed to process oriented, approach, it requires a theoretical framework rooted in behavioral considerations. Agency theory is an appropriate framework for studying governance options.

Autonomy and technological capability in joint ventures in China

China's economic reform – started in 1979 under the new leadership of Deng Xiaoping – began a gradual movement from a centrally planned to a market economy. In the ensuing quarter century, the private business sector, including small businesses, township enterprises, and foreign-owned firms, has become the driving force behind China's economic renaissance. Many of these local businesses have become highly innovative. Taking the perspectives of competence-based view of the firm and of organisational learning, this study examines the organisational mechanisms of the technological capability building process by studying the joint venture (JV) autonomy between the Chinese joint venture and the JV-partner's (parent company). We found the correlation between JV autonomy and technological capability accumulation is negative and significant. However, the level of technological innovation capability is positively associated with the degree of outcome measurability.

Testing the Validity of the Brown-Potoski Model in the Czech and Slovak Republics

This paper is based on the new institutional economic approach, which focuses on analysis between services features (asset specificity, outcome measurability) and their eligibility to contract out. This issue, which de facto constitutes one of the subsets of the ""make or buy decision"" issue, is also analysed by the so-called Brown-Potoski model. It analyses the relations between selected features of a demanded service and its suitability or unsuitability for outsourcing, whilst making use of information about transaction costs economy. Using data from 100 Czech municipalities and 100 Slovak municipalities, the viability of the Brown-Potoski model is tested. The results of the research show that a connection was identified between the measurability of the required service and its suitability for external provision, but the relationship between the specificity of investments and the suitability for external provision was not. The reason is probably the previous financial demands of the initial investment, which is, above all in the case of small municipalities, beyond their budgetary means.

Influence factors for operational control and compensation in professional service firms

Professional service firms have distinct operational challenges due to the type of work that is transacted by the employees of these firms, and due to the nature of the employees themselves. In this paper, we develop and present factors that influence professional service operations in firms and compensation structures for professional service providers. We establish professional service influence factors, which we posit will impact agency relationships in professional service firms. That is, we hypothesize that professional service influence factors (PSIFs) will moderate the effect of task programmability and outcome measurability in predicting the use of behavior- or outcome-based compensation schemes (control strategy). Logistic regression is used on data provided by 192 professional service providers in order to examine the impact of the agency variables and moderating factors on control strategies. The results indicate that company- and profession-based factors have moderating effects on task programmability when predicting control strategy. We discuss the implications of our findings.

Outsourcing: two case studies from the Victorian public hospital sector

Outsourcing was one process of privatisation used in the Victorian public health sector in the 1990s. However it was used to varying degrees and across a variety of different services. This paper attempts to answer the questions: Why have managers outsourced? What have managers considered when they have decided to outsource? The research was carried out in a rural hospital and a metropolitan network in Victoria. The key findings highlight the factors that decision makers considered to be important and those that led to negative outcomes. Economic factors, such as frequency of exchange, length of relationships between the parties, and information availability, were often ignored. However, other factors such as outcome measurability, technology, risk, labour market characteristics and goal conflict, and political factors such as relative power of management over labour were often perceived as important in the decision-making process. Negative outcomes from outsourcing were due to the short length of relationships and accompanying difficulties with trust, commitment and loyalty; poor quality; and excessive monitoring and the measurement of outcomes.