Organizational Control

by

Laura B. Cardinal, Markus Kreutzer, C. Chet Miller

• LAST MODIFIED: 25 September 2019
• DOI: 10.1093/obo/9780199846740-0176

Introduction

Organizational control is a key managerial function, and the focus of a great deal of research in the management and organizations field. Research on organizations goes as far back as the 1950s, 1960s, and 1970s, and discussions and advice date back even farther to the ancient Chinese. Organizational control is defined as any process by which managers direct attention, motivate, and encourage organizational members to act in desired ways to meet the firm’s objectives. Control, thus, is central to organizational and strategic management theories. It can be distinguished from other managerial functions by being goal-oriented and being multifaceted, that is, not being represented by a single managerial practice. It comprises a wide myriad of practices that correspond with concepts such as market, clan, and bureaucratic control; formal and informal control; input, behavior, and output control; and belief, boundary, diagnostic, and interactive control.

Reviews and Conceptual Articles

The articles and books summarized here represent foundational theories of organizational control and reviews of the control literature. Weber 1946 studies the bureaucratic form of management. Thompson 1967 examines how organizations cope with uncertainty. Williamson 1975 distinguishes between markets, bureaucracies, and clan systems. Adler and Borys 1996 shows the potential of bureaucracy to be enabling, not only coercive. Eisenhardt 1985 contrasts organization theory with agency theory. Sitkin, et al. 1994 distinguishes control from learning, and Makhija and Ganesh 1997 combines a learning with an information-processing perspective. Turner and Makhija 2006 theoretically discusses how control influences learning and knowledge in organizations. Cardinal, et al. 2017 is a comprehensive review of empirical organizational control research that provides an overview where theoretical attention in organizational control work is going to. Sihag and Rijsdijk 2019 conducts a meta-analysis of the organizational controls-performance relationship.

• Adler, P. S., and Borys, B. “Two Types of Bureaucracy: Enabling and Coercive.” Administrative Science Quarterly 41.1 (1996): 61–89.

  Adler and Borys present a novel approach to bureaucracy. Whereas prior views have assumed only a conformity role for bureaucracy, the authors suggest that bureaucracy can be both stifling (coercive) and goal enhancing by helping employees achieve their goals and aspirations.

• Cardinal, L. B., M. Kreutzer, and C. C. Miller. “An Aspirational View of Organizational Control Research: Re-Invigorating Empirical Work to Better Meet the Challenges of 21st Century Organizations.” Academy of Management Annals 11.2 (2017): 559–592.

  The authors conduct the first comprehensive review on empirical organizational control research since 1985 in the management literature and examine three foci that have dominated the control literature—control formality, control coerciveness, and control singularity. They show the movement toward foci that are more aligned with 21st-century organizations—informal control, enabling control, and holistic control.

• Eisenhardt, K. M. “Control: Organizational and Economic Approaches.” Management Science 31.2 (1985): 134–149.

  Kathleen Eisenhardt’s article is one of the most influential theory articles on understanding the underlying assumptions of two core theories used as the foundation for organizational control research.

• Makhija, M. V., and U. Ganesh. “The Relationship between Control and Partner Learning in Learning-Related Joint Ventures.” Organization Science 8.5 (1997): 508–527.

  Makhija and Ganesh take a unique approach to examining strategic alliances by integrating learning theory with the resource-based view of the firm and information processing theory. The authors’ model is unique in that they take a time-based process approach to the type of learning being pursed in the joint venure and the learning capacity of the partners across the life of the joint venture and how control affects the parter relationship.

• Sihag, V., and S. A. Rijsdijk. “Organizational Controls and Performance Outcomes: A Meta-Analytic Assessment and Extension.” Journal of Management Studies 56.1 (2019): 91–133.

  This meta-analysis of the organizational controls–performance relationship shows the complementary role of controls (clan, behavior, and outcome control) and the dependence of that relationship on the organizational task.

• Sitkin, S. B., K. M. Sutcliffe, and R. G. Schroeder. “Distinguishing Control from Learning in Total Quality Management: A Contingency Perspective.” Academy of Management Review 19.3 (1994): 537–564.

  In this theoretical article, Sitkin and colleagues present a fresh approach to understanding control in total quality management situations versus total quality learning situations.

• Thompson, James. D. Organizations in Action. New York: McGraw–Hill, 1967.

  Thompson’s influential book examines how organizations cope with uncertainty and presents his famous means/ends framework that explains the type of uncertainty that exists for a given task determines how the firm should be organized.

• Turner, K. L., and M. V. Makhija. “The Role of Organizational Controls in Managing Knowledge.” Academy of Management Review 31.1 (2006): 197–217.

  Turner and Makhija develop a groundbreaking theory about how control influences learning and knowledge in organizations.

• Weber, Max. From Max Weber: Essays in Sociology. Translated edited by H. H. Gerth and C. W. Mills. New York: Oxford University Press, 1946.

  Weber studied and wrote about the bureaucratic form of management. Bureaucratic forms developed as the economy moved from an agricultural economy to an industrial economy. Monarchy and craft forms of control were no longer were effective with industrialization and were replaced with bureaucracy.

• Williamson, O. E. Market and Hierarchies: Analysis and Antitrust Implications. New York: Free Press, 1975.

  Williamson develops his famous market failures framework to describe how organizations initially employ market control systems will then have to adopt more formal, bureaucratic control system when those market systems fail due to increasing transaction costs. He then later describes in his framework how bureaucratic control systems fail as performance evaluation becomes increasingly vague and ambiguous, and thus organizations adopt a clan system when the bureaucratic system is no longer effective.