Management Control System Design: Conditional Interdependencies between Behavioral Constraints, Incentives and Employee Selection
AbstractMy research contributes to the understanding of management control system design. Despite ongoing relevance and over 30 years of research there is still a limited understanding about the interdependence of management control. In this paper I analyze the interdependencies of behavioral constraints, incentives and employee selection under differing degrees of task uncertainty and output immeasurability. I find that in situations characterized by low task uncertainty and low output immeasurability employee selection and behavioral constraints act as substitutes. In a low task uncertainty/high output immeasurability context behavioral constraints and employee selection appear to act as substitutes. In a high task uncertainty/low output immeasurability setting there appear to be no significant interdependence effects between behavioral constraints, incentives and employee selection. Lastly, given a high task uncertainty/high output immeasurability background I find that incentives and employee selection act as complements and employee selection and behavioral constraints are substitutes. In addition to contextual factors managers have to take these interdependencies into account when designing optimal management control systems in order to achieve both external fit and internal consistency.
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