Conflict reduction in organization design: budgeting and accounting control systems.

Author:Alino, Nelson U.


Existing research on group decision making behavior defines conflict as disagreement about decisions or differences in viewpoints, ideas, and opinions (see, for example, Simons and Peterson 2000; Jehn 1995). Although some conflict can certainly be helpful, it can lead to process losses and inferior outcomes. These negative outcomes, such as lower levels of group member satisfaction with the process and poor decision quality have been found in multiple studies (see, for example, De Dreu and Weingart 2003; Jehn 1995; Lau and Murnighan 1998; 2005; and van Knippenberg et al. 2004). Thus, it becomes useful to identify organizational designs that can minimize these negative outcomes by minimizing the negative effects of conflict on group decision making processes. The research program outlined in this paper is directed at such identification.


Organizations often form decision-making groups that draw persons with a wide range of experience and expertise to help the organization achieve specific strategic objectives (Cohen and Bailey 1997; van Knippenberg et al. 2004). Some researchers have argued that group heterogeneity is more advantageous for complex decision-making tasks than homogeneous groups or individuals (Harrison et al. 2002; Jackson et al. 2003; Lau and Murnighan 2005; Naranjo-Gil and Hartmann 2007; Williams and O'Reilly 1998). When people from different backgrounds come together in a heterogeneous group, they tend to be attracted to those who appear to be most like themselves (Byrne 1971). The things members tend to notice when they first encounter each other are superficial and obvious attributes such as gender, nationality, ethnicity, and profession. Later, members find similarities and differences related to deeper characteristics such as ideologies and backgrounds, function, and educational background.

One could argue that heterogeneity should help in problem solving and decision making through the collaborative exchange of knowledge and ideas across individuals having different backgrounds and expertise. Existing research in psychology and management, however, shows that heterogeneity often has negative effects on group decision processes and outcomes because intra-group conflicts interfere with the smooth functioning of the group (Ancona and Caldwell 1992; Jehn 1995; Lau and Murnighan 1998; 2005; Thatcher et al. 2003; van Knippenberg and Schippers 2007; Williams and O'Reilly 1998).

Andersen et al. (2002), who examined the performance of activity-based costing teams in the automotive industry, found that "as team heterogeneity increases, the team's ability to resolve conflict decreases" (198). Thus, researchers have concluded that heterogeneity in groups is a key concern (van Knippenberg et al. 2004) because it can have both positive and negative consequences for decision-making groups (Lau and Murnighan 1998; 2005; Thatcher et al. 2003; van Knippenberg and Schippers 2007; Williams and O'Reilly 1998). One explanation for the mixed effects is the effect of group heterogeneity on group conflict.


Conflict arises in groups because of incompatible or discrepant views between group members (Jehn & Bendersky 2003). Two types of conflict that have received attention in past research are task conflict and relationship conflict (Jehn 1995; O'Reilly et al. 1998). Task conflict relates to task issues such as goal clarification. Relationship conflict refers to conflict about interpersonal issues. Simmons and Peterson (2000, 102) define task or cognitive conflict as involving "differences in viewpoints, ideas, and opinions," and contrast relationship or emotional conflict as involving "tension, annoyance, and animosity among group members."

Although some researchers find task conflict to improve group decision-making outcomes, other researchers find it to be detrimental to those outcomes (for a comprehensive review, see De Dreu & Weingart 2003). On the one hand, research suggests that task conflict can promote information sharing, which can improve individual understanding of the task. On the other hand, research suggests that task conflict may distract members from the task, thus creating dissatisfaction and lack of consensus on decision outcomes. Research shows that one potential reason for the negative effects of task conflict is its high correlation with relationship conflict (De Dreu & Weingart, 2003). De Dreu & Weingart (2003) found that relationship conflict negatively affects team outcomes.

Similarly, Cronin and Bezrukova (2006) found that relationship conflict was positively associated with negative emotions and irritation, two types of affect that can, in turn, reduce group members' ability to process information. In a study of the effect of demographic diversity on group performance, O'Reilly et al. (1989) find a very strong correlation (r = 0.88) between task and relationship conflict. Thus, they conclude that task conflict and relationship conflict are often indistinguishable from each other. Consistent with the findings of O'Reilly et al. (1989) and De Dreu and Weingart (2003), this...

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