Organizational Controls and Performance Outcomes: A Meta‐Analytic Assessment and Extension

• Published date: 01 January 2019
• DOI: http://doi.org/10.1111/joms.12342
• Date: 01 January 2019

© 2018 The Authors

Journal of Ma nagement Studies publ ished by John Wiley & Sons L td and

Society for the A dvancement of Management S tudies

Organizational Controls and Performance Outcomes:

A Meta-Analytic Assessment and Extension

Vikrant Sihag and Serge A. Rijsdijk

Erasmus Unive rsity; VU Unive rsity Amste rdam

ABST RACT Managi ng employees and externa l partners effectively has been a pr imary concern

for organizations a nd their manag ers. Many studies have investigated t he effectiveness of

organizat ional controls in a w ide variety of contexts. Using organ izational controls literature

that discr iminates among outcome, beh aviour, and clan control, this st udy synthesizes the research

on the effectiveness of t hese controls. In particular, the study e xamines 23,839 organizat ional

controls–perfor mance relationships from 120 independent samples, and tests s everal new

hypotheses usi ng advanced meta-analytic method s. The results indicate that outcome, behav-

iour, and clan controls general ly enhance performance, with each cont rol having a distinct

performance ef fect. Our ana lysis also demonstrates that controls f unction as complements to

one another. This fi nding ind icates that one form of control incre ases the effectiveness of other

forms of control. We also exam ine the organizational controls –performance relationships

across various contex ts, and our results show that they var y according to the type of ta sk. The

paper concludes with a disc ussion on the theoretical and manager ial implications of these

findings.

Keywo rds: complementarity, inter-org anizational, level of analys is, meta-analysis,

organizat ional controls, t ask type

INTRODUCTION

Organizational controls are ‘integra l to the way in which organi zations function’

(Cardinal et al., 2010, p. 51). They are exercised by controllers (e.g., project managers,

client firm s, business unit heads) over controllees (e.g., project team members, suppliers,

business unit members). Controls are defined as a ny process through which controllers

motivate and direct controllees to behave in ways t hat are aligned w ith the control-

lers’ objectives (Cardinal et al., 2010; Kirsch, 20 04). In the absence of organizational

Journal of Manageme nt Studies 56:1 January 2019

doi:10.1111/j oms .123 42

Address for re prints : Vikra nt Sihag, Depar tment of Technology and Operat ions Manage ment, Rotterdam

School of Manag ement, Erasmus Univer sity, P.O. Box 1738, Rotterdam, 3 000 DR, t he Netherlands

(siha g@r sm.n l).

This is an op en access article under the ter ms of the Creative Commons Att ribution License, which per-

mits use, dis tribution and reproduction in a ny medium, provided the orig inal work is properly cited.

92 V. Sihag and S. A. Rijsdijk

© 2018 The Authors

Journal of Ma nagement Studies publ ished by John Wiley & Sons L td and

Society for the A dvancement of Management S tudies

controls, or when controls are used inappropriately, controllees are assumed to act in

ways that favour their own interests and objectives t hat are not necessarily in l ine with

the controllers’ objectives (Eisenha rdt, 1989).

The organizational controls literature specifies three prototypical types of control: out-

come, behaviour, and clan (Ouchi, 1979; Turner and Makhija, 2006). Outcome and

behaviour controls focus on the specification and evaluation of desired task outcomes

and behaviours. Clan controls involve socialization and input (e.g., selection and training)

mechanisms for influencing controllees’ behaviour (Cardinal et al., 2010; Kirsch, 1996).

A growing body of research on organizational controls has investigated how organiza-

tional controls shape performance in various empirical settings. These studies generally

assert that controls increase performance, as they limit the extent to which controllees

act in their own self-interest and behave opportunistically (Ouchi, 1979). However, two

issues still remain that need to be addressed to advance our understanding of the organi-

zational controls-performance landscape.

First, the empirical evidence for the assertion that organizational controls increase

performance remains equivocal (Cardinal et al., 2017). Some studies report that controls

have a positive effect on performance (e.g., Liu, 2015), while other studies report that

they are ineffective (Tiwana and Keil, 2007). Specifically, there have been contradictory

findings in previous studies as to how outcome, behaviour, and clan controls affect per-

formance. For instance, several studies have reported that outcome control has a posi-

tive effect on performance (e.g., Liu, 2015; Tiwana, 2008), whereas other studies have

found that the effect of outcome control on performance is insignificant or negative (e.g.,

Aulakh et al., 1996; Bonner et al., 2002). Similarly, mixed findings exist with regard to

the effects of behavior and clan controls (e.g., Aulakh and Gencturk, 2000; Bello and

Gilliland, 1997; Bonner et al., 2002; Tiwana, 2010; Tiwana and Keil, 2009). Therefore,

additional empirical evidence is necessary to understand whether and to what extent

organizational controls are related to performance.

Second, the performance effect of one control may depend on its interplay with an-

other control. Some researchers have taken a singular view of control and suggest the use

of single form of control over another to achieve the desired performance (Cardinal et

al., 2017) – for example, behavior control rather than outcome control or clan control

rather than behaviour control. In other words, researchers have historically advocated

that different controls function as substitutes, and that using one type of control decreases

the effectiveness of the others (e.g., Eisenhardt, 1985; Ouchi, 1979). Contemporary re-

searchers have taken a holistic view of control and advocate that different controls jointly

influence performance. Specifically, what these researchers have suggested is that the

different controls function as complements, and that exercising one type of control makes

the other controls more effective (e.g., Kreutzer et al., 2015; Long et al., 2002). In a

recent review, Cardinal et al. (2017) also suggested that we still have only a limited un-

derstanding of control configurations that commonly exist in organizations and how

different controls combine with each other. From a managerial perspective, achieving the

desired performance is strongly dependent on the types of control exercised by managers

(Cardinal et al., 2017; Kirsch, 1996). The current ambivalent findings on the interplay

of outcome, behaviour, and clan controls are likely to confuse managers. Clarification of

Organizational Controls and Performance Outcomes 93

© 2018 The Authors

Journal of Ma nagement Studies publ ished by John Wiley & Sons L td and

Society for the A dvancement of Management S tudies

whether and how different controls interact with each other to improve performance is

therefore needed.

In sum, the present study addresses two primary research questions: (1) How do or-

ganizational controls affect performance, and (2) Do controls substitute or complement one

another's effects? To investigate these questions, we need to meta-analyse the organiza-

tional controls–performance relationships found in prior research. Meta-analysis allows

conflicting empirical findings to be reconciled by calculating effect sizes from existing

empirical observations using weighted average techniques (Hedges and Olkin, 1985;

Hunter and Schmidt, 2004). This method not only provides a rigorous assessment of a

relationship as it corrects for the distorting effects of statistical artefacts, but it also facil-

itates theory extension by throwing light on how different controls combine with each

other with the help of meta-analytic path analysis (Cao and Lumineau, 2015; Hunter

and Schmidt, 2004).

This study therefore contributes to current controls research as follows. It provides rig-

orously derived discrete estimates for the three controls–performance relationships. This

also allows us to assess how much controls matters. Consolidating the relationship be-

tween the three organizational controls and performance across different organizational

settings provides a broader and more complete picture of the relationships. Further, since

meta-analysis helps in addressing open research questions with data that are more proxi-

mate to the general population than those supplied in an individual primary study (Eden,

2002), this study makes a substantial contribution to the ongoing debate in the organi-

zational controls literature on the interplay among individual controls. By focusing on

the interplay among the three controls, we are able to move controls research forward

by providing greater clarity on whether the different types of control are more or less

effective when combined.

THEORETICAL BACKGROUND AND HYPOTHESES

Organizational controls are defined a s any process through which controllers motivate

and direct controllees to behave in ways t hat are aligned w ith the controllers’ objec-

tives (Cardinal et al., 2010; Turner and Makhija, 200 6). The organizational controls

literature discr iminates among three prototypical controls: outcome, behaviour, and clan.1

Controllers (who exercise control) can use outcome, behaviour, and clan controls to mo-

tivate the controllees (those over whom the control is exercised) to achieve the desired

performance (K irsch, 1996; Tiwana, 200 8).

Organiz ational Controls and Performance

Controllers exercising outcome controls specif y quantitative performance objectives and

reward controllees based on the extent to which they ach ieve those objectives (Cardina l,

2001; Turner and Makhija, 20 06). To exercise outcome control effectively, the control-

ler does not need to understand the process by which inputs are transformed into out-

puts (Kirsch, 1996; Ouchi, 1979). Also, outcome control does not require controllers to

monitor controllees’ behaviour closely, and controllers can thus save time and resources