A theory of management control packages and organizational identity

Toshiaki Wakabayashi ()
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Toshiaki Wakabayashi: Sophia University

Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, 2023, vol. 34, issue 4, No 3, 463-488

Abstract: Abstract This study aims to present the conditions under which an organization should use effort standards in addition to performance evaluations for management control. This study uses a mathematical model and focuses on the identities of organizational members and standard-setting cost. This study obtains the following results: First, when an organization uses the effort standard in addition to performance evaluations for management control, it must set relatively high standards at a sufficient cost. Second, the relationship between identity and the principal’s expected utility is U-shaped; in some cases, the principal’s expected utility decreases as identity increases. Third, setting the standard only controls are never optimal. This study contributes additional findings to previous research regarding the role of identity in management control. Moreover, this study has implications for management control packages. From the perspective of increasing the expected utility of the principal, the base of the control package may be accounting control using performance evaluations, and social control using identity may be additional and extended rather than parallel to it.

Keywords: Management control packages; Performance evaluation; Identity; Behavioral contract theory (search for similar items in EconPapers)
JEL-codes: D86 D91 M21 M41 M52 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s00187-024-00366-5

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