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In this chapter, the authors argue that organizational controls are best depicted and studied as sets of control configurations. Concepts from extant control research streams describing basic control elements as well as ideal types of control systems are used to identify and classify control configurations. The authors present compositional distinctions among four control configurations using a decade-long case study of a start-up company. By displaying how specific control elements are simultaneously distinct and intertwined in this company, the authors reveal significant theoretical insights that can assist scholars in distinguishing between different configurational patterns and in comprehending dynamics present in holistic perspectives of control. The authors conclude by discussing how conceptualizing controls as configurations most accurately reflects both organizational and managerial practice in ways that can motivate the development of new theories and approaches to studying this key aspect of organizational design. Because control configurations inherently reflect interdisciplinary concerns, and because such configurations affect the attainment of strategic goals, this work provides findings and ideas that fit the interests of a broad audience.

This paper illuminates the distinction between individual and organizational actors in business-to-business markets as well as the coexistence of formal and informal mechanisms of coordination in multinational corporations. The main questions addressed include the following. (1) What factors influence the occurrence of personal contacts of foreign subsidiary managers in industrial multinational corporations? (2) How such personal contacts enable coordination in industrial markets and within multinational firms? The theoretical context of the paper is based on: (1) the interaction approach to industrial markets, (2) the network approach to industrial markets, and (3) the process approach to multinational management. The unit of analysis is the foreign subsidiary manager as the focal actor of a contact network. The paper is empirically focused on Portuguese sales subsidiaries of Finnish multinational corporations, which are managed by either a parent country national (Finnish), a host country national (Portuguese) or a third country national. The paper suggests eight scenarios of individual dependence and uncertainty, which are determined by individual, organizational, and/or market factors. Such scenarios are, in turn, thought to require personal contacts with specific functions. The paper suggests eight interpersonal roles of foreign subsidiary managers, by which the functions of their personal contacts enable inter-firm coordination in industrial markets. In addition, the paper suggests eight propositions on how the functions of their personal contacts enable centralization, formalization, socialization and horizontal communication in multinational corporations.

This study proposes targeted modernization of the Department of Defense (DoD's) Joint Forces Ammunition Logistics information system by implementing the optimized innovative information technology open architecture design and integrating Radio Frequency Identification Device data technologies and real-time optimization and control mechanisms as the critical technology components of the solution. The innovative information technology, which pursues the focused logistics, will be deployed in 36 months at the estimated cost of $568 million in constant dollars. We estimate that the Systems, Applications, Products (SAP)-based enterprise integration solution that the Army currently pursues will cost another $1.5 billion through the year 2014; however, it is unlikely to deliver the intended technical capabilities.

We examine the empirical relationship between direct equity agency costs measures and corporate governance control mechanisms to control equity agency costs. We measure the three direct agency cost proxies commonly used in the literature: the operating expense; asset turnover; and selling, general, and administrative (SGA) ratios. Internal corporate governance control mechanisms examined are inside ownership (IO), outside ownership concentration (OC), the size of the board of directors (BODs), and the composition of the BODs (proportion of nonexecutive (NE) directors and separation of chief executive officer (CEO) and board chair). The external corporate governance control mechanism examined is the size of bank debt (short-term debt). Univariate and multivariate tests reveal that the only statistically significant relationship between corporate governance control mechanisms and direct equity agency cost measures is the negative relationship between the proportion of IO and direct agency costs. The asset utilization ratio (asset turnover) ratio is the best proxy for direct equity agency costs and can be useful for event studies of announcement period excess returns.

Purpose – This study focuses on the relationship between local governments and public sector joint ventures (JVs). Public sector JVs are separate administrative entities that undertake public service activities on behalf of local governments. The aim of this study is to examine the vertical management control packages that are used by local governments to control the relationship with their public sector JVs.

Design/methodology/approach – Two case studies have been conducted in two public sector JVs, owned jointly by more than 20 local governments. The analysis of the two cases is informed by an integrated conceptual framework describing how transactional and relational factors influence control, trust, and risk in the context of public sector JVs.

Findings – The case studies provide a nuanced understanding of the interplay between the vertical management control packages, trust between the parents and the public sector JVs, and risks as perceived by the local governments. The case findings not only reveal how local governments struggle with adequate outcome control but also highlight how and why they rely on behavioral control. A related finding is that while the probability of poor business performance does not have a significant impact on the design of the vertical control packages, the social impact of failure has the potential to create a sense of urgency with regard to changes in the design of vertical management control packages.

Originality/value – This study adds to the literature on interorganizational relationships by providing insight into the use of vertical management control packages in the specific, but relevant, setting of public sector JVs.

This chapter investigates the antecedents to the development of the three components of subsidiaries’ absorptive capacity (ACAP): recognition, assimilation and application of transferred knowledge in the context of the vertical flow of social and environmental accounting and reporting (SEAR) knowledge from the HQ to acquired subsidiaries. Our analysis is based on an embedded multiple case study of a UK-based MNC, informed by 44 semi-structured interviews and capitalising on agency theory and socialisation theory. Prior knowledge is not a sufficient explanation to the development of ACAP but it is also dependent on organisational mechanisms that will trigger the learning processes. Depending on the nature and degree of the social, control and integration mechanisms, the effects of prior stocks of knowledge on ACAP may vary. Our propositions only hold for one direction of knowledge transfer. The study is based on an embedded multiple case study in one sector which restricts its generalisation. It excludes the specific relationships between the three ACAP learning processes and the existence of feedback loops. Our findings suggest that the HQ’s mix of social, control and integration mechanisms should account for initial stocks of SEAR knowledge. The contribution lies in uncovering the interaction between heterogeneous levels of prior knowledge and organisational mechanisms deployed by the HQ fostering ACAP. We address emerging issues regarding the reification of the ACAP concept and highlight the potential of agency theory for informing studies on HQ-subsidiary relations.

Internal control mechanisms are fundamental to organizational governance; particularly, to the agency relationship associated with decentralization of decision rights. Management accounting and organizational literatures provide conflicting predictions on the association between decentralization and internal controls, with some research arguing that internal controls be tightened to mitigate the risks associated with greater decentralization of decision rights while other work avers that tighter internal controls defeat the purposes of decentralization. In this chapter, we argue that managers choose these two organizational design variables jointly. Capitalizing on a unique database of control practices in the purchasing and payment process within the procurement function, this chapter examines the relationship between control tightness – a critical characteristic of internal controls – and decentralization. Using a simultaneous equation model, the study finds that decentralization and internal control design are endogenously determined. Tight control is negatively associated with the level of decentralization, while decentralization has a positive effect on the tightness of control. These results reconcile the apparently contradictory results relating these two variables. The chapter also finds that decentralization and tight control mechanisms operate both independently and synergistically to improve performance.

This chapter investigates the impact of coordination and control mechanisms on the orientation to performances, looking at the relation between Corporate Foundations and their Founder Firms. The research starts from the consideration that the relationship between CFs and Founder Firms can be considered similar to the relationship between headquarter and subsidiaries in large corporations, as the ties are very strong and significant.

In order to address the impact of control and coordination mechanisms on CFs’ orientation to performance, we managed a survey addressed to 188 CFs from six European countries, representing the most significant context for corporate philanthropy in Europe.

The results of a linear regression show that only selected mechanisms are effective for boosting CFs’ orientation to performance, and that these tools must be adapted to the specific nature of the CFs.

The study can help Founder Firms to identify the more effective mechanisms to improve the performance of the CFs they support, in order to ensure the possibility for both the parties to pursue the shared value creation.

The research has put in evidence that CFs must be explored taking into consideration their close tie to Founder Firm, which differentiates them from other interdependent foundations.