Organizational Design and Control Choices

This is a draft of a chapter/article that has been accepted for publication by Oxford University Press in Oxford Handbooks Online, Forthcoming

39 Pages Posted: 25 Mar 2015 Last revised: 27 Mar 2015

See all articles by Christian Hofmann

Christian Hofmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Laurence van Lent

Frankfurt School of Finance and Management

Date Written: March 24, 2015

Abstract

Building on new insights from organizational economics, management accounting researchers have highlighted how incentive contracts and performance measure choices complement structural arrangements in firms. We discuss how “slow moving” elements in organizational design, such as the allocation of decision rights to local managers and interdependencies between different parts of the production function, affect the working of incentives and performance measures. We pay attention to the empirical challenges that researchers face in this area and argue that mixed method approaches in which economic models are combined with empirical evidence can help to build a body of evidence that is robust and admits cross-study accumulation of knowledge. Finally, we illustrate how recent economic models that incorporate other-regarding preferences can help to bridge the gap between economics-based research in management accounting and more traditional approaches that rely on the behavioral sciences.

Keywords: Organizational design, spillovers, information asymmetry, control choices, decentralization

JEL Classification: M41, M51, M52, L22, L23

Suggested Citation

Hofmann, Christian and van Lent, Laurence, Organizational Design and Control Choices (March 24, 2015). This is a draft of a chapter/article that has been accepted for publication by Oxford University Press in Oxford Handbooks Online, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2584444 or http://dx.doi.org/10.2139/ssrn.2584444

Christian Hofmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

Laurence Van Lent (Contact Author)

Frankfurt School of Finance and Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

HOME PAGE: http://www.laurencevanlent.org

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