Management Controls, Expectations, Common Knowledge and Culture

35 Pages Posted: 13 May 2002

See all articles by Shyam Sunder

Shyam Sunder

Yale University - School of Management; Yale University - Cowles Foundation

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Date Written: April 2002


Control in organizations can be defined as expectational equilibrium, or correspondence between how the members of an organization behave, and how they are expected to behave by others. Using contract model of organizations as the base, we build a theory of control with the help of human expectations, common knowledge, and culture. Changes in factor and product market conditions tend to disrupt control in organizations. Strategic management consists of continual monitoring of the market conditions, and redesign of contracts, to restore and maintain the expectational equilibrium.

Keywords: Management Control, Expectations, Common Knowledge, Culture, Organization

JEL Classification: D84, L20, M14, M41, M46

Suggested Citation

Sunder, Shyam, Management Controls, Expectations, Common Knowledge and Culture (April 2002). Available at SSRN: or

Shyam Sunder (Contact Author)

Yale University - School of Management ( email )

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Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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