Examining Multi-Element Control Systems: Evidence from the Public Sector

36 Pages Posted: 17 Aug 2018 Last revised: 28 Feb 2019

See all articles by Roland F. Spekle

Roland F. Spekle

Nyenrode Business University

Frank Verbeeten

University of Amsterdam - Faculty of Economics and Business, Amsterdam Business School

Sally K. Widener

Clemson University

Date Written: February 26, 2019

Abstract

One of the main themes in the current management control literature is the study of ‘systems’ of control practices. While several studies have examined pairwise complementarities in control practices to investigate whether a control system exists, a system may also be comprised of a combination of more than two control practices. We provide an illustration of how such a multi-element control system can be modeled and empirically examined. Using data from 162 organizational units in the public sector, we examine how organizations design and use their control systems to mitigate the control problem of effort direction in contexts of low and high contractibility. We find that operational, incentive-oriented, and exploratory uses of performance information are interrelated and combine in a single system of controls in a low contractibility setting. This system of control is significantly associated with effort direction effectiveness. In a second analysis, we expand our examination to encompass a broader system of control practices. We find that action, cultural, and personnel controls, jointly with the use of performance measurement information, are interrelated and form a broader system of control practices that is associated with effort direction effectiveness in conditions of low contractibility. In contrast, and consistent with our theory, we find no evidence that organizations choose to rely on a system of controls when contractibility is high. Jointly, our results suggest that organizations select individual control system practices in relative isolation to effectively manage effort direction when contractibility is high, yet choose to use a system of control practices when contractibility is low.

Keywords: Performance Measurement, Management Control, Contractibility, Systems of Control, Linear Systems, Public Sector

JEL Classification: M40, M41

Suggested Citation

Spekle, Roland F. and Verbeeten, Frank H.M. and Widener, Sally K., Examining Multi-Element Control Systems: Evidence from the Public Sector (February 26, 2019). AAA 2019 Management Accounting Section (MAS) Meeting, Available at SSRN: https://ssrn.com/abstract=3233511 or http://dx.doi.org/10.2139/ssrn.3233511

Roland F. Spekle (Contact Author)

Nyenrode Business University ( email )

Straatweg 25
P.O. Box 130
Breukelen, 3620 AC
Netherlands

Frank H.M. Verbeeten

University of Amsterdam - Faculty of Economics and Business, Amsterdam Business School ( email )

Plantage Muidergracht 12
Amsterdam, 1018TV
Netherlands
(+31)0205257391 (Phone)

Sally K. Widener

Clemson University ( email )

Clemson, SC 29634
United States

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