Management Controls, Expectations, Common Knowledge and Culture

Posted: 18 Feb 2003

See all articles by Shyam Sunder

Shyam Sunder

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

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Control in organizations can be defined as expectational equilibrium, or correspondence between how the members of an organization behave and how others expect them to behave. Using a contract model of organizations as the base, we use human expectations, common knowledge, and culture to propose a theory of control. Changes in factor and product market conditions tend to disrupt control in organizations. Strategic management consists of continual monitoring and anticipation of market conditions, and redesign, negotiation, and implementation of contracts to restore and maintain the expectational equilibrium.

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

JEL Classification: D84, L20, M14, M40, M46

Suggested Citation

Sunder, Shyam, Management Controls, Expectations, Common Knowledge and Culture. Available at SSRN:

Shyam Sunder (Contact Author)

Yale University - School of Management ( email )

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Yale University - Cowles Foundation

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New Haven, CT 06520-8281
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