More than five decades of contingency-based research have generated extensive evidence on how management control (MC) practices vary with organisational context, yet the diversity of contingency factors examined makes it unclear what cumulative knowledge the field has produced. This paper synthesises 1844 empirical associations from 266 studies published from 1969 to 2022, using a conceptual framework that relates contingency factors to two sources of uncertainty, complexity and dynamism, and to the distinct control problems they impose. Firms facing greater complexity or dynamism rely less on direct supervision and more on a common set of MC practices, including formal strategic planning, diagnostic measurement use, performance-based pay, decentralisation, lateral coordination, and personnel controls. Uncertainty is therefore associated not with less control, but with reliance on a wider range of MC practices. Complexity is associated with a control pattern termed distributed bureaucracy, in which formalised accountability structures are combined with delegation and lateral coordination to support integration. Dynamism is associated with bounded autonomy, in which formal controls guide and evaluate responses to changing conditions while preserving the local discretion needed for adaptation. The more limited evidence on contexts high in both complexity and dynamism suggests that firms combine the two patterns rather than prioritising one. The paper concludes by outlining priorities for advancing MC contingency theory through research on the functions and interdependencies of MC practices, the implications of digital technologies, and the evolution of MC over time.
This paper presents a case study of a sales team in which members who had reached their individual performance targets helped their peers achieve theirs by gifting surplus performance. At first glance, this form of peer helping may resemble collusion and appear dysfunctional for the organisation, as it alters the attribution of individual performance and increases bonus payments within the team. However, we show that the practice also generates positive effects for both the functioning of the incentive system and team dynamics. This study contributes to the literature in three ways. First, it extends research on helping behaviour by identifying and analysing a distinctive form of peer helping—performance gift-giving—which, to our knowledge, has not previously been examined in organisational research. Second, it contributes to the management accounting literature on performance target setting by demonstrating that risk adjustments, typically addressed through formal managerial processes, may also be addressed through informal peer helping, such as performance gift-giving. Third, it contributes to research on teams in management accounting. Whereas prior work in this field has examined how the transparency produced by individual performance information versus team-based performance information influences team cooperation, our study demonstrates how the transferability of individual performance information among team members through peer helping shapes cooperation.
This paper examines how performance reporting aggregation and frequency affect confirmation bias in subjective performance evaluations. In our first experiment, we predict and find that supervisors’ evaluations of current-period performance details are highly influenced by the employee’s performance reputation (i.e., confirmation bias). However, this effect is mitigated when supervisors see summary metrics alongside the performance details. In our second experiment, we test whether summary metrics mitigate the confirmation bias in a setting where supervisors see detailed information as it becomes available during the period (i.e., frequent reporting) and only see summary metrics at the end of the period. We find that summary metrics do not mitigate the confirmation bias in this frequent reporting setting. Our results suggest that summary metrics reduce confirmation bias only when evaluators see them before or at the same time as the detailed information, rather than after they have already processed the details. Our results contribute to theory and provide the practical implication that managers could look at aggregate information before delving into the details if they wish to be less affected by previously held beliefs.
Managers’ forecasts about future sales are at the core of managerial decision-making. Using a monthly business survey, we study managers’ directional sales forecast accuracy three months ahead. Managers incorrectly predict the direction of sales changes in 42 % of their forecasts. In exploratory analyses, we find that firms with better educated and more tenured CEOs make better forecasts. In our main analyses, we investigate how sales forecast accuracy is related to adjustment costs. We find that SG&A costs increase less per dollar of sales increase in firm-years with high accuracy. The results hold after controlling for different proxies related to long-term cost structure. Accordingly, the empirical evidence is consistent with the explanation that our findings primarily reflect short-term dynamics, wherein SG&A expenses rise disproportionately when firms must make ad hoc adjustments in response to unexpected changes in sales. When focusing on within-firm variation of forecast accuracy, the associations with adjustment costs are only significant for firms with low average accuracy. Additional cross-sectional analyses are consistent with the interpretation that forecast accuracy matters more for larger firms and firms with higher demand volatility. Finally, firms with higher forecast accuracy have a lower cost-to-sales ratio and higher gross profit margins.
Tracing firm-level performance outcomes back to the activities of specific managers or organizational functions facilitates the creation of goal-congruent accountability within an organization. However, it may also lead to tensions between organizational actors when these compete for demonstrating ‘their’ performance. Drawing on interviews with marketing managers from across different firms and sectors, we examine how the tracing work through which these managers attempt to link marketing performance to revenues can create micro-political tensions in their organizations. We first show that marketing managers see tracing as a potential solution to concerns about their functional reputation and status and how they engage in tracing work to demonstrate their contribution to overall firm performance. We then explain how this tracing work triggers two types of micro-political tensions with the sales department: tensions related to ‘ownership’ of customers and customer revenues; and tensions related to the organization of work and how data should be collected and shared. Finally, we discuss the tactics that marketing managers use to overcome these tensions. With these findings, our paper contributes to a better understanding of the micro-political nature of performance measurement and tracing.
