Control Modes in Strategic Initiatives: Balancing Formal and Informal Control

In this paper, we focus on informal control modes (composed of certain levels of informal input, behavior, and output control) utilized by top managers to steer growth initiative teams. We propose that the informal control mode utilized interacts with the existing level of supervisor's political behavior to influence initiative performance. Survey data on strategic growth initiatives collected from 201 corporations serve to test our hypotheses. Our results of moderated regression analysis highlight the importance of adapting the control mode to the specific supervisors' political behavior.

During the past 50 years, a substantial array of research on organizational control has been conducted in management. In spite of its historical prominence in strategic management and organization theory, control research has not been sufficiently cumulative. Organizational forms and environments have changed dramatically since theories concerning organizational control were developed, yet our theories and empirical research have not kept pace with the dramatic changes of our twentyfirst century. The purpose of this review is to make sense of this old, but fragmented research and to identify building blocks, critical relationships, trends, and a roadmap for future research.

This study contrasts the substitution logic advanced by the traditional organizational control view with the complementarity logic inherent in the more recent, holistic organizational control view. We examine whether formal and informal behavior and outcome controls act as complements or substitutes for each other in their effects on performance outcomes, and whether any such interaction will be stable across different organizational contexts or subject to contextual contingencies. Our empirical analysis of 184 strategic initiatives conducted by firms across a variety of industries provides broad support for the holistic view and the positive impact of a complementary use of formal and informal behavior control as well as formal and informal outcome control on initiative performance.

Decision speed has long been recognized as a critical determinant of firm performance, particularly in dynamic environments. Extending prior studies, which have largely focused on firm-level decision speed in small- and medium-sized organizations, this study explores how control mechanisms set by corporate headquarters in multibusiness firms influence decision speed at the strategic business unit (SBU) level. Using a multimethod approach, we first inductively derive six types of corporate control, before deductively examining their effects on SBU-level decision speed in five international multibusiness organizations. Our results suggest that three corporate control types enhance decision speed (goal setting, extrinsic incentives, and decision process control); two have no effect (negative incentives and conflict resolution); and one has a negative effect (strategy imposition). By integrating results from our qualitative and quantitative analyses, we are also able to identify transparency/alignment, outcome orientation, participation, trust, and timely feedback as the key mechanisms accounting for these effects.