Management Controls, Expectations, Common Knowledge and Culture
Yale University - School of Management
Journal of Management Accounting Research, Vol. 14, pp. 173-187, 2002
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, M46Accepted Paper Series
Date posted: February 18, 2003
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