An Examination of the Control System Used to Manage Autonomy

Abstract

We examine how superiors manage autonomy when the measurability of outputs varies. We use three rounds of field interviews with a total of 11 managers to construct a survey which we use to collect data during in-person interviews with 214 unit managers. We use a structural equation model to facilitate the examination of a control system consisting of output control, action accountability control, and the use of subjective judgment, all in performance evaluation. We find that managers have autonomy to direct work activities regardless of the extent to which their unit outputs are measurable. We also find that, depending on the measurability of outputs, the importance of the controls differs, the relations among the controls differ, and the effectiveness of the control system differs. We conclude that when measurability of outputs is low the control system is dynamic. The use of output and action accountability controls increases with autonomy. Moreover, there are complementary relations among the control components. In contrast, we find that when measurability of outputs is high the control system is static.

Keywords: management control, delegation, output control, action accountability control, subjectivity

JEL Classification: M40, M46