Leadership and Control System Design

41 Pages Posted: 23 Sep 2009

See all articles by Margaret A. Abernethy

Margaret A. Abernethy

University of Melbourne, Department of Accounting

Jan Bouwens

Amsterdam Business School

Laurence van Lent

Frankfurt School of Finance & Management gemeinnützige GmbH - Accounting Department

Date Written: September 30, 2009

Abstract

Little attention has been given to the role of leadership characteristics in the organization design literature despite significant evidence of its importance in explaining firm behavior. This study develops and tests a model to assess the effects of leadership style on three control choices that are considered integral elements of a firm’s management control system; namely the delegation choice, the use of planning and control systems and the performance measurement system. Our results, based on data collected from 128 profit center managers, indicate that leadership style is a significant predictor of senior management’s use of the planning and control system and their use of performance measurement system for rewarding lower level managers. After controlling for operating contextual factors (namely, subunit interdependencies and knowledge asymmetries) we find no effect of leadership style on delegation choices but do find that leadership style influences the use of planning and control systems as predicted.

Keywords: leadership style, empowerment, communication, execution, control system use, organization design

JEL Classification: M41

Suggested Citation

Abernethy, Margaret A. and Bouwens, Jan and van Lent, Laurence, Leadership and Control System Design (September 30, 2009). Available at SSRN: https://ssrn.com/abstract=1476788 or http://dx.doi.org/10.2139/ssrn.1476788

Margaret A. Abernethy

University of Melbourne, Department of Accounting ( email )

Victoria
Melbourne, Victoria 3010 3010
Australia
+61 3 8344 7655 (Phone)
+61 3 9349 2397 (Fax)

Jan Bouwens (Contact Author)

Amsterdam Business School ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 5258740 (Phone)

Laurence Van Lent

Frankfurt School of Finance & Management gemeinnützige GmbH - Accounting Department ( email )

Adickesallee 32-34
Frankfurt, 60322
Germany
+4969154008531 (Phone)

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