The Role of Incomplete Measurement Behavior as a Part of a Package of Control Practices Mediating Between Exploitation and Exploration

41 Pages Posted: 8 Feb 2020

See all articles by James Thomas Mackey

James Thomas Mackey

California State University, Sacramento

Feng (Johnny) Deng

California State University at Sacramento

Date Written: November 14, 2019

Abstract

This paper examines the use of incomplete accounting measures as a control practice to align strategy with exploration and exploitation (March, 1991). We examine empirically relationships between Incomplete Measurement Behavior (IMB), Formal Controls, and Organic Innovative Culture for both internal- and market-facing activities. IMB is a control practice that allows managers to mediate the tension between exploration and exploitation using other sources of information. We find evidence suggesting formal completeness acts as a substitute for IMB for market-facing activities. Further organic innovative cultures complement formal controls and indirectly substitute for IMB. Using equifinality as a criterion, we conclude there are indications that market-facing activities use interdependent management control systems (MCS) to mediate between exploitation and exploration strategies. We find indications that a reductionist approach of examining incomplete measures alone, without consideration of control practices, may lead to under specification.

Keywords: Management control packages, measurement completeness, innovation, ambidextrous strategies, strategic alignment

JEL Classification: m

Suggested Citation

Mackey, James Thomas and Deng, Feng (Johnny), The Role of Incomplete Measurement Behavior as a Part of a Package of Control Practices Mediating Between Exploitation and Exploration (November 14, 2019). Available at SSRN: https://ssrn.com/abstract=3521938 or http://dx.doi.org/10.2139/ssrn.3521938

James Thomas Mackey (Contact Author)

California State University, Sacramento ( email )

Sacramento, CA 95819-6081
United States

Feng (Johnny) Deng

California State University at Sacramento ( email )

School of Business Administration
Sacramento, CA 95819-6081
United States
916-278-7136 (Phone)

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