control: organizational and economic approaches
DESCRIPTION
Control: Organizational and Economic Approaches. Kathleen M. Eisenhardt Department of Industrial Engineering and Engineering management, Stanford University. Presenter: Wen Zheng. Contents. Introduction. Theory . Empirical . Discussion. Conclusion. Problem Statement. Introduction - PowerPoint PPT PresentationTRANSCRIPT
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Control: Organizational and Economic Approaches
Kathleen M. EisenhardtDepartment of Industrial Engineering and
Engineering management, Stanford University
Presenter: Wen Zheng
Contents
Conclusion
Discussion
Empirical
Theory
Introduction
This paper want to explore control variables for organization designIntroduction
Theory
Empirical
Discussion
Conclusion
Problem Statement
This paper want to explore control variables for organization designIntroduction
Theory
Empirical
Discussion
Conclusion
Problem Statement
• Reward structure• Task characteristics• Information system
This paper want to explore control variables for organization design
Organization design often focus on structure solution.
Introduction
Theory
Empirical
Discussion
Conclusion
Problem Statement
• Reward structure• Task characteristics• Information system
This paper want to explore control variables for organization design
Theoretical Integration Empirical Test
Introduction
Theory
Empirical
Discussion
Conclusion
Problem Statement
Introduction
Theory
Empirical
Discussion
Conclusion
Organization Theory
Control Strategy
Performance Evaluation
Control
Behavioral based control
Outcome based control
Social or “people”
based Control
Information Characteristics
Task Programmability
Outcome measurability
Thompson(1967) Ouchi (1979)
Introduction
Theory
Empirical
Discussion
Conclusion
Organizational Theory
Perfect Imperfect
High Behavior or outcome control Outcome control
Low Behavior control Socialization “Clan” control
Adapted from Ouchi (1979)
OutcomeTask
Introduction
Theory
Empirical
Discussion
Conclusion
Agency TheoryAgency Problem
Incomplete information
Behavior Control Outcome Control
Complete Information
Determine the optimal contract for the Agent Services
-Behavior measurement
-Risk sharing-Outcome measurement
Assumptions: -Uncertain outcome and risk averse agent-Effort averse agent
Concerned with determinants of control strategy
Rational
Efficiency oriented
Information based
Distinguish between behavior and outcome based control
Introduction
Theory
Empirical
Discussion
Conclusion
Comparison(Similarity)
Introduction
Theory
Empirical
Discussion
Conclusion
Comparison(Difference)
O A
Cost Compare ability to measure behaviors
Compare costs of behavior control and outcome control
Reward Control is a measurement and evaluation process
Control is a measurement, evaluation, and reward process
Social or ”People” Control
Assume divergent performances for effort of workforce
Possible to reduce divergent preferences through social control
Role of Information
Task characteristics determine the information available
Information is a purchasable commodity
Uncertainty Control determined by measurement issue
Control determined by measurement and risk bearing issues
Introduction
Theory
Empirical
Discussion
Conclusion
Hypothesis
Task Characteristics-Task Programmability
Information System-Behavior Measurement-Outcome Measurement
Uncertainty
Control Strategy-Behavior based-outcome based
Introduction
Theory
Empirical
Discussion
Conclusion
Hypothesis
Task Characteristics-Task Programmability
Information System-Behavior Measurement-Outcome Measurement
Uncertainty
Control Strategy-Behavior based-outcome based
Introduction
Theory
Empirical
Discussion
Conclusion
Hypothesis
Task Characteristics-Task Programmability
Information System-Behavior Measurement-Outcome Measurement
Uncertainty
Control Strategy-Behavior based-outcome based
Introduction
Theory
Empirical
Discussion
Conclusion
Hypothesis
Task Characteristics-Task Programmability
Information System-Behavior Measurement-Outcome Measurement
Uncertainty
Control Strategy-Behavior based-outcome based
Sample: 95 specialty stores in a Suburban Bay Area shopping centerIntroduction
Theory
Empirical
Discussion
Conclusion
Organization Sampling
Sample: 95 specialty stores in a Suburban Bay Area shopping center
Definition: Stores with less than 8,000 square feet of selling space
Characteristics: Size, turnover, promotion Reason:
• Provide a relative large number of comparable organizations which are conveniently located
• Provide a setting in which a normative and efficiency model should be descriptively accurate
• Social or “people ” control is not relevant
Introduction
Theory
Empirical
Discussion
Conclusion
Organization Sampling
Task Programmability
Behavior Measurement
Outcome Uncertainty
Cost of outcome Measurement
Control
Alternative Explanations
Introduction
Theory
Empirical
Discussion
Conclusion
Measures (Construct)
Task Programmability
Behavior Measurement
Outcome Uncertainty
Cost of outcome Measurement
Control
Alternative Explanations
Introduction
Theory
Empirical
Discussion
Conclusion
Measures (Construct)Preliminary interview
The amount of service in selling process. (less programmable)ServiceProductSelling timeTraining time
Task Programmability
Behavior Measurement
Outcome Uncertainty
Cost of outcome Measurement
Control
Alternative Explanations
Introduction
Theory
Empirical
Discussion
Conclusion
Measures (Construct)Preliminary interview
Physical limitations on observation of salespeople by managementSelling Space Square footage of
the storeTotal number of store employeesNumber of salespeople per store
supervisor (managers, assistant managers
Task Programmability
Behavior Measurement
Outcome Uncertainty
Cost of outcome Measurement
Control
Alternative Explanations
Introduction
Theory
Empirical
Discussion
Conclusion
Measures (Construct)Secondary source
Three measuresNumber of competitors in
the San Francisco SMSA by merchandise category.
Failure rates in 1975 by merchandise category
Failure rates in 1979 by merchandise category
Task Programmability
Behavior Measurement
Outcome Uncertainty
Cost of outcome Measurement
Control
Alternative Explanations
Introduction
Theory
Empirical
Discussion
Conclusion
Measures (Construct)
Depend on the cost of the outcome measurement system.The number of stores in the store
chain.The dichotomous ownership
variable
Task Programmability
Behavior Measurement
Outcome Uncertainty
Cost of outcome Measurement
Control
Alternative Explanations
Introduction
Theory
Empirical
Discussion
Conclusion
Measures (Construct)
Behavior based vs. outcome based reward structures.Outcome based: Commission,
commission against law and salary plus commission
Behavior based: Salary or hourly rate compensation
Task Programmability
Behavior Measurement
Outcome Uncertainty
Cost of outcome Measurement
Control
Alternative Explanations
Introduction
Theory
Empirical
Discussion
Conclusion
Measures (Construct)
Talbert and Bose (1978)Sex compositionPrice Type (specialty vs. department)Location (city vs. suburbs)
Introduction
Theory
Empirical
Discussion
Conclusion
Measures (Accuracy)Construct Internal
ConsistencyConvergent validity
Discriminant validity
Task Programmability
0.72 0.33-0.54** 4 of 96
Behavior Measurement
0.82 0.49-0.65*** 0 of 54
Outcome Uncertainty
0.82 0.52-0.76** 0 of 54
Cost of Outcome Measurement
0.75 0.6** 0 of 20
Note: 1. Measured by Standardized Cronbach Alpha 2. Measured by Range of correlations 3. Measured by # cross construct correlations>within correlations construct 4. Significant level: * 0.1 **0.05 ***0.01
Correlation Matrix
Discriminant Analysis
Introduction
Theory
Empirical
Discussion
Conclusion
Results
Discriminant Analysis Classification Table (N=54)
Introduction
Theory
Empirical
Discussion
Conclusion
Results
Humanist/attributionist argument that salient extrinsic reward diminishes intrinsic motivation should be used cautiously outside of the experimental laboratory.
Responsibility need not match controllability.
Introduction
Theory
Empirical
Discussion
Conclusion
Implications
Job Design----Simple and Routine job
Invest in information System
Outcomes based control---Simple evaluation scheme, a flexible job content
Employ people whose preference coincide with those of management----selection, training and socialization
Introduction
Theory
Empirical
Discussion
Conclusion
Organization Design Strategy
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