Extending organizational control theory: The role of environmental turbulence and goal polychronicity

Abstract

This dissertation extends knowledge on organizational control theory. Addressing gaps in the literature, my investigation is grounded in four specific research questions regarding organizational controls, environmental turbulence, goal polychronicity, and organizational performance. I develop the arguments drawing on logics from the research on efficiency-flexibility, control-types, polychronicity, and multiple organizational goals. The four research questions lead to four analytical models where the primary hypothesized relationships are; 1) control formalization and flexibility exhibit a complementary effect when environmental turbulence is low and a substitute effect when environmental turbulence is high, 2) behaviour control and outcome control interact negatively regarding performance in turbulent environments, 3) control formalization has a curvilinear (inverted-U shaped) relationship with goal polychronicity and the relationship becomes U-shaped when control flexibility is high, and 4) control formalization and environmental turbulence strengthen the positive performance effect of goal polychronicity.

Empirical evidence was collected with two interconnected phases. Phase 1 included a series of interviews with Chinese top executives in 2014. Phase 2 was based on a large-scale survey of top executives from 555 large and medium sized firms across Australia, the U.S., China, and Israel in 2015 and a follow-up survey in 2016. Empirical analysis was based on the large-scale survey using multiple regression techniques. The results provided general support for the hypothesized relationships across various models.

This research contributes to the strategic management literature on organizational control. While my models focus on distinct literature streams, four novel insights are revealed. First, more formalized control is beneficial in turbulent environments and control flexibility, in its interaction with control formalization, can be counter-productive to performance in turbulent environments. Second, in contrast to the dominant perspective, environmental turbulence degrades the complementarity of formal controls. Third, in the understudied area of goal polychronicity, control systems that are both formalized and flexible exhibit higher levels of goal polychronicity. Fourth, the performance benefits of goal polychronicity are more evident in environments with higher levels of turbulence. Overall, my research adds to knowledge on the contextual contingencies of organizational controls and opens new ways of theorizing multiple goals.