(Georgia Institute of Technology, 2021-06-23)
Kugel, Jonathan
Due to the limits of formal management control systems (MCS) for tasks with unobservable/non-contractible inputs, firms often preferentially select subordinates who exhibit identified motivation (strong perceptions of importance) towards the firm’s mission. While prior literature examines the “crowding out” of identified motivation by formal MCS, less is known about how informal MCS asymmetrically affect subordinates both with and without identified motivation. Given the difficulty in preferentially selecting subordinates with identified motivation relative to those without, I seek evidence of an informal control regime that can best utilize subordinates of all motivation levels. Using the frameworks of Self-Determination Theory and Stewardship Theory, I experimentally test subordinates’ goal congruence and subsequent cooperation with the superior under conventional directives vs “nonformal communications” (unofficial management guidance). Results confirm that informal controls do not crowd out identified motivation yet do impair alignment of amotivated subordinates’ actions to firm objectives.