Management Control System Design and Effectiveness

This doctoral thesis describes the set-up and findings of an empirical study of management control system design and effectiveness. My central problem is to find out which control systems are effective given the circumstances. The Transaction Cost Theory of Management Control (Speklé, 2001a, 2001b, 2004) provides insights into these matters and is taken as the theoretical basis of this study. The theory submits that five effective forms of control systems (so-called archetypes or configurations of control) exist: arm’s length control, result oriented machine control, action oriented machine control, exploratory control, and boundary control. Each archetype is effective for the control of specific activities, but not for others. Using survey data on 258 organizational units, I test the theoretical claims empirically. One result from a regression analysis shows that resemblance of a management control system with the archetype arm’s length control has a positive impact on the perceived effectiveness of the control system