Towards a Transaction Cost Theory of Management Control
2002-03-06
Research Paper
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In this paper, I present and discuss a theory of management control based on Transaction Cost Economics. This theory specifies the composition of various archetypal control structures, and links these to their respective habitat. These are: (1) arm's length control; (2) machine control; (3) exploratory control; and (4) boundary control. The gist of the argument is that activities predictably differ in the control problems to which they give rise, whereas control archetypes differ in their problem-solving ability, and that alignments between the two can be explained by delineating the efficiency properties of the match. This approach has some interesting qualities. Its relatively simple theme seems to speak to a wide empirical domain, and can be used to make sense of a large set of different control practices. Furthermore, it offers a practicable way to address control structure effectiveness. Finally, the approach is empirically testable.
- M41 : Accounting
- M49 : Accounting and Auditing: Other
- M21 : Business Economics
- M : Business Administration and Business Economics; Marketing; Accounting
- D23 : Organizational Behavior; Transaction Costs; Property Rights
- control
- organization
- management
- structure
- activity
- accounting
- research
- transaction
- approach
- theory
- information
- performance
- problem
- management accounting research
- contribution
- asset specificity
- economic
- management control
- transaction cost economics
- level
