Management control system design and dysfunctional behaviors in organizations

Resumen

This dissertation examines how management control system design affects dysfunctional behaviors. It also analyses individual reactions to peers' dysfunctional behaviors. Dishonesty in performance reporting is analyzed as a key dysfunctional behavior in organizations. Specifically, it is analyzed two different dishonest behaviors: (i) dishonesty in performance reporting; and (ii) free riding. In order to examine these issues, I performed three experimental studies. Since management control systems are not effective in the same extent in all individuals, the first experimental study analyzes how management control system design (beliefs system vs. boundary system) affects the honesty in performance reporting taking into account the individual cognitive orientation (individualism-collectivism). Results of this study show that individuals with a predominant individualist cognitive orientation were more dishonest when they reported their results. Results also show that individualists were more dishonest under a boundary system than under a beliefs system. The second study focuses on examining how relative performance feedback (RPF) affects individual performance when individuals are rewarded by a team performance-based system. Specifically, this study analyzes the effects of RPF when it provides information about team members (intra-group RPF) or about several teams (inter-group RPF). Results show that intra-group RPF has a negative effect on individual performance. Results also show that inter-group RPF mitigates this negative effect. The third study analyzes the effects of individuals' fairness perception and inter-group RPF on whistleblowing decisions. Results of this study show that the presence of an inter-group RPF has a negative effect on peer reporting. Results also suggest that when individuals perceive their supervisor as fair, they will be more likely to report peers' overstatement. This only happens when inter-group RPF is absent rather than present. This dissertation contributes to the management accounting research in several ways. First, it extends the evidence about how individuals are motivated by factors different to conventional monetary incentives. Specifically, it focuses on the importance that social comparison have in individual behaviors and it suggests that management control system design has an important role on it. Second, this dissertation not only focuses on the antecedents of dysfunctional behaviors, but also it focuses on analyzing how individuals react when they observe peers¿ dishonest behaviors. Third, this dissertation analyzes the interactive effect of control systems with other control systems, organizational practices and individual cognitive orientation. Finally, this dissertation has implications for management in practice. It provides evidence about when management control systems have positive or negative effects on individual behaviors in organizations. Therefore, the results of this dissertation could help managers to design suitable management control systems in order to motivate behaviors in individuals towards organization's interests.