Informal Management Control Systems: The Effects of Organizational Value Statements and Economic Incentives on Employees’ Performance.

• In Event: DSFI: Part I

Abstract

Prior research demonstrates that the effectiveness of incentive systems is influenced by
the presence of a nonbinding value statement in an organization (Kachelmeier et al. 2015). An
organizational value statement defines the behaviors, attitudes, and character that management is
trying to promote among internal stakeholders, including employees (Urbany, 2005). The purpose
of this study is to examine whether the presence of a value statement will increase employees’
uncompensated task performance. Drawing upon goal regulation theory, I hypothesize that the
presence of a value statement will motivate employees to perform their uncompensated tasks
better, as compared to the absence of a value statement. Goal regulation theory states that
employees who view their behavior as more internally driven perceive themselves as working
toward the accomplishment of ideals, and those who view their behavior as more externally driven
perceive themselves as working toward the fulfilment of obligations. Further, drawing upon
motivation crowding theory, I propose that in the presence of a value statement, employees will
be less likely to perform their uncompensated tasks under a piece-rate incentive scheme compared
to either fixed-pay or quota incentive schemes. I plan to test these hypotheses using a laboratory
experiment with undergraduate business students. This study will contribute to the management
control literature by establishing how and when an informal management control system, such as
an organizational value statement, can be used to improve employees’ uncompensated task
performance and judgment and decision-making.

Author

• Kazeem Olalekan Akinyele, University of Central Florida