IESE Research Papers,
IESE Business School

Abstract: Management control systems are intended to motivate managers to ensure that organizational goals are accomplished. They do this by rewarding and promoting people according to certain criteria. Usually, they are designed to achieve the greatest possible goal congruence, where people pursue personal goals that conduce to the organizational goal. The literature on management control has focused mainly on formal controls, as they are easier to study empirically. Generally speaking, though, formal and informal controls coexist. In this paper, we attempt to show that organizational justice may act as a link between formal and informal control elements. We find that there are two stable states, which we have labeled total goal congruence (where the system is formally fair and the user is fair) and total goal incongruence (where the system is formally unfair and the user is unfair); and two unstable states, in which goal congruence is occasional (unfair system used fairly) or perverse (fair system used unfairly). We conclude with some propositions, which can be used to generate hypotheses that we believe will stimulate, at the core of the management control systems literature, a new stream of research in which justice is seen as a central element of control system design and use.

Keywords: organizational justice; fairness; goal congruence; management control systems

30 pages, April 1, 2011

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