In control we trust!? Exploring formal control configurations for municipally owned corporations

Purpose - This study examines the interplay of formal types of control (input, behavior and outcome) exercised on municipally owned corporations (MOCs). It further investigates whether particular informal contingencies (trust and interdependence) predict affiliation to the derived municipal control configurations. Design/methodology/approach - The paper applies an exploratory cluster analysis based on survey data from 243 top-level managers of German MOCs. It then investigates the clustered municipal control configurations using binomial logistic regression. Findings - The exploratory analysis reveals four municipal control configurations: (1) input-dominated control, (2) outcome-dominated control, (3) mixed input/outcome control and (4) “neglect of formal control”. As expected, both of the informal contingencies demonstrate strong predictive power. More precisely, trust increases the likelihood of belonging to the dominant outcome control cluster and interdependence increases the likelihood of belonging to the mixed input/outcome control cluster. Surprisingly, the neglect of formal control cluster is characterized by low trust and low interdependence. Originality/value - The study sheds light on the widely assumed but understudied interplay of different formal controls in hybrid governance settings. Furthermore, the analysis stresses the importance of trust and interdependence when explaining hybrid control configurations.