Towards a Transaction Cost Theory of Management Control

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Towards a Transaction Cost Theory of Management Control

Author Info

Spekle, R.F. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)

Abstract

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.

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Paper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number ERS-2002-06-F&A Revision_Date: 2008-03-04.

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Date of creation: 06 Mar 2002
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Handle: RePEc:dgr:eureri:2002173

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This paper has been announced in the following NEP Reports:

NEP-ALL-2002-04-03 (All new papers)
NEP-MIC-2002-04-03 (Microeconomics)
NEP-REG-2002-04-03 (Regulation)

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