Traditional Management Control Systems and New Organizations―a view of Deci's motivation theory―

Abstract

Rapidly changing corporate environments are driving an old organizational structures away. Under the situation, Management Control Systems (hereafter "MCS") needs to change because they are designed for an old organizational structure. This thesis aims to find out new MCS features in new organizations. We employed a motivational perspective to analyze the relationship between organizatoonal structure and MCS.

Traditional foundation MCS relied upon the vertical relationships among top managers. In the system, managers are given clear objectives. The objects are reinforced by achivement based compensation. In contrast, emerging flat organizations require innovation and autonomy which are congruent with tlp managenents strategy.

An inherent feature of the traditional MCS is the "contrpl oriented feedback" as derined by Deci(1975). These feedbacks are useful to achive certain targets. But they stifle creativity and decrease intrinsic motivation. Innovation and autonomy sought in new organizations are not compatible with traditional MCS.

As a result, we found that new MCS should contain features what Deci refers to as "informational feedback".