Marketing controls and employee responses: The moderating role of task characteristics

Marketing Controls and Employee Responses: The Moderating Role of Task Characteristics

Sanjeev Agarwal Iowa State University

Sridhar N. Ramaswami Iowa State University

A key concern in implementing organizational controls is that little is known about when controls lead to "negative" employee responses. Previous research has suggested that lower levels of negative responses will be observed only if the controls that are being employed "fit" the characteristics of the tasks being controlled. The two task characteristics usually referred to include performance (outcome) documentation and procedural (cause-effect) knowledge. Unlike previous studies, however, this study assumes that the two task characteristics should have a joint, rather than independent, influence on employee responses to controls. The reason is that knowledge of how well one is doing is not sufficient for expecting lower levels of negative responses if information on procedures that may lead to better performance is not available. Knowledge of procedures, likewise, is not sufficient for lower levels of negative responses if performance documentation is not available. Results of an empirical study provide general support for the above line of reasoning.

Most utilitarian organizations use a variety of organizational control forms (e.g., output, process, and informal) to ensure that employees' efforts can be channeled toward activities that facilitate achievement of organizational objec-

Journal of the Academy of Marketing Science Volume 21, Number 4, pages 293-306. Copyright �9 1993 by Academy of Marketing Science. All rights of reproduction in any form reserved. ISSN 0092-0703.

tives (Flamholtz, Das, and Tsui 1985; Jaworski 1988; Ouchi 1979). While the intention of most conscientious organizations in instituting controls is to constructively monitor, direct, evaluate, and reward employees, use of controls, nevertheless, has been found to lead to numerous "negative" employee responses (Ouchi 1979; Merchant 1982; Jaworski and Maclnnis 1989). For example, if organizations set sales targets and measure performance of their salespersons against the targets, salespersons tend to underreport market potential to their supervisors in order to obtain lower sales targets. Salespersons may respond this way despite having precise information about the market potential in their respective sales areas. Also, they may concentrate their efforts on existing accounts at the expense of identifying and developing new prospects. This may lead to achievement of stated sales targets but may hamper the longer-term performance of organizations. Because such "negative" responses ultimately impact organizational performance, a critical role of managers should be to design control systems that help reduce the intensity of such responses, if not completely eliminate them.

Although substantial knowledge exists about how organizations may choose a particular control form, very little is currently known about when controls produce negative employee responses. The choice of a particular control form, for example, is believed to be a function of two task characteristics, namely, the extent to which forms of documentation are available to measure an employee's performance (labeled "performance documentation"), and the extent to which activities an employee should perform to achieve desired outcomes can be specified (labeled "procedural knowledge"). In a marketing setting, performance documentation would imply that organizations develop measurement scales such as sales volume, productivity, profit mar-

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MARKETING CONTROLS AND EMPLOYEE RESPONSES AGARWAL AND RAMASWAMI

gins, and so forth, whereas procedural knowledge would imply that managers (and their subordinates), for example, have knowledge regarding how sales calls should be distrib- uted between existing and new customers for balancing short-term and long-term performance; or, what factors such as routing, ability to close a sale, and so forth, contrib- ute to maximizing call efficiency. Using these two task characteristics, Ouchi (1979) proposed that organizations should use output control when performance documentation is high, process control when procedural knowledge is high, and informal controls when neither performance documentation nor procedural knowledge is h i g h . .

In order to assess when controls produce negative employee responses, Jaworski and Maclnnis (1989) proposed a contingency model in which they extended Ouchi's logic and suggested that organizations should be able to minimize the negative effects on employees by using controls that "fit" (as implied in Ouchi's model) the nature of the tasks that are being controlled. In other words, they hypothesized that the use of output control for tasks characterized by high performance documentation, and the use of process control for tasks characterized by high procedural knowledge, should result in lower levels of employee job tension, dysfunctional behavior, and information asymmetry. However, despite the appeal of these hypotheses, Jaworski and Macln- nis did not find empirical support. Close scrutiny of how Jaworski and Maclnnis derived the contingency hypotheses from Ouchi's framework reveals two critical assumptions that may have contributed to their nonfindings. In this article, we discuss these assumptions and present alternative hypotheses.

The first assumption made by Jaworski and Maclnnis (1989) is that "fit" between a particular task characteristic, performance documentation or procedural knowledge, and a given form of control can be achieved independently of the other task characteristic. In other words, fit is considered high when process control is used for tasks characterized by high procedural knowledge, regardless of the level of performance documentation. Similarly, fit is considered high when output control is used for tasks characterized by high performance documentation, regardless of the level of procedural knowledge. This notion of fit is, however, difficult to defend, especially for tasks characterized by both high performance documentation and high procedural knowledge. In this task condition, managers can use either output or process control. Researchers have suggested that when both process and output controls are feasible options, managers may have a preference for output control because 1) it is generally more convenient to implement (Rockness and Shields 1984), 2) it reduces the need for direct planning and management for a wide variety of contingencies (Turcotte 1974) and hence is more efficient (Ouchi 1979), and 3) it is perceived as more complete and objective by employees (Hirst 1981; Luthans 1977). Thus, even if procedural knowledge is high, organizations may use output control instead of process control when performance documentation is also high. The notion that a given form of control can be achieved independently of the other task characteristic also fails to explain the use of informal controls. The Ouchi model implies that at low levels of

procedural knowledge, use of informal controls is negatively associated with performance documentation, whereas at high levels of procedural knowledge, use of informal controls is unrelated to performance documentation. These phenomena can only be captured if the joint effects of the two task characteristics are included in predicting choice of a particular control form.

The second assumption implicit in Jaworski and Macln- nis' study is that the notion of task-control fit that underlies Ouchi's model is consistent with the notion of task-control fit that is necessary for studying employee responses. It should be noted that Ouchi's concept of fit is based on whether a particular task condition justifies the use of a particular control type. The bases for justification usually include criteria such as efficiency, ease of implementation, and convenience. Jaworski and Maclnnis (1989), for example, suggest that the use of output control when performance documentation is high indicates presence of fit. The meaning of this fit is that managers find output control to be convenient and easy to implement for tasks characterized by high perfo(mance documentation. But can we expect this fit to lead to lower levels of negative employee responses? The answer is, probably not (Hirst 1983; Porter, Lawler, and Hackman 1975). When employees view a control form, they are probably less concerned with its ease of implementation for managers than how the control provides relevant information for performing their own jobs better. Using this logic, this study suggests that high procedural knowledge needs to be present for the "performance documentation- output control" fit to lead to reduced levels of negative employee responses. High procedural knowledge would en- able employees to know how behaviors need to be changed to narrow gaps in performance (that are identified by the use of output control). If procedural knowledge is low, employees may know how they are performing but have little knowledge about why they are performing well or poorly. These arguments imply that while fit (as viewed by the organization) may be achieved when performance documentation is high, output control may not lead to a reduction in negative employee responses unless procedural knowledge is also high.

Alternatively, fit, as viewed from the implementation perspective, may not be achieved, even though employee responses may be positive. For example, while informal con- trois are not appropriate or necessary for tasks characterized by high procedural knowledge and high performance documentation, employees, however, may show lower levels of job tension and dysfunctional behavior with informal con- trois because these controls do not demand explicit monitoring of their behaviors or outcomes. At the least, informal controls will not increase negative employee responses in this task condition. These examples indicate that there is a fundamental problem in positing that (lack of) fit, as viewed by the organization, will lead to less (more) negative employee responses.

The above arguments can be best illustrated with an example from a typical salesforce situation. Assume that a salesperson has been unable to achieve an assigned quarterly sales target. The supervisor may compare actual performance to the target and inform the salesperson that

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he/she has to improve his/her performance. The means by which this may be carried out is left to the discretion of the salesperson. In this situation, a salesperson who has information about the behavioral changes needed to overcome the performance deficiency will experience lower job tension than one who does not have this information. This suggests that employee responses are contingent on the two task characteristics jointly. In other words, although the organization may be justified in using output control for tasks characterized by high performance documentation, employees may feel tense when procedural knowledge is low because of the difficulties associated ,with identifying specific behavioral changes needed for performance im- provements. The overall implication is that, from the employee's perspective, fit is not achieved.

In summary, the major objective of this study is to provide alternative contingency effect hypotheses to the ones specified in Jaworski and Maclnnis (1989) by incorporating the previously mentioned issues. These hypotheses examine the joint effect of performance documentation and procedural knowledge on the use of controls and the joint moderator effect of these two task characteristics on the relationships of each of the four control forms (output, process, self, and professional) with each of the three employee responses (job tension, dysfunctional behavior, and information asymmetry).

HYPOTHESES

Task Characteristics and Control Forms

Ouchi (1979) posited that control can be achieved by monitoring employee behaviors (process control) when procedural knowledge is high and by monitoring employee performance (output control) when performance documentation is high. The rationale for using process control when procedural knowledge is high is that the outcome of work behavior is ensured (even without output measurement) if employee behavior conforms to the optimal way of performing tasks. The rationale for using output control when performance documentation is high is that by pointing out the ultimate performance gaps, employees will change their behaviors suitably. When there are high levels of both performance documentation and procedural knowledge, an organization could use either output or process control. Thompson (1967) and Ouchi and Maguire (1975) suggested that these two forms of control may be substitutable in this task condition. Rockness and Shields (1984) pointed out that output control may be favored over process control when managers are provided an option between the two. One reason is that use of output control reduces the need for direct planning and management for a wide variety of contingencies (Turcotte 1974). But, at the same time, it is possible that the use of output control may be somewhat reduced when both performance documentation and procedural knowledge are high as compared to when performance documentation alone is high, and the use of process control may be somewhat reduced when both performance documentation and procedural knowledge are high relative to when procedural knowledge alone is high.

Finally, when both performance documentation and procedural knowledge are low, neither process nor output control is feasible, and informal controls, such as professional and self, may be necessary. These relationships can be represented in the form of the following two main effect and three contingency effect hypotheses.

HI: The greater the performance documentation, the greater the use of output control.

H2: The greater the procedural knowledge, the greater the use of process control.

H3: The association between performance documentation and the use of output control is higher when procedural knowledge is high rather than when it is low.

H4: The association between procedural knowledge and the use of process control is lower when performance documentation is high rather than when it is low.

H5a: The lower the performance documentation and procedural knowledge, the greater the use of self control.

H5b: The lower the performance documentation and procedural knowledge, the greater the use of professional control.

Controls and Employee Responses

Output Control It was mentioned previously that when performance doc-

umentation is high, output control is the most appropriate control form to be used. This control form enables managers to provide employees with feedback regarding whether their performance conforms to expected levels. For this reason, Jaworski and Maclnnis (1989) suggested that output control should be associated with lower levels of negative employee responses.

H6: Output control is more likely to decrease job tension, dysfunctional behavior, and information asymmetry when performance documentation is high than when it is low.

However, from an employee's perspective, a performance system should not only show that something is going wrong; it should also point out why this happened and what is necessary to correct the situation (Luthans 1977). If the relevant procedures are not pointed out by management, employees may have to do with self-help. Self-help, however, is only possible when procedural knowledge is high. This means that the use of output control should result in lower levels of negative responses only when both performance documentation and procedural knowledge are high.

On the other hand, the use of output control may be

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associated with higher levels of negative responses when either (or both) performance documentation or procedural knowledge is low. When performance documentation is low, employees will definitely question the objectivity and completeness of output measures used for comparing with standards; however, even when performance documentation is high, questions about the completeness of the output measures may arise, particularly when procedural knowledge is low (Hirst 1981). Hirst (1983) found a higher level of job tension with the use of output control in situations involving high performance documentation but only when high performance documentation was associated with low procedural knowledge. Thus, we present an alternative hypothesis to H6.

H6a: Output control is more likely to decrease job tension, dysfunctional behavior, and information asymmetry when performance documentation and procedural knowledge are high than when performance documentation and/or procedural knowledge are/is low.

Process Control Jaworski and Maclnnis (1989) suggested that when pro-

cedural knowledge is high, process control is the most appropriate control form to be used. Procedural knowledge allows managers to take an active role in monitoring employee behaviors and recommending changes to them whenever they are needed. Moreover, employees are more likely to accept the recommended changes when procedural knowledge is high than when procedural knowledge is low. The reason is that employees will have greater faith in su- pervisory feedback when they can clearly see the cause- effect relationships. And, since there is adequate fit, there should be a reduction in negative employee responses.

H7: Process control is more likely to decrease job tension, dysfunctional behavior, and information asymmetry when procedural knowledge is high than when it is low.

However, employees (and supervisors) can check whether the procedures they have incorporated are appropriate in fulfilling the output goals only if performance measures are available. Because employees can trace changes in overall performance to changes in task behaviors, the use of process control should result in lower levels of negative responses when both performance documentation and procedural knowledge are high. Use of process control may, however, be associated with higher levels of negative responses when either performance documentation or procedural knowledge is low. When procedural knowledge is low, employees may question the objectivity and the completeness of the behavioral changes suggested; when performance documentation is low, employees may not be aware of the consequences of the behavioral changes. Thus, we present an alternative hypothesis to H7.

H7a: Process control is more likely to decrease job tension, dysfunctional behavior, and information asymmetry when performance documenta-

tion and procedural knowledge are high rather than when procedural knowledge and/or performance documentation are/is low.

Informal Controls Control theory considers self and professional controls to

be appropriate and the only choice (compared to formal controls) when both performance documentation and procedural knowledge are low (Oucbi 1979). Studies that have explored the effect of self-reinforcement on motivation have, however, shown that control systems that allow employees to keep a record of their own performance to use as a continuous feedback system and for reinforcement pur- poses (i.e., self control) help them increase their motivation (Bandura and Cervone 1983). This is particularly so when the goals can be specified in sufficiently detailed behavioral terms (i.e., when procedural knowledge is high) to provide adequate guidance for the actions that must be taken to obtain desired outcomes (i.e., when performance documentation is high) (Kerr 1990). The underlying logic is that people are very good at modifying and correcting their work behavior on their own if information about how they are doing is made available and if they possess the knowledge about how they can change their behavior.

Additionally, studies have also shown that control achieved through interaction with group members alleviates bureaucratic pressure and enhances feelings of belonging to a group (Argyris 1953). These benefits may also be rein- forced by the perception that only fellow professionals know enough about the work to evaluate it competently. Such interactions, for tasks characterized by high role clari- ty, have been shown to facilitate group effectiveness and development of positive employee attitudes (Sarbin and Al- len 1968; Collins and Guetzkow 1964). The implication, therefore, is that negative responses will be lower with the use of self and professional controls when both procedural knowledge and performance documentation are high.

Use of informal controls when either procedural knowledge or performance documentation is low (or both are low), on the other hand, should not pose any disadvantages from the attitudinal perspective of employees. In fact, in- creased challenge faced by employees when both performance documentation and procedural knowledge are low, when matched by self-control opportunities, increases perceived self-competency and reduces mental strain (Karasek 1979). Although informal controls may be unnecessary in other situations (as viewed from the implementation perspective because of the possibility of using formal controls), there is no reason to believe that employees may react negatively to such controls in other situations. This is because employees (individually or as a group) prefer to exercise some control over their own destiny but they often receive a greater share of the reinforcing consequences when they are successful (Frederiksen 1982). Thus, it is hypothesized that:

H8: Task characteristics do not moderate the relationships between self control and job tension, dysfunctional behavior, and information asymmetry.

H9: Task characteristics do not moderate the relationships between professional control and job ten-

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sion, dysfunctional behavior, and information asymmetry.

Because Jaworski and Maclnnis did not consider the above relationships, these hypotheses are not stated as alternative hypotheses.

RESEARCH METHOD

Sample

The sampling frame for the mail survey was comprised of 1,298 marketing professionals drawn randomly from the 1990 AMA roster. Forty-eight of these individuals had changed their positions and hence could not be contacted, which reduced the sample base to 1,250. Of these, 335 responded to the questionnaire mailed, resulting in a response rate of 26.8 percent. The responses of high-level executives such as marketing directors and presidents were removed from the sample (29 responses out of 91 mailed) because these individuals were considered to be the makers of, rather than responders to, control systems in organizations. In addition, six responses were excluded because of missing data. This reduced the sample base to 1,159 and the responses to 300, resulting in a response rate of 25.9 percent.

The sample covered a wide variety of marketing professionals who differed in the type of function performed and the organizational level. The sample, for example, included product managers, marketing managers, general managers, marketing research analysts, marketing planning and development personnel, and sales and marketing personnel. Age- wise, 3.7 percent of the respondents were from the age category of less than 25 years, 72.6 percent were from the age category of 25-39, 20.9 percent were from the age category of 40-55, and 2.8 percent were from the age category of 56-70 years. Gender-wise, the sample consisted of 49.1 percent female and 50.9 percent male respondents. Education-wise, the sample consisted of 32.0 percent with high school diplomas, 56.5 percent with bachelor degrees, 9.3 percent with master degrees, and 2.2 percent with doc- toral degrees.

To evaluate nonresponse bias, an analysis of early versus late respondents was carried out by determining the date of receipt of the response and regressing important constructs used in the study against time taken to respond. This method is appropriate for testing nonresponse bias because late respondents are expected to resemble nonrespondents (Armstrong and Overton 1977). Results of the regression analysis showed no significant relationship with time for any of the constructs, suggesting that nonresponse bias may not be a significant issue.

Measurement Scales

The survey questionnaire was designed primarily on the basis of measurement scales used by Jaworski and MacInnis (1989). Modifications were made to four scales that were identified by them as having less-than-desirable scale prop- erties. These included procedural knowledge, performance

documentation, self control, and job tension. A complete description of the scales used in the study is provided in the Appendix.

All scales were assessed for internal and external consistency by using correlation analysis, factor analysis, and Cronbach's alpha. The external consistency assessment was performed independently for three sets of constructs--task characteristics, controls, and employee responses. Results showed that a two-factor model, a four-factor model, and a three-factor model were better than a single-factor model (as indicated by changes in chi-square values) for each of the above sets of constructs, respectively. This finding suggests, for example, that the measures of the four controls tap four distinct dimensions and that each of the four measures is unidimensional. Similar implications apply for the two task characteristics and the three types of employee responses. With the exception of self control, all constructs satisfied the Nunnally (1978) reliability criterion of .70.

Analyses

For examining H I through 1-15, regression analyses of each of the output (OC), process (PC), self (SC), and professional (PRC) controls against performance documentation (PD), procedural knowledge (PK), and their interactions were performed. The contingency hypotheses specified in 1-16 and tt6a were tested using three hierarchi- cal regression models. The first model (Model A) captured the main effects of all four control types on a particular negative employee response, l The second model (Model B) included the main effects and a two-way interaction term reflecting the interaction between output control and performance documentation. 2 The third model (Model C) includes the effects in the second model and a three-way interaction effect reflecting the joint influence of output control, performance documentation, and procedural knowledge) A comparison of the variance explained by Models A and B provides a test for H6, and that for Models B and C provides a test for H6a (Chow 1960). Similarly, to test 1-17 and 117a, the variance explained by Model A is compared with that of Models D and E, respectively. 4,5

It should be noted that if the coefficients d 6 and f6 for the three-way interactions in Models C and E are statistically significant, the implication is that performance documentation and procedural knowledge together moderate the relation between output control and negative response and between process control and negative response, respectively. If the two coefficients are also negative, they provide support for H6a and H7a, respectively. If the coefficients for the three-way interaction terms d 6 and f6 are not significant, but the coefficients of the two-way interaction terms c 5 and e 5 alone are significant, then support is provided for the contingency hypotheses H6 and H7 proposed by Jaworski and MacInnis.

To test tt8 and 119, Model A is compared with Models F and G that include, in addition to the main effect terms, the three-way interaction terms (SC*PD*PK) and (PRC*PD*PK), respectively. 6,7 The two-way interaction terms (PRC*PD, PRC*PK, SC*PD, and SC*PK) were not in the models due to the lack of any theoretical basis for their inclusion.

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M A R K E T I N G C O N T R O L S A N D E M P L O Y E E R E S P O N S E S A G A R W A L A N D R A M A S W A M I

TABLE 1 Regression Analysis Results For Relationships Between Task Characteristics and Controls

Independent Variable

Performance Procedural Documentation Knowledge

Dependent Variable (PD) (PK) PD*PK R 2 F-Value

Outpu t control .59 a .12 b - . 0 5 b .26 36.67 a P rocess cont ro l .43 a .21 a - .05 b .19 24.04~ S e l f cont ro l .22 ~ .06 - . 0 2 .04 4 .42 a P ro fes s iona l cont ro l .16 b .20 ~ - .02 .08 9 .13 ~

,,p < .01. bp < .05.

An important complaint against the use of multiplicative terms in regression analysis focuses on the issue of collinearity (Blalock 1979). Multiplicative terms usually exhibit strong correlations with their component parts and inflate the standard errors for the regression coefficients. This issue was addressed in two ways. First, the model proposed does not include procedural knowledge and performance documentation as independent explanatory variables. This was done in accordance with the Jaworski and Maclnnis control model that specifically excludes such direct effects. Second, the main effect variables were mean-centered and standardized prior to forming the multiplicative term. Such a transformation reduces the correlations between the product term and the component parts of the term. Collinearity is also possible between the two-way and three-way interaction terms in some of the models. Because this could not be entirely avoided, a test of the variance inflation factor (VIF) for each interaction term was computed. The highest VIF value was 1.75, much below the cut-off criterion of 10 recommended by Neter, Wasserman, and Kutner (1985). This finding suggests that collinearity is not a likely threat to the substantive conclusions drawn from the parameter estimates.

Using standardized scores, however, can lead to a problem in interpreting interactions. For example, a low/low combination of any two standardized variables would yield a large positive term, making it indistinguishable from the high/high combination of the same two variables. An interaction term is interpretable only if the low/low combination is represented by a smaller number relative to the high/high combination. We have used a transformation suggested by Cooper and Nakanishi (1983) of the original variables to calculate the interaction term in order to rectify this problem. 8

RESULTS

Output and Process Control

The results pertaining to relationships hypothesized between task characteristics and control forms are reported in Table 1. The use of output control is positively (b = 0.59, p < .01; Table I) associated with performance documentation

(as hypothesized in HI), and the use of process control is positively (b = 0.21, p = .01; Table 1) associated with procedural knowledge (as hypothesized in H2). The interaction term in the equation relating output control and performance documentation is negative (b = - . 05 , p < .05; Table 1), implying that the presence of procedural knowledge weakens the association between output control and performance documentation. This result does not support H3. On the other hand, the negative coefficient (b = - . 05 , p < .05; Table 1) for the interaction term in the equation relating process control and procedural knowledge supports H4. Finally, the interactive effects of the two task characteristics on the use of self and professional controls are not significant, thus failing to support H5a and H5b, respectively.

Controls and Employee Responses The results pertaining to the relationships hypothesized

between control forms and employee responses are reported in Table 2, 3, 4, and 5. The use of output control is not associated with job tension and dysfunctional behavior but is associated with information asymmetry (b = - . 35 , p < .01; Table 2). The use of process control is associated with job tension (b = .15, p < .01; Table 3), dysfunctional behavior (b = .19; p < .01; Table 3), and information asymmetry (b = - . 14, p < .05; Table 3). The use of self control is associated with dysfunctional behavior (b = - . 29 , p < .01; Table 4) but not with job tension and information asymmetry. Finally, the use of professional control is associated with job tension (b = - . 20 , p < .01; Table 5), dysfunctional behavior (b = - . 19, p < .01; Table 5), and information asymmetry (b = - . 29 , p < .05; Table 5). These main effects results are consistent with the main effects findings of Jaworski and Maclnnis (1989).

Next, the contingency effects (corresponding to H6 and H7) were evaluated. The results show that performance documentation does not moderate the relationships between output control and job tension, dysfunctional behavior, and information asymmetry, thus not supporting H6. The difference in R-square between the model that included main effects and two-way interaction effects (Model B) and the model that included only main effects (Model A) is not significant for the three employee responses, namely, job

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TABLE 2 Regression Analysis Results For Contingent Effects of Task Characteristics on Relationship

Between Output Control and Employee Responses


Output Process Self Dependent Control Control Control Variable (OC) (PC) (SC)

Professional Control Cumulative Incremental Incremental (PRC) OC*PD c OC*PD*PK a R 2 F-Value R 2 F-Value

Job tension Model A e .03 .15" .08 Model BY .00 .14 ~ .08 Model Cg .130 .14" .08

Dysfunctional behavior

Model A .05 .19 ~ - . 2 9 a Model B .04 .19 ~ - . 2 9 ~ Model C .01 .19 a - . 3 0 a

Information asymmetry

Model A - . 3 5 a - . 1 4 b - . 0 6 Model B - . 3 8 - - . 1 5 b - . 0 6 Model C - . 3 9 a - . 1 5 b - . 0 7

- . 2 0 ~ .09 7.61 ~ - . 2 0 ~ .02 .10 6.49 ~ .01 1.90

, - . 2 0 4 .00 .02 .10 5.394 .00 .33

- . 1 9 ~ .17 15.03 ~ - . 1 9 ~ .01 .17 12.03 ~ .00 .21 - . 1 8 ~ .04 - . 0 1 b .18 11.00 a .01 5.07 b

- . 2 9 a .26 26.03 a - . 2 9 ~ .02 .26 21.00~ .00 .80 - . 2 9 a .03 .00 .26 17.50 ~ .00 .40

ap < .01. bp < .05. cPerformance documentation. dprocedural knowledge. "Model A includes main effects only. /Model B includes main and two-way interaction effects. sModel C includes main, two-way, and three-way interaction effects.


Between Process Control and Employee Responses


Dependent Variable

Output Process Self Professional Control Control Control Control Cumulative Incremental Incremental

(OC) (PC) (SC) (PRC) PC*PK e OC*PK*PD a R e F-Value R e F-Value

Job tension Model A/ .03 .15 a .08 - . 2 0 ~ .09 7.61 ~ Model Ds .03 .16 a .08 - . 1 9 ~ - . 0 1 .09 6.15 ~ .00 .33 Model E h .02 .18 a .08 - . 1 9 4 - . 0 3 .01 b .11 6.68 a .02 3.97 b


Model A .05 .194 - . 2 9 ~ - . 1 9 a .17 15.03 ~ Model D .05 .24 a - . 2 9 ~ - . 1 8 a - . 0 2 b .18 13.38 ~ .01 5.82 ~ Model E .04 .25 a - . 2 9 a - . 1 7 4 - . 0 3 c .00 .19 11.18 ~ .01 .36


Model A - . 3 5 " - . 14 t' - .06 - . 2 9 " .26 26.03" Model D - . 3 5 " - . 1 t - . 0 6 - . 2 8 " - . 0 1 .26 21.01 ~ .00 .80 Model E - . 3 5 " - . 1 0 - . 0 6 - . 2 8 " - . 0 4 .01 .26 17.66" .00 1.21

~p < .01. bp < .05.

"p < .10. aperformance documentation. eProcedural knowledge. :Model A includes main effects only. gModel D includes main and two-way interaction effects. hModel E includes main, two-way, and three-way interaction effects.

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Between Self Control and Employee Responses

Dependent Variable


Output Process Self Professional Control Control Control Control Cumulative Incremental Incremental

(OC) (PC) (SC) (PRC) SC*PDc*PK d R 2 F-Value R z F-Value

Job tension Model A e .03 .15 ~ .08 - .20`" .09 7.61 ~ Model FY .03 .15 ~ .08 - . 2 0 ~ .00 .09 6.07 ~ .00 .01


Model A .05 .19 ~ - . 2 9 a - . 1 9 ~ .17 15.03" Model F .05 .20 a - . 2 6 ~ - . 1 8 ~ - . 0 1 b .18 13.19- .01 5.08 b


Model A - . 3 5 a - . 1 4 b - . 0 6 - .29`" .26 26.03" Model F - .35`" - . 1 4 b - . 0 5 - . 2 9 a .00 .26 20.82 ~ .00 ,24

op < .01.

bp < ,05. cPerformance documentation. dProcedural knowledge. eModel A includes main effects only. /Model F includes main and three-way interaction effects.

tension, dysfunctional behavior, and information asymmetry (F-values = 1.90, 0.21, and 0.80, respectively; Table 2). Procedural knowledge, on the other hand, was found to only moderate the relationship between process control and

dysfunctional behavior (F-value = 5.82, p < .01; based on a comparison of Models A and D in Table 3). The coefficient estimate for the interaction term PC*PK was negative suggesting that at higher levels of procedural knowledge,


Between Professional Control and Employee Responses


Output Process Self Professional Dependent Control Control Control Control Variable (OC) (PC) (SC) (PRC) PRC*pDd*pK e

Cumulative Incremental Incremental R 2 F-Value R 2 F-Value

Job tension Model AI .03 .15 a .08 - .20 a .09 7.61 ~ Model Gg .03 .15" .08 - .20`" .00 .09 6.07`" .00 ,01


Model A .05 .19 ~ - . 2 9 a - . 1 9 a .17 15.03`" Model G .06 .20 ~ - . 2 8 a - . 1 6 ~ - . 0 1 b .19 13.48 ~ .02 6.20 b


Model A - . 3 5 a - . 14 b - . 0 6 - . 2 9 a '.26 26.03 ~ Model G - . 3 4 a - , 1 4 c - . 0 6 - . 2 8 " .00 .26 20.79 ~ .00 .13

`'p < .01. bp < .05. cp < .10. aperformance documentation. eProcedural knowledge. /Model A includes main effects only. sModel G includes main and three-way interaction effects.

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M A R K E T I N G CONTROLS AND EMPLOYEE RESPONSES AGARWAL AND RAMASWAMI

use of process control was associated with lower dysfunctional behavior. The other two moderator relationships involving procedural knowledge (corresponding to job tension and information asymmetry) were, however, not supported (F-values = .33 and .80, respectively; Table 3). There is thus limited support for the presence of a two-way interaction between procedural knowledge and the use of process control (i.e., in one out of three cases only).

The next set of analyses tests whether performance documentation and procedural knowledge jointly moderate the relationships between controls and employee responses. This involves testing the increase in R-squaa'e for statistical significance between Models B and C to test H6a, between D and E to test HTa, between A and F to test 1-18, and between A and G to test H9. The results provide mixed evidence because five out of a possible twelve three-way interaction terms were as hypothesized, and three more were significant but in the opposite direction. These results are discussed in detail below.

H6a. This hypothesis is supported for the relationship between output control and dysfunctional behavior, but not supported for the relationships between output control and job tension and output control and information asymmetry. The incremental R-square in the three cases, job tension, dysfunctional behavior, and information asymmetry, were .00, .01, and .00 (corresponding F-values were 0.33, 5.07, and 0.40; based on a comparison of Models B and C in Table 2), respectively. The negative coefficient (b = - . 0 1 , p < .05; Table 2) for the significant three-way interaction term, OC*PD*PK, suggests that the use of output control reduces dysfunctional behavior only at high levels of both performance documentation and procedural knowledge.

H7a. This hypothesis is not supported. Although a significant three-way interaction (incremental R-square = .02, p < 0.05; based on a comparison of Models D and E in Table 3) was found in one out of three cases (for the relationship between process control and job tension), the coefficient estimate was positive rather than negative. This coefficient value implies that at higher levels of performance documentation and procedural knowledge, the use of process control increases felt job tension of employees.

H8. This hypothesis is partially supported. The hypothesized null effect was observed in all cases except one. The results show that while performance documentation and procedural knowledge do not moderate the relationships between self control and the dependent variables, job tension and information asymmetry, they moderate (b = - . 0 1 ; p < .05; Table 4) the relationship between self control and dysfunctional behavior. The incremental R-square value (.01 based on a comparison of Models A and F) is significant at the p < 0.05 level.

H9. This hypothesis is also partially supported. The hypothesized null effect was observed in all cases except one. The results show that while performance documentation and procedural knowledge do not moderate the relationships between professional control and the dependent variables, job tension and information asymmetry, they moderate (b = - . 0 1 , p < .05; Table 5) the relationship between professional control and dysfunctional behavior. The incremental R-square value (.02 based on a comparison of Models A and G) is significant at the p < 0.05 level.

=..,

C o (J

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DISCUSSION

This study was designed to examine the joint effect of performance documentation and procedural knowledge on the use of controls and the joint moderator effect of these two task characteristics on the relationships between each of four control forms (output, process, self, and professional) and three employee responses (job tension, dysfunctional behavior, and information asymmetry). A major postulate of this study was that the contingency effect of task characteristics on the relationships between controls and employee responses should be examined from an employee's perspective rather than the organizational implementation perspective.

Task Characteristics and Control Forms

Output and Process Controls The results provide clear evidence that a richer under-

standing of organizational use of controls can be obtained by studying the joint, in addition to the main, effects of the two task characteristics. For example, while the main effect results suggest that increasing levels of performance documentation or procedural knowledge can lead to greater use of output control, the interaction effect could weaken this effect. To facilitate a finer interpretation of the interaction term, we computed the predicted values of output control at different levels of the two task characteristics using regression equations. A visual inspection (see Figure 1) suggests that high procedural knowledge strengthens the use of output control at low to moderate levels of performance documentation but weakens its use at high levels of performance documentation. What this means is that higher cause-effect

FIGURE 1 Predicted Values of Output Control at Selected

Levels of Performance Documentation (PD) and Procedural Knowledge (PK)

1

-2

f I I I I I

- 2 -1 0 1 2

Performance Documentation

[] P K = -2 . P K = 0 = P K = + 2

Note: All effects are in standardized units.

JAMS 301 FALL, 1993


O

r

o

knowledge provided by procedural knowledge facilitates the use of output control in conditions where its use may not be totally justifiable (i.e., at low to moderate levels of performance documentation). On the other hand, higher cause- effect knowledge weakens the use of output control in conditions where its use may be better justified (i.e., at high levels of performance documentation). These results suggest that managers do not choose output control solely on the basis of availability of performance documentation. At higher levels of performance documentation, increases in procedural knowledge may open up the possibility of using other forms of control. '

Similarly, the results also show complex relationships between procedural knowledge and the use of process control at different levels of performance documentation. As hypothesized, the strength of this relationship was weak- ened when performance documentation was high. The slope characterizing this relationship was greater when performance documentation was low to moderate than when it was high (see Figure 2). Similar to the explanation offered for output control, it appears that process control is being substituted by other forms of control when both task conditions are high. A lower level of use of process control may also be a natural reaction on the part of managers to employees' perception that it curtails their freedom and initiative, particularly when output measures are well defined. Porter, Lawler, and Hackman (1975) indicated that this is especially likely to occur when the control system deprives employees of certain discretionary decision making about how they are to carry out their job duties.

Finally, we find that while performance documentation,

r

O t .

FIGURE 2 Predicted Values of Process Control at

Selected Levels of Procedural Knowledge (PK) and Performance Documentation (PD) a

1

-1

-2

Y ! I I I I

- 2 -1 0 1 2

Procedural Knowledge

. a - - - PD = - 2 . P D = 0

= P D = + 2

Note: All effects are in standardized units.

as expected, had a stronger relationship with output control than with process control (b = .59 versus .43; Table 1) and that procedural knowledge, likewise, had a stronger relationship with process control than with output control (b = .21 versus. 12; Table 1), the finding that process control is more strongly related to performance documentation than to procedural knowledge (b = .43 versus .21; Table 1) came as a surprise. No previous study has either hypothesized or empirically investigated this relationship. One possible explanation for this result is that implementation of process control requires information not only on the manner in" which behaviors need to be changed to reduce performance gaps, but also on who needs behavioral counseling and when. This kind of information, it should be noted, is only available through proper performance documentation.

Self and Professional Controls The hypothesis that use of self and professional controls

will be the greatest at low levels of performance documentation and procedural knowledge was rejected. Contrary to expectations, use of these controls appears to be dependent on availability of performance documentation. This finding implies that organizational use of informal controls may not conform entirely to the postulates of the Ouchi (1979) control model.

In summary, it appears that managers do not make control choices solely on the basis of fit with task characteristics (termed as efficiency basis by some researchers). It is possible that managers may have experienced difficulty trading efficiency against motivation and morale benefits derived from using a particular form of control and hence may have focused instead on potential benefits. This difficulty, in turn, may have been instrumental in choosing informal con- trois even for tasks that were relatively more certain.

Controls and Employee Responses

The study findings also support the relevance of examining the joint moderating effects of the two task characteristics on employee responses to controls. Significant moderating effects were found for the relationships between output control and dysfunctional behavior, process control and job tension, and informal controls and dysfunctional behavior. These results are unique because they represent the first empirical evidence in the marketing control lit- erature for the contingent role played by the two task characteristics, performance documentation and procedural knowledge. In light of the common view among researchers that finding two-way moderating effects in field settings is extremely difficult (Sackett, Harris, and Orr 1986), the significant results obtained for four out of twelve possible three-way effects is encouraging. The implications of the joint effect findings as well as nonfindings are discussed below.

Output and Process Controls Organizations may typically use either output or process

control when both performance documentation and procedural knowledge are high. Both forms of control are easy to implement from the viewpoint of the organization. Em- ployees, however, appear to experience higher job tension

JAMS 302 FALL, 1993


when subject to process control (note that the three-way interaction term in the equation relating process control and job tension is positive and significant). On the other hand, the use of output control appears to lead to lower dysfunctional behavior in the high performance documentation, high procedural knowledge condition. Both of these results imply that employees perceive output control, rather than process control, as playing a facilitating role in the goal fulfillment process when performance documentation and procedural knowledge are high. By providing feedback, output control gives a sense of progression and achievement to employees. The outcome feedback itself is accepted by employees because high procedural knowledge implies that performance documentation may be perceived as objective and complete, and employees can decide for themselves the changes in behaviors needed to maximize goal fulfillment. Employees may, therefore, perceive less need to withhold information or to distort its presentation to their supervisors. Withholding information may also not be an option because supervisors may possess knowledge about what can and cannot be achieved (Hirst 1981). With a clearly defined set of behaviors and the ability to measure and verify the re- suits, falsification of information would be risky (Birnberg, Turopolec, and Young 1983).

The results provide legitimacy for nonreliance on process control by managers in any task condition. Future research might investigate the more fine-grained aspects of reactions evoked by process control. In particular, information relating to aspects of process control that are liked or disliked in different task conditions would be extremely useful to prac- titioners.

Self and Professional Controls The use of self or professional control was expected to

uniformly reduce negative employee responses under all task conditions. However, the negative coefficients found for two of the interaction terms (SC*PD*PK and PRC*PD*PK) indicate that this reduction is much more likely under certain conditions. Specifically, when organizations allow the use of professional and self controls in conditions where they are deemed to be unnecessary (i.e., when performance documentation and procedural knowledge are both high), employees reciprocate by exhibiting fewer dysfunctional behaviors.

The managerial implication of the above result is that any organizational process encouraging self and professional initiative and feedback should have a positive potential pay- off. Managers should, therefore, continuously attempt to induce employees to set their own performance goals in explicit terms and also provide flexibility for procedures used in achieving these goals. This flexibility, coupled with continuous monitoring of performance, can reduce the incidence of negative employee attitudes and behaviors that may eventually lead to dissatisfaction and turnover.

CONCLUSION

This study was designed to investigate the interactive (in addition to the independent) influence of two task characteristics, performance documentation and procedural

knowledge, on employees' responses to organizational choice of controls. In doing so, it extended Jaworski and Maclnnis's efforts to examine the contingency model of Ouchi (1979). The results showed that control-employee response relationships are in fact moderated by the characteristics of tasks.

The inferences drawn from these results are, however, subject to several limitations. First, caution must be exer- cised in drawing cause-effect inferences because of the cross-sectional research design employed. Second, like most studies dependent on self-report data, the associations among constructs may be inflated as a result of common methods variance. In the absence of multiple measures for each construct, an effort was made to control for this method bias qualitatively. This involved disguising the objectives of the research from respondents, negatively wording some of the items, randomly placing items within the questionnaire, and assuring complete anonymity. Third, measurement scales of some of the study constructs, especially self and professional controls, need further refinement; the reliability of self-control, in particular, was lower than what is traditionally considered appropriate. The professional control construct was not completely defined because while it focused on control exerted by peer employees, it ignored the control exerted by professional codes of ethics.

On the other hand, the research design used in this study had several positive features. For example, the study used a heterogeneous sample comprised of marketing employees at all levels, rather than just senior-level marketing managers. This sample selection is consistent with one of the recom- mendations of Jaworski and Maclnnis that a sample should span multiple organization levels so that variance on the task characteristics can be enhanced (1989, p. 416). The study also provided partial solutions to measurement limitations acknowledged in their study by improving measurement reliability for the procedural knowledge, performance documentation, and job tension constructs.

Overall the findings of the study provide two important implications. First, they indicate that Ouchi's control model may not capture the reality of how managers make control decisions. Ouchi's model is predicated on choosing a control system on the basis of feasibility or ease of implementation for a given task situation. Managers, however, as the study suggests, exercise caution in choosing controls solely on the basis of feasibility or ease of implementation. They may also consider the impact that controls would have on employee responses. In other words, managers seem to rec- ognize that they cannot expect employees to endorse a particular control form because it is easy to implement.

Second, the use of informal controls was found to reduce dysfunctional behavior in task conditions that were deemed inappropriate from an organizational implementation perspective. Informal controls may thus have a stronger con- trolling value than recognized within the Ouchi model. Al- though such an extreme position was not taken in the hypotheses, it makes sense to conside: the following postulate. If employees consider informal controls to be useful and appropriate in the most uncertain task condition (low performance documentation and low procedural knowledge), then their application in somewhat more certain task conditions ought to be perceived as even more useful and

JAMS 303 FALL, 1993


appropriate. Future research is needed that replicates this study and tests the above postulate, particularly in situations where informal controls may clearly not be the most efficient control form.

In drawing the above conclusions, it should be empha- sized that although this study assumed that output, process, self, and professional controls constitute distinct control forms, they may not be mutually exclusive and hence may be implemented together. Combining their relative strengths may resolve competing requirements of efficiency and cre- ativity. Future research should investigate how task characteristics moderate the choice of different combinations of controls and how different combinations of controls may influence employee responses. Future research should also investigate the effects of other relevant organizational factors such as environmental uncertainty, competitive intensity, organizational structure, control system characteristics, and so forth and individual differences such as need for independence, self-efficacy, competence, and locus of control on employee response to controls.

ACKNOWLEDGMENT

Both authors contributed equally to this article and are responsible for content and remaining errors. The authors would like to thank Bernard J. Jaworski, V. Kumar, James E. McElroy, Paula Morrow, G. Premkumar, Rajendra K. Srivastava, Roy Teas, and the anonymous reviewers for their comments and suggestions on earlier drafts.

APPENDIX: MEASUREMENT SCALES

Performance Documentation (5-point, strongly disagree- agree)

1. Documents exist to measure my performance after activities are complete.

2. The documents that exist can adequately assess my performance.

3. Documents exist to assess my performance on most of my activities, a

4. Information about how my performance will be evaluated has been directly communicated to me. a

Procedural Knowledge (5-point, strongly disagree-agree)

1. There exists a clearly defined body of knowledge or subject matter that can guide me during my work.

2. It is possible to rely upon existing procedures and prac- tices to do my work.

3. On my job, there exist objective procedures that tell me exactly how to respond in all situations, a

4. On my job, I have to actively search for solutions be- yond normal procedures many times, a

Output Control (5-point, strongly disagree-agree)

1. Specific performance goals are established for my job. 2. My immediate boss monitors the extent to which I at-

tain my performance goals. 3. If my performance goals are not met, I would be re-

quired to explain why. 4. I receive feedback from my immediate supervisor con-

cerning the extent to which I achieve my goals. 5. My pay increases are based upon how my performance

compares with my goals.

Process Control (5-point, strongly disagree-agree)

1. My immediate boss monitors the extent to which I fol- low established procedures.

2. My immediate boss evaluates the procedures I use to accomplish a given task.

3. My immediate boss modifies my procedures when desired results are not obtained.

4. I receive feedback on how I accomplish my performance goals.

Self-control (5-point, strongly disagree-agree)

1. The major satisfaction in my life comes from my job. 2. The work I do on this job is very meaningful to me. 3. I feel that I should take the credit or blame for the

results of my work. 4. I like to do more than my share of the work at my job. a 5. I feel bad when I do a poor job. a,b

Professional Control (5-point strongly disagree-agree)

1. The division encourages cooperation between marketing professionals.

2. Most of the marketing professionals in my division are familiar with each other's productivity.

3. The division fosters an environment where marketing professionals respect each other's work.

4. The division encourages job-related discussions between marketing professionals.

5. Most marketing professionals in my division are able to provide accurate appraisals of each other's work.

Job Tension (5-point, strongly disagree-agree)

1. I experience tension in my job. 2. I experience job tension during performance evalua-

tions, c 3. If I don' t attain rfiy performance goals, I feel tense. 4. On my job, I feel tense if I have unfinished work. a 5. I feel tense if I don' t get adequate time to complete my

assignments to my satisfaction, a

Dysfunctional Behavior (5-point, strongly disagree-agree)

1. I tend to ignore certain job-related activities simply because they are not monitored by the division.

2. I work on unimportant activities simply because they are evaluated by upper management.

JAMS 304 FALL, 1993


3. Even if my productivity is inconsistent, I still try to make it appear consistent.

4. I have adjusted marketing data to make my performance appear more in line with division goals.

5. When presenting data to upper management, I try to emphasize data that reflect favorably upon me.

6. When presenting data to upper management, 1 try to avoid being the bearer of bad news.

Information Asymmetry (5 point, strongly disagree-agree)

1. I know how to accomplish the work I riormally encoun- ter.

2. I am intimately familiar with the day-to-day decisions related to my work.

3. I have developed an excellent working knowledge of my job.

4. I can quantitatively assess my performance soon after I complete my activities.

5. I am able to adequately assess my performance after I complete my activities.

6. I can specify the most important variables to monitor in my work.

7. I could specify performance objectives to cover the range of activities I perform.

The seven items below sponding items above to items.

are subtracted from the corre- form seven "difference score"

1. I know how to accomplish the work I normally encoun- ter.

2. I am intimately familiar with the day-to-day decisions related to my work.

3. I have developed an excellent working knowledge of my job.

4. I can quantitatively assess my performance soon after I complete my activities.

5. I am able to adequately assess my performance after I complete my activities.

6. I can specify the most important variables to monitor in my work.

7. I could specify performance objectives to cover the range of activities I perform.

N o t e : " These i tems were added to increase the number o f items

measuring a construct.

b These items were omitted following internal consistency analysis.

NOTES

1. (A)

2. (B)

3. (C)

4. (D)

Job Tension = b o + b I * OC + b z * PC + b~ * PRC + b 4 . SC

Job Tension = c o + c I * OC + c 2 * P C + c 3 * PRC + c 4 . SC + c 5 . OC * PD

Job Tension = do + dt * OC + d e * PC + d 3 * PRC + d o* SC + d~ * OC * PD + de * OC * PD * PK

Job Tension = e o + e / * O C + e 2 * PC + e 3 * PRC + e 4 . SC + e 5 * PC * PK

5. (E) JobTension = f o + f t * O C + f e * P C + f s * P R C + f 4 * S C + fs * PC * PK + fe * PC * PD * PK

6. (F) Job Tension = ho + hi * OC + h e * PC + h 3 * PRC + h 4 * SC + h 5 * SC * PD * PK

7. (G) Job Tension = i o + i I * OC + i 2 * PC + i s * PRC + i 4 . S C + i 5 * P R C * P D * P K

8. The transformation is carried out as follows:

p s i = 1 + ~ i f Z i ) ~ 0 = 1 / (1 + Zi) ifZe < 0

where Zij is the standardized response of respondent i on attribute j. This transformation provides interaction terms that have a theoretical lower bound of zero and an upper bound of infinity.

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ABOUT THE AUTHORS

San j eev A g a r w a l is Assistant Professor o f market ing at Iowa State University. He obtained his Ph.D. at the Ohio

State University. His research interests include the areas of international marketing and sales management. He has previously published in Advances in International Marketing, International Trade Journal, Journal of the Academy of Marketing Science, Journal of lnternational Business Stud- ies, Journal of Personal Selling and Sales Management, and contributed to several national and international conference proceedings.

S r i d h a r N. R a m a s w a m i is Associate Professor of marketing at Iowa State University. He obtained his Ph.D. at the Universi ty o f Texas at Austin. His research interests include sales management , marketing strategy, and international marketing. He has previously published in International Journal of Research in Marketing, International Trade Jour- nal, Journal of Economic Behavior and Organization, Jour- nal of the Academy of Marketing Science, Journal of Inter- national Business Studies, Journal of Personal Selling and Sales Management, Technology Forecasting and Social Change, and contributed to numerous conference proceedings.

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